The UK Court of Appeal has dismissed attempts from two former investment bank traders to overturn their convictions.
Tom Hayes, a former UBS and Citi trader, alongside Carlo Palombo, who worked for Barclays, were accused of manipulating key interest rate benchmarks.
According to court documents published today, Hayes was indicted by US authorities in December 2012 on charges of manipulating the London Interbank Offered Rate.
Libor is a former benchmark that set the rate at which banks could borrow money in London at 11am each business day.
Hayes was alleged to have manipulated Japanese yen Libor during his employment at UBS and Citi. He was subsequently arrested by the Serious Fraud Office and entered into a formal agreement to plead guilty.
As a result he was not extradited to the US and charged by the SFO, after which he withdrew from the agreement. Hayes claimed that he only co-operated out of fear of extradition and was the first person the SFO found guilty in the Libor scandal.
He served five-and-a-half years in prison and was one of nine people successfully charged with rigging benchmark rates.
Palombo, who worked at Barclays, was convicted of Euribor manipulation and served four years in prison.
Both were given a chance to clear their names by the Criminal Cases Review Commission, which looks at potential miscarriages of justice.
Hayes attempted to argue that a ruling from the the US Court of Appeals for the Second Circuit in January 2022 should be applied to him under English law.
The US ruling overturned the convictions of two ex-Deutsche Bank traders for allegedly rigging Libor — Matthew Connolly and Gavin Black.
On July 6 2023, the CCRC referred Hayes’ case to the Court of Appeal. It did so on a single ground: “There is a real possibility that the Court of Appeal will prefer the findings of the US appeal court in Connolly and Black regarding the definition and proper operation of Libor to those which were reached in Hayes’ own case, and conclude that this renders his conviction unsafe.”
On October 12 2023, the CCRC also referred Palombo’s case in similar terms.
But in their ruling, Lord Justice Bean, Lord Justice Popplewell and Mr Justice Bryan said: “We find nothing in the Second Circuit decision in Connolly and Black which causes us any doubt about the correctness of the English decisions as to the construction of Libor as a matter of English law, or by extension, of Euribor.”
According to experts, it is not unexpected that the Court of Appeal did not overturn the decision.
Patrick Rappo, partner at law firm Reed Smith, said: “Unsurprisingly the Court of Appeal did not overturn the conviction — the findings of another court, be it the US courts or elsewhere, are generally not relevant under English law.
“In particular the Court of Appeal expressly agreed with the lower court that the interpretation of regulatory documents was an issue of law for the trial judge to determine and not the jury.
“This decision represents a significant victory for the SFO, and a much welcomed one, bearing in mind the recent criticisms that have been levelled at it.
“The Court of Appeal didn’t make any comments to amending the law in relation to dishonesty nor giving any further guidance as to the types of cases in which it would be appropriate to use the statutory fraud laws as opposed to the common law offence conspiracy to defraud,” said Rappo.
