Libor trial: prosecution slams Hayes defence as 'nonsense'

Prosecution lawyer in the trial of Tom Hayes says standard industry practice defence is “nonsense”

The lead prosecution lawyer in the trial of Tom Hayes dismissed the former trader's defence that his actions were standard industry practice as "nonsense" in court today (July 14).

In a tense cross-examination Mukul Chawla challenged Hayes to explain how trying to influence other banks' Libor submissions was honest.

"At the time, you told us that you were doing it in part because it was industry standard practice, but that's nonsense," said Chawla. "Do you agree that this is nothing to do with range but with profit on your book?"

Hayes replied that he could not answer the question as he had been prevented from doing his own analysis of his trading positions at the time, and so was unsure if it did benefit his trading positions. He raised this complaint several times during the cross-examination.

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During his defence lawyer's cross-examination, Hayes maintained that there is a range of potential Libor submissions that are all accurate. He claimed requesting "favours" of other bank rate submitters to pick a rate that helped Hayes' and his bank's own trading positions did not constitute dishonesty, something Chawla disputed today in court.

"What is that if not rigging the rate?" asked Chawla.

Hayes replied: "Getting a commercially favourable submission within the range because the rate submitted is accurate and honest."

He is accused of being the "ringmaster" of a conspiracy between traders at multiple banks attempting to manipulate the London interbank offered rate (Libor) to benefit their trading positions.

Chawla showed the court several transcripts of phone calls and message threads between Hayes, his brokers and colleagues from his time at Citi, from which he was dismissed in 2010 for misconduct relating to Libor requests.

The documents appeared to show Hayes requesting higher or lower Libor rates at his own bank and from other banks, solicited through a network of brokers.

In one, Hayes asked one of his brokers to ask a Libor submitter at HSBC to move his Libor submission.

"With HSBC I asked him a little while ago and he fucking said to me not to ask him again, but I will try mate," said the broker. "They've all got right fucking funny on it recently."

Chawla asked Hayes if it was not "blatantly dishonest" to try and request a changed Libor rate from another independent bank.

"This is industry standard practice, people would ask each other favours all the time across the industry," Hayes responded.

He added that others in the industry had made Libor requests from him: "These were casual conversations that occurred on a regular basis."

Hayes pleads not guilty to eight charges of conspiracy to defraud related to his time as a yen derivatives trader at UBS and Citi between 2006 and 2010.

The trial continues.