ELEVEN more bank workers face trial after city trader, 35, dubbed 'Rainman' is jailed for 14 years for fixing Libor rate 

• Tom Hayes was described as 'the ringmaster' in an enormous fraud  
• He is the first person to be convicted by a jury of rigging Libor rates
• Eleven other bankers will stand trial accused of conspiracy to defraud
• One senior figure at leading British bank already pleaded guilty to offence  

By Richard Spillett and Jennifer Smith for MailOnline

Published: 09:04 EST, 3 August 2015 | Updated: 13:37 EST, 4 August 2015

Former trader Tom Hayes, pictured with his wife Sarah has been convicted of manipulating Libor rates for personal gain

Eleven more bankers are to face trial after the first City trader was jailed for fixing the Libor rate.

Tom Hayes, a 35-year-old dubbed ‘Rainman’ after making £200million for UBS over four years, was sentenced to 14 years behind bars after being found guilty of conspiring to fix rates for profit.

He was described as the ‘ringmaster’ of a larger group who ‘cajoled’ rate setters at other banks in to submitting false data to manipulate the the London interbank offered rate (Libor) between 2006 and 2010.

Hayes was one of 13 people arrested by the Serious Fraud Office in relation to the scandal.

One senior banker from ‘a leading British Bank’ has admitted conspiracy to defraud in connection with manipulating Libor.

Eleven more are to face trial later this year and early in 2016.

Sentencing Hayes yesterday Mr Justice Cook described his crimes as evidence of the ‘absence of that integrity which ought to characterise banking.’

‘You, as a regulated banker, succumbed to temptation in an unregulated activity because you could.’

John Mann, a Labour MP on the Treasury committee, said last night: ‘The authorities must go after more senior people … who failed to manage the bank, were devoid of strong leadership and created the culture that allowed dishonesty to thrive.’

Mark Garnier, a Tory member of the committee, said: ‘I hope that as a result of this a huge amount of pressure will be brought about on managers who allowed this to happen, especially if they knew about it.’

Hayes, a derivatives trader, was the 'ringmaster' of a group of bankers who 'cajoled', 'begged' and 'bribed' rate setters at other banks into submitting false data on an almost daily basis to manipulate the rate between 2006 and 2010, prosecutors said. 

During his four years at UBS he made the bank almost £200million and was paid £1.3million in total.

But 'dissatisfied' he quit for Citigroup in 2009, where he earned £3.5million before being sacked after nine months when his methods were discovered.

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

'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.'

Prosecutors said Hayes was the 'ringmaster' of a huge conspiracy to defraud by manipulating lending rates. He was accompanied to court by his wife Sarah (right leaving court)

The 35-year-old was jailed for 14 years at Southwark Crown Court after being found guilty of conspiracy to defraud

Hayes, from Fleet in Hampshire, conspired with traders at other banks including JP Morgan, RBS and major financial brokers as well as with colleagues, Southwark Crown Court heard, 

He even asked his stepbrother Peter O'Leary - a junior trader at HSBC - to become friendly with the rate setter so that he procure favours.

In recorded emails and telephone calls Hayes first checked whether Mr O'Leary knew the man in charge of setting Libor.

In the telephone call played to the jury Hayes asked: 'Mate, can you do me a big favour and ask him if he will set three month Libor on the low side in the next few days.'

He added: 'Get to know him, it would be a real help for me, I have $1million of risk, I could come out with half a million bucks if he sets Libor low.

'I just need low yen three month Libor, help your brother out.' 

Giving evidence Hayes said: 'Everything I did was with complete transparency. Everything I did my managers knew about... sometimes going up all the way to the CEO.'

Shortly before the trial he had been diagnosed with mild Asperger syndrome and had been nicknamed 'Rainman' and 'Tommy Chocolate' for preferring hot chocolate while other traders drank beer.

Hayes once offered to pay a contact 100,000 US dollars if he kept the Libor rate as low as possible.

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.' 

Hayes, described as 'extremely intelligent', worked for Royal Bank of Scotland and Royal Bank of Canada before joining UBS in 2006 as a trader in Tokyo.

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

He joined Citi in 2009 after he 'felt that UBS were not paying him enough', and received £3.5 million before tax for just nine months' work.

The court heard Hayes made £3.5million in nine months while working for Citigroup in London

The prosecutor said Hayes immediately set about rigging Libor in his new job. He sent a message on his first day trading with UBS, on September 29 2006, saying: 'Do me a favour and get the Libor rate up?'

