The Spider Network
Page 43
The description of why rivals tend to attack troubled traders is based in part on Lowenstein’s When Genius Failed.
The comment from the Deutsche Bank trader puzzling over why Hayes was fired comes from Deutsche Bank’s 2015 Libor settlement with the U.K. Financial Conduct Authority.
I was given copies of Tighe’s e-mails with her friends in advance of her wedding.
Chapter 14: He’s the One
The section on David Meister comes from my interviews with past and present CFTC officials as well as publicly available documents.
The chronology of how UBS came to investigate Libor manipulation is based on my interviews with past and present bank employees, as well as Pieri’s interview with Australian regulators. The discussion of Gibson Dunn’s role, including regulators’ ceding of large chunks of authority to UBS’s lawyers, is largely derived from the testimony of Gibson Dunn partner Stephen Sletten as a prosecution witness in Hayes’s trial.
Hayes’s quotation in his phone call with Alykulov about the dudes who put people in jail is from the Justice Department’s charges against him. The rest of the quotations in this section come from Hayes and others with direct knowledge of the calls.
The information about the suspension of RBS traders comes from “Secret Libor Transcripts Expose Trader Rate-Manipulation,” Bloomberg News, December 12, 2012, by Liam Vaughan and Gavin Finch.
The section on Kweku Adoboli’s downfall comes in large part from “Kweku Adoboli: A Rogue Trader’s Tale,” Financial Times, October 22, 2015, by Lindsay Fortado.
Chapter 15: Spiders
The Andrew Smith section is based on former traders’ interviews with me and with regulators and internal chat transcripts.
The London Whale description is based in part on J.P. Morgan’s internal review into the debacle, the results of which were published in January 2013 in a 132-page report.
Colin Goodman explained the circumstances surrounding his mother-in-law’s death in detail to regulators.
In this and subsequent chapters, the sections about Hayes’s interactions with his lawyers and their interactions with the SFO and Justice Department are derived in part from detailed notes taken by the lawyers as well as my interviews with lawyers and others.
Chapter 16: A Crook of the First Order
The David Bermingham section is based on my interviews with Bermingham and media coverage of his ordeal starting in 2002.
The draft charges against Hayes, which named Kengeter and Mccappin as his co-conspirators, were handed over to Hayes’s lawyers, and I saw a copy.
Starting around February 2013 in the chronology, when I began regularly corresponding and meeting with Hayes, I witnessed or had firsthand knowledge of some of the scenes and events, as well as Hayes’s deteriorating mental state and erratic behavior. In general, I am the “acquaintance” to whom he spoke or sent text messages. Additional sources include the pretrial reports prepared by a psychologist and a psychiatrist about Hayes’s mental health.
Chapter 17: The Unit Cost of Steak
The section on the SFO’s on-again, off-again efforts to freeze Tighe’s assets comes from my interviews with her, Hayes, and lawyers involved in the fight, as well as court documents and other materials filed by Tighe that provide a rough chronology of events.
Gensler’s revisionist description of his role in the Libor investigation comes from “The Little Agency That Could,” New York Times, November 15, 2013, by Joe Nocera.
The description of Hellsinki-V, Danny Wilkinson’s electronica group, is based in part on YouTube videos of its festival performances.
An amusing account of Hayes’s bingo strategy appeared in the “Caesars Casino Pays Punters in Online Bingo Error,” Guardian, August 14, 2011, by Rupert Neate. The anonymous twenty-nine-year-old doctor quoted in the story got the tip about the loophole via Hayes.
Chapter 18: Charades
Some of the biographical items on Mukul Chawla come from the Times (London), “Lawyer of the Qeek: Mukul Chawla, QC,” September 3, 2015, by Linda Tsang.
Kweku Adoboli texted his acquaintance Lindsay Fortado, a Financial Times reporter who was in court and told me about the exchange.
The section on Hayes’s numb feet is based partly on Hayes’s medical records, which he shared with me.
