A federal judge in San Francisco took the rare step recently of dismissing without sending to the jury a case against a former senior Barclays PLC foreign exchange trader who was accused of conspiracy and fraud charges, a verdict that will prevent federal prosecutors from filing an appeal. U.S. Attorney David Anderson's spokesman saith that they were reviewing the court's decision.
Robert Bogucki was accused of illegally trading in expectation of a sizeable deal by a client. However, the allegations were rejected by the judge, who determined that the U.S. options markets are more like a poker game in "the Wild West" than one governed by clearly defined rules of trust. The judge, Charles R. Breyer, ruled out that the evidence could not convince that the trader tried to influence Hewlett-Packard (HP) to part with its money or property and prosecutors had not proved their case against Robert Bogucki after several days of testimony.
The verdict highlights the complications investigators have faced to hold accused accountable for allegations of corporate malpractice. Moreover, the acquittal of Mr Bogucki, who was the head of Barclays' foreign exchange trading desk in New York, is a setback for U.S. prosecutors who have not been very successful in a broader crackdown against individual bankers for currency market manipulation. It also marks a rare case where a case was dismissed immediately after the prosecution presented its case at trial.
In 2011, Bogucki was alleged of "front-running" a transaction linked to HP's purchase of British software company Autonomy Corp, as part of a 2011 scheme to manipulate dollar-pound exchange rates to profit the bank's trading positions at the expense of client Hewlett-Packard. The prosecutors accused him of trying to influence options' price to profit the bank at HP's expense. In 2015, Barclays was fined more than $2 billion by US and UK authorities after the company had pleaded guilty to manipulating exchange rate.
Although there was some loose talk regarding the suspicious transactions, including a discussion to "spank the market" and warning a colleague not to let someone within the market tell HP, the judge could not find that Bogucki owed HP a duty of trust and confidence. Mr Breyer noted that the relationship between the concerned parties and industry practice called for an acquittal. He further wrote that Bogucki's conduct had not broken any definite rule or regulation, nor it was restricted on the agreements between the parties and added the court couldn't allow the case to go to a jury.
The Justice Department won guilty pleas in 2015 in connection with foreign exchange markets from four banks, Citigroup Inc., Barclays, Royal Bank of Scotland Group Plc and JPMorgan Chase & Co, which had to fork out $2.5 billion. However, few individuals have been held criminally liable, and the ruling was not the first disappointment for the department in its efforts to target individual traders.
In October 2018, a jury in New York federal court acquitted three former forex traders from JPMorgan, Citigroup and Barclays of scheming to manipulate benchmark exchange rates using an online chatroom. That same month, the U.K. Supreme Court did not allow extradition of the former head of currency trading at HSBC.
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