LONDON, Nov 17 (Reuters) - A former broker at ICAP Plc accused of helping rig benchmark interest rates denied the charges in court on Tuesday, saying he would have gone from “hero to zero” if he had favoured convicted trader Tom Hayes over others.
At the opening of the defence in London’s second Libor trial, Darrell Read, 50, told a jury that he lied to Hayes about his ability to influence the London Interbank Offered Rate (Libor), a benchmark used to set rates for around $450 trillion of financial products globally. Read said he made up a string of excuses when published rates did not reflect Hayes’s requests.
The prosecution alleges Read and five others formerly employed by brokers ICAP, RP Martin and Tullett Prebon conspired to manipulate Libor rates to suit the trading advantage of traders such as Hayes, who previously worked for UBS and Citigroup and who was sentenced to 14 years in jail in August.
The six brokers, aged between 44 and 53, are the first brokers to be tried over alleged rigging of Libor and each face one or two counts of conspiracy to defraud.
They have all pleaded not guilty.
Read, a Briton who lives in New Zealand, said it would have been “financially suicidal” to favour, or appear to favour, any one trader over others because other banks would have complained.
“You need to be on good terms with all banks to execute trades,” he said in a statement in February 2014, which was read out and shown to the jury on courtroom screens.
“It does not matter if you have all the orders from the biggest bank in the market, if you do not have the customers on the other side of the trade you will never be able to function as a broker.”
Read, a former geography and zoology student, was persuaded to join the City of London by an acquaintance after a rugby match.
He told the court he had made Hayes believe ICAP could influence other banks to help set rates at certain levels, because Hayes trusted him. But he said this was actually not the case.
When published rates did not reflect Hayes’s wishes, Read said he would come up with excuses.
“The excuse was often: ‘the guy’s not here today; he’s in a meeting; he’s sick today,'” Read told the jury.
Read said he moved from London to New Zealand in April 2007 because he felt his working hours had become too punishing for family life and he wanted to retrain as a teacher.
However, he agreed to continue working for ICAP in New Zealand, partly because he needed to be employed to get a visa. He said his pay there became “totally dependent” on Hayes, who had become an increasingly powerful trader in Tokyo. By 2010, Read’s bonus topped 535,000 British pounds ($814,000), his lawyer said.
Hayes is appealing his conviction and sentence at a Court of Appeal hearing scheduled for Dec. 1 and 2.
The trial of Read and the other six brokers is scheduled to last into the new year.
Libor is the average interest rate calculated through ‘an honour system,’ whereby a panel of major banks report their estimated cost of borrowing from each other in different currencies over various borrowing periods to an administrator. ($1 = 0.6576 pounds) (Editing by Susan Fenton)