LONDON (Reuters) - Tom Hayes, the former star trader on trial for alleged Libor-rigging, tried to build up relationships at Citigroup (C.N) soon after joining from UBS UBSG.VX, hoping to influence the rate-setting process there, according to evidence presented in a London court on Friday.
Hayes, who worked for UBS as a derivatives trader in Tokyo until he was poached by Citi in 2009 with a 2.2 million pound ($3.5 million) “special cash award”, began a dialogue with rate setters and traders at his new firm almost immediately after joining in December that year.
“I think we need a good dialogue with the cash desk (which sets Libor rates), they can be invaluable to us ... if we need to know ahead of the time we can position and scalp the market,” Hayes wrote in an email, shown to the jury, to his new colleagues at Citi on Dec. 14 2009.
Hayes, accused of rigging rates between 2006 and 2010 to increase his trading profits, has pleaded not guilty to eight counts of conspiracy to defraud. His lawyers will set out a defense later in the trial, scheduled to last into August.
The London interbank offered rate, or Libor, is used to price an estimated $450 trillion of financial contracts worldwide.
In January 2010, on a visit to London, Hayes took colleagues involved in the Libor-setting process at Citi to lunch to “get closer,” the court heard.
“How much influence I‘m going to have in inverted commas I don’t know,” he told a broker on a call in February 2010, read out to the jury, after he officially started trading at Citi.
“Took the guys out for a very expensive lunch when I was in London. It cost more than I care to think about,” he said.
in March that year, Hayes was shown communicating to colleagues, brokers and traders at other banks to try to obtain lower Libor rates, the court heard.
“... as a desk, we’ve got a very big 3 month Libor fixing ... So we could do with moving the 3 month Libor down a few basis points on their contributions,” Hayes said to London-based Citi colleague Hayato Hoshino, in a call in March, the court heard.
“Mention we have a big 3 month Libor set ... make sure not to put it in writing ... just have a quiet word.”
In an electronic message shown to the jury dated June 1 2010, Hayes asked Hoshino to talk to Burat Celtik, then Citi’s yen Libor submitter, to try and influence rates downwards.
“Try and catch him when he’s on his own, not with his boss and stuff ... just try and catch him going to the toilet or something,” Hayes tells Hoshino. “We’ve got like $4 million of point fixing in the next 2 weeks.”
Hoshino later sent an email to Hayes and his boss Christopher Cecere, expressing doubt about his attempts.
“I will mention it tomorrow morning ... but to be honest they are really nervous about it, so I don’t think we can be too pushy,” Hoshino said in the email shown to the jury.
Hayes lasted just 10 months at Citi before a colleague complained about his trading methods and he was sacked.
In a letter laying out its grounds for dismissal, sent to Hayes in September 2010, Citi alleged Hayes attempted to manipulate yen Libor and Tibor, the equivalent rate, to benefit his trading position, the court heard.($1 = 0.6295 pounds)
Additional reporting by Matt Scuffham; Editing by David Holmes