SPEAKER_00: 0:18

Okay, let's get into this. I want you to just picture a man sitting in a cell in a high security prison. For the better part of a decade, this guy was the absolute face of financial corruption. I mean, his picture was everywhere. He was the ringmaster, the rainman of the LIBOR scandal. And the whole story, the narrative, was that he basically rigged the global eponymous from his trading desk in Tokyo.

SPEAKER_01: 0:44

Yeah, it was the kind of reputation you just don't come back from. He lost everything: his fortune, his marriage, his health, his freedom. The story was, you know, set in stone. Tom Hayes was the villain.

SPEAKER_00: 0:54

Aaron Powell, but narratives have a funny way of, well, crumbling. Because fast forward to right now, February 2nd, 2026, that same man is a free man. He is not hiding away somewhere, no. He is suing his former employer, the banking giant UBS, for over$400 million.

SPEAKER_01: 1:09

Aaron Powell, it is. And I don't think this is an exaggeration. Arguably the most dramatic U-turn in modern financial history. We're watching a convict turn into a plaintiff in a in a massive way.

SPEAKER_00: 1:17

Aaron Powell So today we are diving deep into this exact battle. We've got two key documents. First, the legal complaint filed by Hayes, which honestly it reads less like a lawsuit and more like a revenge thriller.

SPEAKER_01: 1:31

Aaron Powell And on the other side, a fierce motion to dismiss that UBS filed just last week, January 26th. And they're trying to shut this whole thing down before it even gets started.

SPEAKER_00: 1:41

Aaron Powell And these documents they don't just disagree on a few facts.

SPEAKER_01: 1:45

Aaron Powell No, they describe two completely different realities.

SPEAKER_00: 1:47

Aaron Powell Okay. Before we get into the whole, he said, corporations said, let's just make sure we're all on the same page about the stakes here. Most people have heard of LIBOR, they know it's about interest rates, but why was rigging it treated like a global catastrophe?

SPEAKER_01: 2:00

Aaron Powell Because LIBOR, the London Interbank, offered rate it wasn't just a number, it was for decades the number. It was like the gravity holding the financial solar system together. Put simply, it was the average rate at which major banks estimated they could borrow from each other.

SPEAKER_00: 2:15

Aaron Powell But it didn't just stay between banks, right?

SPEAKER_01: 2:17

Aaron Powell Oh no. That number went on to dictate the interest rates on something like$350 trillion worth of financial products.

SPEAKER_00: 2:25

Six trillion.

SPEAKER_01: 2:26

With a T, mortgages, student loans, corporate debt, massive, massive derivatives contracts. If LIBOR ticked up by just 0.01%, billions of dollars would change hands across the globe.

SPEAKER_00: 2:39

So if you could just nudge that number, even a tiny bit.

SPEAKER_01: 2:43

You could effectively print money. And that is what Tom Hayes was convicted of doing. But our mission today is to dig into the question that's resurfaced in 2026. Was Tom Hayes a rogue, criminal mastermind who broke the system? Or was he the victim of a massive corporate conspiracy to, you know, sacrifice a vulnerable employee just to save the bank?

SPEAKER_00: 3:02

Let's start with the man himself, before the prison cell, who was Tom Hayes.

SPEAKER_01: 3:06

He was a math prodigy. I mean a real genius. UBS hired him in 2006 for their yen derivatives desk in Tokyo. He was young, barely 26, and he was just brilliant at spotting patterns nobody else could see.

SPEAKER_00: 3:18

But the sources we're looking at, they highlight something really specific about his personality, don't they?

SPEAKER_01: 3:23

They do. And it's crucial. Hayes has autism spectrum disorder, or ASD. And in that kind of aggressive trading environment, his colleagues gave him these just awful nicknames, Rain Man, Kid Asperger's.

SPEAKER_00: 3:37

Which is just horrible. But in the context of this legal fight, Hayes is arguing that his ASD is actually key evidence for his innocence.

SPEAKER_01: 3:45

It's the absolute core of his argument. Because of his ASD, Hayes processed the world through explicit rules. He was very literal. If there's a rule, he follows it. His whole point now is that the manipulation he went to prison for wasn't him going rogue. It was him following a mathematical instruction that was embedded in the bank's own policy.

