Could, Would, Should- Should Not and Could Not- the Hypothetical Questions at the Heart of USA v Connolly & Black, and All Libor Panel Interest Rate Submissions Cases

This paper considers the ramifications of the landmark US Appeals Court decision in USA v Connolly & Black (decided January 27, 2022) to acquit on all charges, 2 former Deutsche Bank trader’s Matthew Connolly and Gavin Campbell Black, who had been accused of conspiracy to defraud and false and fraudulent quote submissions during the late 2000s as part of their bank’s participation in the daily BBA Libor interest rate fixing process.The Appeal Court’s finding that: “The government’s [failure] to produce any evidence that any DB Libor submissions that were influenced by the bank’s derivatives traders were not rates at which DB could request, receive offers, and accept loans in DB’s typical loan amounts” meant in turn that the government also “failed to show that any of the trader-influenced submissions were false, fraudulent or misleading” has also effectively torpedoed the questionable logic previously applied to a whole class of Libor-rigging cases in both the United States and United Kingdom. Furthermore the government’s attempts to get the jury to consider or substitute in the words: “would”, “should” or “should not” instead of the word “could” to help its case, in the carefully drafted BBA Libor Panel instructions were neither relevant nor appropriate.The paper also considers the subsequent abandonment in late October 2022 of the case of USA v Hayes & Darin, on the basis that the Connolly & Black decision “implicates the theory charged in this [Hayes & Darin] case and the government’s ability to prove its case”. In fact the 2 US government indictments against Connolly & Black and against Hayes & Darin respectively were substantially just copy-paste, and painting-by-numbers versions of each other.This raises further questions in turn about the safety of Tom Hayes’ earlier 2015 conviction in the United Kingdom criminal courts of conspiracy to defraud and 14 year, subsequently reduced to 11 year prison sentence tariff, on substantially similar Libor market facts to Connolly & Black, which is currently being considered by the UK Criminal Cases Review Commission for potential referral back to the UK Court of Appeal or Supreme Court, and which has for many years troubled both UK market and legal commentators.Finally, new court proceedings recently initiated in November 2022 By Matthew Connolly against his former bank employer, purportedly for malicious prosecution in connection with his Libor-rigging prosecution and associated losses and career damage, has the potential, if this claim proceeds to trial before any settlement, to shed further light on any murky dealings between regulators, banks and traders that led to the whole sequence of Libor-rigging trials and the potential sacrificial offering up of innocent traders to hungry regulators, courts and politicians.Additional areas considered include: the true contractual-type construction of the BBA Libor Definition clause and quote submission instructions; the purported One True Rate theory of Libor submissions; the Libor fixing averaging process; and the usefulness of considering high frequency financial markets interest rate data and bank market practices for evaluating the historic Libor fixing process