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Tom Hayes wins appeal against Libor rigging convictionNewsflash: City trader Tom Hayes has sensationally won his battle to clear his name after being convicted of rigging benchmark interest rates.A panel of five justices at the UK Supreme Court has ruled that Hayes’s conviction was unsafe, ending a decade-long battle.Hayes, who worked for UBS and Citigroup, served five-and-a-half years in prison for rigging Libor, a benchmark interest rate once used in the financial markets to underpin more than $350tn of loans and securities.The court of appeal last year upheld the guilty verdict, saying there was “indisputable documentary evidence” that he had sought to move Libor.But in 2022, a US court dismissed a criminal indictment against Hayes.Libor was used to set the borrowing cost on contracts with notional values of hundreds of trillions of pounds.Regulators found evidence that traders on a committee setting the rate every day had fixed it for their own benefit. Banks paid fines worth hundreds of millions of pounds.ShareKey eventsShow key events onlyPlease turn on JavaScript to use this featureThe quashing of Tom Hayes and Carlo Palombo’s convictions adds to the woes besetting the Serious Fraud Office, says Jonathan Fisher KC, Barrister at Red Lion Chambers.Fisher explains:
The Supreme Court makes clear that the failure in this case stemmed from judicial error – specifically, the misdirection of the jury by treating as a matter of law something that is actually a matter of fact – but this does not exonerate the SFO completely. The Supreme Court criticised the SFO for not making clear the precise nature of its case from the outset.
This highlights just how challenging it is to prosecute financial market fraud cases in the criminal courts. This isn’t just an issue in the UK – only last week in the United States, former HSBC trader Mark Johnson had his fraud conviction overturned after a nine-year struggle. So today’s ruling is not in isolation – it reflects the broader reality that these cases are inherently complex and much careful thought needs to be given before a decision to prosecute is taken. The consequences of a failed prosecution can be devastating for the individual involved.
In this case it is extremely troubling that both defendants spent time in prison when, as the Supreme Court has now made clear, they shouldn’t have.
ShareToday’s Supreme Court Judgment is “a personal triumph” for Tom Hayes and for Carlo Palombo, says Maia Cohen-Lask, partner at law firm Corker Binning.Cohen-Lask explains:
Both have long contended that they were unfairly scapegoated for behaviour that was not only endemic in the City in the early 2000s, but also in government during the banking crisis in 2008.
“The judgment does not go so far as to exonerate them (indeed the judgment states that there was “ample evidence” on which a jury could have convicted). However, the judgment is a comprehensive vindication of the argument Hayes and Palombo have been making for many years: that if a LIBOR / EURIBOR submission was influenced by trading advantage, it could still be a genuine and honest answer to the question posed by the definition.
“Despite calls for an investigation into the wider aspects of rate manipulation and the role of large banks in the early 2000s and the Treasury in 2008, it is unlikely that these calls will be heeded by those with the power to act. After all, LIBOR as a means of setting reference rates has been replaced and reforms to EURIBOR have radically altered its operation, so it could be argued that remediation has already occurred. In my view, the judgment will bring to an end a murky period without further light being cast through the lens of an independent inquiry.”
ShareToday’s press conference heard criticism of the Serious Fraud Office’s role in the Libor convictions.Tom Hayes’s lawyer, Karen Todner, has explained that today’s Supreme Court judgment is critical of the drafting of the indictment by the SFO and their team.She added:
The prosecution of individuals by organisations other than the CPS – I include in this as well as the SFO, the Post Office and the RSPCA – should be removed. The only body who should be bringing criminal prosecutions in the United Kingdom are the Crown Prosecution Service.
The dual role of the SFO as investigator and prosecutor creates a substantial conflict of interest which creates miscarriages of justice.
ShareApple and Google face more UK antitrust scrutinyAway from the Supreme Court ruling…. Britain’s competition regulator said it plans to designate Apple and Google with so-called strategic market status for their role in mobile ecosystems.The move comes as the CMA steps up its scrutiny of what it calls the two companies’ ‘duopoly’, Reuters reports.The plans announced today that a number of markets relating to mobile internet browsers were not working well for consumers or businesses.Apple’s Safari and Google’s Chrome dominate the mobile browser market on iPhones and Android devices, respectively.CMA head Sarah Cardell said in a statement:
“Apple and Google’s mobile platforms are both critical to the UK economy … but our investigation so far has identified opportunities for more innovation and choice.
