Lessons from the Hayes conviction

From The Financial Express –

“Last week’s conviction of Tom Hayes, in the infamous London Interbank Offered Rate (LIBOR) rigging scandal, should be an eye-opener for Indian regulatory authorities. The scandal, which peaked around 2008, involved some major banks—including JP Morgan, Deutsche Bank and Barclays Bank—artificially understating the interest rate.

While it may no longer be shocking to hear Hayes pleading that such interest rate manipulations were common knowledge, both to his seniors and the banking sector in general, it may be heartening to note that RBI has taken proactive steps to counter similar manipulations of MIBOR—Mumbai Interbank Offered Rate—which was originally set up on the lines of LIBOR. Although it is not a global benchmark like LIBOR, it is, as the NSE defines it, the “yardstick for the money market”, serving as a reference in the interest rate swap market in India and a benchmark rate for majority of deals struck for interest rate swaps, forward rate agreements, floating rate debentures and term deposits.”

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Libor fixing scandal: Raft of criminal and civil cases to follow Tom Hayes conviction

From International Business Times –

“Bankers who have bent the City's rulebooks should think about seeking legal advice in the wake of the trial of former Libor trader Tom Hayes, legal experts have said.

Hayes's defence, that he was simply one of several rate-riggers, may now lead to a raft of law cases being brought.

Jeremy Rosenberg, a City barrister expert in criminal law, told IBTimes UK: "I have it on good authority there are 10 more prosecutions to proceed after Tom Hayes, and one is listed in January of next year – I don't know if it's one person or many defendants.”

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So Tom Hayes Is Guilty. Who Else Is?

From Moyers & Company – 

“When people make that kind of money for the bank — in markets that are supposed to be highly competitive — executives don’t want to know too much about what they’re doing.

'Either Tom Hayes’s bosses at UBS and Citi knew what he was doing, in which case they are guilty as well. Or they didn’t know about a widespread conspiracy being conducted across the electronic communications systems of some of the most technologically sophisticated companies in the world, in which case they are recklessly incompetent.'

It’s hard to believe that senior executives at UBS and Citi didn’t know that LIBOR was being fixed. If they weren’t in on it directly, it’s likely that they turned a blind eye — precisely because they knew that it was good for the bottom line.”

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