The Result
On Wednesday, 23rd July 2025, Tom Hayes and Carlo Palombo had their convictions for manipulation of a benchmark index, the London Interbank Offer Rate (‘’LIBOR’) and equivalents quashed by the Supreme Court in the UK.
Description of LIBOR
LIBOR was the index that was used to describe the cost of money in terms of interest rate. It was determined each day at 11:00am when a number of panel banks submitted the rate at which were able to borrow money in the interbank market. The panel banks were all major international banks which tended to have amongst the best credit ratings in the market. There was an individual rate quoted for each of the main currencies (USD, GBP, EUR, CAD and JPY) and for various maturities or durations up to 1 year.
Original Conviction and First Appeal
Tom Hayes was a trader with UBS and subsequently Citigroup and was the first person to be tried and then convicted of the manipulation of the LIBOR rate. It is notable that the expert for the prosecution was subsequently found to be not adequately knowledgeable. Tom Hayes was originally sentenced to 14 years in prison in 2015 and this was then reduced on appeal to 11 years of which he served 5 ½ years behind bars.
If you don’t first succeed try try again.”
Phrase is often associated with a story about King Robert the Bruce
Trials of Others
Subsequent trials were held of others and a further 5 were convicted and the remainder found not guilty. In all 13 traders had been charged by the UK Serious Fraud Office as part of their investigations into the LIBOR scandal. Of those, eight were acquitted in early 2016. Five were found guilty (Tom Hayes, Carlo Palombo, Alex Pabon, Jay Vijay Merchant and Jonathan James Mathew), and one pleaded guilty (Peter Johnson). In particular all the individuals who Tom Hayes was meant to have conspired with to manipulate LIBOR were found not guilty.
Trials were also held in the United States, where two individuals, Matthew Connolly and Gavin Black were originally found guilty in 2018. However in 2022 their conviction was overturned by the Second Circuit Court of Appeals in New York.
Banks Fined
Regulators also got involved in the issue and many of the major banks made settlements of substantial sums to resolve the situation. The largest was Deutsche Bank which paid some US$3.5bn to the Financial Conduct Authority in the UK and the Department of Justice in the US amongst others.
The Route to the Supreme Court
Meanwhile, Tom Hayes had applied to the Criminal Cases Review Commission to have his conviction referred back to the Court of Appeal here in the UK. This process became very delayed and it was some six years later that a decision was made. The decision was initially denied but subsequently granted and led to a further Court of Appeal trial in 2024. This also went against Tom Hayes, but leave to take the case to the Supreme Court was granted.
The Supreme Court held the hearing in March 2025 and the arguments were put that Mr Justice Cooke had mis-directed the jury in Hayes’ original trial. It was on this basis that the Supreme Court agreed that he had not received a fair trial and quashed the conviction.
The Serious Fraud Office has since confirmed that it will not seek a re-trial of either Tom Hayes or Carlo Palombo.
Reasons for the decision
The judge in the original trial had directed the jury that only a single rate applied at the nominated time and that the submitting banks could not have a commercial interest in the rate declared by the bank. These decisions left the jury with little option but to convict Hayes as he had asked for the rate to be higher or lower to suit his trading position. Both of these two directions are wrong. There would always have been a valid range of rates from which a submitter could have chosen a rate for that day. In addition, in a dynamic market, there will always be a link between the index and the interests of the banks which set the prices of the underlying entity.
Expert Evidence International had been involved in the Defendant’s case.
What happens next?
There are a number of others convicted who now need to decide whether they seek for their convictions to be similarly quashed.
Link: R v Tom Alexander Hayes UKSC/2024/0087
Link: R v Carlo Palombo UKSC/2024/0088
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