Two former Berkley's traders have been acquitted of manipulating the library interest rate benchmark. It was the second trial for Greek national Stiliano's Contagulas and American Ryan Reich. The jury couldn't reach a verdict the first time, although three colleagues were convicted and another pleaded guilty. It's the latest development in a global investigation that has cost firms about nine
billion dollars in fines. To talk about the investigation and the latest verdict, we have Cornelius Hurley, professor at Boston University Law School. Welcome, thanks for joining us. Um. You can give us a sense of what went into this trial if you would. First of all, what was the case against these two men. Well, quite simply, it was a case of manipulating libar. And if anybody's interested in learning more about this is a new book that just came out by David Enrich called The Spider Network UH
and that he gives all the glory the tales of it. Basically, what it is is an old fashioned case of infinite information, a symmetry where one side of the trading Florida knew what the rates were going to be for live or and the rest of the market did not. The critical difference here is the information A symmetry is what we would today call fake news, because it wasn't just a symmetric,
it was created. Now, if you happen to be uh those poor fellows who were uh in indited and sent to prison or the one who pled guilty, um, they have to be feeling pretty badly for themselves because the one thing that was missing in your setup piece saying that Barclay's and these other firms had paid billions of dollars, that's absolutely true. What you left out was, however, that they had pled guilty to a felony. Can I say that again? The institutions themselves pled guilty to a fenalty
penalty a felony. Um. That's big time bad news, or used to be for a bank. But in May of twenty fifteen, when these guilty pleads were handed down, relatively nothing happened. Most people have even forgotten it. Why because the regulators and others put foam on the runway to help them get by. This is what was normally anticipated
to be a tumultuous event. Whenever a financial institution pled guilty to a felony, it was well, how is it let me ask you this, how was it that that these two individuals were not convicted given uh that that overhang of their company having pleaded guilty to a felony. Well, it was a case of conspiracy and and uh and you know Tom Hayes and uh and others as you point out, have Apparently the the UK government was just
not able to prove conspiracy or or alternative. They believed the argument that the conspiracy, if it did exist, was sanctioned by by their superiors. How much of a setback do you see this verdict as being for prosecutors. Well, um, let's give a little short little history here. We all that know the name Sally Yates. Now any former acting
attorney general, the former acting Attorney general. Before she was famous for being fired by Trump, she was famous for something called the Yates Memorandum, which basically said that in the context of finding or or enforcing laws against large organizations, they're going to look first to see whether there are culpable individuals at the senior levels of those organizations. That was new policy. See when it was articulated by Sally Yates about two years ago. You mentioned just sessions just
a few moments ago. We wonder whether of the many policies that he is repealing under the Obama administration, the Yates Memorandum and the policy that goes with it is one of them. So, uh, the the answer that's a long one. The answer to your question is we we shall see what are you looking for next in labrary?
What's what's sort of the next and what perhaps may give us a clue is to to the answer to that last question you posed about how the the Sessions Justice Department will handle things, Well, it seems the library since it was revised and now is Thompson Reuters is involved in it. It's it's somewhat different these events, by the way it took place, uh, some of them before the financial crisis. Um so so ours I'm aware, and I'm not in the market every day, but so far
as I'm aware, libor is functioning today. Here's here's the rub, and this is probably a story for tomorrow. We only have about thirty seconds, so let's secret seconds. The Trump administration has uh signaled that it wants to go back to the Glass Stiegel era. Okay, where does libor as a as a traditional banking activity fit in the context of dividing banking from non banking activities, as the administration
apparently wants to do well. I want to thank our guests talking about this the verdict yesterday or the verdict today of two former Berkley's traders quitted of manipulating the library interest rate bench Park. That was Cornelius Hurley, Professor at Boston University Law School. Thank you so much for joining us on Bloomberg Law