`Barrow Boy' Brokers Were Ignored by Bankers on Libor, Read Saysby
Ex-ICAP employee Read is first defendant to testify at trial
`The idea that a bank would listen to a broker' is nonsense
A former ICAP Plc employee accused of helping rig Libor told a London court that interdealer brokers are second-class citizens in the financial world who are ignored by better-educated bankers.
Darrell Read said during his first day of testimony that brokers didn’t have the status to sway bankers when it came to setting the benchmark rate. Most brokers have fewer math and computer skills and aren’t respected by the bankers who are their clients.
"Banks hold all the power," the 50-year-old Read said. "The old image is of East End barrow boys paid to give prices and be entertaining."
Read is one of six brokers from ICAP, Tullett Prebon Plc and RP Martin Holdings Ltd. on trial for conspiring to defraud by helping former UBS Group AG trader Tom Hayes rig a version of the London interbank offered rate tied to the yen. Hayes was convicted of similar charges in August and sentenced to 14 years in prison.
The first of the defendants to testify at the seven-week-old trial, Read was taken through a statement he provided to prosecutors at the Serious Fraud Office in 2014 by his attorney. He will be cross-examined later in the week.
Prosecutors claim Read helped Hayes by pressuring another defendant who worked at ICAP, Colin Goodman, to skew the daily "Libor prediction e-mail" Goodman sent to rate-setting banks to suit Hayes’s positions. The e-mail earned Goodman the nickname "Lord Libor" in the industry.
"The idea that a bank would listen to a broker" is nonsense, Read said.
Wearing a dark suit, Read told jurors he only passed on Hayes’s requests for higher and lower Libors to Goodman so that Goodman’s e-mail would be as accurate as possible. Hayes was the biggest player in the market, so his trading positions would likely affect where Libor was set each day. Read never tried to help him manipulate the rate, he said.
Read met Hayes in 2002 when he was a "painfully shy" 21-year-old. In the years that followed, he watched Hayes morph into an aggressive trader who routinely lost his temper, he said.
In April 2007, Read moved to New Zealand after Hayes moved to Tokyo so they could operate in a similar time zone. From that point on, Hayes was, for all intents and purposes, Read’s only client, he told jurors. In 2010, Read took home more than 500,000 pounds ($760,000) in bonus and salary.
"My salary was totally dependent on Tom Hayes," Read said. "If he didn’t pay any brokerage I didn’t make any money."
After 20 years in the market he had planned to retire to New Zealand and become a teacher in 2005, but was repeatedly persuaded by ICAP to stick around. His wife and two sons are still there, he said.