[Photo:  USC Gould School of Law]

Lee Stewart, a former derivatives trader for Rabobank Groep in London, avoided a 3 -year prison sentence after pleading guilty to participating in a scheme to rig the Libor rate benchmark and testifying against his colleagues at trial.

Instead, the government recommended leniency for Stewart, 53 who testified at the trial of fellow traders Anthony Conti and Anthony Allen. Both were convicted; Allen got 2 years in prison, Conti got 1 year. U.S. District Judge Jed Rakoff sentenced Stewart to time served and imposed a 2-year term during which he must continue cooperating with the government’s investigation of rate manipulation.

"I’d just like to apologize for my terrible behavior and I hope to be a better person going forward," Stewart said at Tuesday's sentencing hearing.

Stewart was a senior trader based in London, dealing in U.S. dollar-denominated interest rate swaps tied to Libor. He admitted conspiring with others to submit false rates that would benefit the bank’s trading positions, rather than a true estimate of the bank’s borrowing costs. He came under suspicion years after he had left the bank, resigning in 2009 to care for his ailing father.

During the trial, Stewart testified that he and other traders regularly asked Conti and Allen to alter their rate submissions to the British Bankers Association to suit their market positions, and that Conti did so. He also admitted lying when he was first questioned. In addition to testifying, Stewart participated in several sessions with prosecutors in which he explained how the scheme worked and walked authorities through trading data, audio recordings and records of electronic chats.