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Thursday, April 7, 2016

Former Trader Tom Hayes Ordered to Pay £878,000 ($1.2 Million) in LIBOR Case

From The New York Times:

...LONDON — A judge on Wednesday ordered Tom Hayes, a former UBS and Citigroup trader, to forfeit more than 878,000 pounds, or about $1.2 million, in bonuses and other compensation because of his conviction last year of manipulating a global benchmark interest rate known as LIBOR.

Mr. Hayes, who is serving an 11-year prison sentence, was the first person to go to trial in Britain and be convicted on criminal charges related to the manipulation of the London Interbank Offered Rate, or LIBOR.

The ensuing scandal has led to billions of dollars in fines and has rocked the reputations of some of the world’s biggest banks, including Barclays, the Royal Bank of Scotland, UBS and Deutsche Bank.

“The court acknowledged the challenges of quantifying the benefit from crime in this case,” Mark Thompson, the head of the Serious Fraud Office’s Proceeds of Crime Division, said in a news release. “The outcome is a substantial confiscation order, which Mr. Hayes will need to satisfy or face a further period of imprisonment.”

Mr. Hayes testified at a five-day confiscation proceeding last week that he lost nearly £1 million through personal trading after he was dismissed from Citigroup.

The trading losses, along with legal fees, wiped out much of his savings, Mr. Hayes said at the time.

The decision means that Mr. Hayes will probably be forced to sell his family’s home in Surrey.  The seven-bedroom home, known as Old Rectory, is worth about £1.7 million.

At a hearing on Wednesday, prosecutors said Mr. Hayes had only about £49,000 in cash, jewelry and other assets that could be sold quickly to satisfy the judgment.

The Serious Fraud Office had accused Mr. Hayes, who worked as a trader in Tokyo, of being a ringleader among more than a dozen traders in what authorities said was a brazen scheme to manipulate LIBOR, which helps determine the borrowing costs for trillions of dollars in loans. He was accused of engaging in misconduct from 2006 to 2010.

Mr. Hayes was convicted of conspiring to manipulate Libor in August. He was originally sentenced to 14 years in prison, but his sentence was reduced to 11 years in prison by an appellate court in December.

This month, an appeals court denied his request to have the Supreme Court, Britain’s highest court, review the case, making it more difficult for him to challenge his conviction.

Mr. Hayes is expected to ask the Criminal Case Review Commission, which examines miscarriages of justice, to examine his case. The independent body can refer criminal cases back to the appellate court for review.

At trial, Mr. Hayes’s lawyers argued that he was open about his conduct and did not believe at the time that he was acting dishonestly.

To set Libor and other rates, banks submit the rates at which they would be prepared to lend money to one another, on an unsecured basis, in various currencies and at varying maturities.

The evidence against Mr. Hayes included 82 hours of voluntary testimony that prosecutors said he provided to the Serious Fraud Office over five months. The authorities said he admitted to rigging rates and provided testimony against many former friends and colleagues, including his half brother.

Mr. Hayes testified during the trial that he decided to cooperate with British authorities because he feared being extradited to the United States, where he is also facing criminal charges, and wanted to remain close to his wife and child.

After providing the voluntary testimony to British authorities, Mr. Hayes stopped cooperating with prosecutors in 2013 and chose to plead not guilty to the charges in Britain.

Mr. Hayes remains the only person convicted at trial in Britain for manipulating LIBOR.

Prosecutors suffered a setback in January when six former brokers were acquitted of criminal charges that they helped Mr. Hayes manipulate LIBOR.

A third trial in London of others accused of manipulating Libor is expected to begin next month.
The first trial in the United States of people accused of rigging LIBOR ended in the conviction in November of two former London-based traders. The men were sentenced to prison terms this month...

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