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Ex-Barclays Forex Chief Cleared By Judge Amid Trial
March 5th, 2019
A federal judge in San Francisco ruled on Monday to acquit a former trader at Barclays PLC of manipulating the price of foreign currency options to defraud the bank's customer Hewlett-Packard Co., saying that no reasonable jury could convict based on the evidence prosecutors offered at trial.
Robert Bogucki was accused of inflating the forex options market in 2011 when HP was trying to swap $11 billion for £6 billion in order to purchase the British software company Autonomy. Prosecutors say the move made Barclays millions of dollars at HP’s expense. Bogucki’s attorneys had moved for acquittal on Feb. 28, assailing the government's evidence on multiple fronts.
U.S. District Judge Charles Breyer agreed, clearing Bogucki of the charges.
"Here, the government has pursued a criminal prosecution on the basis of conduct that violated no clear rule or regulation, was not prohibited by the agreements between the parties, and indeed was consistent with the parties’ understanding of the arms-length relationship in which they operated," Judge Breyer wrote. "The court cannot permit this case to go to the jury on such a basis."
Prosecutors had argued that Barclays owed HP a duty of trust because the bank held confidential information about HP’s planned options transaction. In support, the government pointed to the frontrunning case against former HSBC forex executive Mark Johnson, where the government relied on that theory. Johnson was convicted and has filed an appeal.
But Judge Breyer said on Monday that while the agreements between HSBC and its client in the Johnson case supported a duty of trust, the opposite was true for the deal between Barclays and HP. The agreement that laid the ground rules for the transaction expressly stated that the parties were acting in their own interests, according to the ruling.
The trial testimony of HP employee Zac Nesper also loomed large in the judge’s analysis. Nesper had told the jury that his side was at times “BS-ing” Barclays and that he knew Bogucki was at times “posturing.”
With that context, Judge Breyer said a jury could not find someone in Nesper’s shoes could have been influenced by statements the government had portrayed as promises by the bank not to trade in a way that would drive prices up for HP.
“The government has offered no evidence, and indeed no explanation, of why someone in Nesper’s position, who was himself engaged in ‘bluffing’ and ‘BS-ing’ Barclays, would have had reason to believe that Bogucki was, unlike Nesper himself, being truthful about Barclays’ position in the context of their arms-length negotiations,” the judge wrote.
The U.S. Department of Justice declined to bring a case against the bank itself last year, citing Barclays’ quick report of the conduct and its cooperation in the government’s case against Bogucki. The deal required the bank to pay $12.9 million, including in restitution to HP.
Bogucki’s attorney, Sean Hecker of Kaplan Hecker & Fink LLP, released a statement on Monday celebrating the ruling and blasting the case as an “attempt to rewrite the rules years after the fact” that “runs counter to core constitutional principles of due process.”
“Back in 2011, Mr. Bogucki did his job and did it exceptionally well, providing the best pricing on the market to a bank client while protecting his employer, all the while following the rules that governed foreign exchange market makers,” Hecker said. “This is yet another failed attempt by the Department of Justice to regulate this market with ill-conceived and entirely unfounded prosecutions.”
"We respect the court’s decision and decline to comment further," said Nicole Navas, spokeswoman for the DOJ’s Criminal Division.
A spokesman for the U.S. attorney’s office in Northern California declined to comment.
Another foreign currency trial ended in acquittals last year. In that case, traders at Barclays, Citigroup Inc. and JPMorgan Chase & Co. had been accused of working together to manipulate foreign currency benchmarks.
The government is represented by Justin Weitz and Brian Young of the U.S. Department of Justice's Fraud Section and Chinhayi Cadet of the U.S. Attorney's Office for the Northern District of California.
Bogucki is represented by Sean Hecker, Alexandra K. Conlon, Abra Metz-Dworkin and Derek Wikstrom of Kaplan Hecker & Fink LLP, and Adam F. Shearer and Josh A. Cohen of Clarence Dyer & Cohen LLP.
The case is U.S. v. Bogucki, case number 3:18-cr-00021, in the U.S. District Court for the Northern District of California.
Read this at Law360.