In the aftermath of the Second Circuit’s July 2017 decision in United States v. Allen, companies operating cross-border should be asking how far the Fifth Amendment’s protections against self-incrimination reach. Apparently, the answer is across the Atlantic Ocean and beyond. In Allen, the Second Circuit overturned an indictment and conviction based on testimony compelled by a foreign regulator pursuant to foreign law because the use of the testimony in a U.S. court violated the defendants’ Fifth Amendment rights. This article will examine the Allen decision and offer guidance to U.S. and foreign companies as they navigate (and seek to avoid) criminal indictment and sanctions in the United States while complying with foreign regulators.


In a lengthy opinion authored by Judge Jose Cabranes, the Second Circuit laid out the complicated facts of the underlying investigations and criminal prosecutions in the Allen case. In 2013, the U.S. Department of Justice (DOJ) and the UK’s Financial Conduct Authority (FCA) were actively investigating banks’ practices in setting the London Interbank Offered Rate (LIBOR). The LIBOR fixed rates are based on daily submissions by 16 banks. After removing the outliers, the submissions are averaged, leaving a daily rate that is incorporated into the terms of financial transactions around the world.

The two defendants in Allen, Anthony Allen and Anthony Conti, were employees in the London office of Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) in the early 2000s and were involved in the bank’s LIBOR submission process. In addition to Allen and Conti, a third former employee, Paul Robson, was also among those investigated by the DOJ and the FCA. These three individuals (among others) were investigated for manipulating Rabobank’s daily LIBOR submissions to favor the banks’ traders, who often sat in close proximity to the LIBOR submitters.

Unlike in the United States, FCA investigators are permitted to compel witness testimony. Accordingly, during the dual investigation that began in 2013, the DOJ and the FCA put up a “wall” between the agencies to ensure that the DOJ would not have access to the compelled testimony of any witnesses. Among the witnesses compelled to testify by the FCA were Allen and Conti, who were given direct, but not derivative, immunity, meaning that Allen and Conti could not have their FCA testimony used against them but could have information derived from that testimony used against them.

As part of their investigation of Robson, the FCA granted him access to evidence it had compiled against him, including transcripts of the compulsory interviews of Allen and Conti. While reviewing the transcripts, Robson took detailed notes and made many annotations. In April 2014, the FCA stayed its investigation after Robson and others were indicted in the Southern District of New York on charges including wire fraud. Robson kept his pages of notes and annotations after the FCA stayed its enforcement action. Shortly after he was indicted in the United States, Robson pled guilty and agreed to cooperate with the DOJ.

In October 2014, the grand jury indicted Allen and Conti for, among other things, wire fraud and conspiracy to commit wire fraud. The evidence presented to the grand jury included testimony from an FBI Special Agent who had interviewed Robson. Robson had not testified before the grand jury, but the information Robson provided the Special Agent included Allen’s and Conti’s FCA testimony, which had been compelled under UK law.

Importantly, the information Robson provided to the Special Agent included details Robson had not mentioned during his initial interview with the FCA. The additional information came from the transcripts of Allen’s and Conti’s testimony. In other words, some of the information used to indict Allen and Conti could be traced back only to the source of their own compelled testimony to the FCA.

Following a trial in October 2015 in the Southern District of New York, a jury found Allen and Conti guilty on all counts, including several counts of wire fraud arising from LIBOR manipulation, and sentenced each man to prison. The defendants maintained their innocence throughout the proceedings. Immediately following the trial, the judge held a two-day Kastigar hearing that focused on whether Robson’s review of Allen’s and Conti’s compelled testimony affected the evidence put forth by the U.S. Attorney’s office at trial.  In Kastigar v. United States, 406 U.S. 441 (1972), the Supreme Court held that where a witness in a criminal trial is exposed to the defendant’s compelled testimony, the government must prove that the testimony did not alter the evidence before it can use that witness. At the Kastigar hearing, the trial court held that the Special Agent investigating the allegations had an independent source for his testimony about Allen and Conti, specifically Robson’s personal experience and observations from working with the two defendants. To reach this conclusion, the trial court accepted as true Robson’s statement that the information provided to the Special Agent was not tainted by his review of the compelled testimony of Allen and Conti. As the Second Circuit later found, Robson’s reassurance was contradicted by the fact that his statements to the Special Agent were materially different than those given to the FCA prior to his receipt of the Allen and Conti transcripts.

Second Circuit’s Decision

On appeal, the Second Circuit found that the government’s use of the defendants’ compelled testimony with the FCA—through the conduit of Robson and then the Special Agent—was at odds with the Kastigar rule, and, as such, violated the defendants’ Fifth Amendment right to be free from bearing witness against himself in a criminal action as stated in the Self-Incrimination Clause. In so holding, the court concluded—as have other Circuit Courts of Appeals—that the prohibition against the use of compelled testimony applies in the context of a foreign government’s investigation. In so holding, the Second Circuit found that even where the foreign testimony was compelled lawfully and in a manner that does not shock the conscience, as it was here, it still may not be used without violating the defendant’s Fifth Amendment rights. The evidence provided by Robson to the grand jury through the intermediary of the Special Agent was tainted by Robson’s exposure to the FCA-compelled testimony of Allen and Conti. The government had the burden to prove otherwise, and the trial court committed a reversible error when it failed to require the government to meet that burden. Furthermore, the Second Circuit found that the errors were not harmless; the Robson information was uncorroborated by any other source and thus had a unique impact on the indictments and at trial. Because the tainted evidence was used at the grand jury and trial stages, the Second Circuit overturned the verdict and dismissed the indictments of Allen and Conti.

The facts and history in U.S. v. Allen are certainly convoluted and unusual, but the decision should not be viewed as an outlier as cross-border cooperation becomes increasingly common. As the Second Circuit noted:

The concerns we express here are not idle. However unusual this particular prosecution may prove to be, so-called cross-border prosecutions have become more common. Such prosecutions necessarily entail intimate coordination between the United States and foreign authorities.

864 F.3d at 89.

The Allen decision is a good reminder for companies operating across borders that their activities in one jurisdiction frequently impact activities in other jurisdictions. It is imperative for multi-national companies to retain counsel with experience conducting and defending cross-border investigations. Understanding the authority—and limitations—of regulatory power in different jurisdictions in a global economy can save companies, their executives and their employees from unnecessary criminal and civil litigation.

Lewis Wiener, James Southworth and Kymberly Kochis are partners, and Francis X. Nolan is an associate, at Eversheds Sutherland.