Hayes believed he broke no rules – Libor trial

Defence wraps up Hayes arguments

Tom Hayes

In his closing argument, defence counsel Neil Hawes told the jury in the trial of former UBS and Citi trader Tom Hayes today (July 22) that "you need to ask yourself, are you sure that the prosecution has proved that Mr Hayes knew that what he was doing was dishonest, at the time?"

He pointed to an email Hayes wrote to his superior at Citi during an internal investigation into his conduct around Libor in 2010: "If Citi wishes employees to follow rules then the Citi legal department should write those rules and then publish them so that employees know what is required of them in the workplace ... To my knowledge I have done nothing wrong."

Hayes faces eight charges of conspiracy to defraud, related to his activities when employed by UBS between 2006 and 2009 and by Citibank before being dismissed in September 2010. The prosecution has argued that in that period Hayes conspired with a number of individuals at banks and brokers to manipulate the Japanese yen Libor, ultimately benefitting his trading book at the expense of counterparties.

The defence has said that the practice of requesting Libor submissions or telling submitters of trading positions was "widespread" and Hayes's openness to his colleagues and superiors regarding his tactics prove he did not think he was breaking any rules.

Hawes said today that the jury should put weight on how Libor was "viewed at the time" – that is, as an unregulated product with a lack of written rules surrounding the process.

"The evidence is overwhelming that banks took into account their commercial positions" when setting their Libor submissions, he said. The court has heard that it was commonplace for traders to inform submitters of their trading positions ahead of the 11am deadline for Libor, a trend that predated Hayes's arrival at UBS.

"Make no mistake, it was something that was done, and something that was known about at Citi too," said Hawes today.

Hawes reminded the jury of evidence that he says "goes some way" in portraying the views of the British Bankers' Association (BBA), the industry body tasked with overseeing the Libor-setting process at the time, and authorities such as the Financial Services Authority (FSA) and the Bank of England: "There is evidence there that shows an ethos ... shared by many" that Libor could be submitted inaccurately, he said.

The defence has made the point that since 2012, six banks have been fined for manipulating Libor, including in currencies that Hayes had no connection with. The behaviour set out in the final notices written by the FSA and its successor the Financial Conduct Authority, Hawes told the jury today, demonstrates how the market operated at the time.

"Was he acting in an inconsistent way to others around him? Was his behaviour so isolated from others? The answer is no." Hawes continued by referring the jury to emails that showed making Libor requests to suit trading positions was "not only condoned but encouraged by [Hayes's] employers".

According to the defence, there was no existing guidance or written instructions regarding the Libor-setting process at either UBS or Citi during the periods Hayes worked at both banks. "He received no compliance training and had no regulatory obligations to guide his conduct regarding Libor," said Hawes.

Other relevant elements of the case for the jury to consider include the claim his requests always fell within a range of acceptable submissions, said Hawes today, in line with the Libor definition as interpreted by a number of parties.

Hawes questioned: "What does the request of 'high' and 'low' mean?" referring to examples of Hayes's requests used by the prosecution throughout the trial. "It leaves how and where that is meant to be interpreted ... with the submitter and no-one else. And how could that request make sense if there wasn't a range that the submitter was working with?" Hawes asked the jury.

Also of importance, said the defence, is "perception". Hawes told the jury that Hayes, who has been diagnosed with mild Asperger's syndrome, was under the impression that many of the brokers he dealt with were his friends. He thought he "got on well" with Laurence Porter (the Citi Swiss franc submitter), and that he believed Andrew Thursfield (one of Hayes's senior managers at Citi) thought he was "okay". Both Porter and Thursfield have since appeared in court and said they held a "poor impression" of Hayes when they first met him in 2009. Hawes argued today that even though warning flags were raised, as set out by the prosecution, it is reasonable to believe that Hayes missed them.

The judge, Mr Justice Cooke, will now spend the coming days advising the jury on the law while summarising evidence that has been before the court throughout the trial.

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