LONDON, Oct 6 (Reuters) - Six former interdealer brokers from ICAP, RP Martin and Tullett Prebon were rewarded for “enthusiastically” helping a trader rig a key benchmark interest rate, a prosecutor told London’s second Libor trial on Tuesday.
Mukul Chawla, counsel for Britain’s Serious Fraud Office (SFO), said the actions of former UBS and Citigroup trader Tom Hayes - who he said had been “dealt with” in a previous trial - would loom large in a “simple” case about dishonesty and conspiracy scheduled to run into the New Year.
The six men, aged between 44 and 53, are the first brokers to be tried over the alleged rigging of the London interbank offered rate (Libor), used for setting interest rates on about $450 trillion of financial contracts worldwide, from complex derivatives to student loans.
The SFO alleges that Darrell Read, Colin Goodman, Danny Wilkinson, Terry Farr, James Gilmour and Noel Cryan willingly conspired with Hayes and other brokers and traders to rig yen-denominated Libor rates for profit.
“They were rewarded in various ways to corrupt a process that should not have been corrupted,” Chawla said in his opening speech to the jury, that is expected to last five days.
The men, who have pleaded not guilty, each face one or two counts of conspiracy to defraud. Each count carries a maximum jail sentence of 10 years, although such terms are often served concurrently.
Lawyers for the defendants have not responded to requests for comment.
The brokers, whose nicknames included “Lord Libor” and “big nose”, were key individuals at Hayes’s favoured UK brokerages that willingly entered conspiracies to help ensure that Libor rates were false or misleading, Chawla said.
This allowed Hayes to make millions of pounds for the banks he worked for, he said.
The trial comes more than seven years after U.S. regulators first examined how Libor rates were set, sowing the seeds of a global inquiry that culminated in authorities fining some of the world’s most powerful banks and brokerages $9 billion, charging 21 men and overhauling how market benchmarks such as Libor are policed.
Interdealer brokers became a focus for the inquiry because of the role they play when sharing information with their networks of traders and matching buyers and sellers of bonds, currencies and swaps, for which they charge a fee.
The prosecution alleges that former ICAP brokers Read, Goodman and Wilkinson conspired with at least seven others, including Hayes, to rig Libor between August 2006 and December 2009. Goodman and Read are charged with a second count of conspiracy with Hayes and others between December 2009 and September 2010.
Farr and Gilmour, former RP Martin brokers, are charged with conspiring to rig rates with Hayes and others between August 2006 and December 2009. Farr faces a second count of conspiracy between December 2009 and September 2010 with Hayes and others.
Cryan, a former Tullett Prebon broker, allegedly conspired with Hayes and others between February and December 2009.
The men are expected to start laying out their defence in about mid-November. (Editing by Greg Mahlich)