Tuesday 02, October 2018 by Bloomberg

Trader's $9 million bonus is focus in boss's libor-rigging trial


Defence lawyers for two former Deutsche Bank AG traders accused of manipulating the benchmark Libor lending rate suggested in federal court that a key government witness had minimized the scope of his own crimes to get a more lenient sentence and to retain a $9 million bonus.

Tim Parietti, a Deutsche Bank derivatives trader from 2000 to 2012, told a jury in Manhattan that his supervisor, Matthew Connolly, directed him to share his trading position with colleagues in London responsible for submitting data used to compile the London interbank offered rate. Connolly and Gavin Black are accused of rigging the benchmark, which tracks borrowing costs of the world’s biggest banks and is used to value trillions of dollars of financial products.

Parietti is the second of three former Deutsche Bank traders who have already pleaded guilty and agreed to testify against Connolly and Black. Defence lawyers, who have argued that there were no hard and fast rules about how banks submit their data for Libor calculations, assailed Parietti’s credibility, suggesting he tailored his version of events to accommodate the prosecution.

On Monday, the defence pointed to Parietti’s initial plea agreement with the US, which detailed crimes from 2006 through 2010, while in documents commemorating his cooperation with the government, Parietti said he conspired to manipulate the benchmark from “at least 2006 through at least in or about early 2010."

But a transcript of Parietti’s May 2016 guilty plea shows he told a judge the period was ever narrower, “from early 2006 through approximately 2008." Parietti collected a bonus of about $9 million in 2010 for his work at the bank in 2009, which wouldn’t be included in the funds he’d have to repay the US as illegal proceeds.

“You recognise that’s a shorter period of time?” Ken Breen, a lawyer for Black, asked Parietti during cross examination. “Isn’t that beneficial for you? Wouldn’t that mean your $9 million bonus was outside of that range?"

“Yes, that is outside of the range,” said Parietti, 52, who spent about six hours on the witness stand.

Seth Levine, Connolly’s lawyer, accused Parietti of being a habitual liar who was willing to testify to save himself.

“Isn’t it true what you’re doing is bearing false witness in order to get your deal?” Levine asked.

“No,” Parietti said. “I’m not bearing false witness, so I do not believe that it will impact me.”

Prosecutor Carol Sipperly showed jurors the full transcript of Parietti’s guilty plea, noting that he had corrected his initial statement to say, “the practice I engaged in occurred from early 2006 through approximately 2008, and I should have said, ‘at least 2008.’"

“So that would include the years after the later date?" Sipperly asked.

"Yes," Parietti said.

Before the jury arrived on Monday, prosecutors told US District Judge Colleen McMahon, who’s presiding over the case, that they planned to call their last cooperating witness to the stand on Tuesday—Michael Curtler, a former derivatives trader and manager of the London money-market derivatives desk.

The case is US v Connolly, 16-cr-00370, US District Court, Southern District of New York.

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