Two financial market traders who were jailed for manipulating benchmark interest rates had their convictions quashed at the Supreme Court today.
Former Citigroup and UBS trader Tom Hayes was found guilty of multiple counts of conspiracy to defraud over manipulating the London Inter-Bank Offered Rate (Libor) between 2006 and 2010.
Mr Hayes, who was known by colleagues as ‘Rain Man’ because of his obsessive personality, had been the first trader to be convicted of rigging the Libor rate.Â
Carlo Palombo, ex-vice president of euro rates at Barclays bank, was found guilty of conspiring with others to submit false or misleading Euro Interbank Offered Rate (Euribor) submissions between 2005 and 2009.
The Court of Appeal dismissed appeals from both men in March last year. They then took their cases to the Supreme Court.
This morning, the panel of five justices found there was ‘ample evidence’ for a jury to convict the two men had it been properly directed, but they had not.
In an 82-page judgment, with which Supreme Court president Lord Reed, Lords Hodge and Lloyd-Jones and Lady Simler agreed, Lord Leggatt said: ‘That misdirection undermined the fairness of the trial.’
The jury direction errors made both convictions unsafe, Lord Leggatt said.
Former traders Carlo Palombo and Tom Hayes outside the Supreme Court in London todayÂ
Former Barclays trader Carlo Palombo (left) and Former UBS and Citigroup trader Tom Hayes (right) celebrate after their conviction was overturned at the Supreme Court in London today
Former traders Tom Hayes and Carlo Palombo outside the Supreme Court in London today
Carlo Palombo and Tom Hayes after their conviction was overturned at court in London today
Former traders Tom Hayes and Carlo Palombo outside the Supreme Court in London today
Former traders Carlo Palombo and Tom Hayes outside the Supreme Court in London todayÂ
Carlo Palombo and Tom Hayes after their conviction was overturned at court in London today
Former traders Carlo Palombo and Tom Hayes outside the Supreme Court in London today
Former traders Tom Hayes and Carlo Palombo outside the Supreme Court in London today
He added: ‘Mr Hayes was entitled to have his defence to the allegation that he agreed to procure false submissions as well as his denial that he had acted dishonestly left fairly to the jury.
‘He was deprived of that opportunity by directions which were legally inaccurate and unfair.
‘It is not possible to say that, if the jury had been properly directed, they would have been bound to return verdicts of guilty.
‘The convictions are therefore unsafe and cannot stand.’
Mr Hayes was jailed for 14 years after his conviction in 2015, which was later lowered to 11 years after an appeal, while Mr Palombo was jailed for four years in 2019.
Lord Leggatt continued: ‘When the flaws in the directions given at Mr Palombo’s trial are considered in combination, it cannot safely be assumed that, without them, the jury would still have been bound to convict Mr Palombo.
‘Thus, his conviction also cannot stand.’
He added: ‘Accordingly, both appeals should be allowed.’
Mr Hayes celebrated outside the court alongside his legal team and Tory MP Sir David Davis.
Speaking outside the entrance, Mr Hayes said: ‘I’ve had 10 years to think about what I was going to say and it has all gone.
‘It feels very surreal, a bit like my conviction, like it’s not really happening to me.
‘I’m just very grateful to all the justices who heard the appeal, very grateful to all the people who have supported me, strangers and friends alike.
‘My faith in the criminal justice system at times was likely destroyed and it has been restored by the justices from the Supreme Court today and I think it’s only right that more criminal appeals should be heard at this level.’
Karen Todner, part of Mr Hayes’s legal team, said it has taken ‘far too long’ for the Supreme Court decision to arrive, quashing his conviction.
Former Barclays trader Carlo Palombo at a press conference in London today after the ruling
Sir David Davis MP (centre) with Carlo Palombo (left) and Tom Hayes (right) during a press conference at Great George Street in London after the court quashed their convictions
Former UBS and Citigroup trader Tom Hayes attends a press conference in London today
Speaking outside the court’s entrance, she said: ‘The Supreme Court has declared that the Tom Hayes trial was unfair. We’re all obviously delighted by this decision.
‘Tom was deprived of the opportunity to put his defence to the allegations against him at his trial and what took place was unfair.
‘It has taken far too long to have this conviction overturned. We’ve taken far too long to get here.
‘But now we are here and we’re delighted that we’ve won.’
Supporters of Mr Hayes gave three cheers for justice afterwards.
Sir David described the convictions of Mr Hayes and Mr Palombo as ‘a major scandal’ involving ‘collusion between the banks and ‘Government agencies’.
Speaking at a press conference, Sir David said: ‘This is a major scandal in which traders are made scapegoats for the sins that led to the financial crisis.
‘The implications are far-reaching and of course have been devastating for those caught up in it.
‘Lives ruined, families torn apart, careers and reputations destroyed and of course, Tom and Carlo and others prosecuted. Tom and Carlo were failed at every turn. And their cases serve as yet another example of a justice system gone badly wrong.
‘There were several other people convicted of rate rigging, dozens of others who were either prosecuted, acquitted or not prosecuted. Their lives were upended too.
