Judge Tosses Case Against Barclays Trader in Latest Stumble for Prosecutors

By: 
The Wall Street Journal
Published on:
March 5th, 2019
Sean Hecker, Kaplan Hecker & Fink
Credit: Sylvie Rosokoff

A federal judge dismissed without sending to the jury a case against a former senior Barclays PLC trader accused of illegally trading in anticipation of a major client deal, highlighting the problems prosecutors have faced in efforts to hold individuals liable for allegations of corporate misconduct.

In a 13-page order issued Monday, Senior U.S. District Judge Charles Breyer said the government pursued a case 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.”

The case against Robert Bogucki, the former head of foreign exchange trading in the Americas for Barclays, grew out of a broader investigation into multiple banks’ roles in allegedly trying to manipulate financial benchmarks and foreign exchange rates, which led multiple banks to pay billions of dollars in penalties but has left prosecutors with a mixed record of success in pursuing individuals allegedly involved in the conduct.

Mr. Bogucki was indicted last January and accused of misusing information HP Inc. had provided the bank in 2011 to execute a deal that involved selling £6 billion ($8 billion) worth of U.S. dollar and British pound exchange-rate options.

The indictment included colorful language between Mr. Bogucki and his colleagues, including saying they would “bash the shit out of” selling those options before executing the HP transaction to push down the price, and issuing warnings to stay quiet or “your ass will be in a f— frying pan.”

After a five-day trial, defense lawyers filed what is called a Rule 29 motion which asked Judge Breyer—who had said at trial he was concerned about a potential “massive due-process problem” with the case—to dismiss the charges before they went to a jury.

While defense lawyers routinely file such motions at the end of a trial, courts rarely dismiss all charges, preferring to leave it to juries to decide the facts of a case. Judge Breyer said it is his first time in his 20 years on the bench that he granted such a motion for an entire case.

In his ruling, Judge Breyer said the Justice Department had not presented enough evidence to show Mr. Bogucki had a duty of trust to HP, and that people at both the company and the bank were posturing and bluffing each other.

“I think the government completely overreached in this case,” Judge Breyer said in court, adding that the foreign-exchange market is “an unregulated business” and the transaction involved “two highly sophisticated individuals” who entered the deal “eyes wide open.”

A lawyer for Mr. Bogucki applauded the ruling. “We are so very pleased that the Court recognized Mr. Bogucki’s innocence and affirmed that the government’s attempt to rewrite the rules years after the fact runs counter to core constitutional principles of due process,” the lawyer, Sean Hecker of the law firm Kaplan Hecker & Fink LLP, said.

A Justice Department spokeswoman said: “We respect the Court’s decision and decline to comment further.”

A representative for Barclays declined to comment. The Justice Department declined to prosecute the firm last February in connection with the conduct. Barclays agreed to give up $12.8 million in profits for the conduct.

 

Read this at The Wall Street Journal.