Traders await outcome of challenge to rate-rigging convictions

Former financial market traders Tom Hayes and Carlo Palombo are awaiting a ruling from the Court of Appeal regarding their convictions for interest rate benchmark manipulation. Hayes, a former Citigroup and UBS trader, was found guilty of multiple counts of conspiracy to defraud for manipulating the London Inter-Bank Offered Rate (Libor) between 2006 and 2010. Palombo, a former Barclays banker, was jailed for conspiring to submit false or misleading Euro Interbank Offered Rate (Euribor) submissions. The Criminal Cases Review Commission (CCRC) referred their cases to the Court of Appeal, which is set to announce its decision after a three-day hearing.

Hayes’ lawyers have argued that the convictions of both traders were “unsafe” and should be quashed. They claim that the judge in Hayes’ 2015 trial misinformed the jury about a ban on commercial considerations during the Libor setting process, leading to an unfair trial for Hayes. The lawyers cited a US appeals court ruling that found no such ban on commercial interests when making rate submissions as a reason to overturn the convictions. However, the Serious Fraud Office (SFO) has opposed the appeals, stating that the jury was not misdirected and that the US ruling is irrelevant to the fairness of Hayes’ trial.

The Libor rate, which both traders were accused of manipulating, was used as a reference point for financial deals worldwide. Hayes was depicted as the “ringmaster” of a huge fraud scheme to boost his earnings during his trial. Despite maintaining his innocence, Hayes spent five and a half years in prison before being released in January 2021. He previously challenged his conviction in 2015 and succeeded in reducing his sentence by three years. Palombo, on the other hand, lost his bid to overturn his conviction at the Court of Appeal in December 2020.

The Court of Appeal judges, including Lord Justice Bean, Lord Justice Popplewell, and Mr. Justice Bryan, are expected to announce their ruling on Wednesday morning. The outcome of this decision will determine whether Hayes and Palombo’s convictions will be upheld or overturned. Both traders have faced legal challenges and appeals since their initial convictions, with this latest hearing being the culmination of years of legal proceedings. The impact of this ruling on future cases of financial market manipulation and regulation remains to be seen, as the integrity of benchmark rates like Libor and Euribor continues to be scrutinized by regulatory authorities.