by David Enrich
overnight index swaps, 103
resignation of, 342
switch trades, 173, 173n
at UBS, 89–90
update on, 445
Pinewood Studios, 412
Pitt, Brad, 237
plea bargains, 348
Porter, Chris, 111
Porter, Laurence, x
background of, 245
Libor submissions, 245, 259, 276–77, 279–80, 280n, 284, 295
update on, 445
PricewaterhouseCoopers, 400
Prince, Charles, 275
Prinz, Sascha, x, 105, 145, 159, 166, 304
Project Green, 334
proprietary trading, 19–20, 36–37
public pension funds, 113–14, 404
Queen Camilla (Townsend), 138–39
Queens Park Rangers (QPR), 11, 15, 56, 125, 145, 147
Qureshi, Shah, 345–46
Rabobank, 109, 163–64, 166, 404, 456
“Rate Probe Keys on Traders,” 346–47
Ravazzolo, Fabiola, 189, 195
RBC. See Royal Bank of Canada
RBS. See Royal Bank of Scotland
Read, Darrell, xi
background of, 47–48
commissions, 130–32
Hayes and, 47–48, 59–60, 63–64, 87, 96–100, 125–26, 142, 148, 162, 211–12, 231–32, 235–37, 265, 320, 350–52
home renovations, 274, 282–83
Justice criminal charges, 394–95
Libor investigation, 335
FSA/CFTC interview, 350–52, 354
Libor manipulation, 96–100, 132–34, 148–49, 149n, 211–12
Libor run-throughs, 97–100, 99n, 116, 385
Libor trial, 452–53, 455–56
in New Zealand, 124–26, 130–31, 148–49, 161–62, 168
retirements of, 162, 168, 211–12, 219, 314
return to ICAP, 219
SFO criminal charges, 404
Read, Joanna, 48, 124, 125, 274, 283
Redford, Robert, 199
Reid, Beryl, 48
revolving door (politics), 400–401
Reza Shah Pahlavi, 25–26
Rihanna, 153
Robb, Richard, 75
Robson, Paul “Pooks,” xi, 163–64, 166, 404, 456
Rogers, Simon, 175
Rohner, Marcel, 144, 145, 212, 275
Roka, 279–80
Rolling Stone (magazine), 157
Roskill Report, 331
Royal Bank of Canada (RBC), 58–59
Code of Conduct, 62
Hayes job offer, 55, 57, 58
Hayes resignation, 61
untangling Hayes trades, 62–65
Royal Bank of Scotland (RBS), 21–24, 29–31, 223
bankers and traders, ix–x. See also specific bankers and traders
compliance, 24, 29
expansion strategy, 53–54
government bailout, 164–65
Libor investigation, 334–35
switch trades, 169–77
RP Martin
brokers, xii, 44–48. See also specific brokers
compliance, 117–18
culture of, 44–45, 46, 117–18
firings, 378–79
Libor investigation, 333–34
Libor manipulation, 109, 163–64, 165–66
SFO investigation, 361
switch trades, 169–77
year-end bonuses, 122, 314–15
Rubin, Robert, 247
Salmon, Chris, xii, 15, 22, 204, 447
Salmon, Felix, 197
Salomon Brothers, 21, 33, 75
San Francisco International Airport, 254
Sanders, Bernie, 249
Sandy Lane, 319–20
Sarao, Navinder, 286n
Saudi Arabia, 332
savings and loan crisis, 268
Schumacher, Michael, 187
Scott, Andy, 55, 57, 61, 63
Securities and Exchange Commission (SEC), 200, 270–72
Seger, Holger, x, 83, 102, 232–33, 445
Seinfeld (TV show), 153, 280
September 11 attacks, 120–21, 202
Serious Fraud Office (SFO), xiii, 331–33
Hayes cleansing interview, 375–77
Hayes as cooperating witness, 371–72, 374–77, 380, 382–85
Hayes criminal fraud charges, 4–5, 6, 367, 370, 371–72, 374–75, 387–92, 397, 407
Hayes not guilty plea, 395–97, 401–2
Libor investigation, 332–33, 359, 360–62
arrests, 364–67
seizure of Hayes assets, 391, 392, 396–97, 452, 455
trial of Hayes. See Libor trial of Hayes
S. G. Warburg, 17, 81
Shearman & Sterling, 138, 381, 396, 455
Shin-Marunouchi Building, 269–70
short-term interest rates, 143
short-term trading, 50
Sibor, 92
Simon & Coates, 40
Skadden, Arps, Slate, Meagher & Flom, 312, 400
slot machines, 13–14, 59
Smith, Andrew, x, 80–83, 232–33, 341–43
Smith, Mark, 261
Smith, Terry, 397–98
Snider, Connan, 250, 251
“Does the Libor reflect banks’ borrowing costs?” 252–53
Soros, George, 155, 280
South Africa, 170–71
Southwark Crown Court, 401, 420–22, 452–53, 455–56
Southwestern Bell, 113
Soviet-Afghan War, 40
Spencer, Michael, xi, 49–50, 395
Christmas party, 121–22
early banking career of, 40–41
early life of, 39–40
education of, 40
at ICAP, 41, 49–50
update on, 445
“spider network,” 6, 349
Spratling, Gary, xiii, 316, 317–19, 323–25, 400
Springsteen, Bruce, 423
squawk boxes, 82, 129
Star Wars: The Force Awakens (movie), 412
Stellmach, William, xiii, 323–25, 400
Stenfors, Alexis, xi, 119–22, 163
background of, 119–20
“mismarking” books, 214–17
switch trades, 170
update on, 447–50
Stenfors, Maria, 214–16
Stewart, Jon, 358