SPEAKER_00: 4:05

Okay, this is the part of the complaint that just it made me stop and reread it. He talks about something called negative delta. Can you break that down for us?

SPEAKER_01: 4:12

Sure. It gets a little technical, but honestly, this is the smoking gun for Hayes. He points to these internal UBS spreadsheets that track the bank's risk. Negative delta just it basically meant the bank was positioned to lose money if interest rates move the wrong way.

SPEAKER_00: 4:25

So it's like a big red light on the dashboard saying, warning, we are losing cash.

SPEAKER_01: 4:30

Exactly. And Hayes claims the spreadsheet explicitly instructed traders that when they saw that red light, that negative delta, they were supposed to adjust their LIBOR submission by 25 basis points to flip that loss into a profit for the bank.

SPEAKER_00: 4:45

Wait a second, so I'm clear. He's saying the instruction to rig the rate wasn't a whisper in a hallway. It wasn't some kind of secret handshake. He's saying it was a formula in the spreadsheet.

SPEAKER_01: 4:55

That is his claim. A literal instruction. If X happens, do Y. For someone with Hayes' mindset, that isn't a crime, that's a job description. He saw an instruction to optimize the bank's position, and he did it.

SPEAKER_00: 5:07

And he wasn't exactly quiet about it either. There's the famous Christmas Day email.

SPEAKER_01: 5:12

This detail is just wild. It's Christmas Day, most of the financial world is offline. A senior trader sends an email explicitly telling Hayes to manipulate the rates to help the bank's position. And this is the real kicker, he copies Hayes' manager on the email.

SPEAKER_00: 5:26

See, that that never made sense. If if you're committing a massive secret fraud, you don't usually CC the boss on a holiday.

SPEAKER_01: 5:32

Precisely. Hayes' argument is if this was so rogue, why was management looped in on Christmas? And let's be clear, management loved him at the time. He made something like$300 million in profit for UBS.

SPEAKER_00: 5:46

I read that when Goldman Sachs tried to poach him with this huge bonus like$5 million, UBS management totally panicked. They sent emails calling his connections to the LIBOR setters invaluable.

SPEAKER_01: 5:59

Invaluable, that's the word they use. He was their golden goose until, of course, the world changed.

SPEAKER_00: 6:03

2008, the financial crisis.

SPEAKER_01: 6:06

And everything shifts, just everything. Suddenly, regulators like the U.S. Department of Justice, the CFTC, the UK's serious fraud office, they're kicking down doors. They're not looking for profits anymore. They're looking for heads on pikes.

SPEAKER_00: 6:18

And UBS was in very, very serious trouble.

SPEAKER_01: 6:21

Existential trouble. They were facing the potential loss of their dollar clearing license. For a global bank, that is a death sentence. You can't operate if you can't clear US dollars. So to survive, they had to cooperate. In the world of corporate plea deals, cooperation often means giving the regulators someone to prosecute.

SPEAKER_00: 6:36

Enter Tom Hayes.

SPEAKER_01: 6:38

And this is the core of his$400 million claim. He says UBS didn't just hand over evidence. He claims they curated it.

SPEAKER_00: 6:47

Curated? You mean like editing a movie?

SPEAKER_01: 6:50

Exactly like that. They handed over the chat logs where Hayes is asking brokers for favors. Mate, can you keep the rate low for me today? Things like that. And that looks bad. There's no denying it. But Hayes claims they deliberately held back the profit and loss spreadsheets.

SPEAKER_00: 7:05

The ones with the negative delta instructions we just same.

SPEAKER_01: 7:08

So by holding back the spreadsheets, they basically removed the context that he was following orders. All that was left were these chats that made him look like some greedy trader just patting his own bonus.

SPEAKER_00: 7:18

And it allowed UBS to paint him as a rogue wolf, a lone bad apple.

SPEAKER_01: 7:23

And it worked beautifully for the bank. UBS paid a$1.5 billion fine, which is a lot, but they signed a non-prosecution agreement. Senior management all stayed out of jail. The bank kept its license. And Tom Hayes got 14 years in prison.

