Ex-ICAP broker tells court Libor emails should not taken literally

By Kirstin Ridley

LONDON, Nov 19 (Reuters) - A former ICAP (LSE: IAP.L - news) broker charged with conspiring to rig Libor benchmark interest rates said on Thursday his electronic communications with colleagues asking for higher or lower rates should not be read literally.

Darrell Read, one of six former brokers on trial at Southwark Crown Court, told the jury that emails to colleagues with headlines such as "morning begging email!!" were designed only to pass on trading information from his principal trader client Tom Hayes and seek market information and were not designed to influence Libor rates.

Hayes, a former UBS (NYSEArca: FBGX - news) and Citigroup (NYSE: C - news) yen derivatives trader, was convicted in August of conspiring to rig Libor - a benchmark for around $450 trillion of financial contracts and consumer loans. He was sentenced to 14 years in jail and is appealing the sentence and conviction.

Broking firms general became a focus for a global inquiry into alleged rate rigging because of the role they play in sharing information with networks of traders and in matching buyers and sellers of bonds, currencies and swaps, for which they charge a fee.

Prosecutor Mukul Chawla, a lawyer for Britain's Serious Fraud Office, on Thursday alleged Read had asked former colleague Colin Goodman to favour Hayes's trading position when sending his daily Libor rate predictions, which Goodman sent to bank clients that help to set Libor rates.

Cross-examining Read in London's second Libor trial, Chawla showed the jury scores of emails and messages between brokers and traders on screens in the court.

"Morning lad, on the scrounge again," Read emailed Goodman on Oct (HKSE: 3366-OL.HK - news) . 23, 2006. "If possible keep 3 month (Libor) the same and get 6 month (Libor) as high as you can," the emails shown to the court said.

Goodman, who is also one of the six on trial in London, sent out daily "run-throughs" - predictions of where he saw yen-denominated Libor rates setting each day.

Prosecutors allege these were used by brokers to lure banks that help to set the interbank interest rates into following the predictions "like sheep."

But Read said he was merely passing on Hayes's trading positions and was hoping for information about where Goodman saw rates heading in return, which he could feed back to Hayes.

"You haven't worked with us for 15 to 20 years and you don't know the manner in which we communicated," he told Chawla.

Read, Goodman and four other former ICAP, RP Martin and Tullett Prebon (LSE: TLPR.L - news) brokers are charged with conspiracy to defraud by manipulating the London interbank offered rate (Libor) between 2006 and 2010. They have pleaded not guilty.

Read said he worked hard to appease Hayes, who he said was volatile and difficult to handle, "fobbing him off" by pretending he could help to influence Libor rates when he could not.

"On his first day of trading at Citigroup in 2010, Hayes threw so many tantrums that he threatened to stop using four brokers. When he realised he was running out of brokers, he briefly made peace with one before promptly dropping him again, Read said.

(Reporting by Kirstin Ridley. Editing by Jane Merriman)