Tom Hayes Libor trial: Trader accused of rigging lending rates ‘tried to enlist help of stepbrother’

Mr Hayes is charged with eight counts of conspiracy to defraud between 2006 and 2010

Tom Hayes, a former UBS and Citygroup trader, described Libor fixing as ‘like the cherry on top’ (AP)

A former City trader accused of conspiring to rig bank interest rates tried to enlist his stepbrother into the alleged scheme, a court has heard.

Tom Hayes, described as the “ringleader” in a conspiracy to influence the Libor interest rates, pleaded with Peter O’Leary to try and persuade an official at HSBC bank to help keep the key interest rate low in order to profit Mr Hayes’ financial trades.

In a taped telephone conversation, played to the jury at Southwark Crown Court, Mr Hayes was heard telling Mr O’Leary: “If you get to know him, he would be a massive help to me,” adding: “Got $1m of risk ... If ... it [the Libor rate] moves by a basis point, for my fix that’s worth 125k plus.”

Libor – the London interbank offered rate – is an average rate used as a benchmark to help price around $450trn (£293trn) of financial contracts, from derivatives to loans worldwide. A small movement in the rate can translate into vast profits, or losses, for traders.

Mr Hayes, a former UBS and Citigroup yen derivatives trader based in Tokyo, is charged with eight counts of conspiracy to defraud between 2006 and 2010. He denies the charges.

Three months after first approaching Mr O’Leary, Mr Hayes urged him to ask his HSBC colleague to set the six-month rate “on the high side”, which Mr O’Leary agreed to in a “jovial email”. The court heard Mr Hayes later regretted asking the favour.

Mukul Chawla, QC, prosecuting, told the jury it may be suggested during the trial that the British Bankers’ Association, which was meant to supervise the Libor rate-setting, “condoned” its manipulation. “Such an approach amounts to no more than a smokescreen to detract from the real issue in this case – dishonesty,” he told the jury.

In a recorded interview with Serious Fraud Office investigators, the former trader described Libor fixing as “like the cherry on top”.

Mr Chawla told the court some brokers aided the alleged rigging scheme by sending daily email suggestions of where they thought Libor rates should be to dozens of market participants, including a senior Bank of England official Martin Mallett.

There is no suggestion Mr Mallett, a former chief currency dealer at the Bank linked to a separate investigation into alleged manipulation of the foreign exchange market, was aware of any Libor malpractice. Mr Mallett was fired last year after a review found he had failed to escalate concerns that traders at top banks could be rigging the $5trn-a-day currency market.

The Bank said it would be inappropriate to comment on active criminal proceedings.

Mr Chawla also told the court that, during the financial crisis, senior employees at UBS encouraged others to lower Libor rates to avoid triggering concerns about the bank’s creditworthiness.

Gaspare la Sala, a former UBS asset liability manager, emailed colleagues in 2007: “It is hugely advisable to err on the low side with fixings for Libor to protect our franchise in these sensitive markets,” the court heard. During this same period Mr Hayes emailed one of his contacts: “Had a lot of compliance pressure due to credit problems. We both need to be a little more subtle in our ‘views’.”

Mr Chalwa asked: “Why would you need to do this in code if it was honest and above board?”