First Libor rigging trial begins in Britain

The first financial trader to face prosecution accused of rigging global benchmark interest rates went on trial in London on Tuesday, following a scandal that cost banking giants billions in fines.

Britain's Serious Fraud Office (SFO) alleges that Tom Hayes was the ringleader of more than a dozen traders it says worked to rig the London Interbank Offered Rate (Libor) in the mid to late 2000s.

Formerly a trader with Swiss bank UBS and its US rival Citigroup, the 35-year-old Briton arrived in court in Southwark, across the river from London's financial centre in a trial expected to last weeks.

"Mr Hayes wanted to make as much money as he could," prosecutor Mukul Chawla said at the trial.

"All bankers want to maximise their profits but Mr Hayes did it in a dishonest way. He did all in his power to manipulate the bank rate known as the Libor.

"His motive -- greed," he told a packed courtroom.

Chawla accused Hayes of behaving in a "thoroughly dishonest and manipulative manner" and doing "everything in his power" to manipulate the rate.
The prosecutor also recalled the eight charges of conspiracy to defraud against Hayes, and said the defendant was the "ringmaster" of the fraud.

Hayes has pleaded not guilty in the case.

- Banks pay billions -

Libor, an estimate of the average interest rate for banks borrowing from other banks, is a key reference for many financial products around the world, from consumer loans to savings accounts.

Hayes is accused of lying about the rates that his bank was borrowing money at in order to manipulate the overall calculation of the Libor rate.

The case is seen as a test for regulators on whether bankers can be jailed for offences and for the SFO, following a series of blunders and setbacks.

It has already damaged the reputation of the banks involved, as well as London's status as a global financial hub.

The Libor scandal erupted in 2012 when British bank Barclays was fined £290 million ($448 million, 409 million euros) by British and US authorities for manipulation.

Since then dozens of traders have been fired and 20 more people charged over manipulation, with a second trial due to start in London later this year.
"The more that he earned for his employers, the more they would value his services and, inevitably, the more that they would pay him," Chawla said of Hayes.

"However, within a matter of months, when his methods were formally reported to senior management at Citi, he was sacked," he added, referring to Citibank.

Apart from Barclays, banks including UBS, RBS and Rabobank have also paid fines, with Germany's Deutsche Bank paying a record total of $2.5 billion for Libor rigging to British and US authorities.

In a further scandal that occurred after the Libor crackdown, six major banks were fined nearly $6 billion, accused of cheating clients by coordinating trades in private chat rooms to manipulate the prices of currencies in exchange markets.