A trader in yen Libor derivatives, he effectively bet on movements of the daily rate at which banks are able to borrow from each other.

He rigged the submissions made by the panel banks, used to calculate that rate.

Hayes was sacked after his methods were formally reported to senior management and he was arrested in the UK in December 2012.

He initially admitted to the Serious Fraud Office that he had been dishonest but said this was simply an attempt to get charged in the UK and avoid extradition to the US for fraud.

Hayes was found guilty on all eight counts of conspiracy to defraud by manipulating the global system of interest rates which each carries a maximum sentence of 10 years in jail.

He stared straight ahead emotionless as the verdicts were read out. His wife and parents sat with their heads bowed as they heard the verdicts.

Prior to the trial, Hayes's barrister George Carter-Stephenson QC suggested that while his actions may have been 'morally reprehensible', they were not crimes. He suggested that the rules governing the submission of Libor fell short of a legal duty.

The scam began while he was working at UBS, which he left because they 'were not paying him enough'

The legal situation has since been clarified under the Financial Services Act 2012 which enacted a specific crime of manipulating benchmarks which carries a maximum sentence of seven years.

In June, Bank of England governor Mark Carney backed plans laid out by the Fair and Effective Markets Review for the lengthening of the maximum sentence for market abuse from seven to 10 years.

After the allegations about rate-rigging came to light, oversight of Libor was passed from the British Bankers' Association to the Intercontinental Exchange and rates are now based on actual transactions not estimates. 

Citigroup declined comment on the guilty verdict.

Legal expert Ben Rose, partner at law firm Hickman & Rose, said after the case that he expected further trials in the future.

He commented: 'Hayes' conviction makes it seem even more odd that no institutions have been prosecuted for their part in manipulation.

'Of course, it is right for individuals to be brought to account, but when an entire industry, from the British Bankers' Association downwards, is complicit in a practice it can seem very harsh to pick off isolated individuals.

'This is no doubt what led to Hayes' change of heart over his admissions, and is likely to cause further prolonged trials.'

'DISHONEST, BLATANT AND WRONG': JUDGE'S SCATHING VERDICT ON FRAUD

Mr Justice Cooke made strong criticism of the crime in his sentencing remarks

Sentencing Hayes, Mr Justice Cooke said: 'There is no separate standard of truth for any group of society and what you did with others was dishonest as you well appreciated at the time.

'What you did was blatant, but when you knew that others would not approve you sought to manipulate by more subtle means.

'And all this was done to improve the trades of your book or your desk.

'What this case has shown is that the integrity that ought to characterise banking was absent here.

'You as a trader succumbed to temptation because you could.

'It was commonplace at the time and common practice and not perceived as wrong but the fact that you were doing it all the same is no excuse.

He added: 'You played a leading role in the manipulation of Libor.

'You exerted pressure on others, essentially trained those junior to you in the activity, made corrupt payments to brokers for their assistance.

'The conduct involved here is marked out as dishonest and wrong and a message (needs to be) 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 in which you played a leading part put all that in jeopardy.'

Nerd who drank hot chocolate as colleagues guzzled bubbly

By Louise Eccles and Chris Greenwood for the Daily Mail 

He was the socially awkward, scruffy maths geek who found himself at the forefront of one of Britain’s biggest financial crimes.

Tom Hayes earned a million-pound salary before his 30th birthday but hounded colleagues to rig lending rates to make ‘every little bit of money’ he possibly could.

However, while he ruthlessly manipulated rates over four years – pocketing almost £5million – Hayes was apparently far from the Wolf of Wall Street stereotype of a brash City trader.

The married father of one was diagnosed earlier this year with a mild form of Asperger’s syndrome and had a self-confessed ‘obsessive’ personality.

He was mocked by fellow traders and nicknamed Rain Man after the autistic character in the 1988 Hollywood film starring Dustin Hoffman.

Tom Hayes, pictured with wife Sarah last week, was said to have a 'love-hate' relationship with his job

Hayes, now 35, claimed he was not seduced by the riches of trading or a lifestyle of excess. He confessed he had kept the same superhero duvet cover from the age of eight to 24 because it was ‘perfectly adequate’.

The maths graduate often refused to join in heavy drinking sessions and was nicknamed Tommy Chocolate for drinking cocoa while colleagues quaffed beer and champagne. He also claimed to eschew designer suits, admitting he ‘looked like a tramp every day’.

But behind this mild-mannered image, Hayes was a highly driven trader with a relentless thirst for money.

