First City trader convicted over Libor is jailed for 14 years

Tom Hayes, the former UBS and Citi trader, has been found guilty of rigging LIBOR.

Motivated by greed and a desire for higher pay, the court heard that Hayes set up a network of brokers and traders that spanned 10 of the world’s most powerful financial institutions, cajoling and at times bribing them to help rig rates – designed to reflect the cost of interbank borrowing – for profit.

Hayes had denied the eight counts of conspiracy, arguing that Libor was unregulated when he was still working and that he had been transparent about requesting rate levels, which he said were within a “permissible” range.

Libor is a key rate that banks use to borrow from each other.

Banks, including Britain’s part state-owned banks RBS and Lloyds and Barclays, have paid billions in fines for manipulating Libor but until now no individuals had been convicted of a criminal offence.

The trial had been going on for two months and judge Mr. Justice Cooke described Hayes as “by nature a gambler”.

The former yen derivatives trader explained that his actions allowed him to enhance the profitability of his trading positions.

Before joining UBS in 2006, he worked for Royal Bank of Scotland and Royal Bank of Canada. He then went to work for Citigroup in Tokyo, earning £3.5 million before tax for nine months’ work.

He rigged the submissions made by the panel banks used to calculate that rate.

Mukul Chawla, counsel for the prosecution, told the jury: “No one suggests…that Mr Hayes should bear the full weight of Libor manipulation on his shoulders”. He said he wanted to gain an “extra edge”, and that his bosses had endorsed his methods.

“It was a matter between the SFO and Mr Hayes and UBS has no comment”.

Swiss bank UBS on Monday distanced itself from its former trader saying: “UBS was not a party to this case. The bank has resolved this legacy matter with most authorities and is committed to reducing operational risks and upholding a culture of doing the right thing”.

Citigroup said in a statement: “Tom Hayes was terminated in September 2010 following an incident that was reported to compliance”.