Britain charges ex-Citigroup trader in LIBOR scandal

• Britain brings its first criminal charges in LIBOR probe
• Thomas Hayes is a former UBS and Citigroup trader
• Regulators have fined banks more than %242.5 billion

LONDON — A former Citibank and UBS trader suspected as a key figure in the manipulation of a currency benchmark rate was hit with criminal charges Tuesday by British authorities as the global investigation into alleged rate-rigging escalated.

The Serious Fraud Office said Thomas Hayes, 33, was charged with eights counts of "offenses of conspiracy to defraud" for his alleged role in manipulating LIBOR, the London Interbank Offered Rate used to set the rates of hundreds of millions of dollars in mortgages, car loans, credit cards and financial derivatives contracts.

Hayes was formally charged Tuesday at London's Bishopsgate police station. He is scheduled to appear before Westminster Magistrates' Court at a later date. Hayes could not be reached for comment, and Fulcrum Chambers, the London law firm that represents him, declined to discuss the case.

The allegations mark the first time that British authorities have brought criminal charges in an investigation that sent financial shock waves around the world as it spread from London to the U.S. and Asia. Authorities in the U.S. and other countries have signaled that criminal charges against other targets are expected as rate-rigging investigations continue.

The charges against Hayes "must be just the beginning," said Dennis Kelleher, president of Better Markets, a non-profit that seeks tougher financial enforcement. "Law-abiding citizens throughout the world can only hope that this prosecution and many more will mean that the era of no-accountability at the global banks is over."

LIBOR:Global interest rate-rigging-crackdown escalates

A December federal court complaint filed in New York accused Hayes and a second trader of conspiracy, wire fraud and other charges based on LIBOR-related transactions between September 2006 and September 2009. Those trades occurred while Hayes worked for Royal Bank of Scotland or UBS before he joined Citigroup.

However, U.S. authorities have been unable to bring Hayes to federal court on those charges amid the separate investigation in London. Successful prosecution of the London charges could prevent U.S. federal prosecutors from proceeding with their case because of double-jeopardy legal restrictions.

Justice Department spokesman Peter Carr in Washington, D.C., declined to comment Tuesday on the new charges in London.

Federal court records show that Hayes, while working for Citigroup, allegedly asked counterparts at other banks to help rig LIBOR rates, thereby helping his other trading positions, USA TODAY reported in February.

The court records show that on March 3, 2010, he messaged a friend at a brokerage firm and explained that his trading would benefit from a low LIBOR rate for Japanese yen — referring to one of the 10 currency-based LIBOR rates that British banks set daily based on their estimated cost of borrowing from each other.

"Any favours you can get … would be much appreciated," Hayes messaged, according to the court records.

I'll give him a nudge later, see what he can do," the unidentified brokerage trader responded. "Thanks mate … really really would appreciate that," Hayes responded.

Royal Bank of Scotland's yen submission edged down the following day, and the brokerage trader messaged "good work!!!!" to the Royal Bank of Scotland bank contact.

U.S. and British investigative focus on Hayes has depicted him as a central player in the LIBOR scandal. However, The Wall Street Journal reported in January that it received a text message from Hayes in which he said, "This goes much much higher than me."

Admissions of improper LIBOR-related collusion from the Royal Bank of Scotland, London-based Barclays and Swiss giant UBS have led regulators to fine the banks more than $2.5 billion collectively.

The charges against Hayes are among several recent developments into the global probe of suspected currency rate-rigging.

On Friday, Singapore's central bank said 133 traders at 20 global banks based in the U.S. or overseas attempted to manipulate foreign exchange and interest-rate benchmarks in the city-state. While there was no conclusive evidence that found the traders improperly influenced the benchmarks, about three-quarters of the traders resigned or were asked to leave their posts, the central bank said.

The banks involved — including Bank of America, Citibank and JPMorgan Chase — were cited for deficiencies in governance, risk management and internal controls. They were ordered to correct the problems and post as much as $959 million each in increased statutory reserves at zero interest rates for one year.

Meanwhile, a probe into possible manipulation of the Hong Kong Interbank Offered Rate, a LIBOR equivalent, has been expanded. The Hong Kong Monetary Authority said Tuesday that HSBC Holdings, Hong Kong's dominant commercial bank, had been added to an investigation that initially focused on UBS. The identities of other banks being investigated in Hong Kong have not been disclosed.

HSBC disclosed a year ago that it was involved in interbank probes in several countries. The bank said Tuesday it would not comment on "specific requests." UBS previously admitted to the manipulation of EURIBOR and TIBOR, interbank rates set in Brussels and Tokyo.

Additionally, The Wall Street Journal reported earlier this month that U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their suspected roles in manipulating benchmark interest rates.

McCoy reported from New York. Zach Coleman contributed to this story from Hong Kong.