Trader tried to rig key HSBC rate, court told

A “greedy” City trader tried to involve his “cheeky young graduate” stepbrother in an attempt to rig a key interest rate, a court has heard.

Tom Hayes, 35, encouraged Peter O’Leary to buy a “few drinks” for his colleague at HSBC in an effort to influence where the bank set its yen Libor rate, jurors at Southwark Crown Court were told.

Prosecutors claim Hayes, a former UBS and Citigroup trader, was motivated by “greed” and acted as “ringmaster” in an enormous fraud to rig the benchmark interest rate, which is behind trillions of dollars worth of financial deals.

The court was shown an email sent to O’Leary on April 20, 2007, in which Hayes wrote: “Do you know the guy who sets yen Libor at your place?” O’Leary replied: “Yes I worked with him ... spoke to him quite a bit in New York.”

Hayes wrote back: “Mate, can you do me a huge favour and ask him if he’ll set his three month yen libor on the low side for the next few days as I have one million US dollars of fixes? Would be a massive help, if not don’t worry.”

The court heard the pair then spoke on the phone in which Hayes encouraged O’Leary to buy his HSBC colleague a “few drinks”.

In an audio recording played to the court, Hayes said: “If you got to know him brother, it would be a big help?”

In a second telephone call with O’Leary, Hayes added: “Say, ‘do you fancy setting a low yen three month libor? It would really help my brother out’.”

Three months later, Hayes urged his stepbrother to ask his HSBC colleague to set the six-month yen libor “on the high side”, the court heard. When O’Leary agreed to make the request in a “jovial email”, Hayes replied: “Just keep it super casual”.

The court heard a day later Hayes, who earned around £4.8m (€6.7m) working at UBS and Citigroup from 2006 to 2010, told his stepbrother: “I thought about it and I shouldn’t have asked you to do that. Sorry mate.

“Don’t think I’m going to bother asking for your help on Libor again. “He probably thought: ‘Who’s this cheeky young graduate?’ As long as your okay.”

Jurors also saw an instant message from Hayes to a city trader in which he said “libor is high because kept it artificially high”.

Prosecutor Mukul Chawla told the jury: “When he says ‘kept it artificially high’, that speaks for itself. If you needed a clearer example of deliberate rigging of rates, this is it. This is strategic, focused. Nothing to do with bank’s borrowing rates, all to do with Mr Hayes’s trading position.”

Hayes, of Fleet, Hampshire, denies eight counts of conspiracy to defraud over a period from 2006 to 2010.

Chawla said there was “huge pressure” on banks at the time of the financial crisis in 2007/08 and a number of them had discussed bringing down their Libor rates, including senior UBS figures.

In one instant message to Hayes in November 2007, which was read to the court, one of his contacts said: “Had a lot of compliance pressure recently due to credit problems. We both need to be a little more subtle in our ‘views’.”

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

The court was read another email between two of the defendant’s contacts from December 7 2007, which said Hayes was “going to Vegas to watch the Hatton fight... lucky bastard. Ps. Bubbly on its way with Tom”.

Hayes, who has been diagnosed with mild Asperger’s syndrome, has been sitting next to his solicitor in the well of the court during his trial, rather than in the dock.

Chawla told the jury it may be suggested during the trial that the British Bankers’ Association “condoned” the manipulation of Libor.

“Such an approach amounts to no more than a smoke screen to detract from the real issue in this case — dishonesty,” the prosecutor said

He added that trying to calculate the amounts of money which resulted from Libor manipulation was an “impossible exercise”.

A recording of Hayes’s interview with the Serious Fraud Office was played to the court, in which he said: “The way I would describe Libor fixing was like the cherry on top. You would try and squeeze as much out of the market as you possibly can. In terms of quantifying that amount, it’s basically trying to quantify the unquantifiable.”

The trial continues.



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