Tom Hayes (trader)

Tom Hayes is a former trader for UBS and Citigroup who was sentenced to 14 years in prison (reduced to 11 years on appeal) for dishonestly driving manipulation of the London Interbank Offered Rate (Libor), a bank reported interest rate, to enhance his trading results.[1] Hayes, in the course of his defence, asserted managers were aware of his actions, and even condoned them.

Tom Hayes
Born
London, United Kingdom
NationalityUnited Kingdom
Other namesThomas Alexander William Hayes
Alma materHult International Business School
University of Nottingham
OccupationTrader, consultant
EmployerUBS, Citigroup
Known forLibor Scandal
Criminal charge(s)Participating in Libor Scandal
Spouse(s)Sarah Tighe

Early life

Thomas Alexander William Hayes[2] was born in West London to Nicholas and Sandra Hayes, and initially grew up in Hammersmith.[3] He moved with his mother to Winchester after his parents divorced, where he was raised by his mother, and Timothy, his stepfather.[1] He attended The Westgate School, and, later, Peter Symonds College. A fellow student described him as an "incredibly smart geek".[3]

After Peter Symonds, he attended the University of Nottingham, working in a restaurant kitchen during the summer holidays.[4] He graduated with a degree in mathematics and engineering.

Career and education

In 2001, after time as an intern at UBS, he joined Royal Bank of Scotland's trainee programme, at the interest rate derivatives desk.[1] After working for Royal Bank of Scotland as a junior trader,[5] he was headhunted by Royal Bank of Canada in 2004, and, upon moving there, he assumed greater responsibility.[1] After two years at RBC, he moved to UBS in late 2006.[4] Hayes was placed in the Tokyo office of UBS,[1] where he began making trades involving the discrepancies between the Libor rate and Japanese interest rates.[4][6]

Hayes turned down an offer from Goldman Sachs in 2008, but in 2009, accepted an offer from Citigroup; the bank gave him a $3 million signing bonus.[6]

Hayes graduated with an MBA from Hult International Business School studying at the London campus. He met Jennifer Arcuri there and founded software company Title X Technology with her in 2012, using developers in Bulgaria.[7]

Manipulating LIBOR

Hayes traded derivatives at UBS and, later, Citigroup, in Tokyo. His favoured activity was basis trading, speculation on the movements in Libor expressed in multiple currencies and various durations, trades he might hedge with trades in other derivatives. The daily reporting of Libor rates by bankers around the world determined his success or failure in generating profits for his bank and bonuses for himself. By September 2008, a one basis point (1/100 of one per cent) move in Libor had about a US$750,000 effect on his bottom line. Through a network of his broker contacts, including one at the world's largest inter-dealer broker, ICAP, he succeeded in having Libor reported lower than its true level in order to drive his profits and personal bonuses higher.[8]

In 2010, Hayes was fired by Citi for his Libor activities. After being fired, he moved back to England, where he day traded with his Citi bonus.

Arrest and trial

On December 11, 2012, Hayes was arrested by British authorities for his involvement in manipulating Libor rates, and on December 19, he was charged by the United States for the same crime. In order to avoid extradition to and subsequent trial by and imprisonment in the U.S., Hayes initially cooperated with the Serious Fraud Office, providing eighty hours of interviews so as to be charged by the United Kingdom. After being charged, Hayes withdrew his offer of cooperation, intending instead to fight the charges levied by the SFO.[9] In response, the SFO narrowed the scope of their charges, so leaving less overlap between charges by American and British prosecutors, creating the possibility of a second trial in the United States.

Hayes was diagnosed with Asperger's syndrome before his trial and was accompanied by a court-appointed aide during the trial. Throughout the trial, prosecutors used Hayes' SFO interviews to establish his greed and corruption. The defence attempted to illustrate that manipulation of Libor was both widespread and expected as part of Hayes' job description, with senior management as high up as the CEO aware of the tactic, though this was not accepted by the courts as a defence.

