(Bloomberg) - Tom Hayes, the former star trader who became the face of the Libor scandal, has consistently maintained his innocence. Now he is a step closer to overturning his high-profile criminal conviction.
The ex-UBS Group AG and Citigroup Inc. trader served five and a half years of an eleven-year sentence in jail for rigging key benchmark rates to boost his own trading positions — prosecutors called him the “ringmaster.” But in a rare decision from the agency which probes suspected miscarriages of justice in England, he’ll now get a shot to go before appeal judges.
“I burst out in tears when my lawyer told me,” Hayes said in an interview. “I’m in a war and I’ve won a big battle,” he said.
The potential breakthrough came Thursday when the Criminal Cases Review Commission said it had referred Hayes’s case to the Court of Appeal in a finding that’s been over six years in progress. It said it had considered fresh evidence and there was a real possibility the judges may prefer a recent US court’s approach to the Libor rules — and could overturn the conviction.
The rigging of Libor and another rate, Euribor, by traders seeking to bolster their positions were among the most high-profile crimes prosecuted in the wake of the 2008 financial crisis. A dozen banks had paid penalties approaching $10 billion for rigging the benchmarks, which are tied to trillions of dollars worth of loans and derivatives.
A New York judge dismissed the case against Hayes in October after US prosecutors accepted there was no provable case. It followed an appeal court decision to overturn the convictions of two Deutsche Bank AG traders over interest rate fixing. It was the impetus Hayes needed in the UK. The CCRC invited Hayes to make new submissions to counter his own conviction — an application that was first filed in 2017.
“The key issue is that the law in the UK is an outlier globally,” Hayes said. “There isn’t another court anywhere that’s supported it, there hasn’t been other prosecutorial bodies that have supported it, or said this was an offense at the time in question.”
Karen Todner, Hayes’s lawyer, said that the UK authorities are now the only ones in the world to continue to look unfavorably on Libor bids based on commercial interests.
It’s likely the appeals case will come down to the definition and the operation of the Libor rules and the difference in approach other jurisdictions have taken to this. However, British judges have previously reconsidered the definition and have upheld their original finding.
“We need legal certainty and we can’t exist in a world where people retrospectively make up rules and send people to prison because that’s a terrifying vista of our commercial life in the UK,” the 43-year-old former yen rates trader said.
The Serious Fraud Office, which led the investigation and prosecution of the Libor and Euribor cases in the UK, said in a statement it stands ready to support the Court of Appeal as it considers the referral. “All our prosecutions are based on evidence and the applicable law,” a spokesperson said.
Lawyers for Carlo Palombo, an ex-Barclays Plc trader who was convicted, said he will now follow suit and apply to the CCRC to look again at his case in the hope that it can be heard at the appeals court alongside Hayes. Hayes’s appeals case could take as long as 12 months to kick off with a judgment following months later.
“There is going to be other battles,” Hayes said. “It wouldn’t surprise me if it went to the Supreme Court, because my feeling is whichever side loses in the initial skirmish will probably want to refer it up.”
By Katharine Gemmell
