Six former brokers with nicknames such as “Lord Libor” were “willing and enthusiastic” participants in a widespread scheme to manipulate Libor with a former trader, Tom Hayes, a jury has been told.
On the first day of a trial that is expected to conclude early in the new year, the jury was told on Tuesday that Tom Hayes had been convicted of conspiracy to defraud in August.
The six men accused – Darrell Read, Colin Goodman, Danny Wilkinson, Terry Farr, James Gilmour and Noel Cryan – each deny the charges of conspiracy to defraud yen Libor. There are five sets of charges, three covering the period up to December 2009 when Hayes worked for UBS and two for the period from December 2009 to September 2010 when Hayes worked at Citi.
The jury was told that the actions of Tom Hayes would “loom large in everything” they were to hear, and were played tape recordings of him speaking to two of the defendants on the opening day of the prosecution.
Mukul Chawla QC, for the Serious Fraud Office, told the jurors that they would be presented with evidence from instant chats, emails and phone calls and that some of the six had nicknames such as “Lord Libor” and “big nose”.
The prosecutor described the six as “middlemen” at interdealer brokers Icap, RP Martin and Tullett Prebon, who conspired to help Hayes make “literally millions of pounds” for banks.
“The motivation was a simple one, it was financial,” Chawla said, alleging there was “dishonest and widespread manipulation” of bank rates. He alleged that “kickbacks” had been made to some of the brokers through “wash trades” – meaning ones that had no legitimate purpose but still generated broker fees, he said.
“Each of these six defendants were brokers, middle men, willing and enthusiastic to lend themselves to Mr Hayes’ dishonest scheme,” Mr Chawla told the jury.
The jury was introduced to the six defendants sitting in two rows in the dock Southwark Crown Crown.
Reed, the court heard, was Hayes’ primary contact at Icap and spent part of his career in New Zealand. Known as big nose, Reed acted as the link between Goodman and Wilkinson, who was the head of the desk on which Reed worked, the court was told.
Goodman signed off his emails with the signature “Lord Libor”, sending out “run throughs” of his predictions of where yen Libor would trade each day. “He’d be told of Mr Hayes’ trading position and his Libor wishes,” the prosecution said, and set his predictions “improperly and dishonestly” to influence the panel of banks which set Libor.
Wilkinson, the jury was told, was more guarded when manipulating Libor, describing it as “arbi” – a shortened version of arbitrage.
These three men were in their early 50s or late 40s and very experienced, the jury was told.
Farr, 44, worked at RP Martin on the forward yen desk, and worked in tandem with Gilmour, 50, who was junior to him. “When Mr Farr was absent, Mr Gilmour seamlessly filled the void,” the prosecutor said.
Cryan, 49, worked at Tullett and his offences covered the shorter period from February 2009, towards the end of Mr Hayes’ employment at UBS. He was “handsomely rewarded” for this efforts, the jury was told.
Chawla told the jury not to put off by financial jargon such as “yards” (billions) and basis points. “At its heart this is a simple case,” he said. The jury had to decide if conspiracies existed and if they were dishonest. Each defendant’s case must be given individual consideration, the prosecutor said.
Libor, he told the court, touches everyone from large international conglomerates to small borrowers and involved dealings in trillions of dollars. The crucial interest rate was set by a panel of banks at 11am every day.
The former brokers are not expected to provide their defence until mid-November. Read, Goodman and Wilkinson are alleged to have conspired to rig Libor between August 2006 and December 2009. Goodman and Read are charged with a second count of conspiracy between December 2009 and September 2010.
Farr and Gilmour are charged with conspiring to rig rates between August 2006 and December 2009. Farr faces a second count of conspiracy between December 2009 and September 2010.
Cryan faces one charge of conspiracy between February and December 2009.
The case continues.
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