Former Brokers Stand Trial Over Libor -- Update
October 06 2015 - 1:21PM
Dow Jones News
By Margot Patrick
LONDON--Six former brokers with nicknames including "Lord Libor"
and "Big Nose" helped convicted bank trader Tom Hayes rig
interest-rate benchmarks for financial gain, a London court heard
Tuesday on the first day of a criminal trial.
Prosecutor Mukul Chawla of Britain's Serious Fraud Office said
the former employees of ICAP PLC, RP Martin Holdings Ltd. and
Tullett Prebon PLC were "willing and enthusiastic" participants
whom he alleged took kickbacks and bribes in their attempts to help
Mr. Hayes manipulate rates.
Darrell Read, Colin Goodman, Danny Wilkinson, all former ICAP
employees, Terry Farr and James Gilmour, who worked at RP Martin,
and Noel Cryan, a former Tullett Prebon broker, are charged with
conspiring to rig rates. Among the allegations is that the brokers
encouraged or attempted to persuade traders at banks to submit
false Libor rates.
All six men have pleaded not guilty.
At his own trial over the summer, Mr. Hayes was convicted of
conspiring with others to manipulate the London interbank offered
rate, or Libor, to make money for himself and his employers. He was
sentenced to 14 years in prison and is seeking to appeal his
conviction and sentence.
Mr. Chawla told the 12-person jury that in a period from August
2006 to September 2010, the six defendants interfered with the
"critical financial process" of benchmark-setting in order to help
Mr. Hayes and other traders make a profit.
Libor is the estimated rate banks charge to lend money to each
other and is used as a benchmark to set rates on many consumer
loans.
"They provided enthusiastic assistance for a simple motive:
financial," Mr. Chawla alleged.
In a brief description of each broker's work history and
responsibilities, Mr. Chawla referred to nicknames used by the
defendants and their contacts, including Mr. Read's moniker "Big
Nose" and Mr. Goodman's signoff on messages as "Lord Libor."
The Serious Fraud Office is expected to lay out its case over
five days before presenting evidence and expert witnesses to the
jury. Lawyers for the defendants will then present their cases
around mid-November, in a trial that is scheduled to last up to 14
weeks.
Mr. Chawla told the jury that the alleged actions of the brokers
led to the manipulation of an interest-rate benchmark that is
linked to trillions of pounds in financial transactions, including
home mortgages, and is crucial to market confidence.
As he described the case, Mr. Chawla urged jurors not to panic
over financial jargon or the reams of written and phone
communications that they would have to consider in reaching their
conclusions about each defendant. He pointed them to a glossary of
both financial terms and more-colloquial terms they would see in
written evidence, such as "yard" for $1 billion and "poo" for
champagne.
"At its heart, this is a simple case. You don't have to be
bankers or in the financial industry to understand," Mr. Chawla
said. "The focus...is whether these alleged conspiracies existed,
and whether these defendants, by doing what they did, were
dishonest."
As a taste of what the jury would see and hear in the coming
days, Mr. Chawla played a recording of a conversation between Mr.
Farr and Mr. Hayes in June 2009, in which Mr. Farr confirmed that
he had followed Mr. Hayes's earlier, written instructions, also
shown to the jury, to ask traders at various banks to raise the
rate on their Libor rate submissions from the previous trading
session.
"It's nothing more and nothing less than dishonest manipulation,
dishonest rigging of the market," Mr. Chawla said.
A global investigation into Libor manipulation started in 2008
after an article in The Wall Street Journal and other reports
questioned the accuracy of the rate in the lead-up to the financial
crisis.
In 2012, Barclays PLC became the first bank to settle
rate-rigging allegations with global authorities, sparking the
resignation of top executives and leading to global regulatory
reforms around market benchmarks.
In all, the probe has ensnared at least 18 financial
institutions and around three dozen individuals. A U.S. trial of
bank traders is scheduled to begin later this month.
Write to Margot Patrick at margot.patrick@wsj.com
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(END) Dow Jones Newswires
October 06, 2015 13:06 ET (17:06 GMT)
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