It It was a gamble—and it paid off.

After a two-week trial, a federal jury in Manhattan on Friday took less than half a day to find a trio of London-based traders not guilty of criminal charges of conspiring to rig the foreign exchange market.

Richard Usher, formerly of JPMorgan Chase; Rohan Ramchandani, formerly of Citigroup; and Christopher Ashton, formerly of Barclays, could have tried to fight extradition, especially since U.K. authorities concluded there was not enough evidence to bring charges against them.

Instead, they voluntarily came to the U.S. to stand trial, risking up to 10 years in prison if convicted.

The not-guilty verdicts are certainly a triumph for their lawyers from White & Case; Wilmer Cutler Pickering Hale and Dorr and Schertler & Onorato.

Still, there's something unsatisfying about it all. Because once again, prosecutors have come up short in trying to hold actual human beings accountable for the misdeeds of the financial institutions that employed them.

The disconnect is fundamental. JPMorgan Chase paid a total of $1.9 billion in fines stemming from the Forex scandal; Citigroup paid $2.3 billion and Barclays paid $2.3 billion. Even for banks, that's a lot of money.

These “historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes,” said then-Attorney General Loretta Lynch in a self-congratulatory press release when the penalties were announced

While such fines punish the banks' (blameless) shareholders, writing a check from corporate coffers to make a messy legal problem go away is business as usual.

But whoa does that calculation change when actual people face actual prison time. And it turns out, the government's case couldn't stand up under the scrutiny of a trial.

“It was a microscope that was placed on something that probably was happening all the time,” the jury foreman, Lucien Samaha, told Bloomberg after the verdict. “At the end, we found there was not enough evidence.”

The defense had some adverse pre-trial rulings. The traders' lawyers passionately argued that the government should not be allowed under any circumstances to mention that the banks pleaded guilty to violating Section 1 of the Sherman Act.  

“Their prejudicial effect is obvious. … If exposed to the bank pleas, the jury could not be expected to impartially evaluate the balance of the trial evidence,” wrote Michael Kendall, J. Mark Gidley and Andrew Tomback of White & Case for Usher; Heather Tewksbury and Anjan Sahni of Wilmer Cutler Pickering Hale and Dorr for Ramchandani and David Schertler and Lisa Manning of Schertler & Onorato for Ashton.

U.S. District Judge Richard Berman was not persuaded.

“The bank pleas state, among other things, that the banks 'through [their] traders, participated in the conspiracy from at least as early as December 2007 and continuing until at least January 2013,'” Berman noted. “Defendants are charged in this case under Section I of the Sherman Act with virtually the same conduct set forth in the bank pleas.”

He allowed the government to use the pleas as evidence that the behavior by the traders was not condoned by their employers. But he also offered these limiting instructions to the jury:

“You have heard that the defendants' employers, Citibank, J.P. Morgan Chase, Royal Bank of Scotland, and Barclays pled guilty to participating in a price fixing conspiracy from December 2007 to January 2013. You are instructed that you are to draw no conclusions or inferences of any kind about the guilt of each defendant on trial from the fact that one or more of their employers pleaded guilty to similar charges.”

Prosecutors relied heavily on the testimony of a single witness, Matthew Gardiner, represented by Wilson Sonsini Goodrich & Rosati's Mark Rosman and Jeff Vanhooreweghet. A former trader at Barclays and UBS Group, Gardiner was the sole alleged co-conspirator and received a non-prosecutlon agreement In exchange for his cooperation.

Government lawyers said the defendants used an online chat room to fix prices in the euro-to-dollar foreign exchange market, coordinating their bidding and refraining at times from trading against each other's interests.

But the defense argued that the chat room posts were innocent banter, and that the traders' conduct was well within the “customs, norms, or expected behaviors” of the foreign exchange. In other words, everybody did it.

In court papers, the defense lawyers also said that bank supervisors were fully aware of the conduct, and that the traders didn't think they were doing anything wrong.

The defense also argued that the $5.1 trillion-a-day foreign exchange market is too vast to be rigged by a few traders and doesn't lend itself to anticompetitive coordination. “This case should never have been brought,” Stephenson Harwood's Sara George, who represented Ashton in the U.K., told the Financial Times. “Dozens of traders lost their jobs and simply billions of pounds of fines were paid by British banks including taxpayer-owned British banks for something that did not happen.”

 

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