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First LIBOR defendant on trial found guilty

3 August, 2015 | News Releases

Tom Hayes, the first individual to be charged and stand trial in the UK as a result of the SFO’s ongoing criminal investigation into the manipulation of LIBOR, has been convicted and sentenced at Southwark Crown Court today.

Hayes, aged 35, from Hampshire, a former derivatives trader at UBS and Citigroup, was found guilty by a jury of all 8 counts of conspiracy to defraud. He was sentenced to a total of 14 years in prison.

Whilst working at UBS and Citigroup, he conspired with numerous other individuals to procure or make submissions of rates into the Yen LIBOR setting process that were false or misleading, thereby intending to prejudice the economic interests of others.

Hayes’ offences took place between August 2006 and December 2009, when he was an employee of UBS, and December 2009 and September 2010, when he was an employee of Citigroup.

The jury heard how Hayes repeatedly asked rival traders and brokers, as well as submitters in his own banks, to move Yen LIBOR submissions up or down to suit his needs, often by offering to reward them for their efforts.

Hayes was sentenced to 9.5 years imprisonment for each of counts 1-4, to run concurrently, and to 4.5 years imprisonment for each of counts 5-8, to run concurrently to each other, but consecutively to counts 1-4, resulting in a total sentence of 14 years imprisonment.

Commenting on the case, Director of the SFO David Green CB QC said:

“The jury were sure that in his admitted manipulation of LIBOR, Hayes was indeed dishonest. The verdicts underline the point that bankers are subject to the same standards of honesty as the rest of us.

“This brings to an end one strand of the SFO’s continuing Libor investigation. One senior banker previously pleaded guilty and another 11 individuals await their trial.”

Mr Justice Cooke, who oversaw proceedings, said:

“The seriousness of the offence is hard to overstate…A message has been sent out to the world of banking accordingly [that] probity and honesty are essential.”

LIBOR – the London Interbank Offered Rate – is the global benchmark interest rate used to set a range of financial deals. It underpins trillions of pounds of investments and contracts both in the UK and around the world. The accuracy of the rate is important to maintaining trust in the financial system.

The trial of some of Hayes’ alleged co-conspirators begins on 21 September 2015. A further trial of individuals charged with the manipulation of US Dollar LIBOR begins on 11 January 2016.

Confiscation proceedings against Hayes have been adjourned to a later date.

The SFO would like to thank the Financial Conduct Authority for the significant assistance it provided in connection with our investigation. We would also like to thank City of London Police, US Department of Justice, Commodity Futures Trading Commission and other law enforcement partners for their help.

Notes to editors:

  1. The SFO accepted the LIBOR matter for investigation on 6 July 2012.
  2. It has, to date, charged 13 individuals as part of the investigation, and reporting restrictions apply to those cases. Reporting restrictions also apply to the guilty plea in October 2014 of a senior banker from a leading British bank for conspiracy to defraud in connection with manipulating LIBOR.
  3. Tom Alexander William Hayes, of Hampshire, was one of three individuals arrested and interviewed on 11 December 2012 by officers from the SFO and City of London Police. On 18 June 2013, he attended Bishopsgate police station where he was charged with eight counts of conspiracy to defraud.
  4. Details of the US dollar LIBOR guilty plea hearing in October 2014 can be found here.
  5. London Interbank Offered Rate, or LIBOR, is the average interest rate at which banks can borrow from one another. Yen LIBOR is the average interest rate at which a large number of banks on the London money market are prepared to lend one another unsecured funds denominated in Japanese yen. A huge number of investments and trades are referenced to LIBOR. These transactions involve small businesses, large financial institutions and public authorities as well as individuals affected by the interest rates attached to a wide range of contracts including loans, savings rates and mortgages.
  6.  The Financial Services Act 2012 came into effect on 1 April 2013, making the administration of LIBOR a regulated activity overseen by the Financial Conduct Authority. The Act, which was not retrospective, made knowingly or deliberately making false or misleading statements in relation to benchmark-setting a criminal offence.

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