ROGUE TRADER: Allied Irish Banks has lost its application to have a trial heard by a jury in the bank's long-running US legal action against Citibank and Bank of America relating to the $691 million in losses incurred by rogue trader John Rusnak.
The Irish lender sued the US banks in New York in 2003 seeking $500 million in damages, claiming that the two banks assisted Mr Rusnak in his rogue trading, which AIB discovered in February 2002.
AIB alleged that Citibank staff allegedly engineered “sham” transactions with Mr Rusnak, including “disguised cash advances” to the trader totalling $80 million and “phony trades” that helped him conceal his trading from the bank.
The bank claimed that the sham options from Citibank provided Mr Rusnak with tens of millions of dollars that enabled him to continue his foreign exchange trading and damage the bank further.
AIB had agreed in writing to waive its right to a jury trial in any action relating to a foreign exchange transaction.
Judge Gabriel W Gorenstein found in a ruling yesterday that each of AIB’s claims related to a foreign exchange transaction and for that reason he struck out the bank’s demand for a jury trial in the proceedings.
Mr Rusnak incurred losses for the bank between 1997 and 2002. He was sentenced to 7½ years imprisonment in 2003 after pleading guilty to one count of bank fraud.
He was released from prison in January 2009 after serving almost six years. – (Bloomberg)
