Former City trader Tom Hayes, 35, was called “greedy” and accused of acting in a “thoroughly dishonest and manipulative manner” during the first criminal trial linked to the manipulation of the Libor interest rate which started yesterday.
The BBC reports that Hayes, a former UBS and Citigroup trader who was arrested in 2013 for his part in the manipulation, denied all eight counts of conspiracy to defraud over the four year period from 2006-2010.
Prosecutor, Mukul Chawla QC said: “This case is about the dishonest rigging of bank rates for profit. The motive was a simple one: it was greed.”
Hayes was described by Chawla as, “the ringmaster at the very centre, telling others around him what to do and in a number of cases rewarding them for their dishonest assistance.”
During the trial, Hayes was accused of enlisting “the help of a large number of people across a large number of different financial organisations to help him” by approaching people at other banks through brokers acting as middlemen, the BBC reports.
The trial is expected to last between 10-12 weeks.
What is the Libor rate-rigging scandal?
Libor (the London Interbank Offered Rate) is an important rate used as the benchmark for trillions of loans and financial products traded around the world.
Over the past three years Barclays Bank, JP Morgan, UBS, Royal Bank of Scotland and Deutsche Bank have all been fined by financial regulators for Libor manipulation. Barclays involvement has been mentioned the most and the Financial Services Authority (FSA) reported that between as early as January 2005 and June 2009, Barclays derivatives traders made a total of 257 requests to fix Libor and Euribor rates. Alongside some other key dates within those years, in 2007, during the financial crisis, Barclays manipulated Libor submissions to give the bank a healthier image for credit quality and its ability to raise funds.
In June last year, Barclays admitted to misconduct and was fined a total of £290m from the FSA, the US Department of Justice and the Commodity Futures Trading Commission. The scandal led to the resignation of Barclays chief executive Bob Diamond and chairman Marcus Agius. Royal Bank of Scotland also fired four people in 2011 for their alleged roles in the scandal.
Since the Libor rate-rigging scandal the way Libor is calculated has been changed.