Dishonesty central issue of Hayes case, judge reminds jury

Judge Jeremy Cooke begins summarising Tom Hayes Libor-rigging trial for jury at Southwark Crown Court

Tom Hayes

"Mr Hayes denies that he was dishonest and that is why we are here," Justice Jeremy Cooke reminded the jury of the Tom Hayes Libor trial in a summing-up that began yesterday afternoon and continued today (July 23). "In order for you to be sure of his guilt, you need to be sure of his dishonesty."

The judge's summing-up, carried out to help the jury reach a verdict, is expected to take three days and Cooke made "no apologies" for the amount of detail he will go into, due to the complexity and length of the case.

Cooke read out today the eight charges Hayes is facing for conspiracy to defraud, as laid down by the Serious Fraud Office (SFO) in 2013 – to which he has pleaded not guilty.

Charges one to four relate to Hayes's employment at UBS between 2006 and September 2009, while five to eight relate to his time at Citigroup between December 2009 and September 2010. He was based in Tokyo during the full period.

The indictment, read out today, says that Hayes and his co-conspirators "dishonestly agreed to procure or make submissions of rates by panel banks into the yen Libor setting process, which were false or misleading, in that they: intended to create an advantage to the trading of Tom Hayes and others; and deliberately disregarded the proper basis for the submission of those rates ... thereby intending to prejudice the economic interests of others."

Cooke told the jury today that they will need to consider three questions while coming to a verdict. First, were Hayes's requests not in line with the bank's true borrowing rate, but to the benefit of his own trading? "Second, was what Mr Hayes did dishonest by the standards of a reasonable person? And third, did Mr Hayes understand that what he was doing was dishonest?"

Much of the morning was spent referring to agreed facts from the evidence that has been shown throughout the trial, which has spanned nine weeks up to now.

One such piece of information was the "the Libor question", which guides banks on the reference rate definition: "At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11:00 London time?"

Expert witnesses have told the court that submitters look at cash deals in the market to come up with their estimate first and foremost, but they could also look at information from factors related to credit ratings, futures activity, news headlines or macroeconomic events such as a central bank cutting interest rates.

"But the final submission needs to be an honest and best estimate at which his bank could borrow," Cooke explained today, "without reference to its own commercial position."

He pulled up conversations between Hayes and his brokers during 2006, in which Hayes regularly requests Libors with reference to his trading fixes.

On October 30, 2006, for instance, Hayes sent a message to one of his brokers saying: "Can you try to keep 6m [six month] Libor up again, i need it high till thurs then after i am out of a lot of these fixes." A few days before, a broker had asked Hayes: "Where do you need Libors to be to come out ok?"

The judge said Hayes's requests were "sometimes dealing with [exact] figures, sometimes dealing with highs and lows."

Cooke also referred to the final notice issued by the Financial Conduct Authority in November 2012 following its investigation into UBS for Libor rigging, in which the regulator concluded that the Libor culture at the Swiss bank was "evasive" and submitting rates to suit trading positions was "considered to be an open and accepted practice".

Hayes's defence lawyers have argued that he was never trained in the Libor process and had no regulatory or compliance obligations imposed on him at either UBS or Citi regarding Libor, that it was "common practice" at the time to submit inaccurate Libors favourable to trading positions, and his employers "not only condoned but encouraged his behaviour".

Earlier in the trial the prosecution showed how Hayes rewarded his brokers for relaying Libor requests to submitters at other banks by putting through 14 wash trades between September 2008 and August 2009. Wash trades involve two transactions cancelling each other out with the sole purpose of producing brokerage fees.

Cooke took the jury through selected transcripts of chat messages and phone calls, mapping out events that ultimately led to Hayes and the brokers setting up these trades. One such example showed Hayes instant-messaging one of his brokers on September 18, 2008: "If you keep sixes [six month Libor] unchanged today, yeah, I will fucking do one humongous deal with you, alright? Like a 50,000 buck deal whatever. I need you to keep it as low as possible, alright. If you do that, then I'll cross the spread and I'll pay you, you know, $50,000, $100,000 whatever you want alright. And I'm a man of my word."

Cooke also cautioned the jury: "Your concern is with Mr Hayes, not in concern to others who may or may not be prosecuted in the future."

A large part of the jury's decision also rests on what is termed "state of mind", he said. "How do you decide what a person knows? You cannot open up a person's head ... but what you can do is use your common sense and your life experience."

The trial continues.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Financial crime and compliance50 2024

The detailed analysis for the Financial crime and compliance50 considers firms’ technological advances and strategic direction to provide a complete view of how market leaders are driving transformation in this sector

Investment banks: the future of risk control

This survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control

Op risk outlook 2022: the legal perspective

Christoph Kurth, partner of the global financial institutions leadership team at Baker McKenzie, discusses the key themes emerging from’s Top 10 op risks 2022 survey and how financial firms can better manage and mitigate the impact of…

Emerging trends in op risk

Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…

Moving targets: the new rules of conduct risk

How are capital markets firms adapting their approaches to monitoring and managing conduct risk following the Covid‑19 pandemic? In a webinar in association with NICE Actimize, the panel discusses changing regulatory requirements, the essentials…

Most read articles loading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here