Tom Hayes Libor Saga's $1.2 Million Finale Leaves Nobody Happy

  • Penalty is about one-third of amount prosecutors had sought
  • Hayes may still need to sell family home outside London

If the sign of a good compromise is one where none of the parties are happy, then the judge presiding over Tom Hayes’s confiscation hearing got it spot on.

Tom Hayes
Tom Hayes
Photographer: Simon Dawson/Bloomberg

Hayes, the former UBS Group AG and Citigroup Inc. trader serving 11 years in jail for rigging Libor, was ordered to pay back about 880,000 pounds ($1.2 million) determined to be the proceeds of his crimes. While the amount was less than a third of what prosecutors at the Serious Fraud Office had sought, Hayes immediately issued a statement reaffirming his innocence and stating that his actions were victimless.

Jeremy Cooke -- the same judge who last summer handed Hayes one of the harshest ever sentences for a white-collar crime -- ruled that the former trader should return 35 percent of the 2.5 million pounds he earned in bonuses from the banks between 2006 and 2010.

"It is clear to me that, however a good a market maker the defendant was and however diligent he was in that respect, his reputation was significantly enhanced by the trading he carried out on his own account where it was his practice to attempt to manipulate Libor rates," Cooke said in a written ruling. "His reputation in a small market for doing what he did was well known."

Hayes, 36, is serving a prison sentence after he was convicted last year of conspiring to rig the London interbank offered rate, a benchmark tied to trillions in derivatives and loans. The Libor scandal led to fines of about $9 billion for a dozen banks and brokerages.

While the award may be seen as a reprieve for Hayes and his family, it still means they will likely have to sell their seven-bedroom home outside London. Hayes said he and his wife might even have to sell their wedding rings.

Maintains Innocence

“I vehemently maintain my innocence,” Hayes said in a statement. “The practices for which I have been imprisoned were industry standard practice and had been for 20 years. I have every intention of telling the general public the truth about Libor and will do so at the earliest possible opportunity.”

Hayes, who was diagnosed with Asperger’s syndrome before his trial, was a highly successful trader who made close to 300 million pounds for UBS alone. His wife, Sarah Tighe, testified last week that the scandal had ripped her family apart, burning through their savings and leaving Hayes suicidal. He lost close to 1 million pounds spread betting in 2013, compounding their problems, Tighe said.

The ruling could be seen as another setback for the SFO, which dropped a high-profile probe into currency rigging earlier this month. In January, a group of brokers accused of conspiring to fix Libor with Hayes were cleared by a London jury.

But prosecutors maintained Cooke’s ruling validated their position.

Benefit of Crime

"The court acknowledged the challenges of quantifying the benefit from crime in this case,” Mark Thompson, head of the SFO’s proceeds of crime division, said in a statement. “The SFO provided the court with all the available information and the outcome is a substantial confiscation order, which Mr. Hayes will need to satisfy or face a further period of imprisonment.”

Prosecutors argued over the course of a four-day hearing in London that Hayes should lose all his salary and bonuses from 2006 and 2010 on the grounds that his entire reputation was built on rate-rigging.

"It’s like a runner who’s on steroids," SFO lawyer Michael Parroy said. "He’s a good runner, but what gets him over the line first is the steroids."

Hayes’s team rejected that assertion, suggesting Hayes’s activities were “at the margins” and only added 5 percent to his bottom line.

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