This month began rather badly for Tom Hayes. A jury found him guilty of eight counts of conspiracy to defraud in connection with the manipulation of the London Interbank Offered Rate. He was then sentenced to 14 years, half of which will be spent in prison before there is any possibility of release.
Hayes had defended himself by trying to kick responsibility up the ladder. His superiors have thus far managed more successfully to do the same in reverse: they’ve kicked responsibility down the same ladder, blaming everything on rogues.
“Well, that’s why you’re the boss.”
Next month may bring Hayes at least a small sense of vindication to clutch to his heart as he begins serving that term. Portfolio/Penguin is bringing out Open Secret, a book on the way Libor was rigged, written by Erin Arvedlund, whose previous book Too Good to be True (2009) was one of the better additions to the Madoff-scandal library.
Aug 14 U.S. prosecutors on Friday identified a British former trader at Rabobank as a potential target of a broad investigation into Libor benchmark manipulation that has already resulted in charges against seven of the bank’s employees.
The identity of Damon Robbins, the ex-Rabobank employee, was confirmed by a U.S. Justice Department prosecutor and others during a court hearing in New York on Friday in a criminal case against two of the trader’s former colleagues.
The prosecutor, Michael Koening, called Robbins an unindicted co-conspirator of the two former Rabobank traders, Anthony Allen and Anthony Conti, who are scheduled to face trial on Oct. 5.
It is unclear if Robbins will ever face charges. Koenig said the Justice Department has “not made a determination” on whether to indict Robbins.
The year 2009 was rough for the Bank of America and its chairman and chief executive, Ken Lewis. On Jan. 1, the bank closed its $50 billion purchase of Merrill Lynch, a deal Lewis had hastily negotiated the previous September, as the financial world appeared close to collapse.
Just weeks later, it all came a cropper, after Bank of America revealed, shockingly, that its new unit had lost more than $15 billion during the fourth quarter of 2008. That bank had to ask the government to backstop $118 billion in Merrill’s toxic assets, and to provide it $20 billion in additional capital. The stock dropped below $7 a share from over $33.
Furious shareholders sued. But they also did something else: Led by the Service Employees International Union and Finger Interests, a Houston hedge fund, shareholders offered a binding resolution at the annual meeting calling for Lewis to step down from his role as board chairman. The idea was that having separate people serve as C.E.O. and chairman would provide additional board oversight.
The resolution narrowly passed. Several participants have since told me that they believe it’s the only example of shareholders passing a binding resolution over a board’s objection.
Fast forward to last October. Without question, Bank of America has come a long way since those dark days. Under Brian Moynihan, who has been the chief executive — but not the chairman! — since 2010, the company has “reduced leverage, rebuilt its capital and simplified its business,” according to Jonathan Finger, comanaging partner of Finger Interests, which remains a shareholder. But the bank has also had trouble passing the Federal Reserve’s “stress tests,” had a $4 billion accounting error in 2014, and its stock has underperformed its banking industry peers.