Sixth broker cleared in Libor case, dealing blow to investigators

Darrell Read, an ex-ICAP broker accused of helping convicted trader Tom Hayes rig Libor, was found not guilty on Thursday by a London jury, a day after the panel acquitted five other men in a major setback to the UK's Serious Fraud Office.

The jury in the four-month trial took little more than a day to acquit Noel Cryan, 50, who worked at Tullett Prebon in London, Colin Goodman, 54, and Danny Wilkinson, 49, formerly of ICAP, and RP Martin's Terry Farr, 44, and James Gilmour, 50.

The jury couldn’t reach a unanimous verdict on 50-year-old Mr Read - whose family remained in their home in New Zealand - and the judge asked them to continue deliberating on Thursday.

“I’m just incredibly relieved,” said Mr Read, holding back tears, after the verdict. “I’m looking forward to seeing my wife now.”

The verdicts will be seen as a blow to the SFO, which appeared to have turned its fortunes around in the last 12 months.

A dozen banks have been fined about $9 billion (€8.25bn) by global authorities over the last four years in relation to the manipulation of Libor, the benchmark interest rate used in trillions of dollars of derivatives and loans.

More than 30 individuals have been charged, and Mr  Hayes was convicted last year.

Hayes sentence

Mr Hayes, the former UBS Group and Citigroup trader prosecutors alleged was at the center of a conspiracy, was jailed in August. His sentence was reduced to 11 years from 14 years upon appeal in December.

The men, who are all British, were accused of assisting Mr Hayes to manipulate the yen variant of the London interbank offered rate by lying to clients about rates or leaning on them for favors.

In exchange, they were paid more than £450,000 in kickbacks between them. They also gained the loyalty of Mr Hayes, one of the most prolific and profitable traders in the market, according to the prosecution’s case.

The defendants admitted taking the money, but argued that their only vice was conning Mr Hayes about their actions.

At the time, yen Libor was based on a survey in which 16 banks estimated their borrowing costs each morning at 11am for periods ranging from overnight to a year. By controlling the input of multiple banks, Mr Hayes attempted to nudge the benchmark to suit his multi-billion dollar trading positions, prosecutors said. The alleged conspiracy lasted between 2006 and 2010.

‘Psycho’ trader

Mr Hayes was portrayed by several of the defendants as a controlling and emotionally volatile “psycho” who screamed down the phone and threatened to pull his business if he didn’t get his way. When he was happy he threw money at the men in the form of wash trades - controversial transactions which involve carrying out two diametrically opposing trades minutes apart for the sole purpose of generating brokerage fees.

The jury was given a rare glimpse into the colourful but fading world of interdealer brokers, the middlemen in financial markets who line up buyers and sellers in exchange for a small commission.

The men spoke rapidly in lingo and gave each other nicknames like ‘Big Nose’ and ‘Asbo.’ Several of the defendants left school at 16, drifting into the City of London via friends or family members, and starting at the bottom rung.

All complained they were given no compliance training or guidance on the rules surrounding Libor, which underpins more than $350 trillion of securities around the world.

Bloomberg