The British Bankers’ Association was told that banks were lying about Libor submissions to suit their trading positions as early as 2007, according to evidence at a London criminal trial.
“I am starting to receive more and more comments and queries on the levels at which rates are currently setting,” BBA Libor Director John Ewan said in a November 2007 e-mail sent to Libor panel banks, which was shown to jurors in London today. “Currently these queries are coming largely from hedge funds, non-contributor banks, and the occasional broker.”
The e-mails came to light Friday, on the eighth day of the trial of former UBS Group AG and Citigroup Inc. trader Thomas Hayes, who is accused of eight counts of conspiracy to manipulate the London interbank offered rate. BBA deputy Chief Executive Officer Sally Scutt was being questioned about the lobby group’s oversight of the rate by defense lawyers Friday.
Ewan requested feedback from the banks and received several responses that detailed some bankers’ concerns that competitors were submitting rates that suited trading bets.
“Many institutions set their Libors based on their derivative reset positions,” Philip Rawlins, a treasury employee at Bank of Scotland Plc, said in a Dec. 6, 2007, message.