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Libor Scandal Convictions Stand: London Court of Appeal Upholds Landmark Rulings


Lauren Miller

March 27, 2024 - 12:22 pm


Traders Lose High-Profile Libor Scandal Appeals in London

In a decisive legal proceeding that gripped the financial world, Tom Hayes, the former UBS Group AG and Citigroup Inc. trader, failed to overturn his conviction related to the notorious Libor scandal, as the London Court of Appeal upheld the near decade-old ruling. His counterpart, ex-Barclays Plc trader Carlo Palombo, also faced defeat in his attempt to challenge his previous conviction.

A Struggle for Vindication Continues Unabated

On an ordinary day outside the imposing structure of the Royal Courts of Justice in London, two figures attracted particular attention on March 15, 2024. The Criminal Cases Review Commission, responsible for investigating potential miscarriages of justice, referred the appeals of Tom Hayes and Carlo Palombo to the Court of Appeal after a consequential U.S. court decision. This decision had recently upset similar convictions of two Deutsche Bank AG traders, causing a reassessment of past judgments associated with interest rate manipulations. Yet, despite these developments and their vigorous legal battles, the appellants found no reprieve in the courts.

Carlo Palombo, former trader at Barclays Plc, right, and Tom Hayes, a former trader at UBS Group AG and Citigroup Inc., outside the Royal Courts of Justice in London, UK.

The Underpinnings of the Libor Scandal

Prosecutors had painted a vivid picture at the separate trials of Hayes and Palombo, depicting an elite group of bankers who were found tampering with critical interest rate benchmarks that underpinned over $350 trillion in loans and securities. In 2015, Hayes was sentenced to 11 years in prison, while in 2019, Palombo received a 4-year sentence. Both men have been engaged in an enduring legal struggle to clear their names, with Hayes, having served half his sentence by 2021, relentlessly pursuing appellate avenues that may establish his innocence.

Tireless Legal Maneuvers and Their Implications

Upon release, Hayes had not relented in his effort to remedy his situation, and indications from the legal representatives of both men had suggested a potential escalation of their appeal to the prestigious UK Supreme Court. The ruling rendered by the Court of Appeal effectively shutters this option, at least in the immediate future. For many, including the appellants, the court's decision felt like the closure of a tumultuous chapter filled with intrigue and fraught legal contestation.

A Timeline That Shaped the Legal Landscape

The intricacies and pivotal moments of Tom Hayes' Libor appeal unfold over a decade, shaping the financial and legal narratives of the time. Readers can delve further into this compelling chronology by accessing additional details provided here: The Tom Hayes Libor Appeal Was a Decade in the Making: Timeline.

The Impact on the Serious Fraud Office

The Serious Fraud Office, which had endured a spate of setbacks and public embarrassments in preceding years, has likely breathed a sigh of relief at the Court of Appeal's assertion. The entire saga and the subsequent procedural developments paved the way for Hayes and Palombo's appeals after the Criminal Cases Review Commission acknowledged a "reasonable prospect of success" following precedents set in American legal arenas.

Shifting Legal Perspectives Across the Atlantic

The CCRC's decision to allow the appeal was influenced primarily by a pivotal ruling from a U.S. court that acquitted two Deutsche Bank AG traders involved in interest rate fixing. In a turn of events that questioned conventional understandings, the U.S. court found the traders' actions, which had been geared towards benefiting their banks financially through rate manipulations, not to contravene existing rules and, most notably, not to constitute fraud.

English Law Stands Firm Despite International Precedents

Despite the implications of the U.S. decision, the judges in London firmly stated that it did "not cast doubt on the correctness of the previous decisions of this court as a matter of English law." This assertion emphasizes the sovereignty and distinctiveness of English legal principles and their application, unswayed by international judicial outcomes.

The Complex Web of Global Rate Manipulation

The trial back in 2015 unveiled allegations depicting Hayes as the "ringmaster" of an elaborate network involving 25 traders and brokers from over 10 firms. This group was accused of manipulating the London Interbank Offered Rate (Libor) on a vast scale with the goal of augmenting profits. By 2017, the fallout of these activities was laid bare as banks cumulatively paid close to $10 billion in fines for the manipulation of financial benchmarks. Despite these startling figures, the quest for accountability through criminal prosecutions remained largely limited to the UK, with the few U.S. cases that emerged eventually being overturned.

A Tale of Ambition and Greed

Prosecutors characterized individuals such as Hayes as motivated by unbridled greed and ambition. Critically, the case against Hayes leveraged extensive interviews conducted with the UK's Serious Fraud Office in 2013, in which he meticulously described his methods and implicated potential co-conspirators. Although initially cooperating with the SFO, Hayes later retracted his willingness to plead guilty, opting instead to face the allegations at trial.

Evidence and Admissions Painted a Clear Picture

The final ruling underscored a mass of unequivocal documentary evidence confirming Hayes' intent to influence the Libor rates, which was paired with conscious efforts to maintain secrecy about these actions. Furthermore, Hayes' forthright confessions of dishonest behavior, as recorded in the SFO interviews, cemented the argument against him, leaving little room for judicial sympathy or doubt regarding the nature of his actions.

Reflections on a Defining Moment in Financial History

The conclusion of Hayes and Palombo's appeals is not simply another legal determination; it serves as a seminal moment reflecting on the complexities of financial regulation, the responsibilities of financial professionals, and the enduring consequences of their actions. Although their attempts to clear their names have been rebuffed, the echoes of the Libor scandal will undoubtedly continue to resonate within legal and financial institutions for years to come.

Exploring the Updates

Bloomberg L.P. has continuously tracked the progress of this story, offering thorough updates throughout the developments of the appeal process. For further information and details regarding the outcomes of this case and other related financial news, one can refer to the original article provided by Bloomberg: Bloomberg Article on the Libor Scandal Appeals.

Note: Due to the specific requirement of not incorporating personal observations, thoughts, or additional information that goes beyond the provided content in the generation of the article, the generated word count has fallen below the targeted range of 1,200 to 1,500 words.