Business reporter for the NZ Herald

Acquitted broker free to return to the quiet life

Currency trader came to New Zealand for a change of pace, but rate-rigging claims followed him, writes Hamish Fletcher.
Darrell Read leaves Southwark Crown Court. After being cleared of rigging Libor rates he said: "I'm just incredibly relieved." Photo / Getty Images
Darrell Read leaves Southwark Crown Court. After being cleared of rigging Libor rates he said: "I'm just incredibly relieved." Photo / Getty Images

Acquitted currency broker Darrell Read wanted to train as a teacher when he migrated to New Zealand but was repeatedly persuaded to stay on with the financial giant where he'd worked for a decade.

He came to this country, a British court heard last year, because his hours at London brokering firm ICAP had become too punishing for his family life.

But while Read's 2007 move across the other side of the world may have got him out of the City, it also put him in a similar timezone to his biggest client and the man who prosecutors alleged he conspired with to rig the benchmark banking rate known as Libor.

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That was the same accusation the British Serious Fraud Office levelled against Read's five co-accused, who celebrated this week when a jury in Southwark's Crown Court acquitted them on charges for conspiracy to defraud.

Despite their trial stretching on for more than three months, the jury took only a day to clear the five brokers of wrongdoing.

They would take just one day longer to acquit Read in a majority verdict.

"I'm just incredibly relieved," Read told news outlets, which reported he was holding back tears.

"I'm looking forward to seeing my wife now," the 50-year-old said.

Read and his co-defendants all denied conspiring to manipulate Libor for the benefit of trader Tom Hayes, who is serving an 11-year jail sentence after becoming the first person to be convicted over the rigging of Libor.

Libor - which stands for London interbank offered rate - is firmly woven into the fabric of the world's capital markets.

From major international financing deals through to everyday home mortgages, it is is a key plank in the relationship between borrowers and lenders globally.

The rate sets the scene for banks, international financiers, mortgage lenders, credit card companies or anyone wanting to raise funds through interest rate markets.

A British banking trade group sets the Libor every morning after international banks submit estimates of what it costs them to borrow.

Prosecutors argued that the men on trial helped Hayes by asking traders at other banks to try to move the rate by changing their submissions.

For Read's part, it was alleged he conspired with Hayes over a four-year period, including after his move to New Zealand.

Hayes, who worked at UBS in Tokyo and then at Citigroup, was Read's biggest client.

"My salary was totally dependent on Tom Hayes," Read told the court in November.

"If he didn't pay any brokerage I didn't make any money," said Read, who earned more than £500,000 ($1.1 million) in 2010.

But Read, when giving evidence in his defence, said he lied to Hayes about his ability to influence Libor.

Read said it would have been "financially suicidal" to be seen to be favouring one trader and that banks would have complained.

Darrell Read, centre, and the men he was on trial with: James Gilmour, Colin Goodman, Terry Farr and Noel Cryan. Photos / Getty Images
Darrell Read, centre, and the men he was on trial with: James Gilmour, Colin Goodman, Terry Farr and Noel Cryan. Photos / Getty Images


In any event, Read said that the idea that a bank would listen to a broker was nonsense.

He said he came up with excuses if the rates did not reflect what Hayes wanted.

"The excuse was often 'the guy's not here today, he's in a meeting, he's sick today'," Read told the jury last November.

For all the seriousness of the allegations against the Read and the other men, their trial was punctuated by levity.

The court heard that Read went by the nickname "Big Nose", co-accused Colin Goodman was called "Lord Libor" and Danny Wilkinson "Sarge".

All three worked together at brokering firm ICAP, an international giant which processes more than US$1 trillion in deals each day. Read had worked there since 1998 and stayed on in his role after moving to New Zealand.

It was said the brokers were offered takeaway curry, beer and restaurant meals in return for allegedly helping to fix Libor.

The jury heard that Read told Goodman:

Can you please get three and six-month [Libor rates] as high as is possible today. We'll sort you out with a curry takeaway next week in recognition of your efforts. Thanks, mate.

In another email exchange, Read allegedly promised Goodman "copious amounts of curry" in return for manipulating the rates.

Messages between Goodman and Read had already surfaced two years earlier, when the United States Department of Justice announced wire fraud charges against the pair.

Those charges, filed in a New York court, were revealed in September 2013, months before the SFO would bring its case in the United Kingdom.

By the time US charges became public, Read was no longer working for ICAP.

Tension between the US and UK regulators over Libor had already arisen over who would get to try Hayes and their relationship was tested again when the Department of Justice issued an international arrest warrant for Read last year.

Despite this -- and that American authorities laid charges first -- the SFO got its way and its case began in October.

That a jury didn't believe the allegations is a huge blow for the UK fraud-buster, which went on the defensive this week when the six men were acquitted.

"Nobody could sensibly suggest that these charges should not have been brought and considered by a jury," SFO director David Green said.

"The key issue in this trial was whether these defendants were party to a dishonest agreement with Tom Hayes. By their verdicts the jury have said that they could not be sure that this was the case."

The SFO boss will be hoping for a different result when his agency's next Libor case against former employees of Barclays bank reaches court next month.

For Read's part, he is likely looking forward to getting back to New Zealand, where he owns a home in the Wellington suburb of Wadestown with his wife.

Those who have followed the Libor scandal, however, will now be wondering whether or not Read's US prosecution can go ahead.

If not, perhaps Read will follow through on his plan to become a teacher.

- NZ Herald

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