Trader jailed for 14 years for rigging Libor interest rates

Former City trader Tom Hayes was sentenced to 14 years in prison after a London court found him guilty of rigging global Libor interest rates.

The 35-year-old from Hampshire became the first person to be convicted by a jury of manipulating the London interbank offered rate (Libor)- a benchmark for $450 trillion of financial contracts and loans worldwide.

Hayes, a former UBS and Citigroup yen derivatives trader, was accused of being the ringleader in a vast conspiracy to fix the Libor rate between 2006 and 2010 while working in Tokyo for UBS and Citigroup. He was the first person to face trial after a global investigation into the rate-rigging scandal. 

He was convicted of eight counts of conspiracy to defraud. 

“The conduct involved here is to be marked out as dishonest and wrong and a message sent to the world of banking,” Justice Cooke said when delivering his sentence. “The reputation of Libor is important to the city as a financial sector and the banking institutions of the city.

“Probity and honesty is essential as is trust. The Libor activity of which you played a leading part put all that in jeopardy.”

The court heard how Hayes, motivated by greed, set up a network of brokers and traders that spanned ten of the world’s most powerful financial institutions and cajoled or bribed them to help rig Libor rates – designed to reflect the cost of interbank borrowing – for profit. Hayes would then place large bets on financial markets that were sensitive to Libor shifts. 

Hayes claimed that he was taking part in an “industry-wide” practice. He described the broking market he worked in as “the wild west”, a place with no rules and where relationships relied on lavish entertainment. He said that the high-pressure working environment took its toll on him, prompting him to threaten brokers and pick fights with colleagues to move interest rates to aid his trades.

Defence barrister Neil Hawes asked the judge to take into account the prevalence of Libor manipulation at the time, as well as Hayes’ diagnosis with mild Asperger’s syndrome.

Hawes also said that managers and senior managers at Hayes’ bank knew of, and in some cases condoned, Libor manipulation.

However, a jury rejected his defence and found him guilty of all eight counts.

Citigroup had no comment to pass about the verdict, while UBS said that it was not a party to the case.

Hayes was arrested in December 2012 and questioned by the Serious Fraud Office. He initially cooperated with SFO investigators, admitting that his trades had earned £150m for UBS in a three year period. However, four months after he was charged in 2013, Hayes changed his legal team and his plea. He pleaded “not guilty” to the charges, resulting in the trial, that began on 26 May.