Chapter 19: Within the Ark
The details about the jurors’ actions after the brokers’ acquittal come from two sources. The fist pumps were reported by the Guardian in the article “Serious Fraud Office Back in the Dock After Libor Acquittals,” January 29, 2016, by Graham Ruddick. The juror’s hug of a broker’s wife was reported in “How Six Brokers Walked Free After Unraveling of U.K. Libor Case,” Bloomberg News, February 8, 2016, by Liam Vaughan.
The criminal investigation of David Nicholls was reported in “Two Ex-Deutsche Bank Traders Charged by U.S. in Libor Probe,” Bloomberg News, June 2, 2016, by Tom Schoenberg.
After the verdicts, I followed the brokers to the Shipwrights Arms, where I witnessed the events that are recounted in the book’s final scene.
Index
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10th Avenue Bridge, 249, 250
Aaron, Lee, xii
background of, 118
compensation, 314–15
Hayes introduction to, 45
Libor investigation, 378–79
Mahiki party, 227–28, 228n
nickname of, 45, 118
switch trades, 170–71, 172, 176–77, 227–28, 379
Abu Dhabi, 415
Adoboli, Kweku, 22, 335–37, 401, 428
Adolph, Guillaume “Gollum,” x, 220–22
alliance with Hayes, 220–21
background of, 220
Bank of Japan information, 278–79
Hayes and Libor submissions, 220–22, 234–35, 273–74, 292, 435
Hayes firing, 305
Libor investigation, 292
Afghanistan, Soviet invasion of, 40
Ainsworth, Sarah, x, 55–57, 123, 125
breakup with Hayes, 148, 152
move to Japan, 86
pie-in-bath story, 56–57, 325
at RBS, 30, 31, 55
Thailand vacation, 115–17
Aldington, Charles, 192–93
Alford, Stuart, 375
Allen, Anthony, 456
Allen & Overy, 271, 315–16
Alykulov, Mirhat, x, 217
background of, 89–90
Hayes and Libor manipulation, 273–74, 288–90, 294, 316
Hayes UBS resignation, 239–40
Japan tsunami, 325–26
Justice investigation, 326–27, 342, 348
telephone call to Hayes, 328–31, 367, 397
nicknames of, 90
Read and, 236–37, 274
resignation from UBS, 342
suspension from UBS, 326
Thanksgiving dinner, 168
update on, 444–45
American Idol (TV show), 285
American International Group, 164
American Psycho (movie), 121
Archer, Neil, 229
Armstrong, Lance, 436
Arthur Andersen, 266–67
As Good as It Gets (movie), 153
Asperger’s syndrome, 199, 322, 413–14, 417, 422, 428, 452
Avistar, 88
BAE Systems, 332
Baird, Bruce, 371
Bajari, Patrick, 250–51
“Does the Libor reflect banks’ borrowing costs?” 252–53
Bali, 160–61
Ball, Matt, xiii, 366, 372, 405–6
Balls, Ed, 358
Bank for International Settlements, 194–95
Bank of America, 111
Hayes job offers, 57, 320–21
Merrill Lynch acquisition, 164, 170, 320
Bank of Credit and Commerce International (BCCI), 331
Bank of England, xii
Libor, 69–70, 181, 195, 203–4, 207, 446–47
Bank of Japan, 278–79
interest rates, 36, 60–61
banking laws, 268
Barbados, 319–20
Barclays
financial settlement, 357–60, 407
Libor manipulation, 79, 80, 193–94, 295, 295n
audio recordings, 207, 262–63, 264, 266, 269, 313
SFO criminal charges, 404–5n
Barings Bank, 37
Basingstoke, 147–48
BBA. See British Bankers’ Association
Bear Stearns, 152, 186–87
Beck, Alison, 412–13, 428
Belfast, HMS, 439
Bere, Scott, 246, 246n
Bermingham, David, 373–74
Bernanke, Ben, 195
BGC Partners, 51, 122, 379, 407
“Big Bang,” 70
