Photographer: Simon Dawson/Bloomberg

Five of Six Brokers in Libor Trial Are Acquitted by London Jury

  • Jury to return Thursday to consider charge against sixth man
  • Brokers were accused of working with Tom Hayes to fix rates

Five ex-brokers accused of helping convicted trader Tom Hayes rig Libor were acquitted Wednesday by a London jury, in a setback to U.K. fraud prosecutors.

QuickTake Broken Benchmarks

Noel Cryan, 50, who worked at Tullett Prebon Plc in London, Colin Goodman, 54, and Danny Wilkinson, 49, formerly of ICAP Plc, and RP Martin Holdings Ltd.’s Terry Farr, 44, and James Gilmour, 50, were found not guilty and released. The jury couldn’t reach a unanimous verdict on a sixth man, ICAP’s Darrell Read, 50, and was sent home to come back Thursday to discuss the remaining charge. After a four-month trial, the jury took about a day to find the others not guilty.

The verdicts will be seen as a blow to the Serious Fraud Office, which appeared to have turned its fortunes around in the last 12 months. A dozen banks have been fined about $9 billion by global authorities over the last four years in relation to the manipulation of Libor, the benchmark interest rate used in trillions of dollars of derivatives and loans. More than 30 individuals have been charged, and Hayes was convicted last year.

"It’s always been a surprise and disappointment that these people were seen as front and center when they weren’t even bankers,” Matthew Frankland, a lawyer for Wilkinson, said by phone. “If what the SFO says is true, it’s rather shocking that more senior people aren’t being prosecuted."

Hayes Sentence

Hayes, the former UBS Group AG and Citigroup Inc. trader prosecutors alleged was at the center of a conspiracy, was jailed in August. His sentence was reduced to 11 years from 14 years upon appeal in December.

“The key issue in this trial was whether these defendants were party to a dishonest agreement with Tom Hayes,” SFO Director David Green said in a statement. “By their verdicts the jury have said that they could not be sure that this was the case. Nobody could sensibly suggest that these charges should not have been brought and considered by a jury.”

The result comes at the end of a sprawling and complex case that was postponed for several days when one of the defendants, Wilkinson, fell ill. Several of the men cried as the verdicts were read out. Farr burst from the dock and climbed the stairs to embrace his wife and son.

Conning the Client

The men, who are all British, were accused of assisting Hayes manipulate the yen variant of the London interbank offered rate by lying to clients about rates or leaning on them for favors. In exchange, they were paid more than 450,000 pounds ($641,000) in kickbacks between them. They also gained the loyalty of Hayes, one of the most prolific and profitable traders in the market, according to the prosecution’s case. The defendants admitted taking the money, but argued that their only vice was conning Hayes about their actions.

At the time, yen Libor was based on a survey in which 16 banks estimated their borrowing costs each morning at 11 a.m. for periods ranging from overnight to a year. By controlling the input of multiple banks, Hayes attempted to nudge the benchmark to suit his multi-billion dollar trading positions, prosecutors said. The alleged conspiracy lasted between 2006 and 2010.

Hayes was portrayed by several of the defendants as a controlling and emotionally volatile “psycho” who screamed down the phone and threatened to pull his business if he didn’t get his way. When he was happy he threw money at the men in the form of wash trades -- controversial transactions which involve carrying out two diametrically opposing trades minutes apart for the sole purpose of generating brokerage fees.

Big Nose and Asbo

The trial offered a rare glimpse into the colorful but fading world of interdealer brokers, the middlemen in financial markets who line up buyers and sellers in exchange for a small commission. The men spoke rapidly in lingo and gave each other nicknames like ‘Big Nose’ and ‘Asbo.’

Several of the defendants left school at 16, drifting into the City of London via friends or family members, and starting at the bottom rung. All complained they were given no compliance training or guidance on the rules surrounding Libor, which underpins more than $350 trillion of securities around the world.

"Justice was done," Cryan said outside the courtroom. "I’m still pretty angry about the whole thing. For two years my world has been turned upside down. I’ve been cleared and exonerated at every stage, yet I may never work in finance again. Is this the British justice system?"

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