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Libor Trial: Bank of England Official Received Alleged Libor-Fix Emails

A senior Bank of England official was among more than 20 recipients of emails that were part of an alleged campaign to rig lending rates between banks, evidence presented in the trial of trader Tom Hayes in London has revealed.

Martin Mallett, the former chief currency dealer at the Bank of England, was copied into emails sent in 2007 by brokers allegedly working in collusion with Hayes, a trader working for UBS in Tokyo at the time.

In the emails, the brokers disseminated daily forecasts of the interest rates charged between banks for lending in the Japanese yen. Mukul Chawla QC, the prosecutor trying Hayes, said the emails were sent in an attempt to skew JPY Libor rates for the benefit of Hayes.

Libor is set by taking the average rate from a designated panel of 16 top banks, and the forecasts sent out in daily alerts by the brokers were intended to inform rate submitters at the panel banks as to where they believed the published JPY Libor rate would set for a particular day.

Chawla claims Hayes pushed big fees through the brokerage firm issuing the alerts, in return for being able to influence their contents. Hayes is alleged to have placed big bets in contracts that could earn him hundreds of thousands of pounds, depending on fractional movements in Libor.

According to reports, Mallett, who left the Bank last year, was copied in using his address.

It is not clear why Mallett received the emails and there is no suggestion that he knew of, or was involved in, the alleged Libor manipulation by Hayes and his brokers.

In an emailed statement, a spokesperson for the Bank of England, tells Profit & Loss: “In line with convention followed by public bodies, where precedence to criminal trials is afforded wherever possible, it would be inappropriate for the Bank to comment on an active criminal proceeding.”

Hayes’ employer, UBS, paid a $1.5 billion fine to US, UK and Swiss regulators in 2012 for its role in the manipulation of Libor. Earlier this month it pleaded guilty to a criminal charge after the US Justice Department tore up a non-prosecution agreement.

Hayes has pleaded not guilty to criminal charges, but has not yet presented his defence to the jury at Southwark Crown Court.

News organisations covering Hayes’ trial are not allowed to report on the identities of the brokers or their employer.

The trial comes after a seven-year global investigation into Libor manipulation that has resulted in banks and brokerages paying around $9 billion in fines. Twitter: @profit_and_loss

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