Libor-rigger plays the damned fool

The Times Robert Lea: Business commentary 4-8-2015

So at least Tom Hayes now knows where he sits in society — with sex traffickers and child pimps, paedophiles, terrorist bombers, heroin suppliers, killer drink drivers and violent burglars.

Hayes’ 14 years for fiddling Libor — he was officially done for fraud, as taking the mickey out of the financial markets has yet to be properly defined as a crime — ranks along with the worst of felonies before you get a life sentence.

Fraud ordinarily takes a ten-year sentence, so the former UBS and Citigroup trader may theoretically feel a little hard done by. There is a debate to be had, though, over what sentencing tariffs should be for financial markets abuse, for which this becomes a landmark conviction in a nascent field of the law.

Kweku Adoboli, the UBS rogue trader, got seven years for abuse of position and false accounting. The use of the cuddly term “rogue” confuses the matter, but where is the line drawn between someone losing a whole £2 billion of his bank’s money playing the markets (badly) like Adoboli, and someone like Hayes whose very being was all about winning his bank money? Perhaps the clue is in the less cuddly terms “fixing” and “rigging”.

Who is to say 14 years is a bit steep when the judiciary clearly wants to set the example that fixing markets — even if everyone knows traders have been rigging them for decades and centuries — is not just bad form but badly illegal? Mark Carney believes that ten years is about right for financial market abuse, although this country’s separation of judiciary from state suggests that his opinion, though welcome, should have no sway.

Whether we are inclined to believe Hayes was an Aspergic pointy-head unaware of the enormity of his crime, or a greedy, lying Machiavelli of Libor, we now know he and his cohort aren’t as smart as their seven-figure salaries would suggest.

Yet huge questions remain unanswered. There are more Libor-rigging trials coming. None of them is understood to include Hayes’ supervisors or his bosses. Are such crimes limited to the people at the terminals playing the fool down the phone, or does it extend to their employers, who, deliberately or not, are failing to oversee them?

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