GO into a City bar, of the sort where veteran traders gather, mention Tom Hayes’s name and the chances are that someone will make the sign of the cross.
There but for the grace of God is how they feel about the former UBS and Citigroup trader who was convicted in 2015 of conspiring to rig Libor and sentenced to 14 years in prison, reduced to 11 on appeal.
They’ve got nothing but sympathy for Hayes, who was released in January last year after serving five-and-a-half years and continues to protest his innocence. Hayes is awaiting a final decision from the Criminal Cases Review Commission or CCCR, which investigates potential miscarriages of justice.
This week, he received a boost when a New York judge threw out criminal charges against him. That decision followed an appeals court ruling in a separate US case, which overturned the convictions for Libor rigging of two former Deutsche Bank traders. There the court ruled the US government had “failed to show that any of the trader-influenced submissions were false, fraudulent or misleading”.
Hayes was a star, brilliant at his job. He’s said to have made more than $280 million in profits for UBS between 2006 and 2009 while trading derivatives for the investment bank in Tokyo. Citigroup hired him on a $4.2 million joining bonus, he was that good. Ten months later, he was fired, as the Libor scandal exploded.
There’s no doubt some of his emails used in evidence were near the knuckle. They were cocky and aggressive, boastful, but not so different from the thousands of emails that circulate every day between markets folk — or at least did back then until the beaks came knocking. They were unguarded, as Hayes said what he was looking for from the committee that fixed the key Libor rate.
But Hayes claims there was no secret as to what was occurring — senior managers at his employers and at the Bank of England knew what was going on and even condoned it. This is what those on the trading floors believe, that Hayes was made a scapegoat (his case has echoes of the previous Guinness scandal where the sort of share support operation that saw a clutch of superstar businessmen and City figures charged and convicted was not regarded as out-of-the-ordinary).
On paper it looked bad, certainly to politicians and the media who struggled with the closed-shop nature of the City and could not grasp the sort of sums people like Hayes were making. It was from a pivotal interest rate, as well, one that is used to price assets worldwide.
There’s no doubt Hayes paid the cost of a society that wanted blood. It didn’t get any when the banks crashed in 2008 and no senior banker was jailed. Now it sought retribution. His original jail term was high — one of the longest ever awarded in the UK for a white-collar crime.
It was designed to shock and it did that all right, provoking anger in City quarters. Even the reduction to 11 years was widely regarded as out of step.
Hayes was portrayed as being at the centre of a global conspiracy. The UK Serious Fraud Office charged 13 individuals but secured convictions in only four cases. Several banks were fined. Like Hayes they maintained they did nothing wrong.
If there was a fault it lay with the system, with how the rate-setting was conducted, based on submissions from the banks. From discussing their submissions they could gain a good idea of the likely “fix” and trade derivatives accordingly.
The US case against him was relying on the same facts and evidence as the UK one that saw him found guilty and jailed. That’s been dropped and Hayes is looking to the CCCR to follow suit.
Ordinarily, you would expect that to happen. But this has never been a normal prosecution. There are forces at play, in powerful institutions, which would like to see the conviction to stand, for Hayes to be viewed as a criminal one-off, a calculating mastermind who deserved punishment and so perhaps avoid embarrassing interrogation themselves.
While the news from the US was positive, Hayes is not yet in the clear where the UK courts and establishment are concerned.
Chris Blackhurst is the author of Too Big To Jail: Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan)
