UK: Comment On Sentencing Remarks In The Euribor Prosecution

Last Updated: 1 October 2018
Article by Kevin Clancy

Proportionate sanctions, the need for robust compliance procedures, and the importance of mitigation.

Background

In July 2018, Christian Bittar and Phillipe Moryoussef were sentenced to imprisonment for five years, four months and eight years respectively. Philippe Moryoussef was found guilty of manipulating Euribor, whilst Christian Bittar (who was described as the principal conspirator) pleaded guilty before the two-month trial started.

Euribor is defined as "the rate at which Euro interbank term deposits are being offered within the EMU zone by one prime bank to another at 11.00am Brussels time" . It has also been described as being "the primary benchmark for short term interest rates and one of the most globally significant numbers in finance".

The manipulation of the rate, which gave rise to the investigation and subsequent criminal trial, was said to have occurred in several ways – collusion with bank colleagues, collusion with the employees of other banks, and "cash pushing" (which is offering cash to the market with the intention of altering the Euribor rate in the lead up to a fixing or reset date).

General observations by Judge Gledhill QC

In making his sentencing remarks, His Honour Judge Gledhill QC made a number of observations about the context within which the rate manipulation could occur, as well as the specific manipulation offences itself. Phillipe Moryoussef did not attend the trial, with adverse comments being made about his attitude towards the English judicial process.

The judge made reference to the casual, if not foolhardy, approach to the submission of rates by banks. Speaking about how the offences could be committed at all, the judge commented:

"Neither the definition of Euribor nor the Code gave any instruction, guidance or assistance as to how the panel banks' submitter should determine the rates they submit. That failure might be thought by an interested observer to be at best foolhardy, if not utterly negligent. It was an open door for those involved in the conspiracy to manipulate, or attempt to manipulate, the Euribor rate for the advantage of their own banks' trading positions.

This case has shown all too clearly that both the banks and some of the employees fell far below these standards".

The sentencing remarks also made a relevant observation about the frailty of being human, in a banking culture where gaining the smallest of advantages could have consequences running into billions of pounds / euros:

"Bankers may earn huge amounts of money, but they remain human beings, and sometimes the prospect of earning money either for their banks or themselves, or the risk of losing money, stifles both ethics and honesty."

Christian Bittar

That particular point came into sharpest focus when Judge Gledhill reflected on the trading reputation of Christian Bittar.

Mr Bittar was described in the sentencing remarks as being "a highly successful derivatives trader, perhaps the best in the world. One of his character witnesses, who worked with him at Deutsche Bank, described him as the 'single most talented trader he had ever met". Another said he was 'without doubt, the best short end derivatives trader in the country' ".

His remuneration reflected his reputation: he received over £3.5 million in 2005 and in 2009 this had risen to £47.8 million.

The Judge's observation sums up his earlier assessment that, despite the ability of an individual to be highly successful in the arena in which he operates, bankers remain human beings:

"It is beyond irony that he was legitimately earning huge sums and there was no obvious need to resort to dishonest manipulation."

However, it could be said that the fault is not just a lack of honesty. Rather, a problem was with compliance procedures that appeared to be so lax that dishonest traders could act with little fear of being discovered.

The importance of mitigation

When determining the correct sentence to impose, it is necessary for the Court to have regard to the aggravating and mitigating factors that arise in any particular case.

A clear theme in the sentencing remarks is that the purpose of sentencing in a case such as this is not just one of punishment, but also a clear message of deterrence to others. In the world of financial crime, this is not new: probity, honesty, and trust are essential characteristics in ensuring that the banking industry functions correctly and effectively.

The case of Mr Bittar was considered so serious that the correct starting point was a custodial sentence for 9 years. Of wider interest may be the Judge's remarks in connection with mitigation.

Regard was had to Mr Bittar's previous good character (supplemented by a number of positive character references) and that the investigation and criminal proceedings will have taken its toll on Mr Bittar, and his family. It was noted that the likelihood of further offending in the future was very low, and the Judge was prepared to take into account the lengthy delay (around 10 years) between the period of offending and the resulting trial.

As such, the sentence was reduced to 8 years.

Mr Bittar pled guilty at the first opportunity available to him. An early guilty plea often attracts a sentencing discount from the court. That typically reflects that utilitarian value of a plea to both the court and to potential witnesses.

However, the early guilty plea in this case had a further advantage to the prosecutor: that by pleading guilty at an early stage, the prosecutor was able to prove, in relation to the other defendants, that there was in fact a conspiracy to defraud. That was a significant development.

The consequence was that not only was the prosecution of Mr Bittar more efficiently concluded, but that the issues to be resolved in other proceedings were reduced substantially.

The net effect of all of these mitigating factors was that the sentence was reduced to 5 years and 4 months.

Phillipe Moryoussef

No such mitigatory factors could be relied up by Phillipe Moryoussef. The evidence in relation to Mr Moryoussef was particularly damming, with reference being made to a document dated 9 March 2007 in which he said: "They are flooding the market. They are already massively long in futures ... All in all, they earned some dough".

The sentencing remarks observed that two conclusions could be drawn: "firstly, that [Phillipe's] motivation was greed. But perhaps, more importantly, he was confessing to his profitable role in manipulating the Euribor rate."

The matter against Mr Moryoussef was heard in his absence after he had fled to France. A French advocate was instructed to engage with the court process. This did not escape criticism. It seems the impertinent tone of the letter from the French advocate did not find favour with the Court. The sentencing remarks note that the letter "demonstrates the ignorance of the advocate of English law" and that, had it been written by an English advocate, it "would be dealt with by a contempt proceedings".

Conclusion

This case highlights not just the importance of robust compliance procedures, but also how co-operation with the authorities can result in significantly reduced sentences. And, be polite to the judge!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions