![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
Libor trial: Libor fixed with £336,000 in bribes – prosecution
Former UBS and Citigroup trader Tom Hayes promised to pay hundreds of thousands to brokers through 'wash trades' in exchange for help shifting Libor rates
![Tom Hayes Tom Hayes](/sites/default/files/styles/landscape_750_463/public/import/IMG/349/318349/tom-hayes-580x358.jpg.webp?itok=l8MbHCpi)
Former UBS and Citigroup trader Tom Hayes asked for Libor submissions to be doctored in hundreds of messages to his brokers in exchange for hundreds of thousands of pounds in "bribes", London's Southwark Crown Court heard on May 28.
Prosecution lawyer Mukul Chawla went through message streams, emails and telephone transcripts showing Hayes requesting Libor fixes at multiple banks from his brokers to benefit his trading positions. Hayes has pleaded not guilty to six charges of conspiracy to defraud.
On multiple occasions, Chawla said, rates submitted the day after these conversations exactly matched the figures Hayes and the brokers that "do his bidding" asked for.
"There are hundreds of these [Bloomberg] internal chats where Mr Hayes is asking to move [Libor] wherever he wants it to move," said Chawla.
After speaking to Hayes about what rate he wanted, his brokers would then contact individual bankers and ask them to change their Libor submissions, sometimes in return for the promise of future rate fixing in their favour.
After one banker agreed to doctor Libor, he reminded Hayes's broker: "Make sure [Hayes] knows. Scratch my back and all that."
Chawla told the court Hayes's brokers were motivated by the money they would make from brokerage fees through 'wash trades' – simultaneous buying and selling with no overall position impact, carried out purely to gain extra commission for the broker.
"That's the conspiracy at work being done by Mr Hayes, using [his broker]," said Chawla. "Getting them to speak to their mates at the banks to move their rates ... in order to help Mr Hayes's trading positions – and in exchange they are paid through these wash trades or bribes."
Chawla outlined the details of 14 wash trades – totalling more than £336,000 – made by UBS between September 2008 and August 2009.
"They were nothing more than kickbacks or bribes to reward [the] brokers," said the prosecution lawyer.
The court heard that in one exchange, Hayes offered a "humongous deal" to his broker if Libor turned out in his favour.
"I don't care right, just get me any trade which pays you, basically," Hayes said on a Bloomberg chat to the broker. "If you keep [Libor] fixes unchanged today I will fucking do one humongous deal."
"I need you to keep it as low as possible. If you do that I'll ... pay you $50,000, $100,000, whatever, OK?"
On another occasion Hayes promised a different broker: "Big effort on getting these Libors lower today. [Get the Libor three-month rate] down [and] you'll get a decent deal from me tomorrow."
In another conversation, Hayes gave his broker the names of some bankers he "might be able to lean on" to set the Libor in his favour.
Chawla showed how Libor rates changed, often exactly matching the numbers discussed by Hayes and his brokers. On several occasions conversations showed Libor rates being determined months in advance by Hayes and his co-conspirators, the prosecution said.
Chawla presented one set of messages to the court which he said demonstrated the complete chain of influence from Hayes, to broker, to Libor submission.
Hayes initially requested help fixing the Libor from his broker: "It's killing me mate. I am losing so much cash – then I can't pay you."
The broker then contacted the rate submitter at Rabobank, Paul Robson – who has already pleaded guilty to charges of wire fraud, and conspiracy to commit wire and bank fraud with the US Department of Justice – to ask Libor to be set to favour Hayes's position. A rate of 0.63 was agreed between Robson and Hayes's broker during their conversation, Chawla said.
"[Rabobank's] previous submission had been at 0.71 and on this day it dropped to 0.63, following that conversation between the submitter and [the broker]," said Chawla. "Cause and effect."
The trial continues.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Operational risk
Integrated GRC solutions 2024: market update and vendor landscape
In the face of persistent digitisation challenges and the attendant transformation in business practices, many firms have been struggling to maintain governance and business continuity
Vendor spotlight: Dixtior AML transaction monitoring solutions
The Chartis Research report, AML transaction monitoring solutions, considers how, by working together, financial institutions, vendors and regulators can create more effective anti-money laundering (AML) systems.
Financial crime and compliance50 2024
The detailed analysis for the Financial crime and compliance50 considers firms’ technological advances and strategic direction to provide a complete view of how market leaders are driving transformation in this sector
Automating regulatory compliance and reporting
Flaws in the regulation of the banking sector have been addressed initially by Basel III, implemented last year. Financial institutions can comply with capital and liquidity requirements in a natively integrated yet modular environment by utilising…
Investment banks: the future of risk control
This Risk.net survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control
Op risk outlook 2022: the legal perspective
Christoph Kurth, partner of the global financial institutions leadership team at Baker McKenzie, discusses the key themes emerging from Risk.net’s Top 10 op risks 2022 survey and how financial firms can better manage and mitigate the impact of…
Emerging trends in op risk
Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…
Moving targets: the new rules of conduct risk
How are capital markets firms adapting their approaches to monitoring and managing conduct risk following the Covid‑19 pandemic? In a Risk.net webinar in association with NICE Actimize, the panel discusses changing regulatory requirements, the essentials…