A FEDERAL judge in New York vacated the guilty plea of a former Deutsche Bank trader who admitted to conspiring with others to manipulate the Libor interest-rate benchmark, after an appeals court overturned the convictions of 2 of his ex-colleagues earlier this year.

Timothy Parietti “must be viewed as innocent” in light of the January reversal, US District Judge Paul Engelmayer ruled Friday (Aug 5) in Manhattan. He also vacated a judgment of conviction against Parietti and ordered the government to “promptly return” the US$1 million fine he paid as part of his sentence.

“We are grateful to the judge for overturning Mr Parietti’s conviction, based on his finding that Mr Parietti is innocent and allowing his conviction to stand would be a profound injustice,” said his lawyer, Larry Krantz. “Justice has now been done.”

Parietti was a key witness in the 2018 trial of Matthew Connolly and Gavin Black, who were accused of conspiring to rig the London interbank offered rate for years. But the 2nd US Circuit Court of Appeals reversed their convictions, finding prosecutors failed to prove they had influenced the bank into making false or misleading submissions. The decision was a setback for the US government’s crackdown on alleged market manipulation.

By then, Parietti had already completed his sentence of 1 day of time served and a period of supervised release. Parietti filed a petition to clear his 2016 guilty plea to conspiracy to commit wire and bank fraud.

Engelmayer said Parietti’s plea proceeding included claims by prosecutors that the government had enough evidence to back the charges - a claim that turned out to be wrong.

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“That representation was material to the court’s decision to accept Parietti’s guilty plea, as it likely was to Parietti’s decision to plead guilty,” the judge wrote. “With the circuit - based on its close review of the trial proof - now having exposed the government’s underlying proof as insufficient to prove that offence, Parietti must be viewed as innocent.”

The Justice Department, which didn’t oppose Parietti’s motion, declined to comment. BLOOMBERG