Lord of the rigs: Trader accused of being Libor 'ringmaster' admits price fixing with Deutsche Bank pal nicknamed 'GOLLUM'

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A city trader accused of being the ‘ringmaster’ of a global conspiracy to rig interest rates admitted price fixing with a friend at Deutsche Bank nicknamed ‘Gollum’, a court heard yesterday.

Tom Hayes, 35, a former employee of UBS and Citigroup, pestered friends to instruct their ‘cash boys’ to rig the London Interbank Offered Rate, or Libor, in his favour.

In return he bribed them with brokerage fees, promising to ‘share the lump’ while they jokingly demanded bottles of Dom Perignon champagne, Southwark Crown Court heard. 

Tom Hayes, 35, a former employee of UBS and Citigroup, pestered friends to instruct their ‘cash boys’ to rig the London Interbank Offered Rate - Libor - in his favour

Hayes did ‘everything in his power’ to manipulate the rates in his favour with the help of a large number of people across a large number of financial institutions, jurors heard.

He allegedly ‘behaved in a thoroughly dishonest and manipulative manner’ by skewing the rates to boost profits for his employers – and drive up his bonus.

In a recorded interview with a Serious Fraud Office investigator that was played at court, Hayes admitted price fixing with his friend Guillaume Adolph at Deutsche Bank. The trader was nicknamed Gollum after the covetous character in Tolkien’s Lord Of The Rings.

In the interview, Hayes told investigators that he was dishonest on a ‘micro scale’ and insisted he did not think of himself as in the same league as notorious American fraudster Bernie Madoff.

But the Tokyo-based trader, who has been diagnosed with mild Asperger’s syndrome, protested there were ‘no rules’ at UBS and no compliance training to make it clear what was legal or not.

He added: ‘I was participating in an industry-wide practice that predated my arrival at UBS and post-dated my departure.’

The court heard how when Hayes was investigated by Citigroup – which he joined after leaving UBS – he protested there were no ‘rules’ that governed Libor manipulation.

Hayes netted huge profits for his employers and in return pocketed pay packets and bonuses worth millions between 2006 and 2010.

This is the first trial concerning manipulation of Libor – the benchmark used to determine the interest charged on loans worth trillions of pounds. UBS was fined £990million for rigging Libor interest rates, while Citigroup was also hit with a £63million penalty over the scandal.

Before Hayes’s arrest in 2012 his reputation as a prolific money-maker meant his services were very much in demand. While working at UBS Hayes was aggressively pursued by Goldman Sachs.

Desperate to keep the star trader on their books, UBS offered him a £335,000 cash bonus in 2009 and a pay rise. 

Hayes would use fees paid to brokers as bribes to manipulate Libor interest rates in his favour, prosecutors said. In one exchange Hayes told a broker: ‘If you get that up I will f*****g reward you.’

Hayes remained with Swiss investment bank UBS but quit for US bank Citigroup in September 2009 when he felt they were not ‘paying him enough’, it was said.

He described UBS as ‘s******g on you’ if you failed to make enough money and slammed the bank for its ‘broken promises’, the court heard. But within months his ‘methods’ were reported to management at Citigroup and he was sacked. 

Hayes made just under £1.3million during his time at UBS in salary and incentives, with his salary soaring to more than £3.5million for his short stint at Citigroup, jurors were told.

The trader told investigators: ‘But the point is you’re greedy, you want every little bit of money you can possibly get because that is how you are judged.’

Hayes, one of 13 charged by the SFO over Libor, denies eight counts of conspiring to defraud between September 2006 and September 2010. The trial continues.

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