Sentencing him to 14 years in jail for fraud yesterday, Mr Justice Cooke labelled him a ‘gambler’ and found he had acted dishonestly again and again for his own profit.

The grandson of a stockbroker, Hayes was born in 1979, in Hammersmith, London, to Sandra and Nicholas Hayes, a television producer. His parents divorced when he and brother Robin were young. He was brought up by his mother and stepfather Timothy in a £1.5million house in Winchester, Hampshire, where he attended the local Westgate state comprehensive school.

Described as a ‘lovely bright boy’ by neighbours, he used to babysit for nearby families as a teenager.

After a degree in maths and engineering from the University of Nottingham, he began his stellar career as a graduate trainee at the Royal Bank of Scotland, but impatient for success, he then joined the Royal Bank of Canada.

In 2006 he was poached by Swiss bank UBS and moved to Tokyo as a derivatives trader, betting on currency markets. But his large salary was apparently not enough – it was while in Tokyo that Hayes allegedly began rigging the interbank lending rate Libor.

He continued with his criminal activities when he was poached again, this time by America’s Citigroup in 2009, staying in Tokyo. Months later, however, he was fired after his colleagues reported his rate-rigging to bosses.

Geeky: Disgraced trader Tom Hayes, who has been dressed up in a frog costume, was apparently far from the Wolf of Wall Street stereotype of a brash City trader

During the trial, Hayes admitted to a ‘love-hate’ relationship with his job, saying it could be ‘the worst job in the world, could make you want to jump off a bridge and make you feel physically sick … But the success when you got it right, that’s like solving that equation, it’s like seeing that number pop up on your screen.’ Instead of being motivated by money to rig rates, he says he wanted ‘to do my job to perfectly as I could do it’. But the court heard he became greedy and would stop at nothing to make more profit, even trying to persuade younger stepbrother Peter O’Leary, who worked at HSBC, to rig rates for him.

He became increasingly brazen, even talking on Facebook about needing rates to move up or down, prompting his own defence team to ask: ‘Is he the stupidest fraudster ever?’ But their portrayal of a bumbling trader, who was more Austin Powers than James Bond, was rejected by the jury.

Pictures of him in a frog outfit from a friend’s social media site showed the trader’s louder, more sociable side and some colleagues have told how he had a fierce temper.

The court heard he gained a reputation at Citigroup for being difficult and demanding. Some former co-workers recalled how he ‘exploded’ after claiming equipment was not good enough. Despite his claims of shunning luxury, he regularly attended court in designer trousers. In 2010, he enjoyed a lavish wedding at Hampshire’s Four Seasons hotel, a Georgian mansion, to solicitor Sarah Tighes.

Shortly after losing his Citigroup job, the couple bought a £1.2million Victorian rectory in the Surrey Hills, with seven bedrooms and seven bathrooms. The house was registered in his wife’s name only. She still owns the property but the couple and their four-year-old son have moved into a modest four-bedroom house in Fleet, Hampshire.

Hayes’s wife arrived hand-in-hand him daily during the trial, but was emotionless as he was jailed yesterday. She declined to comment afterwards. She has spoken out only once since his arrest, writing on Twitter: ‘When is the US DoJ [Department of Justice] going to pursue a US bank for Libor manipulation? Why only foreign banks?’

Now bring the bank bosses to justice, says City Editor ALEX BRUMMER 

Seven years after the great financial panic and after a succession of revelations of corrupt behaviour by bankers, British justice has finally delivered its first jury verdict and a stunning 14-year prison sentence for City trader Tom Hayes.

The trial will almost certainly be portrayed as a brilliant success for the Serious Fraud Office, and a sign that bankers – widely blamed by the public for the economic suffering of the recession – are getting their comeuppance.

Nevertheless, the guilty verdict on eight counts of conspiracy to manipulate Libor – the interest rate that governs the cost of borrowing for ordinary citizens and businesses – raises uncomfortable questions.

At Barclays, where the Libor scandal was first revealed, the former chief executive Bob Diamond, who was sacked after Barclays faced a £290million fine in 2012, has founded African bank Atlas Mara and has faced no charges

Hayes earned salaries and bonuses in the millions as a result of his role in rigging markets for his employers, the Swiss bank UBS and Citibank of New York. Yet he was no more than a middle-ranking trader.

Despite being described in court as the ‘Machiavelli of Libor’, there is absolutely no way he could have engaged in such practices without the knowledge of some of his superiors.

