Tom Hayes Libor trial: Trader was 'ringmaster' in conspiracy to rig interbank lending rates

The prosecution at Southwark Crown Court said Mr Hayes planned to 'make as much money as he could'

Former UBS and Citigroup trader Tom Hayes arrives at Southwark Crown Court (EPA)

A City trader “motivated by greed” rigged bank lending rates, a court has heard. Tom Hayes, 35, is alleged to have manipulated the London inter-bank lending rates to earn his bank millions.

Mr Hayes, a former currency trader for UBS and Citigroup banks, “behaved in a thoroughly dishonest and manipulative manner by repeatedly cheating those with whom he had entered into huge financial transactions,” said Mukul Chawla QC, for the prosecution.

“The motive was a simple one: it was greed,” he told Southwark Crown Court.

He described Mr Hayes as a “ringmaster” in an enormous conspiracy to influence the rate, which underpins trillions of dollars of financial deals around the world, “striking at the very integrity” of the financial system.

“His desire was to earn and make as much money as he could. The more he earned for his employers the more they would value his services and the more they would pay him,” said Mr Chawla.

However, when he moved banks to earn more money a complaint was made about his methods and he was sacked after an investigation. When Mr Hayes, who was based in Tokyo, returned to Britain he was questioned by investigators from the Serious Fraud Office (SFO).

Hayes left UBS when he felt he was not being paid enough, the prosecution said (Getty) (Getty Images)

During one interview he admitted: “I probably deserve to be sitting here. I made concerted efforts to influence Libor [the London Interbank Offered Rate].”

Mr Hayes, who the court heard had been diagnosed with mild Asperger’s, told investigators: “I was operating within a system in which it was commonplace [to rig rates] you know, ultimately I was someone who was a serial offender.”

Mr Hayes, from Fleet in Hampshire, denies eight charges of conspiring to defraud.

He was described in court as a very clever man who graduated from university with a degree in mathematics and engineering.

He worked for the Royal Bank of Scotland and the Royal Bank of Canada before joining the Swiss bank UBS as a currency trader.

He told investigators that UBS realised he had “valuable intelligence” from working in London about how Libor would move. “That’s how I sort of started,” he told them. “I wasn’t hired because I was a Libor manipulator but because I was a very good trader,” he said.

He allegedly influenced the market by either speaking directly to people at the 16 banks who calculated the interest rates to create an official lending rate or to London-based brokers who dealt with them on a daily basis.

The court was told he paid “kickbacks” or bribes to brokers who helped him to move the interest rate up or down.

UK trader Tom Hayes is accused of eight counts of conspiracy to defraud in the Libor scandal (Getty) (Getty Images)

The ability to influence the movement of the interest rate by a few base points – one point is one-hundredth of a single percentage point – could reap profits of hundreds of millions of dollars, Mr Chawla said.

Mr Hayes specialised in the Japanese yen Libor rate and was eager to influence the rates on that currency, the court heard. On his first day of trading at UBS he sent a message to one London broker asking for the six-month lending rate to go high to help his trades.

He allegedly rewarded his brokerage friends with curries as well as fees for so-called “wash trades” – deals which when placed cancelled each other out ensuring his bank did not suffer any loss but enabled him to the pay the brokers up to £25,000 for their services.

The “kickbacks” paid were dwarfed by the potential profits that he and his bank could make on the trades which could run into billions of yen, the court was told.

One of the brokers he dealt with was known as “Lord Libor” such was his reputation for influencing the rate.

Mr Hayes told the SFO that his trading earned UBS £49m in 2007, £89m in 2008 and £130m in 2009. His success was rewarded with a pre-tax salary of £1.8m but he did not think this was an adequate reward and left to join the US bank Citigroup, where his pre-tax salary rose to £3.5m.

Mr Chawla said Mr Hayes will claim that when he joined UBS Libor-rate fixing was prevalent and widespread.

However, six weeks after joining Mr Hayes had to ask which official in the bank was responsible for setting the UBS rate and was politely rebuffed when he tried to get the official to change the rate to benefit Mr Hayes’ trading position.

The trial is expected to last up to four months.