Library:The Spider Network
| The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History | |
|---|---|
| Author | David Enrich |
| First published | 2017 |
| ISBN | 978-0-06-245300-6 unverified |
| Role | Analysis |
| Domains | Business, Finance & Scams |
| Tactics | Fraud or Scam Statistical & Evidentiary Distortion |
The Spider Network is a 2017 book by David Enrich.
Summary
David Enrich, a reporter for The Wall Street Journal and later The New York Times, tells the story of the manipulation of LIBOR, the London Interbank Offered Rate, through the career of Tom Hayes, a brilliant and socially awkward trader at UBS and Citigroup in Tokyo. LIBOR was a benchmark interest rate used to set the terms of hundreds of trillions of dollars of loans and financial contracts worldwide. Enrich shows how traders and brokers colluded to nudge it in directions that benefited their trading positions.
How LIBOR worked
LIBOR was calculated each day from estimates submitted by a panel of large banks of what it would cost them to borrow from each other. Because the rate was based on estimates rather than actual transactions, the banks' submitters had discretion. Traders whose positions depended on LIBOR asked submitters at their own banks, and through brokers at other banks, to move the estimates slightly up or down.
Tom Hayes
Hayes became one of the most profitable traders of yen interest rate derivatives. Enrich describes how Hayes cultivated a web of brokers and contacts, the "spider network," to influence rate submissions, and how such requests were treated as routine in the industry. Enrich also explores Hayes's personality, later diagnosed as consistent with Asperger syndrome, and his sense that he was being made a scapegoat.
The scandal
Investigations from 2010 onward led to settlements in which banks including Barclays, UBS, RBS, Deutsche Bank and others paid billions of dollars in fines. In 2015 a British jury convicted Hayes of conspiracy to defraud, and he was sentenced to 14 years in prison, later reduced to 11. He served about half. In 2025 the UK Supreme Court quashed his conviction, ruling that the jury had been misdirected. LIBOR was phased out between 2021 and 2023 and replaced by rates based on actual transactions.
Relevance to Bullshitopedia
The Spider Network shows how a widely trusted number can be manipulated when it depends on self-reported estimates from interested parties, and how practices that insiders regard as normal can amount to deception. It raises questions about how responsibility is assigned when misconduct is widespread.
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