By Nate Raymond
NEW YORK (Reuters) - Two former Rabobank traders abused their positions in setting Libor interest rates to help the bank gain an "unfair advantage" trading financial products tied to the benchmark, a U.S. prosecutor said on Wednesday.
Carol Sipperly, the prosecutor, told jurors at the start of the trial of Anthony Allen and Anthony Conti in federal court in Manhattan that the two traders engaged in a years-long scheme to manipulate the U.S. dollar and yen Libor rates.
"Anthony Allen and Anthony Conti were cheating," Sipperly said. "They were bankers giving themselves and their bank an unfair advantage for years, continuously."
But the British citizens' lawyers said while others at Rabobank may have sought to manipulate Libor, their clients acted honestly.
"Actions speak louder than words," Michael Schachter, Allen's lawyer, said. "And Tony Allen's actions will speak loudly and clearly to you."
Libor, or the London interbank offered rate, is a short-term rate banks charge each other for loans that is calculated based on submissions by a panel of banks. It underpins hundreds of trillions of dollars in financial products globally.
The case is the first by the U.S. Justice Department to go to trial following investigations by U.S. and European authorities into whether banks submitted artificial rate estimates to bolster profits on trading derivatives tied to Libor.
Those investigations resulted in charges against 22 people in the United States and United Kingdom and around $9 billion in regulatory settlements with financial institutions.
Allen, Rabobank's former global head of liquidity and finance, and Conti, a senior trader, were indicted in October 2014, a year after the Netherlands-based bank reached a $1 billion deal resolving related U.S. and European probes.
During her opening statement, Sipperly said Allen and Conti had been entrusted to make Libor submissions "honestly and fairly."
"These men exploited and abused that role over and over again to serve their own ends," she said.
Aaron Williamson, Conti's lawyer, said the prosecutors "cherry picked" a handful of electronic messages to support their claim, when Conti's 15,000 Libor submissions told another story.
"You'll see no evidence Tony's submissions skewed to benefit those traders' positions," he said.
Both defense lawyers sought to discredit the expected testimony of three ex-Rabobank employees who pleaded guilty and are cooperating in hopes of lenient sentences. Williamson said those men "panicked and told a story."
The first of those employees, ex-Rabobank trader Lee Stewart, is expected to testify on Thursday.
The case is U.S. v. Allen, U.S. District Court, Southern District of New York, No. 14-cr-00272.
(Reporting by Nate Raymond in New York; Editing by Meredith Mazzilli)