U.S. District Judge Charles Breyer

A federal judge in San Francisco on Monday cut short a criminal trial against Robert Bogucki, the former head of Barclays Capital Inc.'s foreign exchange trading in New York, by granting his lawyers' motion for an acquittal.

A little more than halfway into a trial scheduled to last two weeks, U.S. District Judge Charles Breyer of the Northern District of California found that Bogucki and Barclays were operating as principals on the opposite side of a complicated foreign exchange transaction with Hewlett-Packard, rather than as HP's agent.

“Here, the 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,” Breyer wrote Monday in a 13-page order granting Bogucki's acquittal motion. “The court cannot permit this case to go to the jury on such a basis.”

Bogucki is represented by lawyers at Kaplan Hecker & Fink and Clarence Dyer & Cohen.

Kaplan Hecker's Sean Hecker said in a phone interview Monday that “this is a case that never made any sense.”

“This was a transaction based on binding contracts entered into by sophisticated parties,” Hecker said. “I do think this is of a piece with the Justice Department being over-eager to prosecute individuals for practices in markets that were really unregulated. There's a core due process problem with coming in years later and trying to assign criminal liabilty to practices that no one in the market could have reasonably forseen that would have crossed the line.”

A spokesman for the U.S. Attorney's Office for the Northern District of California, which was prosecuting the case alongside the U.S. Department of Justice Criminal Division's Fraud Section, said the office had no comment.

Prosecutors brought charges of wire fraud and conspiracy against Bogucki last year claiming that he misused information provided by HP, which had hired Barclays in September 2011 to execute a £6 billion foreign exchange transaction related to its planned acquisition of a UK-based Autonomy. Prosecutors claimed that Bogucki misled HP and its officials to conceal the self-serving nature of the bank's actions in the market.

But at the end of the trial day Feb. 28, Breyer said the government had a “massive due-process problem.” The government had hammered against Barclays' “front-running” when no rules prohibited Barclays from pre-positioning itself and hedging in regards to the Barclays deal, the judge said. Indeed, the judge pointed out in Monday's ruling that International Swaps Dealers Association agreement that governed the underlying deal made clear that the bank and the company were “engaged as principals at opposite sides of an arms-length transaction.”

The judge also found that the government couldn't prove that Bogucki made false or misleading statements that could have influenced HP officials to part with money. Breyer pointed out that the HP official who was the primary point of contact with the Barclays team testified at trial that he “bluffed” or was “BS-ing” Barclays during the parties' interactions. Breyer wrote that “the import of [the HP official's] own dishonesty and expectations regarding Barclays' honesty is not that it shows HP to have been attempting to defraud Barclays—and to be perfectly clear, the Court does not hold the view that HP was attempting to defraud Barclays—but rather that it shows what expectations the parties had for one another, and thus whether even false statements had the capability of influencing HP's decision-making.”

Hecker said Monday that his client “did his job and did it exceptionally well, providing the best pricing on the market to a bank client while protecting his employer, all the while following the rules that governed foreign exchange market makers.”

He said, “It's unfair to have a one-way attack on a party in a sophisticated transaction.”

Read Judge Breyer's order: