LONDON—Tom Hayes, the alleged mastermind of a global
interest-rate-rigging conspiracy, said that he decided to fight
charges against him after discovering in 2013 that his former
employer, UBS AG, had what he called an "instruction manual" for
manipulating rates.
Mr. Hayes, who broke down in tears on the witness stand Friday,
is accused by British prosecutors of eight counts of fraudulently
trying to manipulate the London interbank offered rate, or Libor.
For several months in 2013, he cooperated with British prosecutors,
admitting his guilt and planning to testify against his alleged
co-conspirators. It was part of an attempt to avoid extradition to
the U.S., which charged him with fraud and antitrust violations in
December 2012.
As part of his process of cooperating with British prosecutors,
Mr. Hayes said he was shown an internal UBS spreadsheet that
appeared to spell out exactly how the bank's Libor submitters
should skew rates to benefit their trading positions. Mr. Hayes
said he was "flabbergasted" when he saw that document. "I read that
document and it corroborated what I already knew.... It did give me
some confidence that I can fight this." He said it convinced him
that UBS was guilty of "sheer hypocrisy" for singling him out as a
ringleader when in fact the company appeared to condone skewing
Libor for trading reasons. UBS has previously pleaded guilty to
U.S. charges of Libor manipulation.
Later in 2013, Mr. Hayes decided to stop cooperating with the
U.K.'s Serious Fraud Office and to fight the charges.
Mr. Hayes, who has been diagnosed with a mild form of autism, is
the first person to stand trial for allegedly manipulating Libor.
He says that he is a scapegoat, that Libor-rigging was commonplace
in the market and that his superiors at UBS and Citigroup Inc.
condoned his tactics. Part of his defense is that he didn't believe
he had done anything wrong and that he only admitted dishonesty and
wrongdoing to the SFO in order to get charged in Britain and avoid
extradition.
On the stand Friday, asked by his lawyers to tell the jury why
he initially cooperated with prosecutors, Mr. Hayes appeared to be
overcome with emotion, bowing his head and welling up with tears,
as he described his mental state in early 2013. "I knew what I
thought and what I wanted to say, but I knew I couldn't say it," he
said. "What I wanted to say is, 'I've not done anything, it was
just my job, and I'm not dishonest.'" His wife, Sarah, sitting in
the audience, also cried. The trial was briefly adjourned to allow
Mr. Hayes time to compose himself.
Friday was Mr. Hayes's fourth day on the stand. Next week he
will be cross-examined for the first time by prosecutors.
A UBS spokeswoman declined to comment, citing English
contempt-of-court rules.
Write to David Enrich at david.enrich@wsj.com
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