Daniel Braun spent the last sixteen years or so with the Justice Department — the last five years overseeing the prosecution of the LIBOR cases.
Last month, Braun became a partner at Freshfields in Washington, D.C.
What were the results of the LIBOR prosecutions?
“We won’t know what the results are in any sort of complete way for some time,” Braun told Corporate Crime Reporter in an interview last week. “As we speak right now, there is an ongoing trial in the UK in which individuals previously employed at Barclays are facing charges brought by the Serious Fraud Office.”
“In December 2012, we brought the first charges against individuals. We charged two former UBS employees — Tom Hayes and Roger Darin. They were charged by criminal complaint in the Southern District of New York. Roger Darin is a citizen of Switzerland who, to my knowledge, is currently residing in Switzerland. He is not subject to extradition. There has been extensive litigation surrounding the charges against Mr. Darin. He has not appeared personally and the charges against him remain active. Through his counsel, he has sought the dismissal of those charges, but those efforts have failed.”
“Mr. Hayes was subsequently charged in London by the Serious Fraud Office. He stood trial in London, was convicted and sentenced to 14 years in prison. On appeal, that sentence was reduced to eleven years. There has been subsequent litigation in the UK regarding Mr. Hayes’ criminal trial. The Justice Department has also filed charges against several individuals who were previously employed at ICAP, which is a large interdealer brokerage firm. And the Department also charged individuals who worked at Rabobank, several of whom have pled guilty in the United States — two of whom were convicted following trial late last year. Those individuals — Anthony Conti and Anthony Allen — were sentenced by Judge Jed Rakoff just a couple of months ago in New York City.”
“As those cases progressed in the United States, the Serious Fraud Office in the UK has charged a number of people who worked at Barclays. And that trial is now ongoing. Ultimately, we will have to assess the results of all of these cases once the trials and the appeals are over. And we can then take a step back and assess the results.”
What do you make of the criticism that the Justice Department failed to charge the big banks or executives at the big banks in connection with the fraud that led up to the 2008 financial collapse?
“It’s difficult to talk about that in the abstract,” Braun says. “In the cases I was involved in, prosecutors and investigators brought cases when they felt they had the evidence to do so and when they thought the law and the facts supported criminal charges. I don’t have any reason to believe that the Justice Department failed to do that with respect to conduct that occurred during and prior to the financial crisis.”
What about the question of joining a UK based firm like Freshfields versus a US based firm?
“I didn’t think about it in that way,” Braun said. “I saw during my time at the Justice Department that with increasing frequency, our work was taking on an international dimension. Much of that has to do with the increasingly globalized nature of commercial activity. The LIBOR cases are a good example of that. If you are investigating conduct that takes place in globalized financial markets, you are going to necessarily have to extend your focus to conduct that occurs overseas. And that’s true in a wide variety of cases these days.”
“When I spoke with friends and colleagues of mine who were at different firms, the people at Freshfields stood out for me, not because they were based in London and Germany, but they had developed a more significant ability and capacity to handle complex cases of the sort I had worked on at the Justice Department.”
“Freshfields currently has about 200 lawyers in the United States — about 150 in New York City and about 50 of us here in Washington, DC. And that sort of investment and progress that the firm has made in developing a significant presence in the United States far surpasses what I had seen other firms do — whether those are firms based outside of the US trying to come in or US firms trying to develop a more significant presence abroad. And you are seeing plenty of both. But I had not seen any firm that has done it as successfully or seriously as Freshfields.”
What about the dominance of deferred and non prosecution agreements?
“They have been a useful tool for the Department and have helped the Department to achieve many of the same objectives they secure with guilty pleas or litigation but without facing the same sorts of risks or expenses. The deferred and non prosecution agreements have played a useful role. They have allowed the Department, and companies as well, a measure of flexibility and a practical means of resolving cases that the parties perceive to be in their mutual interest, at least compared to the contending alternatives. What you have seen recently is that more countries outside the United States have been interested in developing some of the same mechanisms — even if they are not identical to those used here in the United States. They have recognized that between a declination on the one hand and a litigated criminal case against a corporation on the other — having some sort of middle ground mechanism available can serve the interest of justice.”
Companies increasingly are reluctant to self report.
“Plenty of companies have self reported. But I’m quite sure that many have decided against doing so. What you have heard in recent remarks from Leslie Caldwell and Andrew Weissmann is a desire to make the incentives for self-reporting and cooperation both more transparent and more persuasive. Through its statements and policies, the Department of Justice has tried to change the cost benefit analysis that companies have to confront and conduct in making this often difficult decision on whether or not to come in.”
Some say that the Yates memo changed nothing. Others say it changes the landscape. Where do you come down?
“It doesn’t represent a huge practical change in the Department’s approach to corporate criminal investigations. There was a focus on individual accountability before the Yates memo was issued. Throughout my time at the Justice Department, that was always there. And it was always emphasized quite strongly, even though you didn’t see it in an official written policy. If you brought a recommendation to senior officials in the Justice Department regarding a corporate disposition, you could always expect questions on individual accountability and whether or not the individuals responsible for the conduct could or should be prosecuted. Not only was that always a factor, it was always a priority.”
“In that sense, I don’t see the Yates Memo representing any sort of drastic change in the Department’s approach to criminal cases. It may well result in a change of tone and a change in the way the Department’s message is received. And it may lead individuals and their attorneys to be a bit more wary about the way in which companies are being enlisted as surrogate investigators and prosecutors for the Department of Justice. And that may have a real practical impact on the ground during the course of an internal investigation, if individual employees and executives perceive the company’s lawyers to be working on behalf of the Department of Justice rather than working on behalf of the company. I don’t mean to discount the significance of that entirely. But I still don’t view the policy as representing a major change in the Department’s approach on the criminal side.”
Will the Department continue to pursue guilty pleas like the one in Credit Suisse?
“You have seen an increasing willingness by the Department to pursue guilty pleas. It’s not because they are applying a different policy. But in the past, there may have been a reluctance because of the concerns about collateral consequences to shareholders, employees and other parties that weren’t involved in the underlying criminal conduct. That part of the Department policy is still there. But you have seen a greater willingness by the Department to allow the regulatory agencies, who have authority over waivers and exemptions, to do that job and to decide, for example, in the SEC’s judgement or the Department of Labor’s judgment, whether certain bars or exemptions are appropriate because of a criminal outcome.”
[For the complete q/a transcript of the Interview with Daniel Braun, see 30 Corporate Crime Reporter 20(14), May 16, 2016, print edition only.]