Stewart, Rod, 152–53, 154, 209
Storey, Miles, xi, 80, 206
Strachan, Gordon, 320
Structured Note Market, The (Peng), 186
structured notes, 185–87
“Study Casts Doubt on Key Rate,” 196–98, 201–2
Sugar House apartment, 320, 328, 363
Summers, Larry, 21–22
SunGard, 58–59
Supreme Court, U.S., 267n
Swiss Bank Corporation, 81, 83
switch trades, 169–77, 399
syndicated loans, 27–28
T. Rowe Price, 247
Taibbi, Matt, 157
Tamura, Naomichi, x, 145–46, 290, 445
Tan, Stantley, 276–77, 281–82, 291–92
TARP (Troubled Asset Relief Program), 164–65, 187, 212, 230
Tchenguiz, Robert and Vincent, 332
Team America: World Police (movie), 90
Texas A&M University, 184
Texas electricity markets, 250
Thailand, 115–17, 224
Thatcher, Margaret, 15, 41, 70, 331
Thomson Reuters, 72, 76, 222
Thursfield, Andrew, x
BBA meetings, 78
Citigroup Libor submissions, 276–77, 295
first meeting with Hayes, 258–61, 260n
Libor, 79, 192, 244, 245–46, 246n
Libor trial, 405–6
update on, 445
Tibor, 92, 93–94, 113–14, 269–70, 278
Tighe, Emma, 140, 154, 218, 365, 384, 388
Tighe, Karen, 153–54, 167, 306
Tighe, Sarah
Alykulov telephone call, 329–30
cancer of, 381
Citigroup’s firing of Hayes, 303–4, 305–6, 313–14
Citigroup’s investigation of Hayes, 298–99, 300–301
first meetings with Hayes, 137–41
Hayes arrest, 364–65, 367–69, 370
Hayes car accident, 394
Hayes diagnosis, 413–314
Hayes hiring of lawyer, 347–49
Hayes job offers, 213, 230, 231
Hayes prison term, 451–52
Hayes trial, 410–11, 414–16, 419–20, 428–29, 430, 437–38, 443–44
at Herbert Smith, 161, 217–18
honeymoon with Hayes, 307
marriage proposal of Hayes, 209–10
move to Tokyo, 153–55
Old Rectory home, 337–38, 363–64
pregnancy and birth of Joshua, 328, 330, 337
relationship with Hayes, 147–48, 152–55, 167–68
resignation of, 455
SFO investigation, 383–84, 388–89
vacations with Hayes, 160–61, 224, 285–86, 319–20, 402–3
wedding to Hayes, 265, 305, 306–7
Time (magazine), 33
Title X Technology, 360
Tokyo Dome Bowling Center, 93
traders, 17–22, 41–43, 146–47
derivatives and, 31–35
“entertainment” and broker commissions, 50–53
ethos, 23–24
role of luck, 59
Tradition Financial Services, 52–53, 128–29
Treasury Department, U.S., 247–48, 357
Trivedi, Harsh, 351–54
Troy (movie), 237, 459
tulip mania, 32
Tullett Prebon
brokers, xii. See also specific brokers
Libor investigation, 397–99
polo shirts, 88
switch trades, 170–77
Tyrrell, Steven, xiii, 368–69, 374–75
UBS
Adoboli internship, 22
Adoboli trades, 335–37
bankers and traders, x. See also specific bankers and traders
CFTC Libor investigation, 270–71, 315–19, 322
culture of, 275, 336–37
FSA investigation, 338–39
government bailout, 164–65, 212
Hayes job offer, 60–61
history of, 80–81
Justice investigation, 323–25
Libor financial settlement, 369–70, 372–73
Libor system, 81–83
OFT investigation, 332–33
Pieri’s anti-Hayes bandwagon, 292–94
post-Hayes trading, 288–94
shareholder meeting, 149–51
switch trades, 169–77
“Umbrella” (song), 153
UniCredit Bank, 220
University of Bath, 67
University of California, 256
University of Delaware, 311
University of London, 447
University of Minnesota, 249–50
University of Nottingham, 14, 16, 21, 22, 335
University of Pennsylvania, 246–47
University of Southampton, 448
Vampire Squid, 157–58
Venice Beach, 209
Vogels, Frits, xi, 168, 335
Wall Street Journal, 6, 188–91
“Libor Fog: Bankers Cast Doubt on Key Rate Amid Crisis,” 190–91, 195, 202–3, 204–5
“Rate Probe Keys on Traders,” 346–47
“Study Casts Doubt on Key Rate,” 196–98, 201–2
Wallis, Deborah, 183, 192
Walsh, Andrew, 150–51
Wandsworth Prison, 444, 450
Waterloo Station, 98
We Need to Talk About Kevin (Shriver), 54
Weill, Sandy, 230
WestLB, 97, 98, 99, 133, 206
When Genius Failed (Lowenstein), 288
White, Paul, x, 283, 334–35
Whitehouse, Mark, 190–91, 196–98
Whitewater controversy, 268
Wikipedia, 207–8
Wiley, Stuart, xi, 107–8, 108n, 170, 214, 225–26
Wilkinson, Danny, xi, 126–30
background of, 127
fees and commissions, 132, 274
Hayes and, 128–29, 130, 155–56, 225–26, 352–54
Hayes firing, 304
Justice criminal charges, 394–95
Libor investigation, 335
FSA/CFTC interview, 352–54
Libor submissions, 99, 130, 132, 225–26, 274
Libor trial, 452–53, 455–56
music and DJing, 412
nicknames of, 126
SFO criminal charges, 404
