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Former trader Tom Hayes has claimed UBS’s internal investigation into Libor rate-fixing was stacked against him, arguing its code name “Project Chocolate” — after his trading floor nickname — shows he was targeted from the outset.
Hayes, whose conviction for Libor manipulation was quashed last year by the UK’s highest court, is suing his former employer for at least $400mn in the US over claims of malicious prosecution. UBS is seeking to dismiss the case, and Hayes raised the new allegations about the investigation in an effort to keep the case going.
Internal documents disclosed during the discovery process show UBS named its probe “Project Chocolate” because he was known as “Tommy Chocolate” during his time at UBS, as he preferred hot chocolate over alcohol at social events, his attorneys said in a court filing.
By naming its investigation after him before the review was completed, UBS pre-determined Hayes as the target, his lawyers contended in a filing in a Connecticut state court.
“The name was apt. It was chosen because the goal of that investigation was to convince the government to target Hayes,” they wrote. “It worked. Through the ‘project’ named for him, UBS deliberately orchestrated Hayes’ prosecutions.”
UBS launched the internal investigation, run by law firm Gibson Dunn, in 2011, after facing intense pressure from US authorities to respond to the Libor scandal, according to the filing.
In his lawsuit filed last year, Hayes contends the bank made him a scapegoat to protect its own top executives and secure favourable treatment from global regulators.
UBS is seeking to dismiss the suit, arguing it should be heard instead in England or New York. The bank has also invoked Connecticut’s “anti-slapp”, or strategic lawsuits against public participation, law to block Hayes’ claims.
Lawyers for UBS said in a filing earlier this year that Hayes’s complaint “unlawfully seeks to use the Connecticut courts to punish the defendants’ co-operation with law enforcement authorities, a quintessential form of protected speech”.
One person close to UBS said project names for confidential matters at the bank were chosen to ensure they “cannot be associated with the content of the issue”.
UBS declined to comment on Monday.
The manipulation of the now-defunct London interbank offered rate, which was used to set interest rates throughout the financial system, sent shockwaves through global markets. The fallout cost banks billions of pounds in fines and settlements.
Hayes became the public face of the scandal and spent five and a half years in jail after a London jury convicted him in 2015 of rigging the rate.
The former trader has long maintained he was only trying to do his job well and did everything with the knowledge of his superiors.
The UK Supreme Court overturned his conviction last year, although it stopped short of exonerating him.
