Another chat session described Libor as "literally a joke".
And note the moral-free zone that is the City of London (and Wall Street). (The BBC thinks the "tone" is "matey." The "tone" is "criminal" -- the people involved sound exactly like what they are -- blatant, privileged crooks. Hayes cannot see anything wrong in aiding the largest criminal cartel in history because what he was doing increased UBS' profits.
The BBC's key failures were missing the two giant points that emerged from Hayes' statements and the documents the prosecutors and defense counsel introduced into evidence -- the senior managers at UBS knew of the fraud and aided it -- and the SFO knew that they did but has refused to prosecute them. Reuters' article about the trial is even more embarrassing than the BBC's on these two points because it tries to spin what is in substance an admission by senior UBS managers of criminal culpability into a "warning" to Hayes to stop rigging LIBOR. The problem begins with the article's title: "Former trader Hayes ignored 2009 warning, Libor trial hears." The lede is crafted to mislead.
Tom Hayes, the former trader on trial on Libor interest rate rigging charges, told a London court on Wednesday he ignored a 2009 warning to stop trying to influence rates in part because he was pre-occupied with moving jobs.
The sentence is nonsensical for multiple reasons I will soon explain, but it is also carefully crafted by the prosecution to mislead. The article inadvertently begins the process of exposing why the claim is miseading. First, the article correctly describes the SFO's preposterous theory that the largest financial conspiracy in his history was created by the crude machinations of a single trader at UBS without the knowledge of any senior bank officers at any of the roughly 17 banks that formed the real world conspiracy being aware that they were routinely rigging the LIBOR rates.
Prosecutors allege Hayes, a former star trader at UBS (UBSG.VX) and Citigroup (C.N), set up network of brokers and traders that spanned some of the world's most powerful financial institutions to rig Libor for profit, cheating counterparties.
Hayes has pleaded not guilty to eight counts of conspiracy to defraud between 2006 and 2010, saying he was open about trying to influence rates, that his managers knew what he was doing and that the practice was widespread in the industry.
By "star trader" they mean that Hayes was a "slime trader." He made money in financial trades the old-fashioned way that requires only minimal business skills -- he cheated. When he made bad trades and UBS would have suffered a loss he worked with other UBS personnel and personnel from over a dozen elite banks to manipulate LIBOR so that his bad trade would become a profitable trade. No one who knows anything about how LIBOR was set and rigged (which required the coordinated, criminal actions of many of the world's largest banks nearly every business day) believes that Hayes masterminded this real world conspiracy -- and hid it successfully for five years. Under the prosecution's theory, this one trader rigged the rates on over one-thousand trillion dollars in financial transactions -- and successfully hid that fact from every high level officer at roughly 17 of the world's most sophisticated financial institutions.
Hayes' testimony is that "his managers" knew about the criminal conspiracy and "that the practice was widespread in the industry." The obvious question, which the BBC and Reuters fail to ask, much less analyze, is: why have none of these senior managers been prosecuted by the SFO and DOJ? Hayes' lawyers promptly documented one of the reasons that the prosecutors' claim that Hayes was the "idiot-savant" responsible for the world's largest financial conspiracy was a myth. The rigging of LIBOR was widespread before Hayes even joined UBS.
Prosecutors say Hayes bullied and cajoled fellow traders and brokers to move benchmark rates to make his positions more profitable. Hayes's lawyers say the practice was widespread.
Conversations between traders and submitters pre-dating Hayes's arrival at UBS in 2006 were read by Hayes's lawyers, which they said showed the bank was already setting Libor according to its trading positions.
"Do we have fixings?" the yen rate-setter asked a trader in a September 9, 2006, chat.
"Net -50bio 6m today let's go lower 6m Libor," the trader replied, referring to the six-month yen Libor submission.
Hayes's lawyers produced another e-mail from March 2006, months before he joined Zurich-based UBS.
A trader asked submitters for a specific rate on a six-month position. "6m fra we're long we want high Libor fixing," referring to a position in forward rate agreements.
Hayes' nickname at UBS was "Rain Man" -- after the idiot-savant character in the movie of that name. Hayes' lawyers presented a medical opinion that he has Asperger's Syndrome. People with that syndrome are particularly unlikely to be able to recruit dozens of officials at over a dozen banks to join a vast conspiracy.
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