* Second day of Libor trial in London
* Ex trader Hayes says wrong to enlist step brother
* Ex BoE official Mallett got broker Libor emails (Adds Bank of England staff receiving Libor emails, BoEcomment, details)
By Anjuli Davies
LONDON, May 27 (Reuters) - Tom Hayes, a former traderaccused of conspiring to rig benchmark interest rates, abandonedan attempt to enlist his step brother into the alleged scamafter deciding it was wrong to ask for his help, a London courtheard on Wednesday.
On the second day of the world's first jury trial of anindividual charged with benchmark rate-rigging offences,Southwark Crown Court was played a recording of a phone callbetween Hayes, a former UBS and Citigroup trader, and former HSBC trader Peter O'Leary.
Hayes, 35, painted by prosecutors as a ringleader in aconspiracy involving around 25 staff at 10 of the world'slargest banks and brokerages to rig rates for profit, askedO'Leary to persuade an HSBC colleague to help lower Libor rates.
"If you get to know him, would be a massive help to me," thecourt heard Hayes saying. "Got $1.0 million of risk ... If ...it (the Libor rate) moves by a basis point, for my fix that'sworth 125k plus."
But Hayes, diagnosed with a mild form of Asperger's and whoprosecutors said handed the names of alleged accomplices toinvestigators during 82 hours of interviews following his arrestin Dec. 2012, later decided against leaning on his family.
"I thought about it and I shouldn't have asked you, sorrymate," Hayes tells O'Leary, referred to in court on Wednesday ashis step brother.
"It's wrong of me to ask you a favour."
Hayes's trial comes after a seven year, global inquiry thathas led to banks and brokerages paying around $9 billion infines, 21 people being charged. It also triggered an overhaul ofhow financial benchmarks such as Libor are policed.
Libor, the London interbank offered rate, is an average rate used as a benchmark to help price around $450 trillion offinancial contracts from derivatives to home and other loansworldwide. A small movement in the average rate can translateinto vast profits, or losses, for traders.
BROKERS EMAILED BOE'S MALLETT
Mukul Chawla, prosecuting for Britain's Serious Fraud Office(SFO), alleges Hayes was a ringleader motivated by greed whoused staff at his bank, at other banks and interdealer brokers,middlemen who match buyers and sellers of bonds, currencies andswaps, to aid his alleged scam.
Some brokers aided the scheme when sending daily emailsuggestions of where they thought Libor rates should be todozens of market participants, including a senior Bank ofEngland (BoE) official Martin Mallett, Chawla alleged.
There is no suggestion that Mallett, a former BoE chiefcurrency dealer who has been linked to a separate investigationinto alleged manipulation of the vast foreign exchange market,was aware of any Libor malpractice.
Mallett was fired last year after an independent BoE reviewfound he had failed to escalate concerns that traders at topbanks could be rigging the $5 trillion-a-day currency market. Hewas not immediately available for comment.
The BoE said it would be inappropriate to comment on activecriminal proceedings.
In a sign of how widespread alleged Libor manipulation was,Chawla also told the court that during the financial crisis, senior employees at UBS encouraged others to lower Libor ratesto avoid triggering concerns about the bank's creditworthiness.
Gaspare La Sala, a former UBS asset liability manager, emailed colleagues in 2007: "It is hugely advisable to err onthe low side with fixings for Libor to protect our franchise inthese sensitive markets," the court heard. He did not respond toa Reuters request for comment via professional network LinkedIn.
Hayes, a former yen derivatives trader based in Tokyo, ischarged with eight counts of conspiracy to defraud between 2006and 2010, a criminal offence that carries a maximum jailsentence of 10 years. He has pleaded not guilty.
His defence team is expected to lay out its case next weekin a trial scheduled to last between 10 and 12 weeks.
(Writing by Kirstin Ridley and Sinead Cruise; Editing by DavidHolmes and Jane Merriman)
HSBC Holdings (HSBA)
