NEW YORK — A U.S. appeals court cited the Fifth Amendment right to be free from self-incrimination as it reversed the convictions Wednesday of two British ex-bankers charged with conspiring to manipulate the primary benchmark for global short-term interest rates.
The 2nd U.S. Circuit Court of Appeals in Manhattan said the 2015 trial of Anthony Allen and Anthony Conti improperly included evidence gained from testimony the men were forced to give in the United Kingdom. It also tossed out the indictment against them.
“In short, compelled testimony cannot be used to secure a conviction in an American court. This is so even when the testimony was compelled by a foreign government in full accordance with its own law,” the three-judge panel said in a lengthy opinion written by Circuit Judge Jose A. Cabranes.
It added: “If as a consequence of joint investigations with foreign nations we are to hale foreign men and women into the courts of the United States to fend for their liberty we should not do so while denying them the full protection of a “trial right” we regard as “fundamental” and “absolute.”
The Justice Department in Washington, which prosecuted the men, declined to comment.
“Today’s decision is a tremendous relief for Tony Allen and his family, who now look forward to putting this stressful chapter of their lives behind them,” said defense attorney Michael Schachter.
“We’re thrilled and the client’s thrilled,” said Tor Ekeland, a lawyer for Anthony Conti. “This is a really great vindication of our client’s constitutional rights.”
They were convicted in part on the testimony of Paul Robson, who also worked in the London office of Dutch bank Rabobank before pleading guilty to U.S. charges and cooperating.
The 2nd Circuit noted the United Kingdom enforcement agency, the Financial Conduct Authority, forced Allen and Conti — both U.K. citizens and residents — to answer questions.
Robson then reviewed the testimony, taking several pages of handwritten notes, after the Financial Conduct Authority initiated and later dropped an enforcement proceeding against him, the appeals court said.
Allen was sentenced to two years and Conti received one year in prison after their 2015 convictions on charges that they tried to manipulate the London interbank offered rate, known as LIBOR. U.S. District Judge Jed Rakoff in Manhattan permitted them to remain free pending appeal.
Banks use LIBOR to borrow from one another. It affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
The 2nd Circuit said Allen had joined Rabobank in 1998 and was the bank’s LIBOR rate submitter until 2005 while Conti was the primary LIBOR rate submitter from 2005 through 2009.
The appeals court said U.S. government investigators were aware they needed to closely coordinate with U.K. authorities.
“The practical outcome of our holding today is that the risk of error in coordination falls on the U.S. government (should it seek to prosecute foreign individuals), rather than on the subjects and targets of cross-border investigations,” it said.