LIBOR rigging: Difference between revisions

LIBOR rigging (view source)

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 {{Quote|“An individual BBA LIBOR Contributor Panel Bank will contribute '''''the rate at which it could borrow funds''''', were it to do so by asking for and then accepting inter-bank offers in reasonable market size just prior to 1100.”}}
-On any day there would be a range of rates at which a bank ''could'' borrow. These might be firm offers from other lenders, good faith estimates or model outputs. There is an excellent subjunctive in there: “were it to do so” implies that it need not actually do so.
+On any day there would be a range of rates at which a bank ''could'' borrow. These might be firm offers from other lenders, good faith estimates or model outputs. There is an excellent [[subjunctive]] in there, by the way: “''were'' it to do so” implies that it need not actually do so.
-Say the range on a given day was between 2.50% and 2.53%. Which of these was, for the purpose of the LIBOR Definition, “the rate at which it could borrow funds”? Plainly, a submitter could not submit all of them.
+Say the range of available rates on a given day was, as the court hypothesised, between 2.50% and 2.53%. Which of these was “the rate at which it could borrow funds”? Plainly, a submitter could not submit all of them.
-It seems to JC the logical options (leaving aside their legality for a moment) were:
+The logical options (setting aside for now their legality) were:
-''Pick one of the available rates'': Choose one rate from those that were genuinely available per the bank’s good faith enquiry as above.
+''Pick an “available” rate'': Choose one rate from those that were genuinely available per the bank’s good faith enquiry as above.
-''Make a blended rate'':  Contrive some artificial rate from within that range, reflecting a weighted average, or some such thing.
+''Manufacture a blended rate from the range'':  Contrive some artificial rate from within that range, reflecting a weighted average, or some such thing.
 ''Make one up'': Submit a rate that did not fall within the estimated range, whether lower or higher.
-“Making something up” plainly falls outside the scope of the LIBOR Definition. “Making a blended rate” does not quite match the literal text, but perhaps captures its spirit. But in any case, Hayes did neither of these things.
+“Making one up” plainly falls outside the scope of the LIBOR Definition.
-''Picking one of the available rates'' is what Hayes actually did. The complication is that Hayes actively sought out opinions as to which available rate would best suit the bank’s overall derivative trading position. That is, he was guided by the bank’s overall commercial interest, and not, well, its basic banking commercial interest.
+“Making a blended rate” does not quite conform to the text, but perhaps captures its spirit. But in any case, Hayes did neither of these things.
-This is the crux of the case. This, so the Crown alleges, is a punishable conspiracy to defraud. Hayes’ motivation was dishonest in light of the ''proper basis for the submission of those rates''.
+“''Picking one of the available rates''” is what Hayes actually did. The complication is that Hayes actively selected the available rate that best suited his derivative trading position. That is, he was guided by his desk’s commercial interest, and not, the bank’s “structural” commercial interest.
+This is the crux of the case. Having this ulterior motive — dishonest in light of the ''proper basis for the submission of those rates'' so the Crown alleged — was an imprisonable conspiracy to defraud.
 ====“A conspiracy to defraud”====