LONDON (Reuters) – Tom Hayes, the first trader ever jailed for interest rate rigging, launched a bid to clear his name at Britain’s top court on Tuesday, arguing it was not automatically dishonest to take into account commercial considerations when making Libor submissions.
Hayes, 45, a former star Citigroup and UBS trader, was convicted in 2015 of conspiracy to defraud by manipulating Libor, a benchmark rate once used to price trillions of dollars worth of financial products globally.
The Libor rate was phased out in 2023.
Hayes is challenging his conviction during three days of hearings at the UK Supreme Court along with Carlo Palombo, 46, a former Barclays trader who was found guilty in 2019 of skewing Libor’s euro equivalent, Euribor.
Those rates, designed to reflect banks’ short-term funding costs, were based on daily estimates from a group of banks as to how much they would expect to pay to borrow funds from each other for a range of currencies and periods.
Hayes and Palombo argue their convictions depended on a definition of Libor and Euribor which assumes there is an absolute legal bar on a bank’s commercial interests being taken into account when setting rates.
The court is also being asked if a Libor or Euribor submission had to be the single cheapest rate at which a bank could borrow at the time, or whether it could be selected from within a range of potential borrowing rates.
Hayes’ lawyer Adrian Darbishire said in court on Tuesday that the judge in his client’s trial had directed the jury that a submission which took into account trading advantage was, in law, not genuine and not honest.
Darbishire said honesty of conduct was not a matter of law, but should instead be resolved by a jury, not a judge.
The effect of the direction, he said, meant the central factual questions which the jury needed to resolve were determined by the judge.
“We say, therefore, Mr Hayes’ conviction is unsafe,” he said.
The Supreme Court challenge follows a landmark U.S. court decision in 2022 which overturned the Libor rigging convictions of two former Deutsche Bank traders.
Lawyers for Hayes and Palombo argue Britain was the only country in the world where it was illegal for traders to take account of commercial consideration when submitting Libor or Euribor rates.
Hayes was originally jailed for 14 years, a sentence that was later reduced to 11 years.
He was released from prison after serving five and a half years. Palombo was given a four-year sentence.
(Reporting by Michael Holden; Editing by Joe Bavier)
