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UBS and Citigroup react to trader's rigging conviction

The two banks, where Tom Hayes worked while he was rigging Libor rates, have made the following statements, after he was sentenced to 14 years in prison for conspiracy to defraud.

UBS was not a party to this case. It was a matter between the SFO (Serious Fraud Office) and Mr Hayes and UBS has no comment. The bank has resolved this legacy matter with most authorities and is committed to reducing operational risks and upholding a culture of doing the right thing.

– UBS statement

Tom Hayes was terminated in September 2010 following an incident that was reported to compliance. Citi (Citigroup) also reported the matter to the appropriate regulators at the time.

– Citigroup statement

Hayes was employed at UBS from August 2006 to December 2009, and at Citigroup from December 2009 to September 2010.

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Libor rate-rigging proved costly for a number of banks

Libor rate-rigging was a practice that proved costly for a number of banks when the extent of the scandal emerged in the wake of the 2007 and 2008 financial crisis.

£290m
Barclays was the first bank to be fined over the affair
£940m
was paid by UBS and the US Justice Department filed charges against British trader Tom Hayes
£391m
was the fine for Royal Bank of Scotland
£218m
was the fine levied on Lloyds Banking Group in July 2014 after it admitted rate-rigging

Much of the money paid in fines in the UK has been allocated to charities.

Libor scandal prompted reform of financial markets

In the wake of the Libor rigging scandal, there has been a renewed focus on the practices of the financial markets.

A review in September 2012 found that manipulation of the way Libor was fixed had damaged trust in the financial system and called for urgent reforms.

Dozens of traders have been fired as a result of their alleged involvement in the Libor scandal. Credit: PA

The role of the British Bankers' Association in overseeing Libor was severely criticised and responsibility for it was handed to America's Intercontinental Exchange Benchmark Administration this year.

Rules published in 2013 laid out new requirements for checking banks' submissions and monitoring for suspicious activity by benchmark administrators, as well as the policy on handling conflicts of interest.

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.

Libor: What is the rate that was rigged?

A number of banks including Barclays, Lloyds Banking Group, the Royal Bank of Scotland and Deutsche Bank have been fined billions of pounds for their part in the Libor rigging scandal. But what exactly is the rate that was manipulated?

  • Libor - or The London Interbank Offered Rate - is a benchmark that indicates the interest rate that banks charge when lending to each other.
  • Each day, a panel of banks set out what rates they think they can borrow from others over a range of periods - from overnight up to 12 months.
  • The data is collated, the top and bottom estimates are removed and the rest are then averaged to give a final figure.
  • It is used as the basis for hundreds of trillions of dollars of loans and transactions around the world from complex derivatives to mortgages.
  • Libor is seen as fundamental to the operation of UK and world markets.

Hayes offered contact $100,000 to keep Libor rate low

Tom Hayes, who has been sentenced to 14 years in prison for manipulating Libor rates, built up a network of traders to help him carry out the fraud, the prosecution said.

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

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."

"The motive was a simple one: it was greed", he added.

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Hayes set about rigging Libor on first day at Citigroup

A trader, convicted over the Libor scandal, was paid £1.3m before tax in salary and incentives by UBS from September 2006 to December 2009.

Tom Hayes then joined Citigroup in 2009 because he "felt that UBS were not paying him enough", and received £3.5 million before tax for just nine months' work.

The prosecutor in his trial said Hayes immediately set about rigging Libor sending a message on his first day trading, saying: "Do me a favour and get the Libor rate up?".

Hayes was sacked from the bank after his methods were formally reported to senior management. He was later arrested in the UK in December 2012.

Trader was a 'ringmaster' who liked Superman bedding

City trader Tom Hayes is now facing a prison sentence after becoming the first person to be convicted of rigging Libor rates.

During his trial, prosecutors said the banker, who has mild autism, and is a fan of Superman bedding, was a "ringmaster" who would "cajole" and "bribe" brokers into manipulating the rate.

Tom Hayes is believed to have carried out the fraud between 2006 and 2010.

As a trader in yen Libor derivatives, he bet on movements of the daily rate banks are able to borrow from each other.

He admitted making "requests" concerning the Libor rate, but insisted lots of bankers were doing the same, and "no one batted an eyelid".

I was made out to be the Jesse James of Libor, the Bobby Dazzler of Libor. I was being portrayed as the architect and the ringmaster of what was a global financial issue.

– Tom Hayes

Hayes had denied eight counts of conspiracy to defraud when he worked for Switzerland's UBS and America's Citigroup but a jury found him guilty of all counts.

City trader is first to be convicted over Libor scandal

City trader Tom Hayes is now facing a jail sentence. Credit: PA

A City trader has become the first person to be convicted of rigging Libor rates in a scandal that shook financial markets.

Tom Hayes, 35, was the "ringmaster" in an enormous fraud to manipulate the benchmark interest rates.

The highly-paid ex-trader at UBS and Citigroup orchestrated a scheme in order to boost his own six-figure earnings, London's Southwark Crown Court heard.

In an audio clip he said "influencing" Libor was "commonplace" and admitted being a "serial offender".

He denied eight charges of conspiracy to defraud when he worked for Switzerland's UBS and America's Citigroup but a jury found him guilty on all counts.

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