Conviction

In August 2015, Hayes was sentenced to fourteen years in prison, to serve a minimum half of this sentence before being considered for early release.[10] The judge, Jeremy Cooke, indicated he wished to "send a signal" to traders involved in illegal trading, as the sentence was significantly harsher than those given to other individuals convicted of financial crimes, such as Nick Leeson.[10] Hayes maintained his innocence through the trial process.[11] notwithstanding having stated during SFO interviews,

“Well look, I mean, it’s a dishonest scheme, isn’t it? And I was part of the dishonest scheme, so obviously I was being dishonest.”[8]

Appeal

Appeals by Hayes against conviction failed but his sentence was reduced by the Court of Appeal comprising Sir Brian Leveson, Elizabeth Gloster and John Thomas, Baron Thomas of Cwmgiedd to eleven years, under the same parole conditions.[11][12]

Having exhausted all avenues of appeal, in May 2016, Hayes instructed solicitor Karen Todner to make an application for review by the Criminal Cases Review Commission (CCRC).[13]

Time in prison

Hayes has released letters concerning his time in prison.[14] In them, he described being held separate from other prisoners, for his protection, in a "segregation unit".[14] In 2019 he was moved to HM Prison Ford.[15]

Personal life

Hayes is married to Sarah Tighe, a corporate lawyer in London. They have one child, Joshua. He received several nicknames from his colleagues, including Rain Man and "Tommy Chocolate," in reference to his preference for hot chocolate over alcohol.[1][4][16]

gollark: So why not E³ and whatever?
gollark: So SSE is start start end somehow‽
gollark: Ah, a bezier thingy?
gollark: Fascinating.
gollark: Are EEE and whatever meant to be *functions*?

See also

References
  1. Vaughn, Liam (13 September 2015). "Was Tom Hayes Running the Biggest Financial Conspiracy in History?". Bloomberg. Retrieved 26 September 2015.
  2. Kuitenbrouwer, Peter (27 May 2015). "Tom Hayes - Libor Trial". Financial Post. Retrieved 27 December 2015.
  3. Evans, Martin (3 August 2015). "Convicted Libor trader Tom Hayes: the self-confessed scruff 'not motivated' by money". The Telegraph. Retrieved 26 December 2015.
  4. Broad, Mark (3 August 2015). "Libor trader: Who is Tom Hayes?". BBC. Retrieved 26 December 2015.
  5. Enrich, David (8 February 2013). "Rate-Rig Spotlight Falls on 'Rain Man'". The Wall Street Journal. Retrieved 26 December 2015.
  6. Enrich, David (15 September 2015). "The Unraveling of Tom Hayes, Pt. 1: Rain Man in Trouble". The Wall Street Journal. Retrieved 26 December 2015.
  7. Vaughan, Liam; Finch, Gavin (24 January 2017). The Fix: How Bankers Lied, Cheated and Colluded to Rig the World's Most Important Number. John Wiley & Sons. p. 132.
  8. Vaughan, Liam; Finch, Gavin. The Fix: How Bankers Lied, Cheated and Colluded to Rig the World’s Most Important Number. Wiley. Retrieved 19 January 2016.
  9. Enrich, David (15 September 2015). "The Unraveling of Tom Hayes, Pt. 3: The U-Turn". The Wall Street Journal. Retrieved 26 December 2015.
  10. Economist, The (4 August 2015). "Sentenced to 14 years' hard LIBOR". The Economist. Retrieved 26 December 2015.
  11. Vaughan, Liam (21 December 2015). "Tom Hayes Libor Jail Sentence Cut to 11 Years, Conviction Upheld". Bloomberg. Retrieved 26 December 2015.
  12. "Trader Tom Hayes has Libor rate-rigging sentence cut to 11 years". BBC. 21 December 2015. Retrieved 26 December 2015.
  13. "Tom Hayes hires Gary McKinnon's lawyers for new appeal". Telegraph. 4 May 2016. Retrieved 11 November 2016.
  14. Topham, Gwyn (3 January 2016). "Libor fraudster Tom Hayes describes prison life in series of letters". The Guardian. Retrieved 1 February 2016.
  15. Newlands, Chris (April 29, 2019). "Convicted Libor rigger Tom Hayes moved to Ford open prison". www.fnlondon.com. Retrieved 26 February 2020.
  16. Enrich, David (3 August 2015). "Former Trader Tom Hayes Sentenced to 14 Years for Libor Rigging". Wall Street Journal. Retrieved 26 December 2015.
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