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How Tom Hayes Rigged Libor, and How He Was Caught

A fantastically written story on how the Libor “rigging” scandal unravelled, and Tom Hayes was caught:  (Bloomberg)

Libor was set by a self-selected, self-policing committee of the world’s largest banks. The rate measured how much it cost them to borrow from each other. Every morning, each bank submitted an estimate, an average was taken, and a number was published at midday. The process was repeated in different currencies. During his time as a junior trader in London, Hayes had gotten to know several of the 16 individuals responsible for making their bank’s daily submission for the Japanese yen. His stroke of genius was realizing that these men mostly relied on interdealer brokers, the fast-talking middlemen involved in every trade, for guidance on what to submit each day.

Hayes saw what no one else did because he was different. Hayes’s intimacy with numbers, his cold embrace of risk, and his manias were more than professional tics; they were signs that he’d been wired differently since birth. Hayes would not be officially diagnosed with Asperger’s syndrome until 2015, when he was 35, but his co-workers, many of them savvy operators from fancy schools, often reminded Hayes he wasn’t like them. They called him Rain Man. Most traders looked down on brokers as second-class citizens, too. Hayes recognized their worth. He’d been paying them to lie ever since he had.

The whole article is fabulous.

It’s from a book – The Fix, By Liam Vaughan and Gavin Finch (Only available for Preorder)

In that context, the investigators in India are nowhere close. We let people go for much graver offenses, and the layers of investigation are too weak. We would find a hundred such things and let most of them go. Now that banks in the US and UK have been fined big time for such manipulation, it remains to be seen if (or when?) we find banks caught with their pants down in India – either evergreening loans or manipulating their books or worse, hoodwinking customers into buying insurance policies instead of deposits – will our courts fine them enough so they learn a lesson? Let’s hope so.