Tom Hayes, one of two former UBS AG traders charged by U.S. prosecutors, is portrayed by American regulators as the kingpin of a three-year campaign that succeeded in manipulating global interest rates.
Hayes, 33, was charged with wire fraud and price-fixing, the Department of Justice said in a criminal complaint unsealed Wednesday. The trader and Roger Darin, a former short-term interest-rates trader at UBS whose responsibilities included the firm's Libor quotes in yen, were also charged with conspiracy. Yen Libor reflects how much banks charge each other for loans in the Japanese currency.
Hayes colluded with brokers, counterparts at other firms, and his colleagues to manipulate the rate, the Justice Department said. Between 2006 and 2009, a UBS trader made at least 800 requests to the firm's yen Libor rate-setters, about 100 to traders at other banks, and 1,200 to interdealer brokers, according to the Commodity Futures Trading Commission, which did not identify Hayes by name.
"Many UBS yen derivatives traders and managers were involved in the manipulative conduct," the CFTC said. "But the volume of unlawful requests submitted by one particular senior yen derivatives trader in Tokyo dwarfed them all."
UBS was fined $1.5 billion by U.S., U.K., and Swiss regulators for trying to rig Libor, which is derived by asking banks how much it would cost to borrow from each other in different rates and currencies.
More than $300 trillion of loans, mortgages, financial products and contracts are linked to Libor.
Hayes joined UBS in 2006 and worked at the Swiss lender until 2009, when he joined Citigroup Inc. He was dismissed by Citigroup less than a year later for involvement in suspected rate-rigging, a person with knowledge of the matter said in October. Efforts to contact Hayes and his lawyer were unsuccessful.
Hayes "globally impacted transactions and financial products tied to yen Libor," defrauding counterparties including New York-based financial institutions, the Justice Department said. The trader led a "massive effort" to manipulate yen Libor, at times daily, to profit from his bets on derivatives, the CFTC said.