Goldman Sachs offered Tom Hayes US$3m bonus to quit UBS

MAY 28, 201511:30 PM

[LONDON] Goldman Sachs Group Inc tried to poach Thomas Hayes from UBS Group AG in 2008 with the promise of a US$3 million signing bonus, according to documents at a London trial.

The job offer was disclosed on Thursday in an e-mail sent by one of Mr Hayes's bosses at UBS, Sascha Prinz, years before the Libor scandal which resulted in Hayes facing criminal charges that he conspired to manipulate the benchmark interest rate.

"One of my most talented young traders in Tokyo, Tom Hayes, is being aggressively pursued by Goldman Sachs," Mr Prinz, head of fixed income for Europe, wrote to Jerker Johansson, the head of UBS's investment bank, in a June 24, 2008, e-mail shown to the jury by UK prosecutor Mukul Chawla.

"They are offering Tom a large role with significantly more responsibility plus a US$3 million guarantee for 2008."

Mr Hayes, 35, is accused of eight counts of conspiracy to manipulate the London interbank offered rate, the benchmark used to value more than US$350 trillion of loans and securities, from 2006 through September 2010. The former trader, who worked at banks including UBS and Citigroup Inc, has pleaded not guilty to the charges.

Mr Prinz asked his boss to secure a US$2.5 million bonus to keep Hayes as the trader had made approximately US$30 million for the bank in 2007 and was already US$45 million up so far in 2008, the letter said.

"Tom's bonus at UBS for 2007 was US$1.25 million, which was on the very low end of his expectations," Mr Prinz wrote to Mr Johansson. "We do not have a single guarantee in rates for this year - but I would like to make an exception in this case."

UBS managed to retain Hayes with the improved compensation package, Mr Chawla said. Mr Hayes didn't get the full bonus however, because of the global financial crisis, the prosecutor said.

Mr Hayes is accused of colluding with co-conspirators at banks including HSBC Holdings Plc, JPMorgan Chase & Co and Deutsche Bank AG and interdealer brokers to manipulate yen Libor.

Mr Hayes paid kickbacks to his brokers for their assistance in rigging the rate, Mr Chawla said.

One method of paying the bribes was through so-called wash trades, where counterparties place two or more matching trades through the broker that cancel one another out, but still trigger fees for the middle man.

"If you keep 6's unchanged today, yeah, I will f--ing do one humongous deal with you," Mr Hayes said on a Sept 18, 2008, call with one broker, referring to the six-month yen Libor rate. "Like a f--ing 50k buck deal."

Between September 2008 and August 2009, UBS paid more than 300,000 pounds in brokerage fees through 14 such deals to two interdealer broker firms, Mr Chawla said.

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