suspension of, 343–44, 343n
Williams, Andrew, 372
Williams, David, 348, 348n, 391
Willkie Farr & Gallagher, 400
Wilmot-Sitwell, Alex, x, 231, 233, 372–73
Windsor Pub, 152–53, 313
Wink, Angus, xii, 173–74, 174n
Wiston House, 256–57
World Darts Championship, 401–2
World Trade Center, 120–21, 202
Yomiuri Giants, 93
Youle, Thomas, 249–53
“Does the Libor reflect banks’ borrowing costs?” 252–53
Libor research, 250–53
Zombanakis, Minos, 26–27, 28, 68
Zurich, 237–38
About the Author
David Enrich is a veteran writer and editor at the Wall Street Journal. He currently is the Journal’s Financial Enterprise Editor, heading a team of investigative reporters. He previously served as the Journal’s European banking editor, based in London. He has won numerous journalism awards, including the 2016 Gerald Loeb Award for his coverage of Tom Hayes and the Libor scandal. A Massachusetts native and a graduate of Claremont McKenna College in California, he lives in New York with his wife and two sons.
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Copyright
the spider network. Copyright © 2017 by David Enrich. All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the nonexclusive, nontransferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, downloaded, decompiled, reverse-engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereafter invented, without the express written permission of HarperCollins Publishers.
first edition
Cover design by Ben Wiseman
Cover photographs: © Bloomberg / Getty Images (Tom Hayes); © Brand New Images / Getty Images (businessmen); © staystock.com (man with knife); © Lauren Burke / Getty Images (money)
Digital Edition MARCH 2017 ISBN: 9780062453006
Print ISBN: 978-0-06-245298-6
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* Hayes’s boss at the club gave him good marks, but the teenager did exhibit some odd behavior. Once, instructed to gather stray
tennis balls, Hayes collected roughly 150 balls and squirreled them away at his home.
* Trading profits and losses aren’t zero-sum among banks. In many cases, nonbank institutions are on the opposite side of a bank’s trade, meaning that for every winning trade, there doesn’t need to be an offsetting loser at another bank.
* The Fed’s base rate, or federal funds rate, represents how much banks charge each other to borrow money that’s on deposit at the Fed. It serves as the basis for the interest rates that banks charge to lend that money out to their customers.
* The honor would be stripped away, years later, after the financial crisis.
* Bonuses historically made up the vast majority of traders’ and investment bankers’ total compensation.
* Following Read’s delivery, Japanese trash collectors sent Hayes a letter telling him he had to stop using the black bags. It was against the rules. Hayes grudgingly complied.
* Hayes would later claim that he didn’t view it as a genuine request so much as an articulation of his desire to see Libor inch higher.
* Those tenors ranged from overnight—in other words, the rate at which a bank thought it could borrow money for less than a day—to one year. Intervals included one week, one month, two months, three months, and six months.
* Read would later deny that it was his idea.
* Pieri would later say that he thought such arrangements were standard industry practice.
* While most adults in Japan get a “-san” attached to their names, Hayes was known as “Tom-chan”—a suffix usually reserved for children.
* Before long, J.P. Morgan would install a new Libor submitter, one whom Wiley viewed as more amenable to requests from traders. “So do you wander over, give him the odd Mars bar and say, you know, ‘end of the year, we’ll sort you out’?” an ICAP broker asked after Wiley shared the good news. Yes, Wiley replied.
* The notional value refers to the “headline” size of the instruments that the derivative is referencing—as in the $100 swap that ABC Corp. entered into with Giantbank. The actual amount of money that changes hands in the derivative transaction is much lower than the notional amount.
* Goodman would later say that the run-through was based on figures he was seeing in the market and wasn’t an attempt to manipulate Libor.