Daily Management Review

World’s first Libor trial finds Former Trader Hayes Guilty


World’s first Libor trial finds Former Trader Hayes Guilty
A former UBS trader was sentenced to 14 years imprisonment on charges of manipulating an important interbank interest rate. This is the first occasion that someone has been found guilty and sentenced to imprisonment under Libor Trial.
This verdict, passed by a London jury marked a new phase after a seven seven-year probe.
Tom Hayes, who received the 14 year sentence, had been associated with the trading for the UBS and Citigroup. He was found guilty on 3rd August of persuading and bribing leading financial institutions to rig the London interbank offered rate, or Libor.
The investigations into the allegations against Hayes were concerned about establishing whether he was the ringleader who led a network of brokers and traders from various other banks. The court held the trial towards this end and found that Hayes had in fact tapped other traders and brokers from other banks to manipulate the Libor rate. Libor rate is an important benchmark for around $450 trillion or 409.7 trillion euros in financial contracts and consumer loans. This trail was also significant as this was the first of its kind of trial and a first verdict of imprisonment for the guilty.

Experts are of the opinion that this verdict and the preceding trial would begin a new phase in the investigations of financial and market manipulations and frauds.  
The convicted, Hayes however pleaded innocent and had denied the eight counts of conspiracy. His argument was that at the time he was working for the two banks, Libor was unregulated. He also argued that he had been transparent about requesting rate levels, which he said were within a "permissible" range.
Hayes could face jail term of upto 10 years in jail for each count against him.
Britain’s Serious Fraud Office (SFO) carried out the investigations against Hayes. However the actual inquiry was conducted on a global scale that involved some of the most well known banks of and financial institutions the world who have had to shell out around $9 billion in settlements to the regulators.
UBS, for which Hayes worked, had to pay a hefty fine itself after it pleaded guilty of the allegations during the trial. The US regulators had imposed a hefty fine on the Swiss banking giant.
UBS had accepted in court that it had resorted to forgery in the US of having manipulated benchmark interest rates. The investigations, which were termed as the global Libor rigging scandal, found the UBS to be guilty of conducting one count of wire fraud. The Swiss bank accepted liability for the same and had accepted to cough up $203-million or 182 million-euro for the crime and a three-year term of probation in the US.
However the UBS had been freed of charges in the US of currency rigging and granted it conditional immunity for cooperating with the authorities.

The multi country multi company Libor fraud also included someo f the very big names of the global banking industry like JPMorgan Chase, Citigroup, Barclays and Royal Bank of Scotland.
(Source: www.digitallook.com & http://www.dw.com)