United States: DOJ Fraud Section Suffers Rare Rule 29 Acquittal In Forex Options Case

On March 4, 2019, a former Barclays foreign exchange currency trader was acquitted of charges filed by the U.S. Department of Justice (DOJ) Fraud Section in the United States District Court for the Northern District of California. In granting the defendant's motion for judgment of acquittal under Rule 29 of the Federal Rules of Criminal Procedure, Judge Charles Breyer dealt the DOJ its second loss in a foreign exchange (forex) market prosecution in the past six months—a significant blow to the DOJ's efforts to hold individuals accountable for corporate wrongdoing.

Rule 29 Acquittals

Rule 29 requires a judge to enter a judgment of acquittal if the evidence the government has presented in its case in chief is insufficient to sustain a conviction. To grant a Rule 29 motion, the court must find that, viewing the evidence in the light most favorable to the government, the jury cannot reasonably find the defendant guilty beyond a reasonable doubt. In other words, the court determines that the evidence the government has presented fails not only to prove guilt beyond a reasonable doubt, but also to meet the much lower threshold of sufficient evidence to send the case to the jury. Complete acquittals on all counts against a defendant, as occurred here, are extremely rare.

The DOJ's Case Against Robert Bogucki

Robert Bogucki was a foreign exchange options trader for Barclays. The DOJ’s Fraud Section alleged that he defrauded Barclays' client Hewlett Packard (HP) by engaging in aggressive trading against HP’s position when HP sought to unwind $11 billion in options to buy British pounds that it had obtained for its planned acquisition of U.K.-based software firm Autonomy Corporation. Such "pre-positioning" or "pre-hedging"—placing trades in advance of a transaction to manipulate the price and thereby reduce risk—is a common practice in the forex industry. In 2017, former HSBC forex trader Mark Johnson was convicted of similar charges and received a two-year jail sentence. (Johnson has appealed his conviction to the United States Court of Appeals for the Second Circuit.)

The indictment charged Bogucki with one count of conspiracy to commit wire fraud affecting a financial institution, in violation of 18 U.S.C. §1349, and six counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. §1343, and associated forfeiture allegations. The case went to trial. After the government rested its case, Bogucki filed a motion under Rule 29 for a judgment of acquittal on all charges.

Judge Breyer’s Decision to Grant the Rule 29 Motion

In deciding the motion, Judge Breyer focused on one of the elements that the government was required to prove, namely, that the statements Bogucki made or facts he omitted as part of the fraud scheme were “material,” i.e., that they were capable of influencing the decision of the decision-making body to which they were addressed. The judge concluded that none of the representations that Bogucki made to HP were material. The judge noted that the government’s main witness from HP testified that he himself was not always truthful with Barclays, and that he often did not believe what Bogucki was telling him. Thus, the jury could not reasonably conclude that any of the representations Bogucki made were capable of influencing HP to part with money or property. Moreover, the court determined, the key agreement governing the relationship between Barclays and HP—the International Swaps Dealers Association agreement—stated that the parties were simply principals at opposite sides of an arms-length transaction, and thus (unlike in the Johnson case) Bogucki did not owe HP any duty of loyalty.

Judge Breyer concluded that:

[T]he Government has pursued a criminal prosecution on the basis of conduct that violated no clear rule or regulation, was not prohibited by the agreements between the parties, and indeed was consistent with the parties' understanding of the arms-length relationship in which they operated. The Court cannot permit this case to go to the jury on such a basis.

In handing down his ruling, Judge Breyer stated that it was the first time in his 20 years on the bench that he had granted a motion for judgment of acquittal in its entirety. Following the ruling, Bogucki’s lawyer referred to the case as “yet another failed attempt by the Department of Justice to regulate this market with ill-conceived and entirely unfounded prosecutions.”


Speaking at the American Bar Association’s 2019 White Collar Crime National Institute in New Orleans on March 8, the DOJ’s Criminal Division head, Assistant Attorney General Brian A. Benczkowski, stated that the DOJ remains “steadfastly focused on holding culpable individuals accountable—which I think everyone understands is the most effective deterrent to corporate crime.” He pointed out that in 2018, the Fraud Section had charged 33 percent more individuals than in 2017. But the Bogucki acquittal is a significant setback in those efforts. Moreover, the loss follows the October 26, 2018, acquittal, by a jury in the U.S. District Court for the Southern District of New York, of three London-based former forex traders of price-fixing charges brought by the DOJ Antitrust Division.

It remains to be seen what effect these trial losses will have on the DOJ’s future enforcement efforts against individuals for financial crimes. What seems clear is that, three and a half years after announcing in the “Yates Memo” its renewed focus on holding individuals accountable for corporate wrongdoing, the DOJ’s successful pursuit of that mission remains a work in progress.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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