‘This scapegoating exercise happened as a result of collusion between the banks and Government agencies, including the SFO (Serious Fraud Office) and FCA (Financial Conduct Authority) and we’re not done with that.
‘This scandal also highlights the need for urgent reform within our justice system on a range of issues – the handling of expert witnesses right through to the rigidity of the appeals system.’
Sir David added: ‘I think today will be seen, as we go into the future, as an incredibly important day, not just for them, for Tom and Carlo, but also for the system.
‘I think the judicial system needs a shake-up, and this is the latest demonstrator of it, and we will be returning to it in the future.’
Mr Hayes said at the press conference that he would like to live by the sea following the quashing of his conviction.
Asked at a press conference if he feels angry, he said: ‘I’ve had to deal with a lot of rage and anger and bitterness in prison and I’ve managed to defeat that in large part. It’s not good for me to return to those sorts of emotions.
‘For a long time I’ve tried not to be angry because it’s not good for my mental health.
‘If I seem sanguine then I can tell you, it’s a daily battle, like a flowerbed and pulling up weeds to stop those emotions welling up inside me.
Tom Hayes (centre), a former Citigroup and UBS trader, outside London’s Supreme Court today
Carlo Palombo (left), ex-vice president of euro rates at Barclays, at the Supreme Court today
Tom Hayes and his lawyer Karen Todner arrive at the Supreme Court in London this morning
Former trader Carlo Palombo (centre) outside the Supreme Court today ahead of the ruling
Tom Hayes and his lawyer Karen Todner arrive at the Supreme Court in London this morningÂ
Carlo Palombo, ex-vice president of euro rates at Barclays, hugs a man outside court todayÂ
‘Today’s a happy day. Peter Sullivan was in prison for 38 years and he came out and the only thing he said to my knowledge was, ‘I’m not bitter, I’m not angry’. If he can say that then I can say that.’
Asked about his thoughts on what roles juries play in cases like his and Mr Palombo’s, Mr Hayes said it was a ‘dangerous idea’ for complicated fraud and financial cases to be heard by a judge.
He said: ‘The jury is the last defensive barrier that every citizen in this country has between them and a wrongful conviction.
‘And are juries perfect? No, they’re not. Do they make mistakes? Yes, they do. And you know, it’s the best of a whole load of options, none of which are perfect.’
Hayes also said his years in jail taught him to be more resilient and to value the non-material aspects of life.
Speaking at the press conference, he told reporters: ‘I’m a better person today than when I went into prison. My faith really helps me overcome a lot of the anger to see myself through that sentence.
‘I had a lot of stuff. Money enables you to buy more stuff and more stuff on top of that and your goal is to require more stuff again.
‘But when all your stuff is taken away from you, and then your liberty is taken away from you and your family gets taken away from you and your children get taken away from you, what are you left with?
‘When I got to my open prison, being able to walk on the grass and see the stars in the sky was such an amazing thing. Going on a train, crossing the road, and then when I got released after five-and-a-half years into Covid, walking around Regent’s Park in the snow and hearing a lion’s roar, those were just amazing things for me, it was so powerful.
‘I’ve really learned what you should value in your life as a result of what’s happened to me. I’m not chasing stuff anymore.’
A spokesperson for the Serious Fraud Office (SFO) said it would not be seeking a retrial.
In a statement issued after the judgment, it said: ‘Our investigation led to nine convictions of senior bankers for fraud offences, with two of these individuals pleading guilty and seven found guilty by juries.
‘This judgment has determined that the legal directions given to the jury at the conclusion of trial were incorrect in Hayes’ and Palombo’s trials and for that reason their convictions have today been found unsafe.
Tom Hayes and his lawyer Karen Todner arrive at the Supreme Court in London this morningÂ
Carlo Palombo speaks with his legal team outside the Supreme Court in London today
Carlo Palombo, pictured today, had been convicted of interest rate benchmark manipulation
Former trader Carlo Palombo (right) outside the Supreme Court today ahead of the rulingÂ
Former Barclays trader Carlo Palombo was appealing his conviction for manipulating the rate
Former Barclays trader Carlo Palombo speaks with a member of his legal team in London today
Former trader Carlo Palombo (right) outside the UK Supreme Court in London this morning
‘We have considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial.’
The Libor rate was previously used as a reference point around the world for setting millions of pounds worth of financial deals, including car loans and mortgages.
It was an interest rate average calculated from figures submitted by a panel of leading banks in London, with each one reporting what it would be charged were it to borrow from other institutions.
Euribor was created along with the euro currency in 1999 as a benchmark rate of interest for transactions in euros.
In 2012, the SFO began criminal investigations into traders it suspected of manipulating Libor and Euribor.
Mr Hayes was the first person to be prosecuted by the SFO, who opposed his and Mr Palombo’s appeals at the Supreme Court.
The SFO brought prosecutions against 20 individuals between 2013 and 2019, seven of whom were convicted at trial, two pleaded guilty and 11 were acquitted.
Mr Hayes had also been facing criminal charges in the United States but these were dismissed after two other men involved in a similar case had their convictions reversed in 2022.
