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Tom Hayes, the trader jailed for rigging Libor benchmark rates, has taken his long-standing fight to clear his name to the UK’s highest court, arguing that the original trial that led to his conviction was “fatally compromised”.
Lawyers for the former UBS and Citigroup trader are trying to convince a panel of five senior judges at the Supreme Court in London to overturn his conviction from 10 years ago. A three-day hearing started on Tuesday.
Hayes, 45, was the first person in the world to be found guilty by a jury over the Libor scandal and served five-and-a-half years in prison.
The Court of Appeal last year upheld Hayes’s guilty verdict, saying there was “indisputable documentary evidence” that he had sought to move Libor and that he had made “frank admissions of dishonesty”.
Hayes was described by one investigator in the original case as the “Machiavelli” of Libor, a benchmark interest rate whose manipulation sent shockwaves through financial markets and went on to cost banks billions of pounds in fines and settlements.
Libor, determined by daily submissions from several “panel banks”, was used for decades to underpin trillions of pounds of mortgages and other loans and financial products around the world. It has since been replaced. It was an average rate calculated by asking banks to submit their estimated borrowing costs in the interbank market.
Hayes was one of nine people successfully prosecuted by the UK’s Serious Fraud Office for rigging benchmark rates.
In written arguments presented to the Supreme Court for the hearing this week, Adrian Darbishire KC, representing Hayes, said that directions to the jury at the original trial were “fundamentally wrong in law. They fatally compromised the fairness of the trial.”
Hayes is fighting the case alongside Carlo Palombo, a former Barclays trader similarly convicted of manipulating Euribor, another benchmark rate, who received a four-year sentence.
The Supreme Court case turns on two technical issues. First, whether as a matter of law, a Libor rate submitted by a bank was inherently “not a genuine or honest answer” if it had been “influenced by trading advantage”.
Second, whether a Libor rate submission needed to be the “single cheapest rate” available or whether it could be selected from a range of potential borrowing rates.
Hayes, nicknamed “Rain Man” as he was deemed to be obsessed with numbers, was a star yen derivatives trader at UBS in Tokyo between 2006 and 2009. He claimed to have generated more than $280mn in profits for the bank.
Citigroup subsequently poached him with a $4.2mn joining bonus but dismissed him 10 months later as the Libor scandal took hold.
At the trial in 2015, prosecutors said Hayes had acted as the ringleader in manipulating yen Libor by asking rate-setters and traders at UBS — as well as at other banks and external brokers — to move the rate up or down in ways that would benefit his trading positions.
Hayes said he had only been trying to do his job as well as he could, and that his actions were known to his superiors.
The SFO, which received special government funding to bring its Libor prosecutions, said in a statement: “We will continue to support the Supreme Court as it hears this matter.”
