Former bank trader convicted in Libor scandal

Former Citigroup and UBS trader Thomas Hayes was convicted in the Libor scandal Monday, becoming the first individual found guilty on charges of manipulating the global financial benchmark.

After a Southwark Crown Court jury in London found Hayes, 35, guilty on eight counts of conspiracy to defraud, a judge sentenced him to 14 years in prison. Hayes had faced up to 10 years on each count.

The jury found that Hayes conspired to rig Libor — the London Interbank Offered Rate — a global benchmark used to set rates on trillions of dollars in mortgages, loans, credit cards and some financial derivatives.

British prosecutors alleged that Hayes was the ringmaster of a group of more than two dozen traders and employees of several banks who pushed Libor rates up or down to benefit their trading positions and boost profits. He was accused of conspiring with other group members while working in Tokyo, first as a yen interest rate trader for UBS and later handling similar trading for Citigroup — which fired him in 2010.

Hayes and a second trader were first charged by U.S. prosecutors in December 2012. A court complaint filed in New York accused them of conspiracy, wire fraud and other crimes allegedly committed while Hayes worked for UBS or Royal Bank of Scotland before he joined Citigroup.

U.S. court records show that on March 3, 2010, he messaged a friend at a brokerage firm and explained that his trading would benefit from a low Libor rate for Japanese yen — referring to one of the 10 currency-based Libor rates.

"Any favours you can get ... would be much appreciated," Hayes messaged, the records show.

"I'll give him a nudge later, see what he can do," the unidentified brokerage trader responded. "Thanks mate … really really would appreciate that," Hayes responded.

Seeking to avoid extradition to the U.S., Hayes initially cooperated with investigators from Britain's Serious Fraud Office. But he subsequently pleaded not guilty and opted to defend himself at trial. He testified that he did not think his trading tactics were improper.

“I was very, very, very open, very transparent,” Hayes testified July 10, according to The Wall Street Journal. “All my managers knew. I had no reason to think that it was wrong.”

However, David Green, director of the Serious Fraud Office, Monday said "the jury were sure that in his admitted manipulation of Libor, Hayes was indeed dishonest."

A British trial of some of Hayes' alleged co-conspirators is scheduled to start Sept. 21.

In all, a dozen global banks have paid a cumulative total of $9 billion in penalties related to the rate-rigging scandal. Deutsche Bank paid the biggest fine, $2.5 billion in a settlement announced by U.S. and British prosecutors and regulators in April.