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Libor trial: court hears Tom Hayes interview with investigators Libor trial: Tom Hayes claims interest rate rigging was 'industry-wide practice'
(about 7 hours later)
A trader who is accused of trying to rig a key interest rate which is behind trillions of dollars of financial deals told investigators there was one time when he feared he may have overstepped the mark, a jury has heard. A trader accused of trying to rig a key interest rate which is behind trillions of dollars in financial deals told investigators he was taking part in an “industry-wide” practice.
Prosecutors claim Tom Hayes, 35, a former UBS and Citigroup trader, was motivated by “greed” and acted as the “ringmaster” in an enormous fraud to rig the benchmark Libor interest rate. Prosecutors claim Tom Hayes, 35, a former trader for UBS and Citigroup, was motivated by greed and acted as the “ringmaster” in an enormous fraud to rig the benchmark Libor interest rate.
A jury at Southwark crown court was played excerpts of an interview with investigators regarding “chats” Hayes had with a contact in the summer of 2009. In the interview Hayes said: “There was one occasion where there was a very deliberate attempt by me and a guy … to align our position and make an agreement to keep our Libors, you know, high and then the low. You know, and that was probably for me the most dishonest because at the end of the day I can say on a particular day ‘look, I want them high, I want them low’.” A jury at Southwark crown court was played excerpts of an interview with investigators, regarding “chats” Hayes had with a contact in the summer of 2009.
Hayes claimed he was “confused about everything”, including what rules may have been broken. He added: “So as far as I was concerned any rules I’d broke were like retrospectively being applied. And I wasn’t sure ... Libor wasn’t a regulated product. We had no compliance training. No rules were outlined to us.” In the interview, Hayes says: “There was one occasion where there was a very deliberate attempt by me and a guy … to align our position and make an agreement to keep our Libors, you know, high and then the low. That was probably for me the most dishonest because at the end of the day I can say on a particular day ‘look, I want them high, I want them low’.”
Regarding this instance he said: “I knew that was not right. I blatantly knew I should not have done that.. But I was participating in an industry-wide practice that pre-dated my arrival at UBS and post-dated my departure.” Hayes claimed he was “confused about everything”, including what rules may have been broken. He added: “As far as I was concerned, any rules I’d broke were retrospectively being applied. And I wasn’t sure ... Libor wasn’t a regulated product. We had no compliance training. No rules were outlined to us.”
Regarding this instance, he said: “I knew that was not right. I blatantly knew I should not have done that.. But I was participating in an industry-wide practice that pre-dated my arrival at UBS and post-dated my departure.”
Hayes, of Fleet in Hampshire, denies eight counts of conspiracy to defraud between 2006 and 2010. He has been diagnosed with mild Asperger’s syndrome and has been sitting in the well of the court during his trial rather than in the dock.Hayes, of Fleet in Hampshire, denies eight counts of conspiracy to defraud between 2006 and 2010. He has been diagnosed with mild Asperger’s syndrome and has been sitting in the well of the court during his trial rather than in the dock.
The jury also heard a recording of a call from May 2009 in which Hayes appears to tell a contact that he will give him a lucrative payback. Hayes tells the contact that he will “fucking reward you” if he helps to get the numbers up.The jury also heard a recording of a call from May 2009 in which Hayes appears to tell a contact that he will give him a lucrative payback. Hayes tells the contact that he will “fucking reward you” if he helps to get the numbers up.
Hayes said: “Any favours you can call in, make sure you take the guys out for like a strip club or whatever the night before. You know I am always good to my word when I say I’ll make sure I will share the lump, OK.”Hayes said: “Any favours you can call in, make sure you take the guys out for like a strip club or whatever the night before. You know I am always good to my word when I say I’ll make sure I will share the lump, OK.”
With regard to the “lump” or possible sum of money, Mukul Chawla QC, prosecuting, told the jury to “look at what is being suggested”. Ask yourself the question, if it has any of the hallmarks of honesty?” With regard to the “lump” or possible sum of money, Mukul Chawla QC, prosecuting, told the jury to “look at what is being suggested”. He said: “Ask yourself the question, if it has any of the hallmarks of honesty?”
Chawla described the alleged manipulation as “strategic and focused”.
Hayes moved to Citigroup in December 2009 and began trading in February 2010. He received a starting lump sum of just under £2m and by the time he was sacked, almost a year later, he had earned the equivalent of £3.5m.
Chawla told the court that Hayes, while at Citigroup, “continued to use his contacts” on the Japanese markets in “attempts to manipulate Japanese yen Libors”.
The prosecutor said Hayes’s “pattern of behaviour did not change at all”. He pointed out that since Hayes was trading for a matter of months – from February to August – that his opportunities to manipulate were limited.
Hayes was a trader in yen Libor derivatives, effectively betting on movements of the daily rate at which banks are able to borrow from each other.
The case centres on the allegation that he sought to rig the submissions made by banks to calculate that rate.
Chawla told the jury that Haynes initially agreed a deal to help the prosecution but was now trying to throw up a “smokescreen and red herrings” after changing his mind.
He said Hayes made several admissions during a series of interviews with Serious Fraud Office (SFO) investigators after his arrest in December 2012 .
The jury was taken through one question where an SFO investigator asked: “Do you admit that you acted dishonestly in the manipulation and attempted manipulation of submissions made for Libor?”, to which Hayes replied: “Yes”.
During another interview, he told investigators: “Did I think I was going to get a medal from the regulator for it? No. But equally I did not think I was Bernie Madoff.” He was referring to the American fraudster who was given the maximum prison sentence of 150 years in 2009 for masterminding a fraud that robbed investors of $40bn.
Hayes told the SFO: “It was a dishonest scheme and I was part of that dishonest scheme so obviously I was being dishonest, if that is what your question is.”
He continued: “So the first thing you think is, where’s the edge and where can I make a bit more money? How can I push the boundaries? Maybe, you know, a bit of a grey area.”
Chawla said: “Mr Hayes’s position there is very different from his position now.”
Hayes told the SFO in August that he had changed his lawyers. Chawla pointed out that by that time he had already “made various submissions across those months” and told the jury: “You may think it is no more than an attempt now to explain away the detailed submissions of guilt he had made.
“Is the reality that he simply changed his mind and now needs to supply an explanation to justify it? Was he lying then to the SFO? Is he lying now?”
“Or is the reality that he is just a man out for himself, thoroughly dishonest, manipulative and prepared to do whatever it takes to save his own position?”
The hearing was adjourned until Tuesday at 10am.