Controversial former UBS trader Thomas Hayes was the first in a series of bankers to be prosecuted for their involvement in the Libor scandal. The former investment banker appeared in court on June 20th over charges that he, along with others in the financial services industry, manipulated the Libor interbank interest rate.
Hayes, who worked at UBS, RBS, and several other financial services firms outside the UK, is one of several involved in the scandal. Investigators claim that the Libor scandal extends to several other investment banks, including US-based Citigroup, Swiss financial firm UBS, and British banks Barclays and Royal Bank of Scotland.
Three of the banks involved in the scandal, RBS, UBS, and Barclays, have spent an estimated US $2.6 billion to clear fines and charges levied against them for alleged involvement in the scandal. The scandal has been declared ‘the worst fraud to hit the financial markets’ by a leading financial services newspaper.
While several traders and mid-level executives have been formally charged in the investigation, high-level banking executives have thus far failed to be linked to the case. Mr. Hayes, who has been called the ‘connective tissue’ of the fraud by leading prosecutors, was involved in the financial services industry for over a decade.
The severity of the Libor scandal has prompted similar investigations by regulators in several international banking centres. Hong Kong, one of Asia’s largest financial hotspots, launched its own investigation into local rigging issues. Singapore, also a leading Asian financial hub, has fined 20 local banks in a large-scale enquiry.
More traders are expected to be named by investigators in then coming weeks, with the prosecution of Hayes seen as a ‘test case’ by many in the banking industry. Libor has been pointed to as one of the financial industry’s ‘biggest frauds’ by many in the industry, who claim that many others will be prosecuted or publically named.
