The UK’s Supreme Court has quashed the convictions of two financial market traders, Tom Hayes and Carlo Palombo, who were accused of manipulating benchmark interest rates in a scandal related to the global financial crisis. The court ruled that the judges’ instructions to jurors were inaccurate, preventing them from considering key questions about the traders’ actions.
Hayes, a former Citigroup and UBS trader, was convicted in 2015 and sentenced to 11 years in prison, while Palombo was convicted in 2019 and sentenced to four years. However, both men will be released early due to the court’s decision.
The convictions were related to alleged efforts to influence the London Inter-Bank Offered Rate (Libor) and its euro currency equivalent Euribor. These benchmarks, used to set interest rates on trillions of dollars of loans, were vulnerable to manipulation by banks that could profit from swings in interest rates.
In 2012, the Serious Fraud Office began investigating alleged Libor manipulation. The investigation led to the conviction of nine bankers. However, Hayes and Palombo’s appeals were repeatedly rejected before they took their case to the UK Supreme Court.
The court’s decision comes after a US appeals court overturned the convictions of two traders charged with similar crimes in 2022. The Serious Fraud Office has stated that it will not seek a retrial due to the court’s judgment.
Libor and Euribor were used to set interest rates on business loans, home mortgages, and credit card debts. However, they became central to complex financial transactions and were vulnerable to manipulation because banks could profit from swings in interest rates. The benchmarks have since been phased out as part of efforts to address the risks they posed during the financial crisis.
Source: https://www.pbs.org/newshour/world/uk-supreme-court-quashes-2-bank-traders-convictions-after-deciding-their-trials-were-unfair