Former derivatives trader sentenced on 8 counts in London

Tom Hayes, a former Union Bank of Switzerland (UBS) and Citibank currency derivatives trader and the mastermind of a complex scheme to manipulate the London Interbank Offered Rate (LIBOR), was sentenced to serve 14 years for his role in the scandal.

Beginning in 2006, the indictment alleged, Hayes built an elaborate network of brokers and traders within some of the largest banks in the world who participated in an intricate scheme to exploit the LIBOR interest rate, a model rate for member banks engaging in interbank borrowing, and proceeded to execute currency trades based on the influenced rates where he recorded hulking profits.

Precis:  Through a prearranged fixed rate, Hayes invested heavily in derivatives with knowledge his investments would reap sweeping proceeds.

In delivering Mr. Hayes sentence, Mr. Justice Cooke said:

The conduct involved here is to be marked out as dishonest and wrong and a message sent to the world of banking accordingly. The reputation of Libor is important to the city as a financial sector and the banking institutions of the City. Probity and honesty is essential as is trust. The Libor activity of which you played a leading part put all that in jeopardy.”

Hayes, along with his defense counsel, Neil Hawes QC (Queen’s Counsel), implored the court for leniency as Hayes claimed his career was beset by immense pressure to furnish profits and his superiors were aware of his activity.

Justice Cooke was unmoved:  “The fact that others were doing the same as you is no excuse.”

Hayes’ conviction is only the beginning:  A further 12 of Hayes’ co-conspirators in the LIBOR scandal are awaiting trial in London.

Hayes’ guilty secret exposed, he involved himself in the utterly ridiculous self-preservation tactic of blaming others and offering a despairing message he was the primary caregiver to his son.  Thankfully, and mercifully, the jury remained skeptical and delivered a just verdict.

The impending trial of the 12 remaining defendants may provide some equally sobering results on those who claimed ownership of a rare talent, but chose to create a financial abomination with their willful failure to resist sustained pressure in their search for posterity and worldly goods.

Do not despair for Hayes:  It is likely he has a substantial nest egg hidden away somewhere.

[The Guardian] [accountingdegree.net]