A former employee of major bank Barclays has had a market manipulation case against him thrown out by a judge before it even reached a jury.
Robert Bogucki, who was formerly a senior forex trader at the firm, was told by US District Judge Charles Breyer in the Californian city of San Francisco that his trial for fraud-related crimes would no longer be going ahead.
According to Breyer, the options markets – which Bogucki stood accused of front-running, or making decisions based on advantageous knowledge he may have had of what was going to happen next – were not in fact regulated by obvious rules of trust.
Instead, the judge said, the whole scenario was more akin to gambling and hence out of the law’s purview. The judge used the common description of these markets as operating in “the Wild West”.
In a toughly-worded statement, the judge accused the government of pursuing Bogucki despite “no clear rule or regulation” being broken.
“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”, he wrote.
“The court cannot permit this case to go to the jury on such a basis”, he also said.
The allegations against Bogucki were extensive. He had been working alongside Hewlett-Packard, or HP, which had wanted Barclays to purchase cable options totalling around £6 billion in value as part of a takeover.
However, Bogucki allegedly then attempted to artificially make the options worthless – meaning that HP allegedly lost out, but Barclays could allegedly have gained.
During the investigation, there was some discussion about the extent to which Bogucki owed HP a duty of trust.
It was said by some that this was the case, although the judge in California said he believed that this was not actually the case, given that Bogucki’s actions were supposedly standard within his industry.
Bogucki was also alleged to have told a colleague that it was important “some loose-lipped market monger” did not speak to HP about the plans.
According to The New York Times, legal professionals have found the judge’s decision unusual.
“It’s over, and there cannot be a retrial… Very unusual result”, the newspaper quoted Daniel Silver, a former Brooklyn-based federal prosecutor who now works for Clifford Chance in New York, as saying.
The judge’s decision represents a significant blow for the US Department of Justice, which had brought about the indictment in the first place.
At the time, its Acting Assistant Attorney General John P. Cronan had strongly worded opinions on Bogucki.
“Robert Bogucki and others allegedly not only betrayed his client’s confidences, but also risked undermining public trust in the foreign exchange options market”, he said.
“The Criminal Division and our law enforcement partners remain committed to protecting American interests by investigating and prosecuting sophisticated schemes such as the one alleged in this indictment.”