“The targeted and proportionate actions we have set out today would enable UK app developers to remain at the forefront of global innovation while ensuring UK consumers receive a world-class experience.”
A final decision on both the designations will be made by October 22, the statement said. The regulator also published roadmaps on potential further action as part of these parallel investigations.A strategic market status (SMS) designation allows the CMA to impose interventions on a firm, such as requiring it to adhere to specific behaviour so as not to undermine fair competition.Both Apple and Google pushed back against the CMA’s proposals, with Google calling the step “disappointing and unwarranted.”Google’s senior director for competition, Oliver Bethell, said.
“It is … crucial that any new regulation is evidence-based, proportionate and does not become a roadblock to growth in the UK.”
Apple said separately it was concerned that the new rules being considered would undermine the privacy and security protections expected by its users.Share”Path” for other convictions to be overturnedLawyers representing Tom Hayes and Carlo Palombo believe other traders who were convicted of rigging the Libor and Euribor interest rates could consider appealing their convictions too.Hayes’s lawyer, Karen Todner, tells reporters in London that she thinks they will all be taking advice over the course of the next couple of weeks to see if they can overturn their convictions.Ben Rose, who represented Palombo, says he takes a “slightly more strident” position, explaining:
My initial impression is that the ruling today opens the door to those seven securing a route by which they can have their convictions overturned. I can’t obviously promise that to them, but I think… I can see a path.
ShareHere’s a photo from today’s press conference: Photograph: Kalyeena MakortoffShareCarlo Palombo, who is Italian, suggests that xenophobia and racism played a role in his conviction.He tells the press conference that his opinion of the British legal system is that “it’s not very good, as an understatement”.He says that most of the defendents brought to trial over rate-rigging accusations were acquitted, which prompted the SFO to only charge foreigners, explaining:
When we look at the people who actually were acquitted or convicted in our trials by jury, the vast majority of English accused were acquitted, whereas the vast majority of non-English accused were convicted.
All of the dark skinned one were convicted. And all our trials also happened at the same time as the Brexit problem.
Palombo says this created the idea that the case was about Europeans coming to England, stealing money from the English people.ShareHayes: We had nothing to do with the financial crisisQ: Would you describe yourself as scapegoats for the financial crisis?Hayes says the term has been used about him and Palombo continually, insisting:
We had nothing to do with the financial crisis, like zero.
Hayes adds that he and Palombo were caught up in politics surrounding the financial crisis, and the desire for institutions and politicians for people to go to prison.ShareTom Hayes then explains that he has dealt with “a lot of rage and anger and bitterness” in prison, and does not want to return to those emotions.He then cited Nelson Mandela’s quote that anger is like drinking poison and thinking it is going to kill the other person [Mandela was talking about ‘resentment’, but the point stands!].Hayes then reveals that he battles against anger every day, and tries to drop those emotions welling up.And he cites Peter Sullivan, who had his murder conviction quashed in May after 38 years in prison, and said he was “not angry” and “not bitter”.Hayes says:
If he can say that, then I can say that.
ShareThe compensation question…Tom Hayes tells the press conference that he “very much doubts” whether he will receive any compensation for the time he spent in prison, due to changes made by former Justice Secretary Chris Grayling.However, Conservative MP David Davis (who is chairing the press conference) says he raised the question of compensation arrangements with prime minister Keir Starmer, who said he’d look at it.Asked what his plans are now, Hayes says he has been unable to plan any aspect of his life in the last 10 years.He says he doesn’t know what he will do now, but that his main goal is to go and live close to the sea.
I don’t know where, but I’d like to be near a large body of water.
