Jailed Libor trader Tom Hayes loses appeal against fraud charges

Tom Hayes was sentenced to 14 years in prison, which was later reduced to 11. Photo: REUTERS/Peter Nicholls

Two traders appeals against convictions of key interest rate riggers have been rejected by senior judges.

Tom Hayes, a former star trader at Citigroup and UBS, and Carlo Palombo, a former trader at Barclays, had their appeals rejected by the Court of Appeal on Wednesday after a hearing that began last week.

In 2015, Hayes was found guilty of conspiracy to defraud by manipulating the London interbank offered rate, known as Libor, a benchmark rate once used to valuations of financial products worth over £270 trillion worldwide.

Palombo was found guilty. in 2019, the euro-equivalent rate of Libor and Euribor was skewed. Hayes was sentenced to 14 years in prison, which was later reduced to 11, and Palombo was jailed for four years.

Their sentences depended on whether they acted dishonestly in carrying out those acts, or that was considered normal practice at that time.

Lawyers for the two men argued that the judges should follow the approach of the US appeals court, which in January 2022 overturned the convictions of two former Deutsche Bank traders for Libor fraud.

In that case, the judges concluded that that the US government failed to provide evidence that the traders said anything false or broke any rules.

However, Lord Justice Bean, who delivered the judgment, said in his summary of the Court of Appeal decision that the US decision “does not call into question the correctness of previous decisions of this court as a matter of English law.”

Prosecutors called Hayes the “ringmaster” of a global network of 25 traders and brokers from at least 10 firms who tried to manipulate the Libor rate on an industrial scale to maximize profits.

By 2017, a dozen banks had paid nearly $10 billion in fines for falsifying benchmarks.

In 2015, the judges told Hayes there was «compelling documentary evidence» showing how he tried to change the London interbank offered rate, known as Libor.

The judges said the evidence «were accompanied by attempts to maintain secrecy, as well as his frank admissions of dishonesty during preliminary interviews.»

Hayes and Palombo were given 14 days to apply for leave to appeal to the Supreme Court.

Hayes always said that the Libor rates he requested were within the acceptable range — and that his behavior was common at the time and approved by bosses.