In a very welcome legal development the Supreme Court has quashed the convictions of former traders Tom Hayes and Carlo Palombo. These traders were accused of collusion in manipulating two critical financial benchmarks, Libor and Euribor. The court has already determined that the trials were deeply unfair. This ruling casts deep doubt on the impartiality and fairness of the judicial process in these spotlighted cases.
Mr. Hayes, who was the first banker to be imprisoned for rate-rigging in 2015, faced serious allegations of orchestrating an international conspiracy to influence interest rates to benefit his employers, UBS and Citibank. Initially sentenced to 14 years, subsequently commuted to 11, he ended up serving only about half his sentence before being released. In stark contrast, Mr. Palombo only served a four-year sentence after pleading guilty in 2019 for his involvement in the manipulation schemes.
In closing This decision by the Supreme Court is an absolute game-changer for both Mr. Hayes and Mr. Palombo. It has far-reaching implications for the entire financial community. Unsurprisingly, the court agreed that the charge against Mr. Hayes was “hopelessly vague.” It was very critical of the long delay in being able to get those cases to appeal. As the ruling notes, there were glaring defects in the initial prosecution. It illustrates the critical importance of urgently rethinking how we prosecute white-collar crime.
Mr. Hayes pleaded guilty to attempts to rig the Libor rate while at each of the banks. Today he is particularly frustrated by the impact the conviction has had on his life. Speaking at a press conference following the ruling, he stated, “I’ve lived for the last ten years on a 24-hour basis because I’ve been unable to plan any aspect of my life.”
The court’s short order granting this right of action is especially remarkable as it comes after a colorful and long legal journey. Between 2015 and 2019, the Court of Appeal blocked five attempts for the traders’ cases to be heard by the Supreme Court. This history highlights the dangers of an anti-financial crime systemic imbalance in the justice system.
Think of both merchants as having powerful beliefs. This was happening within the overall context, where central bankers and government officials around the world were pressuring banks to do the same. These scandals have prompted a national outcry over public accountability and institutional transparency on the part of large, complex financial institutions.
Mr Hayes’ solicitor, Karen Todner, is calling for a full public inquiry into the convictions. Investigators who are prosecutors, she contends, have a huge conflict of interest that can lead to preventable miscarriages of justice. She particularly stressed that changes in the justice system must occur so that these problems do not happen in other cases down the line.
Mr Palombo’s solicitor Ben Rose said it was other market traders who finally have an opportunity to correct the wrongs that were done to them. He is optimistic that this ruling could set the precedent for more appeals or lawsuits from those who experienced the same challenges in previous prosecutions.
As Libor has now been discontinued and Euribor undergoes reform, this ruling may reshape how financial regulations are enforced and understood moving forward. Anxious eyes from every corner of the financial services industry are on this precedent-setting ruling. Specifically, they want to see the guidance’s effect on future prosecutorial action against financial misconduct.