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Libor accused 'motivated by greed'

A highly-paid trader motivated by greed was the "ringmaster" in an enormous fraud to rig benchmark interest rates known as Libor, a court has heard.

Tom Hayes, 35, orchestrated a scheme to manipulate the rate, which is behind trillions of dollars worth of financial deals, and the plot "struck at the very integrity of that system", Southwark Crown Court heard.

Jurors heard that he told investigators: "You want every little bit of money you can possibly get."

Mukul Chawla QC, prosecuting, said: "On an almost daily basis he set out to dishonestly manipulate or rig Libor at his bank and other banks."

Hayes, of Fleet, Hampshire, denies eight counts of conspiracy to defraud covering a period from 2006 to 2010, a period when he worked for Switzerland's UBS and America's Citigroup.

Mr Chawla said: "He behaved in a thoroughly dishonest and manipulative manner by repeatedly cheating those with whom he had entered into huge financial transactions.

"The motive was a simple one: it was greed."

He added: "He was the ringmaster at the very centre, telling others around him what to do and in a number of cases rewarding them for their dishonest assistance."

Hayes, said to be "extremely intelligent", worked for Royal Bank of Scotland and Royal Bank of Canada before joining UBS in 2006 as a trader in Tokyo, gaining "enormous" profits for the bank for which he was "very well paid".

The court heard that there had "undoubtedly been some manipulation of Libor at UBS before Mr Hayes's own dishonest activity".

Hayes joined Citi in 2009 after he "felt that UBS were not paying him enough", and continued working in Tokyo.

But he was sacked after his methods were formally reported to senior management. He returned to the UK where he was arrested in December 2012 and questioned by the Serious Fraud Office.

Hayes "admitted his guilt, setting out precisely what he had done with whom", Mr Chawla said, and offering to give evidence about a "large number of other people".

Jurors heard an audio clip in which he said he was part of a system in which "influencing" Libor was "commonplace" but admitted he was a "serial offender".

Mr Chawla said: "Despite the evidence and admission in interview, Mr Hayes claimed what he was doing in rigging and manipulating Libor was not dishonest."

The court heard that Hayes, who is sitting in the well of the court rather than the dock, has been diagnosed with mild Asperger's syndrome.

Mr Chawla said: "Mr Hayes's desire was to earn and make as much money as he could.

"The more that he earned for his employers, the more they would value his services and, inevitably, the more that they would pay him."

"All bankers want to maximise their profits, but Mr Hayes did it in a wholly dishonest way, concerned wholly with his profits and wholly unconcerned by the fact that he was cheating those with whom he was trading.

"In his own words, he was greedy."

Jurors heard that Hayes told investigators: "The point is, you are greedy, you want every little bit of money you can possibly get... that's how you are judged, that's your performance metric."

Mr Chawla said: "It is that greed that led to his dishonesty on an enormous scale.

"Mr Hayes's dishonesty involved doing everything in his power to manipulate bank rates known as the London Interbank Offered Rate (Libor)."

Mr Chawla said Libor rates were "rigged to his financial advantage and therefore inevitably to the financial disadvantage of those with whom he was trading".

"He enlisted the help of a large number of people across a large number of different financial organisations to help him achieve this."

The prosecution said the dishonest rigging was not confined to the banks at which Hayes worked.

"He tried to rig and in many cases succeeded in rigging the rates at other banks," Mr Chawla said, doing so by directly approaching those at banks or through middle men known as brokers.

Hayes was a trader in yen Libor derivatives, effectively betting on movements of the daily rate at which banks are able to borrow from each other.

The case centres on the allegation that he was seeking to rig the submissions made by the panel banks, used to calculate that rate.

Mr Chawla said: "They were false and misleading because rather than being genuine assessments of the rate at which the bank could borrow money, they were designed to maximise Mr Hayes's profits."

The prosecutor said the case may seem complicated but was in fact simple.

"You do not have to be bankers or financial experts to understand what this case is about," he said.

"The primary focus of this case is whether Mr Hayes, in doing what he was doing, was dishonestly rigging or manipulating Libor."

Mr Chawla said Hayes would "cajole", "beg" and "bribe" brokers through "corrupt" trades which had "no legitimate purpose".

"These are payments for their help in manipulating Libor," he told the court.

The court heard Hayes was paid £1.3 million before tax in salary and incentives by UBS from September 2006 to December 2009.

He then received £3.5 million before tax from Citigroup for just nine months' work, the hearing was told.

Hayes told the SFO he made a "couple of million" dollars for UBS as a result of his trades over four months after joining the firm in 2006, Mr Chawla said.

In 2007, the defendant said he made the company "50 or 49 million dollars", equivalent to £25 million, while in 2008 he claimed to have made UBS 89 million dollars, or £61 million, the prosecutor added.

Over nine months in 2009, Hayes said his trades made the Swiss bank about 150 million dollars, the court heard.

Mr Chawla said Hayes wanted his brokers to "exert pressure" and use influence on banks to get them to submit their Libor in a way that was "helpful" to his trading position.

The defendant did not deny making requests to influence Libor, he added.

"That would be nonsensical," the prosecutor said.

"They speak for themselves. He has to accept he did set out with others to manipulate Libor.

"He says to you, that is not dishonest."

The prosecutor said Hayes sent a message on his first day trading with UBS, on September 29 2006, in which he said: "Do me a favour and get the Libor rate up?"

The court heard that in another message on the same day, he added: "Can you sort me out on Libor?"

Mr Chawla said: "On the first day he was trading he was making a request to get the Libor rate up."

The trial, which is expected to last 10 to 12 weeks, was adjourned until tomorrow.

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