Four traders already convicted of manipulating the London Interbank Offered Rate (Libor) are appealing their convictions. We know they are taking this action due to recent developments in the case. A revived legal challenge has emerged since the Supreme Court’s decision last month to overturn the convictions of two traders. Tom Hayes and Carlo Palombo were the first criminally prosecuted for their roles in the Libor scandal.
Libor was one of the world’s most important benchmarks for determining rates on loans between banks. After the 2008 financial crisis, it was under fire for very serious allegations of wrongdoing. The scandal broke in 2012. As a result, it was revealed that banks were manipulating Libor rates upwards to make money on trades while submitting lower rates to disguise their instability during the crisis. These manipulations were investigated by the Serious Fraud Office (SFO), resulting in a number of convictions.
Four such traders are currently battling to win their convictions thrown out. Jay Merchant, Jonathan Mathew, Philippe Moryoussef and Christian Bittar were all participants in the wider consequences of the Libor scandal. In 2023, the BBC opened up a trove of evidence that further complicated their argument. It highlighted a greater, state-sponsored distortion of interest rates which it claimed was forced by central banks and governments in the financial crisis.
In light of the Supreme Court’s ruling regarding Hayes and Palombo, Hickman & Rose, representing the four traders, stated, “Following the Supreme Court’s landmark decision yesterday to quash the convictions of Tom Hayes and Carlo Palombo, all four of our clients now intend to appeal against their convictions.” They continued, though, by saying that they would decline to comment any further at this stage.
The SFO acknowledged the Supreme Court’s decision, stating they had “considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial.” This declaration marks a historic turn in the legal terrain for Libor-related prosecutions.
Just as Libor has now officially ceased to function, there are similar moves afoot to reform its European equivalent, Euribor. The impact of these legal challenges is significant. Together, they have the potential to reconfigure how we think about market behavior and regulatory supervision in our financial markets.