His sentence and those of others still to come to trial may be seen as a huge deterrent to dirty dealings on the City’s trading floors, but it does nothing to address the reckless culture in bank boardrooms that allowed fraudulent practices to fester. The convicted trader, with his low-key lifestyle and brilliant mathematical skills, was way down the food chain from the bank bosses that brought the British and global economy to a shuddering halt.

Hayes and several of his colleagues will be spending long stretches behind bars. Yet many of the bankers who put in place and benefited from the bonus structure which encouraged market-rigging have suffered no penalties and have gone on to forge new careers. At Barclays, where the Libor scandal was first revealed, the former chief executive Bob Diamond, who was sacked after Barclays faced a £290million fine in 2012, has founded African bank Atlas Mara and has faced no charges.

Fred Goodwin, the boss of RBS, still enjoys a pension beyond dreams of avarice funded by the taxpayer.

Fred Goodwin, the boss of RBS, still enjoys a pension beyond dreams of avarice funded by the taxpayer (left). Andy Hornby, the HBOS banker who forged its downfall, has gone on to a career as the nation’s top bookie at Coral (right)

And Andy Hornby, the HBOS banker who forged its downfall, has gone on to a career as the nation’s top bookie at Coral. An investigation into the collapse of his bank has never been published.

The completeness of the verdict against Hayes will nonetheless empower the SFO to press ahead with other cases of rigging of the Libor and foreign exchange markets. The Home Secretary Theresa May has been itching to abolish the SFO – the City investigator and prosecutor – and subsume it within a broader Serious Crimes Agency.

The skill and expertise with which David Green QC, the director of the SFO, has pursued the Libor cases should give it a new lease of life.

What will be particularly satisfying is that for once, British financial justice has led the way, ahead of the Americans.

Hayes testified in court that he had co-operated with the SFO because he was terrified of extradition to the US where sentences for crimes against capitalism are especially harsh and jail can be brutal.

As a result of the misdeeds by Hayes and his fellow manipulators, consumers have almost certainly paid more for their mortgages, and travellers will have received worse foreign exchange rates than otherwise would have been the case.

In this blatant conspiracy against bank customers, one cannot but feel it is a very poor justice system that succeeds in finding scapegoats but allows the ‘Masters of the Universe’ – who brought the City into such disrepute – to escape almost without stain.

'THIS DECISION WILL SEND A CHILL DOWN THE SPINE OF OTHER TRADERS': LAW FIRMS WARN THERE WILL BE MORE PROSECUTIONS AFTER TOM HAYES BECOMES FIRST BANKER TO BE CONVICTED OF LIBOR FIXING 

Barclays was fined £190million last June for its role in the scandal (file image above) 

Law firm have told how the first Libor fixing conviction would haunt other traders charged with the same offence, describing Tom Hayes's guilty verdict as a 'watershed moment' in the industry.

The 35-year-old was yesterday sentenced to 14 years behind bars at Southwark Crown Court in the first trial relating to the scandal for which Barclays was fined £290million in June last year.

Legal experts have heralded his sentence as a significant development in trading which will seek to deter others from committing similar crimes. 

'This decision will send a chill down the spines of the other traders charged with conspiracy to defraud in relation to benchmark manipulation and also senior managers within banks who are alleged to have been complicit in this activity, but have, to date, not yet been charged,' said Stevie Loughrey, financial services litigation partner at Carter-Ruck. 

'This is something of a watershed moment and it appears it is, at least in part, intended to represent a stiff warning to others who may be tempted to engage in such conduct in future.'  

Industry experts called for prosecution to be brought against the banks themselves.

'Hayes’ conviction makes it seem even more odd that no institutions have been prosecuted for their part in manipulation, especially in relation to lowballing (proposing a lower Libor rate to make a bank look more creditworthy than it actually was),' said Ben Rose, partner at law firm Hickman & Rose 

'Of course, it is right for individuals to be brought to account, but when an entire industry, from the British Bankers’ Association downwards, is complicit in a practice it can seem very harsh to pick off isolated individuals. 

'This is no doubt what led to Hayes’ change of heart over his admissions, and is likely to cause further prolonged trials.' 

Others speculated over whether the banker, who made £200million for UBS over four years, will be ordered to repay funds. 

'If he has sizeable assets then they will be attractive for a seizure order,' said Simon Morris, a financial services partner with law firm CMS. 

'But this depends if he made a lot of commission, and whether he hasn’t dissipated it in the usual trader high-style.' 

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