High Court overturns criminal convictions of city traders for manipulating the Libor interest rate
Supreme Court Overturns Convictions of Tom Hayes and Carlo Palombo
In a landmark decision, the UK Supreme Court has quashed the convictions of Tom Hayes and Carlo Palombo, two former bank traders who were found guilty of manipulating the Euro Interbank Offered Rate (Euribor) and the London Interbank Offered Rate (Libor).
The Supreme Court's ruling, delivered in March, was based on the finding that the trial judges' instructions to the juries were legally inaccurate and unfair. This misdirection prevented the juries from properly considering whether the traders had acted dishonestly, a critical factor in assessing criminal fraud.
Tom Hayes, a former UBS and Citigroup trader, was initially found guilty in August 2015 of conspiracy to defraud by 'rigging' the Libor and sentenced to 11 years in prison. Carlo Palombo, a former Barclays trader, was found guilty in March 2019 of conspiracy to defraud by rigging the Euribor.
The Court found that the trial judges' directions failed to properly distinguish between dishonesty and normal commercial behavior. As a result, the Supreme Court quashed their convictions entirely.
The decision has important implications for other traders convicted in related cases, as four additional traders have since challenged their convictions on similar grounds. The Serious Fraud Office (SFO) has confirmed it would not comment on these appeals at present.
The SFO had previously determined that it would not be in the public interest for them to seek a retrial for Tom Hayes. Hayes, expressing his faith in the criminal justice system, has welcomed the Supreme Court's decision.
Karen Todner, Hayes' lawyer, stated that the case highlights numerous issues about the criminal justice system and meets the criteria for a public inquiry. The London Interbank Offered Rate (Libor) was permanently retired by the City regulator in October.
The Court of Appeal had initially rejected Hayes and Palombo's application to appeal to the Supreme Court, but certified their case. The United States Court of Appeal for the Second Circuit reversed the conviction of two former US traders for fraud in the manipulation of Libor rates in January 2022.
The Supreme Court ruled that any consideration of commercial advantage made the rate submitted not necessarily false or misleading. The Criminal Cases Review Commission (CCRC) referred these cases to the Court of Appeal, after concluding there was a 'real possibility' that the court would find their convictions unsafe.
Hayes and Palombo were deprived of a fair trial due to the legally inaccurate and unfair directions given at their trial. The Supreme Court's ruling restores faith in the criminal justice system for Hayes, who has been vindicated by the justices from the highest court in the land.
The Supreme Court's decision to overturn the convictions of Tom Hayes and Carlo Palombo could have significant impacts on the business sector, as it questions the accuracy of past judgments in the banking and finance industry. This ruling may prompt a review of similar cases, potentially shaking the foundations of the international banking and business framework.
