U.S. and European authorities have been probing whether banks attempted to manipulate the rate to benefit their own trading positions.
The probe has already resulted in over $6 billion in settlements with banks and brokerages and several people being charged, including Stewart and 11 others in the United States.
Stewart, 51, admitted that from May 2006 through early 2011, he conspired with others at Rabobank to manipulate the Libor, according to U.S. Department of Justice officials.
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Stewart's attorney, Christopher Clark, said Stewart was "pleased to be cooperating with the government and looks forward to putting this matter behind him."
On Friday, Anthony Allen, another former Rabobank trader charged in the scheme, pleaded not guilty before Rakoff, becoming the first defendant to waive extradition to fight U.S. charges over Libor manipulation.
Rakoff set Oct. 5 as Allen's trial date.
Five other former Rabobank employees besides Stewart and Allen are facing charges over Libor manipulation. One of them, Anthony Conti, could waive extradition and join Allen for trial, his attorney said in court on Friday.
Two other former Rabobank employees - Paul Robson, a former Rabobank Libor submitter, and Takayuki Yagami, a former trader - pleaded guilty last year. The remaining two facing charges have not yet pleaded.
Rabobank agreed in 2013 to pay $1 billion to resolve U.S. and European Libor-related probes, including $325 million as part of a deferred prosecution agreement with the U.S. Justice Department.