Former UBS trader Tom Hayes has been found guilty of rigging global interest rates by a London court. The 35-year-old has been sentenced to jail in the first ever trial of an individual for Libor rate fraud.
After a trial that lasted nine weeks, a jury made up of seven men and five women held seven day negotiations before pronouncing Hayes guilty of eight counts of fraud. The former trader was sentenced to nine and a half years for fraud committed during his time in UBS and four and a half years for fraud during his time at City. The two sentences will run concurrently. Hayes will have to serve seven years before being eligible for parole.
Hayes is the first individual to be sentenced for the manipulation of the London Interbank Offered Rates (Libor). The rate is used by banks to set the prices for financial products worth over $450 trillion. Reports indicate a tiny manipulation of the rate can result in handsome profits for fraudsters.
The sentence marks a new era in investigations into Libor rates manipulation, which have led to 21 people being formally charged and up to $9 billion in regulatory settlements.
During the sentencing, presiding Justice Jeremy Cooke said a stern message had to be sent to the world on dishonest financial conduct. “Probity and honesty are essential as is trust … The Libor activities of which you took part puts all that in jeopardy.”
Cooke proceeded to call Hooke a “center and hub” of manipulation. He said, “You succumbed to temptation because you could… To gain status, seniority and remuneration.”
During the reading of the verdict, Hayes repeatedly shook his head and stole a few glances toward his wife, mother and relatives. When the sentence was being read, he had his face buried deep in his hands.
Britain’s Serious Fraud Office alleged that Hayes had set up a long network of traders and brokers from 10 leading financial institutions, helping him rig for profits.
Hayes initially pled guilty to the charges levelled against him in December 2012. However, in December 2013, he changed his legal team and leaded not guilty, saying he had only pleaded guilty to avoid being extradited to the U.S. where he faces different fraud charges.
Citigroup said it has no comment on the verdicts while UBS said it was not a party to them.
Hayes’ sentencing will mark an age of stricter controls over Libor rate manipulations which have been growing in recent years to unprecedented levels, destroying proper economic policy for the benefit of a greedy few.
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