A jury last week found former UBS and Citi trader Tom Haynes guilty of eight counts of conspiring to manipulate the London interbank lending rate (LIBOR) which is based on the rate at which leading banks are willing to lend to one another and is used as the basis for setting financial contracts around the world. The “Machiavelli of Libor” was sentenced to 14 years in jail.
The prosecution portrayed him as a calculating, greedy manipulator who rigged the interest rate for the sole purpose of boosting his trading book. The trader who generated $260m in revenue over three years at UBS and later left for Citi (Citi fired him one year later, after it was discovered that he was trying to manipulate LIBOR) portrayed himself as a number-obsessed individual who only cared about doing his job right.
Mr Justice Cooke, who presided over the case, said Hayes “is, by nature, a gambler”. But the defence tried to portray him as a sufferer of Asperger’s syndrome who was teased by colleagues for being “different” and was dubbed “Rain Man”.
The trial should be a wake-up call for those individuals who are part of a world where “not even Mother Teresa wouldn’t manipulate Libor if she was trading it”, as Tom Haynes puts it.
Better Markets stressed that "this is an all too rare moment of accountability for the reckless, illegal, and criminal conduct by too many of those working at the biggest too-big-to-fail banks." It is hoped that this landmark moment will force the senior management in banks and brokers to take necessary measures to prevent further fraud. Money market scandals such as this one show what happens when a financial “market” is left unchecked by its regulator. Systematic attempts to cheat the financial system over a long period are still part of the opaque and lawless culture that rule the currency market.
Read more on the topic: here, here and here.