FX derivatives trader Tom Hayes determined to clear his name

Five long years have passed since FX trader Tom Hayes was made an example of, becoming the first bank employee to be jailed following the regulatory and criminal cases brought against Tier 1 FX interbank dealers and some of their employees in the aftermath of the high profile rate-rigging scandal which took place in the middle of last decade.

Today, Mr Hayes has vowed to clear his name, relying on what he considers to be new evidence that has now emerged.

Mr Hayes, a former UBS trader and former Citigroup employee, served five and a half years in jail before he was released at the end of January this year.

In 2015, he was found guilty and labelled the ‘ringmaster’ of an international conspiracy to move bank interest rates, technically known as Libor, and became the first British banker to be jailed since the financial crash in 2007-08.

Describing his time in jail as ‘very difficult’, Hayes told the BBC: “This wasn’t an easy sentence. In that time, I lost my mind, I lost my mental health. I suffered deep bouts of depression. I harboured suicidal thoughts often. I was very angry and bitter. I struggled with my emotions” he said.

LIBOR, an acronym for London Interbank Offered Rate, determines the interest rate at which traders can lend and borrow money. By manipulating the benchmark, traders could make more money depending on what was on their books. But Mr Hayes, now aged 42, believes this practice was well known, adding that traders had a fiduciary duty as part of their jobs to do all they could to maximise revenues and minimise losses for their banks.

Mr Hayes claims that the involvement by the Bank of England in the rigging of rates was not included in his trial. In 2017 a secret recording was uncovered implicating the Bank of England in rigging Libor in 2007 and 2008, pressuring banks to understate what they were paying to borrow the cash – a practice known as ‘low-balling’.

Mr Hayes said: “Unfortunately some of that evidence was not actually in front of my jury” but there was no desire to go after the real story here, which was the low-balling story – which was the submission of false and inaccurate rates – because it was just easier for everyone to go after the traders.

“At the time it was expedient that, for political reasons, a banker went to prison and I was that banker. I was given an egregious sentence and my life destroyed” he said.

Mr Hayes has filed an application, running to 2,300 pages, with the Criminal Cases Review Commission, the body to review miscarriages of justice.

“I don’t blame the jury for it but they were presented with a false narrative and they reached a conclusion based on those facts,’ he told the BBC. ‘I believe had they been presented with full evidence they would have reached a very different conclusion” said Mr Hayes.

Back in early 2016, the UK authorities made a huge effort to make an example of Mr Hayes, with the fraud squad having told him to hand over all his assets following his jail sentence.

Mr Hayes, who at the time was a London-based Yen derivatives trader who became a prominent figure within the criminal investigations into FX rate rigging within interbank desks during the 2015 year due to the somewhat controversial ruling against him in August in which he was found guilty of eight charges of conspiracy to defraud for his part in the LIBOR rate-rigging scandal, consigning him to 14 years in jail, the grip of the authorities is tightening even further.

He of course did not serve all of his sentences, but even so, draconian is an understatement. In early 2016 Mr Hayes was ordered to hand over his entire portfolio of personal assets or face an extended jail term.

The Serious Fraud Office (SFO) at the time made a comprehensive assessment of Mr Hayes’ assets which range from his home as the principle asset, valued at £1.7 million, his personal pension fund, and somewhat unbelievably, his wife’s wedding ring and engagement ring.

The British authorities made an example of Mr Hayes, to say the least, and in December last year, his lawyers took his case to the court of appeal, stating that he was denied a fair trial, something he is now using to be able to attempt to clear his name.

At that time, the team of lawyers representing Mr Hayes believed that the jail sentence was far too harsh, largely because Mr Hayes’ defence was prevented from delivering key evidence. His sentence was later reduced to 11 years.

At the time of sentencing, famous ‘rogue trader’ Nick Leeson, who had brought down Barings in the early 1990s and served a jail term, his trading escapades later becoming the subject of a movie, had stated he believes Mr Hayes’ sentence to be “too heavy.”

Mr Hayes had his sentence reduced to 11 years, which is still the longest sentence handed down to any individual trader since the criminal investigations into LIBOR and FX benchmark rigging had begun in 2014. However, this was clearly not enough as the SFO then brought about a further prosecution case which claimed that Mr Hayes’ ability to increase his profits by working to manipulate LIBOR made him highly valuable to his employers, and demonstrated this by showing internal emails which were sent whilst Mr Hayes worked at UBS shortly after he was approached by Citigroup reading “If Tom was easily replaceable, Citi would have given up by now.”

The court heard that the SFO believes that the edge given to Mr Hayes by his ability to manipulate the LIBOR rates “put himself in a position where he was perceived to be the top man in what was a relatively small pond of Yen Libor traders”.

He is now out… and although he certainly did take his part in fiddling the system, he is determined not to let this level of draconianism slide.