It almost gave him the good God without confession! Tom Hayes, who was sentenced Monday to fourteen years in prison for masterminding the manipulation of the London interbank rate Libor said, was not caustic and extroverted trader. Rather, it was a boy cerebral, solitary and taciturn. Yet professional wall color, aged 35 today, was the backbone of a sinister conspiracy between traders a dozen major banks worldwide. Together, they have distorted the calculation of this rate, which serves as benchmark for trillions of dollars of financial products being exchanged every day.
A secret agreement
” You have succumbed to the temptation to rise in rank and greed, “said the judge’s Southwark court. Between October 2006 and November 2010, Hayes had made a secret deal with colleagues brokers to falsify more than three hundred times the data submitted respectively to the British Bankers Association and the Bank of Japan to enable them to calculate the rates at which banks lend money.
In fact, the trader intermediaries bribed with liquid or promising them lucrative contracts. One of his accomplices was a London broker, Colin Goodman. This was an authority on the index trading the yen. Banks that received each morning his email suggesting a rate tended, for ease or laziness, to resume its estimate in their bids. But the expert, who called himself by bragging Lord Libor, Hayes actually followed the instructions. In exchange for sugarcoat the reference tool, the operator received the latter the equivalent of 1500 euros per month, during a case of champagne and reimbursement of expenses mouth, usually a chicken curry . All this pales in relation to the sums involved, but to encourage them to cheat, Hayes kept saying to him: “Soon you’ll be able to buy you a Ferrari. “And every time that Goodman had moods, the organization threatened to withdraw its purchasing and sales orders that were a good part of his bonus.
A spectacular end
His story, while not trivial, is not exceptional: only the end is spectacular. This is the saga of a meritocratic social success in the world of speculative finance. What happened to Tom Hayes? His degree in mathematics and computer pocket, Hayes was recruited by the London branch of the Swiss bank UBS in 2001. The maths is then assigned to the trading of the most complex financial products based on Libor. The path is traced to fame and fortune. This bulimic speculation does not know the words strain , rest or friends . Impressed by his huge gains, his Swiss employer sends in spring 2008 in Tokyo, where he negotiated not only the local interbank rate, but also products as sophisticated qu’opaques.
The fall ” Rain Man “
jealous of his success, his colleagues in Tokyo had pejoratively nicknamed Rain Man (” supergénie “) in reference to Eminem’s song about rainmakers that cause floods dollars . The success is such that Goldman Sachs is trying to poach a few months after his arrival by offering him a golden bridge. UBS, which does not want to see him go, outbid. Whereby the “Rain Man” agrees to stay with the Swiss. But a year later, they lurch by joining the Japanese subsidiary of Citigroup. The US bank doubled its fixed remuneration, and promises a guaranteed bonus (regardless of performance)! He visibly baraka. But the game is biased.
In 2010, more than two years after the fall of Lehman Brothers that triggered the financial crisis, an envious London colleague discovers the pot to the roses. Management is notified. Hayes is forcibly terminated. His fall becomes the epicenter of a great financial earthquake. To protect themselves, Citigroup immediately inform the authorities in Washington that trigger an investigation worldwide involving a dozen national and international supervisory bodies. The hunt leads the British and US regulators to impose a heavy fine on a plethora of renowned institutions.
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