Banker Fraud?

Media reports and online research indicate that a California federal judge has recently refused two bids by a former Barclays trader to have dismissed, without trial, indictments relevant to an alleged scheme to defraud Hewlett-Packard. Robert Bogucki was head of Barclays FX trading in New York. Barclays itself has not been charged, it has voluntarily disgorged some relevant profits.

US District Judge Charles R Breyer denied two motions and stated that a conviction for wire fraud could be based on affirmative misrepresentations. The defendant had claimed that the government had failed to allege that he was in a fiduciary relationship with Hewlett-Packard.

The judge noted that representations that constituted misleading half-truths was at the core of certain of the allegations made by the government “Contrary to the defense’s contentions, liability for misleading half-truths need not be premised on the existence of a fiduciary duty”.

Also interesting to note is the failure to dismiss the charges based on the allegation that the paperwork and the agreements with Hewlett-Packard excluded a specific duty of care.

This is a criminal case and it is interesting to see the difference between what appears to be the stance of the American courts in a criminal case contrasted by that taken by the English courts in civil cases.

Again this contrasts with the line apparently taken by English courts in civil cases.

Also of interest from a local perspective is a very deep divide between English contract law which on a basic level seems to work very much on a caveat emptor principle and Jersey contract law which, in common with other civilised jurisdictions, regards good faith between contracting parties as being a normal, enforceable and fundamental obligation of contracting parties. The concept of “reticence dolosive”“the voluntary abstention from giving useful information to the contracting party”remains to my mind alive and well.

A further interesting facet of that case is the fact that the bank acted as, market maker, adviser, lender, and then as an "arms-length trading counterparty”.

Speaking as somebody who has spent decades suing banks and suing trust companies owned by banks who bought their own products - legislation to prevent obvious conflicts of interest and potential conflicts of this nature is, I believe, long overdue.