Ex-UBS Trader Hayes Asks UK’s Top Court to Overturn Libor Rigging Conviction

(Bloomberg) — Tom Hayes, the former star UBS Group AG trader who was the face of the Libor rigging scandal, urged Britain’s top judges to overturn his decade-old conviction.

The Supreme Court appeal started Tuesday and lawyers for Hayes and ex-Barclays Plc trader Carlo Palombo argued that it was permissible for a bank to consider its trading advantage when making their submissions for Libor or Euribor. The juries that convicted Hayes and Palombo in 2015 and 2019 respectively were unfairly told by the judge that taking the bank’s commercial interest into account was unlawful, lawyers said.

The trial judge decided the issue of the illegality of Hayes’ conduct and not the jury, Adrian Darbishire, a lawyer for Hayes said. The “fundamentally wrong” directions to the jury “fatally compromised the fairness of the trial.”

Hayes and Palombo conspired with others to dishonestly manipulate the process to set the interest rates at which banks could borrow money. Hayes engaged in the criminality to enhance his bank’s profits and increase bonus payments for himself, the Serious Fraud Office previously argued. 

A Supreme Court ruling in favor of Hayes could pave the way for overturning several other convictions for tampering the rates setting process, and pose questions around the Serious Fraud Office’s ability to make complex financial prosecutions stick.

The scandal — over fixing of benchmark rates used to value more than $350 trillion of loans and securities — led to fines of almost $10 billion for a dozen banks and brokerages.

The Libor scandal broke out when the banking community was still facing public outrage after the 2008 financial crisis. 

“As the first person to stand trial in the UK for Libor manipulation, Hayes found himself in the unfortunate position of the poster boy for this outrage,” said Richard Sallybanks, a lawyer at BCL Solicitors. “His sentence on conviction sent shockwaves through the financial community.”

Hayes was sentenced to 11 years in prison in 2015, while Palombo was sentenced to four in 2019. Ever since he was released from prison in 2021 after serving half his jail sentence, Hayes has worked consistently to try and prove his innocence.

Hayes, who also worked at Citigroup Inc., was the “ringmaster” of a global network of 25 traders and brokers from at least 10 firms who tried to manipulate Libor on an industrial scale to maximize profit, prosecutors alleged at his trial.

Hayes suffered “immense harm” because of the unfair trial and his conduct is not considered criminal outside the UK, his lawyer Karen Todner said. “We very much hope the Supreme Court will correct this historic wrong.”

Defense lawyers have argued across several trials that the accused were merely convenient scapegoats and bullied by bosses into making the submissions. It was an open secret that everyone did it, but that didn’t make it illegal, they said.

Despite losing at the Court of Appeal he was allowed to take his arguments to the Supreme Court where judges will sit for three days. 

“It’s difficult to see how the conviction could be overturned on the basis that the UK is an outlier in its approach to Libor,” said Emma Shafton, a lawyer at Reed Smith who worked with the SFO’s fraud division between 2015 and 2016.

(Updates with details from the court hearing throughout.)

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