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Clifford Chance

Clifford Chance


Second Circuit Reverses LIBOR Convictions; Holds Prosecutor's Use of Testimony Lawfully Compelled by Foreign Sovereign Violated Fifth Amendment

20 July 2017

On July 19, 2017, the United States Court of Appeals for the Second Circuit overturned the criminal convictions of two former traders sentenced to jail in connection with the years-long, multi-jurisdictional investigation into LIBOR manipulations. In United States v. Allen, the Second Circuit held that the Fifth Amendment right against self-incrimination prohibits prosecutors from using a defendant's compelled testimony against him at trial, even if the testimony was lawfully compelled by a foreign sovereign under normal protocols in that jurisdiction. The court also clarified that when the government's evidence is challenged as having been derived from compelled testimony, prosecutors bear a heavy burden in proving that the evidence was wholly derived from a legitimate, non-compelled source. The Allen decision, which undoes the first individual convictions secured by the US Department of Justice in connection with the LIBOR investigations, will meaningfully impact the DOJ's interactions with foreign regulators conducting parallel investigations, and is required reading for any practitioner representing individuals and entities in the increasingly active world of cross-border investigations.

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