SPEAKER_00: 7:37

14 years? That is a long, long time. And reading the sources, the personal toll was just horrific. He lost his liberty, his assets were seized, his marriage fell apart, and the stress during the trial was so intense he actually developed multiple sclerosis.

SPEAKER_01: 7:52

It's a tragedy, however you view his guilt. But that brings us to the present day. Because the reason we're even having this conversation is that the legal ground completely shifted.

SPEAKER_00: 8:01

Right. He's out and not on parole. His conviction was quashed. But I think this is where a lot of people get confused. He was convicted by a jury. He even admitted to it at first. How does a conviction like that just evaporate?

SPEAKER_01: 8:15

It took a massive change in how the law is interpreted, both in the US and the UK. It actually started over here in the US with the Connolly decision in the Second Circuit Court of Appeals.

SPEAKER_00: 8:24

I remember that one. That was the Deutsche Bank case, wasn't it?

SPEAKER_01: 8:27

It was. And the court essentially ruled that a trader, considering their bank's commercial interest when submitting a rate isn't automatically fraud, as long as the rate they submit is within a plausible range.

SPEAKER_00: 8:38

So if I can borrow at 3%, but I submit 3.1 because it helps my bank, that's okay, as long as 3.1 is a real believable market rate.

SPEAKER_01: 8:49

Broadly speaking, yes. The court said wanting to make money isn't a crime if you aren't actually lying about the underlying numbers. After that ruling, the DOJ dropped its U.S. charges against Hayes in 2022. Then, in July 2025, the UK Supreme Court followed suit and quashed his UK conviction entirely.

SPEAKER_00: 9:09

So, legally speaking, he's an innocent man.

SPEAKER_01: 9:11

Well, hold on. This is where we have to look really closely at that motion to dismiss filed by UBS last week because they are pushing back very hard on that word innocent.

SPEAKER_00: 9:19

Aaron Powell What's their argument? The court let you go, but we still think you did it.

SPEAKER_01: 9:23

Essentially, yes. They point out that the UK Supreme Court didn't say Hayes was an angel. The court said the jury instruction was technically wrong on that commercial interest point. But and UBS quotes this directly in their motion, the court explicitly stated there was still ample evidence. A jury could have found him guilty of conspiracy to defraud.

SPEAKER_00: 9:41

So they're just saying he got off on a technicality.

SPEAKER_01: 9:43

Precisely. Yeah. And they make sure to remind the court that Hayes actually admitted to dishonesty in his early interviews with the Serious Fraud Office. He sat there on tape and said, I was dishonest.

SPEAKER_00: 9:55

But Hayes has an answer for that, doesn't he? He claims he only confessed because he was terrified of being extradited to some U.S. Supermax prison.

SPEAKER_01: 10:03

Aaron Powell That's his claim. He says he was trying to game the system, confessed to the lesser crime in the UK to stay in the UK. It was a strategy he later abandoned, but the tapes exist. And you can bet UBS is using those tapes to say, look, he told us he was a crook. We just reported what he said.

SPEAKER_00: 10:18

Aaron Powell Which brings us to the battleground, Connecticut. Why are we talking about a British trader, a Swiss bank, and alleged crimes in Tokyo and London in a court in Stanford, Connecticut?

SPEAKER_01: 10:30

That is the multi-million dollar question. And it's the first pillar of UBS's entire defense strategy. They're arguing something called forum non-convenience.

SPEAKER_00: 10:37

There was fancy lawyers speak for this is the wrong place. So why did Hayes file in Connecticut? I mean, is he just throwing darts at a map?

SPEAKER_01: 11:01

No, it's strategic. Yeah. Hayes alleges a UBS entity is based there. UBS says that holding company has nothing to do with this. Really, Hayes' team is probably looking for a jury pool that's maybe more skeptical of big banks. Or they're trying to use U.S. discovery laws, which are much broader than in the UK. He wants to force them to hand over documents they didn't have to before.

SPEAKER_00: 11:21

But UBS's argument is we can't even defend ourselves there.

SPEAKER_01: 11:24

Right. They argue they can't force witnesses to show up. You can't subpoena a British prosecutor and force them to fly to Connecticut and explain why they charged Tom Hayes ten years ago.

