(Repeats story issued Friday, no changes to headline or text)
* New York swaps trader was fired over Libor emails
* Now works at New York-based hedge fund WCG Management
* Supervisors knew of his Libor emails-source
* Traders saw nothing wrong with Libor actions-lawyers
Aug 3 (Reuters) - A 30-year-old former Barclays Plc
swaps trader in New York, who was fired from the bank in 2010,
is among those drawing scrutiny from prosecutors in the
deepening scandal over the manipulation of global benchmark
interest rates.
U.S. prosecutors in Washington, D.C. are looking at Ryan
Reich's activities while at Barclays between August 2006 and
March 2010, said several people familiar with the situation, who
declined to be identified because the bid-rigging investigation
is ongoing.
Reich, now a portfolio manager with New York-based hedge
fund WCG Management, was dismissed from Barclays for allegedly
sending inappropriate emails seeking internal bank information,
according to two sources familiar with the situation.
One of those sources, who used to work for the bank, said
the information Reich sought concerned how the Libor benchmark
rate was going to be priced, information that could have been
useful for his trading positions.
Reached by telephone on Friday, Reich declined to comment. A
spokeswoman at the U.S. Department of Justice did not return
phone calls or emails seeking comment.
Libor, the London interbank offered rate, is used to set
rates on trillions of dollars of contracts for everything from
home mortgages to credit cards. The investigation has embroiled
banks on both sides of the Atlantic and involves yen and euro
rates as well as those for the dollar.
Lawyers familiar with the investigation say federal
prosecutors continue to reach out to individuals to gauge
interest in cooperating or taking pleas. They said p r osecutors
are expected to begin making decisions on charging individuals
late this month or in early September.
Indeed, many of the traders under scrutiny do not believe
they did anything wrong because their employers and regulators
had some awareness of their activities, the lawyers said.
Information released by the New York Fed shows that bank
regulators in the United States and Europe knew some banks were
submitting low Libor bids during the financial crisis to make
institutions appear healthier than they were.
A person familiar with Reich's dismissal from Barclays said
that the young trader, who joined Barclays just two years after
graduating from Princeton University, was directed by his
supervisors to send the emails and they were aware of everything
he was doing.
The person, who did not want to be identified, said the
practice of sending emails to gather information on future Libor
pricing went back to the 1990s at Barclays, long before Reich
joined the firm.
"This was systemic at Barclays," said the person.
Barclays declined to comment.
INCONSPICUOUS
Reich was a part of a low-profile New York trading desk at
Barclays that is now increasingly in focus as prosecutors and
regulators extend their investigation of the Libor scandal,
which began to come to light in 2008. In June, Barclays paid a
$453 million penalty to authorities in t he United States and the
UK to settle allegations some of its traders colluded with
people at other banks to manipulate Libor.
In the United States, federal authorities and regulators are
focusing on the activities of the Barclays desk on which Reich
worked. It traded U.S. Treasury and U.S. dollar and Canadian
dollar interest rate swaps.
Reuters previously reported that Jay Merchant, one of that
desk's top traders, who in 2009 served as head of U.S. dollar
swaps trading, is being scrutinized by federal authorities as
well. Merchant moved to UBS in late 2009 to run that firm's
swaps desk.
Ritankar "Ronti" Pal, who Merchant reported to and who had
overseen all of the desk's trading since 2006, recently left
Barclays, according to people familiar with the matter. A man
who appeared at an address listed for Pal declined comment and
called for building security to escort a reporter away. Pal
didn't respond to a written request for comment.
The Libor investigation is focusing on allegations that
traders at various banks colluded to try and rig the price of
Libor to impact the interest rate on swaps, a type of derivative
contract. On many swaps, the interest paid is a floating rate,
so depending on which side a bank sat on a trade it would have
an interest in getting either a lower or higher Libor rate.
One thing authorities are looking into is whether traders at
banks were trying to get information ahead of time to know where
Libor was going to be set for the next day, or work with other
traders to influence the rate.
As reported last week by Reuters, people familiar with the
investigation said authorities are looking at whether some
individuals on the Barclay's trading desk tried to influence the
rate on Libor by communicating with other traders in London to
get a higher return on certain swaps the desk was trading.
Traders at JPMorgan Chase & Co also had dealings with some
of the Barclays traders under scrutiny, according to a person
familiar with the investigation. JPMorgan declined to comment.
Reich filed an employment arbitration case against Barclays
following his dismissal. The case was eventually resolved,
though terms were not disclosed.
POSSIBLE CHARGES
Another lawyer familiar with the investigation said
prosecutors could charge traders with wire fraud, a charge that
does not require them to actually have succeeded in manipulating
Libor, but merely have sought to do it. Wire fraud is often used
when individuals communicate through emails or cell phones as
part of a conspiracy charge.
Reich's current employer, WCG Management, is a macro hedge
fund that specializes in trading bonds, currencies and interest
rate swaps. It oversees $3.4 billion in assets and is led by
Barry Wittlin, a former top proprietary trader with Merrill
Lynch.
Officials at WCG did not respond to a request for comment.
People familiar with the investigation said there is no
indication authorities are looking at the hedge fund and
authorities are not looking at any of Reich's activities at the
fund.
(Editing by Martin Howell and Leslie Gevirtz)
