A former trader will become the first person to face a judge over allegations of conspiracy to rig the crucial Libor benchmark interest rate, when he goes on trial on Tuesday.
Tom Hayes, a former UBS and Citigroup trader, 35, will appear at Southwark crown court to face charges of conspiring to rig the London interbank offered rate (Libor) – a key benchmark in determining the cost of $450tn (£291tn) worth of borrowing for households and companies.
A total of 21 individuals face similar charges, but Hayes will be the first to stand trial when he appears in court before the high court judge, Mr Justice Cooke.
The case is seen as a crunch test for the Serious Fraud Office, whose reputation has been battered after a series of high-profile mishaps, including the collapse of a costly inquiry and accidentally sending bags of confidential papers to the wrong witness.
Hayes faces eight counts of conspiracy to defraud covering 2006-10, offences that carry a maximum jail sentence of 10 years. He has pleaded not guilty.
The trial, which is expected to last 10-12 weeks, will focus on his activities working for UBS and Citigroup in Tokyo, where he was trading derivatives linked to the Japanese yen. He is accused of conspiring with seven former employees at UBS, two at JP Morgan two at Citigroup and individuals at RBS, Deutsche Bank, Rabobank and HSBC.
Prosecutors allege that Hayes played a central role in the alleged Libor conspiracy. The SFO’s legal team will have to prove that he “dishonestly” made false or misleading submissions to benefit his own trading book, while deliberately disregarding the proper basis for making submissions and prejudicing the economic interest of others, according to the indictment.
Born in west London, Hayes began his career at the Royal Bank of Scotland, where he worked from 2001-03. He joined UBS in 2006, where he generated $260m for the bank over a three-year period. His success brought him to the attention of headhunters and he was persuaded to join Citigroup in 2010, but left after 10 months.
The former trader, who lives in Surrey, has been described by acquaintances as shy, gifted and socially awkward. Although he almost certainly once earned a six-figure salary, he now receives legal aid to pay his lawyers’ bills. He was arrested by the SFO in December 2012, shortly before receiving an indictment from the US Department of Justice, which is still pending.
The case will revisit the frantic days of the 2008 financial crisis, when banks stopped lending to each other. At that time the Libor system was administered by the lobbying group the British Bankers’ Association , arrangements later described as “a fox guarding the henhouse”.
Banks have been fined billions by regulators to settle Libor cases, while several senior bankers lost their jobs over the scandal. Most recently Deutsche Bank was fined a record $2.5bn (£1.7bn) for rigging Libor, coming after penalties for Barclays, UBS, Rabobank and the broker RP Martin.
guardian.co.uk © Guardian News and Media Limited 2010