The United States Commodity Futures Trading Commission (CFTC) has clashed with former HSBC executive Christophe Rivoire, who stands accused of market manipulation, over depositions of traders. This is made clear by documents filed with the New York Southern District Court and seen by FX News Group.
The CFTC argues that the depositions have to be remote, whereas the defendant says they have to be in-person, with any party wishing to participate remotely to be provided with such an option.
Let’s recall that the CFTC charged Christophe Rivoire with market manipulation and fraud, in violation of Section 6(c)(1) of the Commodity Exchange Act (the “CEA” or the “Act”) and Rule 180.1 in relation to a 2012 interest rate swap transaction between HSBC and a Japanese bond issuer (the “2012 Transaction”).
In 2012, Mr Rivoire was the head of HSBC’s North American rates business. He was not directly involved in trading related to the problematic ransaction, but the CFTC alleges that he instructed a junior trader to engage in market manipulation and fraud in relation to the transaction.
The CFTC’s case relies heavily on two witnesses from HSBC – a junior basis trader and another junior trader on the rates desk (“Trader A” and “Trader “B”) – as well as witnesses from an interdealer broker firm.
To date, the parties have taken two in-person depositions of two former HSBC rates traders, one in Washington, D.C., and one in New York City. At those depositions, the witnesses and their counsel, counsel for Rivoire, and representatives from the CFTC were present in-person. Additional members of the CFTC and Rivoire’s defense team participated remotely. At times, the depositions had to be paused in order to address audio issues for the remote participants, but these were resolved relatively quickly and the depositions proceeded within the allotted seven hours and with full participation of the parties.
Six depositions are currently pending, including four in New York City, one in Florida, and one in Paris, France. Defendant has noticed five of these depositions. The witnesses whom Defendant has noticed are critical to this litigation, including Traders A and B and two employees of the interdealer brokerage firm. The CFTC has noticed the deposition of Mr. Rivoire and has indicated its intention to cross-notice the deposition of Trader A.
On August 27, 2021, the first of four upcoming in-person depositions is scheduled in New York. These depositions are defense counsel’s first opportunity to question each witness. The depositions involve complicated topics and lengthy audio recordings with accompanying transcripts, trading records and e-communications. Witnesses will be asked to look at multiple documents simultaneously, while listening to the audio recordings. That is hard, even in person, but in a remote format, it would be particularly challenging and time-consuming, the defense argues.
All witnesses have indicated their willingness to appear for an in-person deposition, subject to appropriate precautions. To that end, defense counsel has implemented reasonable precautions to ensure that the depositions can proceed safely in-person. For instance, Defendant has required vaccination for anyone who attends a deposition in-person. The procedures comply with current CDC guidelines and New York City mandates. As noted, participants who do not wish to attend in-person will be provided with remote access.
Despite the defense’s efforts, however, the Court has taken the health concerns raised by the CFTC seriously and has sided with the regulator. On August 25, 2021, the Court granted the CFTC’s request for remote depositions.