The US government's case against senior Australian financial trader Paul Thompson has been bolstered with a Japanese co-accused pleading guilty to what prosecutor's describe as "the ultimate inside job".
Singapore-based Thompson, who was Rabobank's head of money market and derivatives trading for northeast Asia, and three other former Rabobank employees, were charged in April by a US federal grand jury with conspiracy to commit wire fraud and bank fraud.
The quartet is accused of manipulating Rabobank's Yen London InterBank Offered Rate (LIBOR), an average interest rate calculated based on submissions from leading banks around the world.
LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for interest rate contracts, mortgages, credit cards and other consumer lending products.
"This was the ultimate inside job," US assistant attorney-general Leslie Caldwell said.
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"As alleged, traders illegally influenced the very interest rate on which their trades were based, using fraud to gain an unfair advantage."
Takayuki Yagami, a Japanese national who specialised in yen derivatives at Rabobank, entered the guilty plea on Tuesday in a New York court.
US government officials trumpeted the guilty plea, which bolsters the case prosecutors have built against Yagami's Rabobank colleagues Thompson, Paul Robson of the United Kingdom and Tetsuya Motomura of Japan.
From about May 2006 to at least January 2011, the four defendants allegedly made false and fraudulent Yen LIBOR submissions for the benefit of their trading positions.
Because the trades were settled based on the published Yen LIBOR, the profitability of their trading positions depended on the direction in which Yen LIBORs moved, prosecutors said.
"I'll probably get a few phone calls but no worries mate there's bigger crooks in the market than us guys!" Robson allegedly wrote in an email exchange with Yagami.
Robson worked as a senior trader at Rabobank's money markets and short term forwards desk in London, Motomura was a senior trader at Rabobank's Tokyo desk and Yagami worked as a senior trader at Rabobank's money market/foreign currency forwards desks in Asia.
