Libor Fixing Scandal: SFO Charges Ex-Citi and UBS Trader Thomas Hayes with 8 Counts of Fraud

Britain's Serious Fraud Office (SFO) has charged former Citi and UBS trader Thomas Hayes with conspiracy to defraud over one of the world's most important interbank lending rates, Libor.

The SFO charged Hayes, 33, with eight counts of fraud in connection with the investigation by criminal investigation unit into the manipulation of Libor.

"He attended Bishopsgate police station where he was charged by City of London Police with eight counts of fraud. He will appear before Westminster Magistrates Court on 20 June," the SFO told IBTimes UK.

The SFO confirmed he was one of the three individuals arrested and interviewed on 11 December, 2012.

A day after being questioned by UK authorities, the US Justice Department charged Hayes with fraud, conspiracy and an antitrust violation and he faced possible extradition proceedings. It also charged former UBS trader Roger Darin with conspiracy. Since the SFO has charged Hayes with criminal offences, it would allow the UK to stake a jurisdictional claim to the British suspect.

Citi and UBS declined to comment.

Barclays was the first to settle with US and UK authorities in June last year over its role in the Libor fixing scandal.

In December, UBS agreed a record $1.5bn fine with US, UK and Swiss authorities for its role in manipulating a number of key benchmark interbank lending rates. The UBS Japanese unit, where Hayes had previously worked, also pleaded guilty to US criminal charges by admitting to one count of wire fraud relating to rigging rates in Yen.

Hayes joined UBS in Tokyo in 2006 when he was 27 and later became a senior and highly valued trader of interest rate derivatives indexed to yen-denominated Libor. His trading generated nearly $260m in revenues by late 2009, say reports, but he left UBS to join Citigroup after a dispute over his salary package.

However, Citi fired him less than a year later after colleagues allegedly raised concerns about inappropriate Libor requests.

The Royal Bank of Scotland (RBS) was the third and most recent bank to settle with US and UK authorities related to civil charges related to the manipulation of Libor. A RBS subsidiary, RBS Securities Japan Limited, also pleaded guilty to one criminal charge of wire fraud.

In an Q&A session following the settlement, RBS Chairman Philip Hampton said "if people break the law they should face the full weight of the criminal justice system. We have already seen traders at other banks arrested over Libor manipulation and I expect we will see more."

"That is how it should be. If people don't end up in prison over this scandal I worry it will further perpetuate the sense that there is one rule for the financial system and another set of rules for the rest of society."

Despite only three banks settling with authorities, dozens of banks around the world are still under rate rigging investigations.

Earlier this year, UK lawmakers grilled UBS chiefs over a slew of scandals that rock the group, including Libor fixing and a rogue trader losing billions for the bank.

UBS' investment banking chief Andrea Orcel, the group's chief risk officer Philip Lofts and it global head of compliance Andrew Williams gave evidence in front of the Parliamentary Commission on Banking Standards panel.

Hayes was mentioned several times in parliament, as regulators allege Hayes and others made thousands of unlawful requests to colleagues to submit false Libor rates, but UBS chiefs would not comment.

Regulators have revealed, as part of presenting civil settlements with Barclays, UBS and RBS, a raft of transcripts that cite unnamed traders who colluded to manipulate interbank lending rates in the UK and abroad.

Notably prior to the US, UK and Swiss authorities settling with the three banks, the Japanese regulator Securities and Exchange Surveillance Commission (SESC) cracked down on a number of firms that have been seen to manipulate or attempt to rig the Tokyo interbank offered rates (Tibor).

Japan's Financial Services Agency's (FSA) subsequently imposed penalties for Citi and UBS in December 2011.

Japanese regulators suspended Citi and UBS' operations, after the SESC found that some staff attempted to manipulate Tibor rates.

In UBS' revealed in a quarterly report last year, that it had reached conditional immunity deals from certain jurisdictions with the Department of Justice and regulators in Switzerland and Canada, giving it protection against enforcement action in relation to certain transactions and submissions for Yen Libor and Euroyen Tibor.