SPEAKER_00: 11:33

Can't they just, you know, zoom in or fly them over?

SPEAKER_01: 11:36

Not if the UK government says no. And UBS cites a very recent case. From 2025, Bank of England v. Treasury solicitor. The UK courts basically ruled they are not handing over documents or personnel to foreign courts if it infringes on their national sovereignty.

SPEAKER_00: 11:52

So UBS is saying, if you make us do this trial in Connecticut, our hands are tied because all our evidence is locked up in London.

SPEAKER_01: 11:59

It's a very strong procedural argument. But UBS has another weapon in this motion. And this one is, it's fascinating. They're using an anti-SLAPP defense.

SPEAKER_00: 12:08

Now wait, usually I hear SLAPP laws associated with journalists, like a big company suing a reporter to shut them up. How can a massive bank use that against a former employee?

SPEAKER_01: 12:19

This is some really clever legal maneuvering. SLAPP stands for strategic lawsuit against public participation. It's designed to protect free speech. UBS is fully the script. They are arguing that their cooperation with the DOJ and the SFO, you know, basically calling the police on Hayes counts as petitioning the government.

SPEAKER_00: 12:36

Aaron Powell And petitioning the government is protected free speech under the First Amendment.

SPEAKER_01: 12:39

Exactly. The law says reporting a potential crime is a protected activity. So UBS is arguing we exercised our free speech rights to report what we saw as a crime. You can't sue us for that.

SPEAKER_00: 12:52

That sets a massive hurdle for Hayes to clear, doesn't it?

SPEAKER_01: 12:55

Aaron Powell A huge one. To get around this, Hayes can't just prove they lied. He has to prove malicious prosecution. And the legal bar for that is incredibly high.

SPEAKER_00: 13:04

What does he have to prove?

SPEAKER_01: 13:05

Three things really. First, that UBS initiated the prosecution, that the government wouldn't have done it without them. Second, that they did it with malice. And third, and this is the big one, that they did it without probable cause.

SPEAKER_00: 13:17

And UBS's comeback is we didn't start the fire.

SPEAKER_01: 13:20

Pretty much. Their counter narrative is we didn't initiate this. The DOJ and SFO came to us with subpoenas. We didn't hide senior management's involvement. Go read the settlement documents. They admit managers knew. And we definitely had probable cause because a grand jury indicted you and then a trial jury convicted you.

SPEAKER_00: 13:36

Even though that conviction was later overturned.

SPEAKER_01: 13:38

UBS's point is that the fact a jury at the time found him guilty is proof enough that there was probable cause to accuse him in the first place. They're saying, We reported what we saw, the government investigated, 12 people voted you guilty. You can't sue us for$400 million just because the law changed 10 years later.

SPEAKER_00: 13:57

It's just a clash of two completely different realities. On one side, Hayes says, I was a cog in a machine doing what I was told, and you fed me to the wolves to save your own skin. And on the other, UBS says, you were a dishonest trader, we reported you, and now you're trying to cash in on a legal technicality.

SPEAKER_01: 14:16

And the stakes, they go way beyond Tom Hayes' bank account. If Hayes actually wins this, think about what that means. It exposes this entire cooperation model between big banks and government regulators.

SPEAKER_00: 14:28

Right. It suggests that these non-prosecution agreements, where the bank just pays a huge fine and walks away, might be built on a foundation of scapegoating.

SPEAKER_01: 14:36

It would basically imply that the bank bought its survival with Tom Hayes' freedom. It calls into question every major corporate plea deal from the last 15 years. But if UBS wins, it just reinforces how incredibly hard it is to hold a corporation liable for what happens after the state gets involved. It solidifies the idea that if a company cooperates with law enforcement, they're largely shielded from being sued later, even if the information they provide is selective.

SPEAKER_00: 15:04

So where are we right now?

SPEAKER_01: 15:06

We're in limbo. Hayes wants vindication and enough money to rebuild a life that was basically incinerated. UBS wants this case thrown out of court immediately. They're arguing Connecticut is the wrong place, and what they did was protected speech. And the judge in Connecticut has a very, very difficult decision to make.