You Don't Want to Know: Tullett Manager Warned Off Hayes Paymentby
Tom Hayes paid Tullett 35,000 pounds for one wash trade
Tape played for jurors on fifth day of Libor trial in London
A broker at Tullett Prebon Plc was able to stop an internal review of a 35,000-pound ($53,000) payment made by derivatives trader Tom Hayes for help rigging Libor by telling his boss that “you don’t want to know” about it, according to tapes played to jurors Monday.
When questioned about the February 2009 payment, Noel Cryan, a former Tullett broker on trial in London for rigging the benchmark rate, told his boss, Simon Rogers, that he was better off looking the other way.
Cryan is one of six brokers from Tullett Prebon, ICAP Plc and RP Martin Holdings Ltd. on trial for conspiring to rig Libor, the benchmark used to value more than $350 trillion of loans and securities. Hayes, a former trader at UBS Group AG and Citigroup Inc., was the first person convicted of charges related to the rate.
"Have you just done a 35 grand trade today or is that just gone in wrong?" Rogers, who hasn’t been charged with a crime, asked Cryan on the call that was played by prosecutors Monday.
"We did that yeah," Cryan replied in an almost whisper.
"Holy s---!" Rogers said, then asked Cryan where the payment came from.
"You don’t want to know," Cryan warned his boss.
"Oh don’t I?" Rogers replied. "All right I get you. I don’t want to know."
Mukul Chawla, the Serious Fraud Office’s chief prosecutor, told jurors Monday, the fifth day of the trial, that Cryan was drafted into Hayes’s conspiracy to rig Libor a few weeks earlier. Cryan agreed to pass on Hayes’s requests for movements in Libor to Tullet clients in exchange for regular wash trades -- financial transactions that cancel each other out, but still generate fees for the broker.
Libor was based on a survey in which several of the world’s largest banks are asked to estimate their borrowing costs each day at 11 a.m. in London. The brokers, who line up buyers and sellers, don’t contribute to the rate or directly benefit from where it’s set. Prosecutors say the six men on trial used their position in the middle of the market to influence it on behalf of favored clients.
The trial is scheduled to last 12 weeks and the defendants’ lawyers will respond to the allegations at a later point in the case. Hayes is appealing both his conviction and a 14-year-prison sentence issued by the judge.