Andrew Smith discusses Libor prosecutions in Thomson Reuters Accelus

Compliance officers may become court witnesses on Libor prosecutions, say lawyers

By Alex Davidson

Criminal investigations into potential Libor-rigging can result in compliance officers becoming witnesses against their banks’ former employees as defendants, lawyers said. Views on the likelihood of such an outcome in future criminal court hearings, in Libor or Euribor or also, if it should arise, in market abuse, vary, but two lawyers’ experience is that a compliance officer could certainly end up in court.

“Often, the firm’s compliance officer will appear in court as a witness for the prosecution to say that there were certain rules or ethical duties in place and the defendant would have been notified of them,” said Andrew Smith, partner at Corker Binning.

Lessons from Hayes

The defence strategy can make a difference to the outcome. Smith said bank traders facing a criminal investigation were more likely to get their case dropped if they adopted the right strategy from day one. Anyone snared in a market abuse criminal investigation must be careful about answering questions in a SFO interview, he said.

“The long sentence of Tom Hayes shows what can happen when a defendant tries to distance himself from the answers given during an earlier interview,” he said.

“The SFO is trying to establish a fraud. While each case turns on its own facts, it is often best to say nothing during the first interview if you are told little about the allegation and no documents are shown to you by the SFO. Wait until you know what the SFO has on you,” Smith said.

He said if the defendant should talk, there was a risk that, for instance, he or she could say something in general terms and the SFO could later produce documents that it said contradicted this. This could become part of the prosecution’s case at trial and the defendant could be cross-examined on it.

According to Smith, when the case comes to trial, the defence strategy involves decisions such as, for example, which witnesses to examine, and whether it is possible to object to admissibility of evidence, or to question the status of an expert witness.

Whether the defendant would benefit from giving evidence turned on the circumstances of the particular case, Smith said. “Some defendants may be too quick to blame others. Some defendants can be evasive in answering questions.”

Read the full article in Thomson Reuters Accelus.