Former trader Tom Hayes jailed over international rate rigging scandal

TOM Hayes has never fit the profile of a greedy banker, let alone a criminal. That didn’t save him from a long prison sentence.

HE was known as “Rain Man” and “Tommy Chocolate” and now, the first to take the rap for what’s been called the most shameful episode in financial history.

Tom Hayes, a trader who worked for finance giants UBS and Citigoup, has been jailed for 14 years by a London court after being unmasked as the ringleader of a scam working to rig interest rates worldwide.

Hayes had always wanted to do every job “perfectly”, but on Monday became the first person to be found guilty by a jury of fixing the London Interbank Offered Rate — an estimate of the average interest rate for banks borrowing from other banks.

Tom Hayes was supported by his wife Sarah at Southwark Crown court in London.

Though the 35-year-old insisted he had acted with complete transparency — “my managers knew, my manager’s manager knew,” he told the court — the verdict seemed to come as a surprise to his colleagues and family.

Hayes didn’t seem to fit the profile of a white-collar criminal, or even of a greedy banker.

He was “different”, and admitted he did not always fit in with his high-flying colleagues.

While the other bankers would down beers at social and networking events, Hayes would load up on hot chocolates, earning him one of his nicknames “hot chocolate”.

The other nickname “rain man” came from his high level of intelligence and quick speech, something frustrated lawyers noted during the trial when he was asked to slow down several times.

The court was told the trader had recently been diagnosed with a mild form of Asperger's syndrome, meaning he saw issues in “black and white” rather than shades of grey.

He kept the same superhero-themed bedding for more than 25 years because he couldn’t see the point in replacing it.

“They used to laugh at me,” Hayes said of his colleagues.

“I had the same superheroes duvet cover since I was eight. I didn’t see the point in buying a new one when that one was perfectly adequate.”

Swiss banking giant UBS, where Hayes worked, was fined $1.5 billion over rigging of the Libor interest rate at the heart of global financial markets.

While Hayes’ diagnosis was brought up at the trial, the judge said this was of “no relevance to the issue of dishonesty”.

Behind his quirks, Hayes was motivated by greed and a desire to impress his bosses and make millions, jurors heard.

The court found the 35-year-old to be the ringmaster of more than a dozen traders who worked to rig the Libor rate which is used as a key reference for financial products around the world, from consumer loans to savings accounts.

It is estimated to underpin some $A683.81 trillion of contracts, from mortgages to the cost of corporate lending.

However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

Hayes didn’t seem to see the problem with what he was doing. He had denied eight counts of conspiracy to defraud between 2006 and 2010 and told investigators that “influencing” the daily calculated rate was “commonplace”. When he eventually confessed, he referred to himself as a “serial offender”.

Emails sent by Hayes explicitly discussing fixing the Libor rate were shown to the jury.

He said to a colleague: “Do me a favour and get the Libor rate up?”, in an email on his first day at UBS in 2006.

On another occasion he engaged his stepbrother to buy “a few drinks” for a colleague at another bank to influence the rate, offering a deal of up to $100,000 in return.

The judge found Hayes was motivated by greed and described him as “by nature a gambler”. He had a base salary of around $2 million at UBS but earned more than 100 times that in three years trading.

He stared ahead, emotionless, as the verdict was read out while his wife and parents sat in court with bowed heads.

“I acted with complete transparency to my employers. My managers knew, my manager’s manager knew. In some cases the CEO [chief executive] was aware of it,” Mr Hayes told the court.

‘They used to laugh at me’ ... Tom Hayes never fit in with his banking colleagues. Pic: Leon Neal

Banks including Barclays, UBS, Royal Bank of Scotland and Deutsche Bank have been fined billions of dollars for manipulating the rates and Hayes is the first criminal conviction arising from a British investigation into Libor.

Ben Rose, a partner at law firm Hickman and Rose with experience in the financial services industry, said the conviction was a boost for the Serious Fraud Office which had “a number of other Libor cases in the pipeline”.

However, he said it emphasised how “odd” it was that no institutions have been prosecuted for their role.

“When an entire industry ... is complicit in a practice it can seem very harsh to pick off isolated individuals,” he said.

— With AFP, AP

Originally published as Former trader Tom Hayes jailed over international rate rigging scandal