Bird, Stephen, 281
Bishopsgate Police Station, 364, 387
black garbage bags, 87, 87n
Black Monday (1987), 33
Blair, Tony, 15, 332
Blankfein, Lloyd, 248
Blind Side, The (movie), 154
BNP Paribas, 85–86, 138–39, 149, 429
Boesky, Ivan, 311
Bolivia, 289
Bond, Tim, 193–94
Bond University, 89
Born, Brooksley, 248
Brackenbury Primary School, 9
Brady, Nicholas, 33
Brand, Danny, xii, 104, 129, 299, 398
Breuer, Lanny, 267, 268–69
Brevan Howard, 315, 349
British Bankers’ Association (BBA), xii, 68–70, 75–80, 446
false Libor submissions, 79–80, 181–83, 192–94, 195–96
introduction of Libor, 69–70
Libor improvements, 203–4
Libor investigation, 205–7, 244, 257, 271–72
licensing fees for Libor, 76–77
brokers, 41–42
“entertainment” and commissions, 50–53
broking, 42–43
Brown, David, 13–14, 411
Brown, Gordon, 10, 15, 30, 358
Bubor, 92
Bulgaria, 360
bumblebee socks, 103–4, 398, 401
bunching phenomenon, 251–52
Bush, George W., 266–67
butterflies, 353
CaesarsBingo.com, 409
California State Teachers’ Retirement System (CalSTRS), 114
call reports, 250, 251
Caltech, 21
Cameron, David, 50, 358, 395, 445
Caplin, David “Mustard,” xii, 122
employee conduct, 117–18
Libor investigation, 334, 407
nickname of, 44
RP Martin culture, 44–45, 46, 117
sale of RP Martin, 407
switch trades, 172–73
year-end bonuses, 314–15
Carroll, John, 311–12
Cars (movie), 409
Carter-Stephenson, George, xiii, 395–96, 410
Casterton, David, xi, 49, 128, 132, 132n, 135, 395, 445
Cayne, Jimmy, 152
Cecere, Chris, x
application to join Tibor, 270, 276
at Brevan Howard, 315, 349
Hayes and Bank of America reference, 320
Hayes and Libor investigation, 296–301, 315
Hayes and “spider network,” 349
Hayes job offer and hire, 229–30, 260
at Japanese getaway, 1–3
Libor submissions, 281–82, 283–84, 291
Pieri and Hayes, 293–94
resignation of, 315–16
risk-taking mandate of, 2
update on, 445
Cecere, Megan, 230, 306
Celtik, Burak, x, 245–46, 276, 294–95, 298, 445
CFTC. See Commodity Futures Trading Commission
Chadwick, Paul, 454
Chamonix, 51, 59
Chance, Clifford, 205–6
Chang Díaz, Franklin, 184
Charles Fulton, 41
Chawla, Mukul, xiii, 422–24, 426, 432, 434–39, 452–53, 454, 457, 458
chemical engineering, 311
Chicago Mercantile Exchange, 73–75
CIA (Central Intelligence Agency), 26
Citadel, 20
Citigroup
bankers and traders, x. See also specific bankers and traders
CFTC investigation, 203, 205–7, 243–46
Code of Conduct, 302
compensation, 230–31
compliance, 295–96
culture of, 275–76, 281, 405–6
FSA investigation, 338–39
government bailout, 164, 230, 243
Hayes firing, 301–7, 313–14
Hayes job offer, 229–32, 239–40
internal Libor investigation, 297–301, 333–34
Japanese getaway, 1–3
Libor investigation, 271
Libor submissions, 245–46, 276–77, 279–82, 294–97, 405–6
Peng at, 186–87
City of London
deregulatory revolution, 29–30, 41
as financial center, 27
Cleary Gottlieb, 297–98, 299
Clinton, Bill, 75, 247–48, 268
Cole, Margaret, xiii, 205, 257, 263, 399–400
commissions, 50–51
Commodity Futures Trading Commission (CFTC), xii, 198–203
Barclays financial settlement, 357–60
Gensler at, 248–49, 253–54
initial interest in Libor, 201, 202–3
Libor and Chicago Merc, 74–75
Libor investigation, 203, 205–7, 243–46, 257, 270–72, 312–13, 350–56, 399–400
