Libor Investigation Reveals Existence of VIP Rate-Rigging Club

It’s very exclusive. Photo: iStockphoto

Libor-gate has been a big deal for a few weeks now, but it hasn’t quite broken the mainstream-interest threshold.

One issue is that, as hard as Jon Stewart has tried, it’s hard to get people riled up about a scandal involving interest rates. But the bigger problem is that investigators aren’t naming names. In the Barclays settlement, regulators gave the alleged villains — the traders accused of conspiring to submit false rates to the authorities who set Libor — the cover of anonymity, calling them things like “Trader F” and “Submitter.”

Who, we all wondered, were the members of this shadowy group?

Thanks to an enterprising bit of digging by the FT yesterday, we now have some names to accompany our collective outrage.

Philippe Moryoussef, a former Barclays trader, was reportedly the “former Barclays senior Euro swaps trader” who conspired with traders at several other banks to rig Barclays submissions to Libor and Euribor — which is the same thing but for the Eurozone.

That means, according to the FT, that Moryoussef was the guy behind exchanges like these:

Barclays’ Senior Euro Swaps Trader discussed the need for low one month Euribor with traders at Bank A and Bank B, and contacted a trader at Bank C.

Barclays’ Senior Euro Swaps Trader then reminded Barclays’ Senior Euribor Submitter of his request from Friday: “hi [Senior Euribor Submitter]. Sorry to be a pain but just to remind you the importance of a low fixing for us today.”

Barclays’ Senior Euribor Submitter replied: “no problem, I had not forgotton. The [voice] brokers are going for 3.372, we will put in 36 for our contribution; 

Barclays’ Senior Euro Swaps Trader’s responded: “I love you.”

But Moryoussef — who left his new job at Nomura over his involvement in the scandal — didn’t work alone. According to the FT, his circle included “external traders” such as Michael Zrihen at Crédit Agricole, Didier Sander at HSBC, Christian Bittar at Deutsche Bank, and an as-yet-unnamed group of traders at Société Générale. 

Together, this VIP club of rate-riggers — let’s call them the Li-bros — are said to have worked together to submit false Euribor rates, which would allow them to squeeze a few extra dollars out of their futures trading positions. They may also have been among the “external traders” who famously celebrated pulling off a successful rig like Sig Ep brothers:

For example, on 26 October 2006, an external trader made a request for a lower three month US dollar LIBOR submission. The external trader stated in an email to Trader G at Barclays “If it comes in unchanged I’m a dead man”. Trader G responded that he would “have a chat”.  Barclays’ submission on that day for three month US dollar LIBOR was half a basis point lower than the day before, rather than being unchanged.  The external trader thanked Trader G for Barclays’ LIBOR submission later that day: “Dude.  I owe you big time!  Come over one day after work and I’m opening a bottle of Bollinger”.

Regulators are investigating all four men, who all appear to have been LinkedIn friends, and some of whom have left their banks and now work for a number of hedge funds in Europe.

No word so far on whether the Li-bros had a secret handshake or whether they just fist-bumped and said, “You the man, dog.” “No, YOU the man.”

Libor Scandal Gets Personal