Ex-UBS trader charged with rigging Libor rate

LONDON, ENGLAND - FEBRUARY 16: A view of 30 St Mary Axe, also known as "The Gherkin" (centre) and Lloyd's Building (Lloyd's of London offices) in the foreground, viewed from the top of The Monument, the world's tallest isolated stone column, on February 16, 2009 in the City of London, England. The Monument, built to commemorate the Great Fire of London of 1666, has reopened after a £4.5 million restoration project taking 18 months. (Photo by Oli Scarff/Getty Images)
Oli Scarff

LONDON British financial fraud investigators have charged a former derivatives trader with conspiring to rig a benchmark interest rate.

The UK's Serious Fraud Office says Tom Hayes, a former trader at UBS and Citigroup, was charged Tuesday as part of the investigation into the manipulation of the London interbank offered rate, or LIBOR.

City of London police charged the 33-year-old with eight counts of conspiracy to defraud. Hayes specialized in products pegged to yen-dominated Libor and worked in offices in London and Tokyo.

He will appear before Westminster Magistrates' Court at a later date.

U.S. prosecutors filed charged against Hayes in December, alleging that he and another UBS trader, Roger Darin, engaged in a scheme to secretly manipulate LIBOR to boost their profits on derivatives trades.

The charges follow an investigation opened last year after Barclays was fined $435 million by American and British agencies for creating false reports on its borrowing costs between 2005 and 2009, specifically related the interbank rate.

LIBOR is the critical rate banks use to borrow from each other. It indirectly affects the cost people pay when they take out loans such as when consumers buy a home or car.

The British Bankers' Association, a trade group, sets the LIBOR daily after a dozen international banks submit estimates of what it costs them to borrow. Regulators in the U.S., Britain, Switzerland and other countries allege some banks submitted fake numbers on purpose to have the LIBOR set at a rate that better suited them.

U.S. and British regulators have fined two big British banks and Switzerland's largest lender hundreds of millions of dollars for manipulating LIBOR.