Henning on Tossed Convictions for Rabobank Traders (Audio)

to be undermining prosecutions of cross border crimes. The case against former London Rebel Bank traders Anthony Allen and Anthony Conti was the first time US prosecutors put bankers on trial for manipulating the Liebord ban, but will it be

the last. A jury convicted the men of conspiracy and fraud, but the Second Circuit Court of Appeals has tossed their convictions, saying their Fifth Amendment rights were violated when prosecutors used testimony they were forced to give to a UK financial regulator to former Deutsche Bank traders are already using the decision to challenge charges against them for library rigging, joining US. It's professor Peter Henning of Wayne State University Law School.

Peter first tell us about this testimony they were forced to give to the UK's Financial Conduct Authority and how it was used at trial. Well, this is something we're not used to here in the United States, that a regulator can force any UK citizen to come in and give testimony. If the deal, though, is that you then receive immunity from having that testimony used against you. They

were required to come in. What ended up happening is the testimony of the two defendants was shown to a cooperating witness who reviewed their testimony and then testified at their trial. In the United States and in the US, if you're given immunity, your testimony can't be used against you. But the Second Circuits that is this is the same rule. We're going to apply it here as if you were given immunity by the US government. In this case that

was given by the Financial Conduct Authority. It's treated as the same and therefore violated their Fifth Amendment rights. Peter, what was the argument the other way? Judge Rakoff upheld these convictions, and I gather he disagreed with with the appeal's quard on that issue. Well, certainly on two grounds. First, he said that the community granted by another jurisdiction doesn't

apply in the US. But even if it does, the government's key cooperating witness testified that I was not affected by the review of their statements that they gave in um Great Britain. Now with the Court of Appeal said was that didn't hold any water. They disagreed rather strongly, with Judge Rakoff saying you came to the wrong conclusion that in fact his testimony was affected by the immunized statements that the two defendants made and therefore the convictions

got reversed. Let's talk about the fallout from this decision, immediate and long term. Immediately, two former Deutsche Bank traders are already trying to use the decision to challenge charges against them for library rigging. Is that likely to be successful? Well, only one of the two defendants made a statement of the Financial Conduct Authority, so it will only directly affect his case, and it's not clear whether that statement was used by investigators or any witnesses in the case. So

we're still at a preliminary stage in that case. It's not clear what the impact will be, but it's certainly is going to raise a question for prosecutors of what prosecutors hate to have to deal with is going after someone who has been immunized. And so now whenever you have one of these situations, they're going to have to be very very careful about their evidence to make sure they avoid the impact of the immunized testimony, Peter one

other immediate consequence or potential consequence. How about the cooperate cooperating witnesses in this case, Um, they testified against Allen and County Uh in exchange for and they pleaded guilty. Is that deal? Are those deals likely to be scuttled because of this decision? Well, certainly that there's a reasonable

chance that they'll challenge them. Now that the Justice Department could refile the charges against Allen and CONTI with the Second Circuits, that is that the indictment was painted by the immunized testimony and therefore dismissed the indictment. The government could reindice I. That's going to be tough to do

because their key witness appears to now be knocked out. Um, if that is in fact the case and the Justice Department doesn't refile the charges, I think there's a reasonable chance you'll see that other cooperating witnesses are going to have to have their guilty please canceled and um, there's a real possibility that everyone relays go to the rabble bank, uh lie or manipulation might be able to escape any

criminal prosecution. Civil would be different. So long term, the US has tried to work with foreign jurisdictions in rooting out criminal behavior. Why has that been difficult and how could this decision make it more difficult. It's always difficult

because you have different procedures in other countries. And where the real impact of this is going to be I think is that the Department of Justice is going to have to look and say, when we work with a foreign regulatory authority or foreign prosecutors, we have to make

sure that their procedures work in our system. And so if someone is compelled to come in and give a statement, which is the case throughout much of Europe, that if they're compelled to come in, then that puts their statement and any evidence derived from that at risk in a US prosecution. So the Justice Department at a minimum is going to have to be a lot more careful when

it works with foreign regulators. Peter. In the UK, eight former traders have been acquitted of criminal charges related to librory. What makes it so difficult to prosecute these cases? Well, in the serious Broad Office has had some issues in its cases. One of the challenges is and where the procedures are a little bit different. And also the type of proof that is admissible at trial is not as broad as it is in the United States, even though

we share a common law background. Um, federal prosecutors in the United States have more freedom to bring in evidence. So it has really been a challenge in the UK to obtain convictions, and so there's a fear that defendants can get away with it in the UK. And now with this ruling that the Justice Department may not be able to pursu who charges, or at least it's going to be hamstrung in pursuing charges in the future. Peter, just about thirty seconds left. But what would you expect

from the Justice Department Now? Do you imagine they will ask, say, the full Appeals Court to review this decision? Um A very interesting question. There is certainly a chance. I'm not sure this is a case that will get to the Supreme Court, but they could ask. The problem for them is the Second Circuit grants uh full rehearing before the entire bench about once a year, and so that is a very much of a long shot. As always, thank

you for being on Bloomberg Law. That's Professor Peter Henning of Wayne State University Law School does it for the decision of Bloomberg Law. Will be back Monday at one pm Wall Street Time, thanks to our producer Mark Sinniscounty and our technical director Chris Strike. Comey. Coming up next Bloomberg Markets with Carol Master and Corey Johnson. And Carol is here to tell us what's coming up. Another busy Friday, June.

I've got to earnings. Investor is not too happy. We're gonna take a look at Airbnb in Mexico, trying to work it out. Confidence back in the art market and CEO perks pizza, clothes, other stuff. I like the clothes part of that. All right. That's coming up next Bloomberg Markets with Carol Masster and Corey Johnson. You've been listening to Bloomberg Law here on Bloomberg Radio. Have a great weekend, and please join us again on Monday at one pm

four more Bloomberg Law. I'm June Grasso with Michael Best and Greg Store. This is Bloomberg,