Barclays recordings, 262–63, 264, 266
Goodman interview, 355–56
Read interview, 350–52, 354
Wilkinson interview, 352–54
original mandate of, 199–200
reputation of, 200–201
Compton, Steve, 260
Conservative Party, 50, 182, 358, 395
Conti, Anthony, 456
Conway, Christopher, 427–28
Cooke, Jeremy, xiii, 406–7, 411, 427–29, 435, 437, 438, 443–44, 452
Cotchett, Joseph, 254–56, 255–56, 431–32
Crédit Agricole, 86, 120
credit default swap indexes, 349–50
credit default swaps, 196–98
Credit Suisse, 212
Cryan, Noel, xii, 123, 171
background of, 43
Hayes bachelor party, 299–300
Hayes introduction to, 43–44
Libor investigation, 361, 398–99
Libor trial, 452–53, 455–56, 458
SFO criminal charges, 404–5
switch trades, 173–75, 226–28
Curious Incident of the Dog in the Night-Time, The (Haddon), 31
Danziger, Neil, ix, 198, 379
background of, 170–71
partying of, 171–72
suspension of, 334–35
switch trades, 170–74, 176–77, 214, 227–28, 379, 399, 408
Darin, Roger, x
background of, 100–101
Hayes and Libor submissions, 101–3, 115, 160, 232–33
Justice criminal charges, 362, 371, 417
Magumbos incident, 218
update on, 445
Davies, Brent, ix
acting work, 391, 411–12
Hayes and Libor submissions, 108
hiring of lawyer, 347
at ICAP, 223, 283, 343
at RBS, 30–31, 41–42, 108, 167, 223
SFO investigation, 391
Deadline (band), 3
Del Missier, Jerry, 359
Delmar, Nigel, xii, 87, 123, 154, 265, 285, 299
entertaining, 134–35, 140–41
derivatives, 31–33
Libor and, 74–75
swaps, 33–35
Deutsche Bank, x, 287
Adolp
h at, 220–21
Hayes job offers, 212
Hayes job search, 21, 305, 321
Libor rate, 79
Libor submissions, 220–21, 222
Deutsche Börse, 445–46
Dimon, Jamie, 349
Diamond, Bob, 359
DKB Financial Products Inc., 75
“Does the Libor reflect banks’ borrowing costs?” 252–53
Dow Jones Industrial Average, 286
Down syndrome, 328, 330
Drexel Burnham Lambert, 40–41
Ducrot, Yvan, x, 232, 233, 239
Dulles International Airport, 326
dumb money, 29
Eisler, Edward, 159
Elizabeth II of England, 12
Ellis, Paul, xi, 293, 445
Engel, Marcy, 75, 83
Enron, 200, 202, 266–67, 373–74
Ethiopia, 39–40
Euribor, 92
Eurodollar, 74–75
European debt crisis, 285
Ewan, John, xii, 67–68
background of, 67
at BBA, 68, 75–80
false Libor submissions, 181–83, 192–93, 195–96, 222
Hayes trial, 426–27
Libor investigations, 205–8, 270n, 272
Facebook, 110, 147, 381
Farah Pahlavi, 25
Farr, Clare, 45, 455–56
Farr, Sam, 119, 122, 345, 455–56
Farr, Terry, xii, 45–47
background of, 45–46, 119
compensation, 175–76, 378
firing of, 378
Hayes and, 45–47, 59, 87, 121–22, 213–14, 216–17, 224–25, 303–4, 344–46, 407–8
Hayes and Libor manipulation, 95, 108–9, 163–64, 168–70, 282
Libor investigations, 333–34, 344–46
Libor trial, 452–53, 455–56, 459
SFO criminal charges, 390–91, 401
SFO trial of Hayes, 407–8
Stenfors and, 119–22, 163, 170
switch trades, 169–77, 213–14
federal funds rate, 34, 34n, 70
Federal Reserve, base rate, 34, 34n, 70
Federal Reserve Bank of Minneapolis, 251–52
Federal Reserve Bank of New York, 195, 203, 280
Financial Conduct Authority (FCA), 407–8, 416–17
financial crisis of 2007–2008, 164–69, 181–82, 186–87, 248–49, 405
financial globalization, 71–72
Financial Services Authority (FSA), xiii, 63, 204