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Business

Ex-trader goes on trial over Libor rate-rigging

A former financial trader has gone on trial in London for allegedly conspiring to manipulate the London Interbank Offered Rate (Libor). Prosecutors say he was a ringleader and his crimes were motivated by greed.

Tom Hayes went on trial in London on Tuesday as the first financial trader to face prosecution over Libor manipulations which already cost a number of global banks billions in fines.

35-year-old Hayes, a former employee of Swiss banking giant UBS and US rival Citigroup, is accused of leading a cartel of traders between 2006 and 2010 that manipulated the so-called Libor inter-bank lending rate in yen derivatives worth billions.

Libor is the rate at which banks lend money to each other, and it is a key reference for many financial products around the world, from consumer loans to savings accounts.

'Greedy'

Opening the case for Britain's Serious Fraud Office (SFO), prosecutor Mukul Chawla told the court that Hayes "wanted to make as much money as he could."

"All bankers want to maximize their profits, but Hayes did it in a dishonest way. He did all in his power to manipulate the bank rate known as the Libor," he said.

"In his own words, he was greedy," Chawla told the jury, alleging that between 2006 and 2010, Hayes set out to manipulate Libor at his bank and others on an "almost daily basis."

Hayes has pleaded not guilty and his defense team has yet to respond to the allegations in court. If convicted, the former trader could face a maximum jail sentence of 10 years.

A string of fines

The Libor scandal erupted in 2012 when British bank Barclays was fined 409 million euros ($448 million) by British and US authorities for manipulation.

Since then dozens of traders have been fired and 20 more people charged over manipulation, with a second trial due to start in London later this year. The scandal has already damaged the reputation of the banks involved, as well as London's status as a global financial hub.

Apart from Barclays, banks including UBS, RBS and Rabobank have also paid fines, with Germany's Deutsche Bank paying a record total of $2.5 billion for Libor rigging to British and US authorities.

Hayes' case is seen as a test for regulators on whether bankers can be jailed for offences and for the SFO, following a series of blunders and setbacks.

The high-profile trial is expected to last 10-12 weeks and the courtroom was packed on Tuesday with members of the media taking seats in the dock, usually reserved for the accused.

sri/uhe (Reuters, AFP, AP)

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