ShareTom Hayes’s lawyer, Karen Todner, criticises Mr Justice Cooke for presiding over “an unfair trial”, and suggested there could be a public inquiry into what went wrong.“For that he must take responsibility,” she tells the press conference.Todner also criticises the Serious Fraud Office and their representatives for failing “spectacularly” for not speaking up when the judge gave a direction that was wrong in law.She adds there are “no winners here”, adding:
Tom has missed out on formative years with his son, time with his family, and the loss of his career and his home time he will never get back. The case highlights numerous problems with our criminal justice system, all of which I believe meet the criteria for a public inquiry.
ShareUpdated at 11.26 BSTPalombo: it’s been a Kafkaesque nightmareFormer Barclays trader Carlo Palombo tells the press conference that he echoes Tom Hayes in thanking everyone who supported them over the last 10 years.Palombo says he feels a mixture of relief and happiness after a “crazy experience”.Palombo calls it a “Kafkaesque nightmare” in which he and Hayes were accused of “things that didn’t make any sense”, and been accused of being dishonest, greedy bankers.He tells the press conference:
We’ve gone through a series of appeals and rulings that made absolutely no sense by people that are supposedly in charge of justice and the rule of law.
They completely disregarded the rule of law on the basis of trying to get people convicted on abstract moral charges.
ShareHayes thanks supporters at press conferenceTom Hayes and Carlo Palombo are holding a press conference now in Westminster, following the overturning of their convictions at the Supreme Court this morning.Hayes speaks first, saying he feels “very blessed” and wants to thank the many people – some of whom he will never meet – who supported him.Hayes explains that his first appeal to the Criminal Cases Review Commission was crowdfunded, including someone in the Philippines who put in $5.Hayes says:
I’m never going to meet that person. If that’s you, let me know, and I’ll buy you a beer.
Hayes then thanks his lawyer, Karen Todner, who he says “really kept me going”, and his barristers, Adrian Derbyshire and Tom Doble, who he says “were just phenomenal at the Supreme Court”.ShareWhen asked whether he might seek financial compensation, Tom Hayes told the Guardian:
“I need to talk to my legal team about what civil remedies I might have, whether some money they took from me I might get back.
But really it’s not about money today…when you’ve lost your liberty and you’ve lost your money, you realise what’s really important to you, and it’s not your money.
The money’s just stuff. And family and friends, your liberty and your health, those are the things that are really important”
ShareLibor (or the London interbank offered rate) and Euribor (the Euro interbank offered rate) were both pushed into the spotlight after the financial crisis.Both rates were designed to show the average cost of borrowing, and were based on submissions from major banks who were trusted to accurately report how much they were being charged to borrow in the market.The ‘Libor scandal’ blew up in 2012, when Barclays was fined £290m for its “serious, widespread” role in trying to manipulate Libor.That exposed that some traders had attempted to manipulate the daily readings to benefit their own firm’s trading positions, in return for inducements such as bottles of Bollinger champagne.In the crisis, Libor became a gauge of the health of a bank – as it showed whether other banks trusted it enough to lend money. The Bank of England faced accusations that it had instructed banks to enter low submissions into the Libor process, to avoid panic.ShareCaroline Greenwell, partner at international law firm Charles Russell Speechlys, suggests that other convictions over the issue of Libor could now be challenged.According to the Serious Fraud Office, there were nine convictions of senior bankers for fraud offences, with two of these individuals pleading guilty and seven found guilty by juries.Greenwell says Hayes and Palombo’s success could lead to other convictions being reviewed, explaining:
“This is a landmark ruling, by which the Supreme Court has made it clear that considering commercial interests when submitting LIBOR rates isn’t automatically dishonest or criminal.
“The judgment brings the UK in line with the US courts, who in 2022 overturned convictions of traders on the basis that banks were permitted to factor in trading advantages when making LIBOR submissions, and confirms that the juries in Mr Hayes’ and Mr Palombo’s trials were unfairly directed by the judge that considering commercial interests in the submissions were prohibited.
“This result not only clears Mr Hayes’ and Mr Palombo’s names, but could also lead to convictions secured in nine other criminal trials prosecuted by the Serious Fraud Office (who naturally opposed Hayes’ and Palombo’s appeals to the Supreme Court) being reviewed. Watch this space.”
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