Former financial market traders Tom Hayes and Carlo Palombo, who were found guilty of benchmark interest rate rigging, have had their convictions quashed at the Supreme Court.
Mr Hayes, a former Citigroup and UBS trader, was found guilty of multiple counts of conspiracy to defraud over manipulating the London interbank offered rate (Libor) between 2006 and 2010.
Mr Palombo, the ex-vice-president of Euro rates at Barclays, was found guilty of conspiring with others to submit false or misleading Euro interbank offered rate (Euribor) submissions between 2005 and 2009.
After the Court of Appeal dismissed appeals from both men in March 2024, they took their cases to the Supreme Court.
On Wednesday, the panel of five justices found there was “ample evidence” for a jury to convict the two men had it been properly directed – but they had not.
In an 82-page judgment, with which Supreme Court president Robert Reed, Patrick Hodge and David Lloyd-Jones and Ingrid Simler agreed, George Leggatt said: “That misdirection undermined the fairness of the trial.”
The jury direction errors made both convictions unsafe, Lord Leggatt said.
He added: “Mr Hayes was entitled to have his defence to the allegation that he agreed to procure false submissions as well as his denial that he had acted dishonestly left fairly to the jury.
“He was deprived of that opportunity by directions which were legally inaccurate and unfair.
“It is not possible to say that, if the jury had been properly directed, they would have been bound to return verdicts of guilty.
“The convictions are therefore unsafe and cannot stand.”
Mr Hayes was jailed for 14 years after his conviction in 2015, which was later lowered to 11 years after an appeal, while Mr Palombo was jailed for four years in 2019.
Lord Leggatt continued: “When the flaws in the directions given at Mr Palombo’s trial are considered in combination, it cannot safely be assumed that, without them, the jury would still have been bound to convict Mr Palombo.
“Thus, his conviction also cannot stand.”
He added: “Accordingly, both appeals should be allowed.”
A spokesperson for the Serious Fraud Office (SFO) said it would not be seeking a retrial.
In a statement issued after the judgment, it said: “Our investigation led to nine convictions of senior bankers for fraud offences, with two of these individuals pleading guilty and seven found guilty by juries.
“This judgment has determined that the legal directions given to the jury at the conclusion of trial were incorrect in Hayes’s and Palombo’s trials, and for that reason their convictions have today been found unsafe.
“We have considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial.”
The investigations
The Libor rate was previously used as a reference point around the world for setting millions of pounds worth of financial deals, including car loans and mortgages.
It was an interest rate average calculated from figures submitted by a panel of leading banks in London, with each one reporting what it would be charged were it to borrow from other institutions.
Euribor was created along with the euro currency in 1999 as a benchmark rate of interest for transactions in euros.
In 2012, the SFO began criminal investigations into traders it suspected of manipulating Libor and Euribor.
Mr Hayes was the first person to be prosecuted by the SFO, which opposed his and Mr Palombo’s appeals at the Supreme Court.
The SFO brought prosecutions against 20 individuals between 2013 and 2019, seven of whom were convicted at trial, two pleaded guilty, and 11 were acquitted.
Mr Hayes had also been facing criminal charges in the United States, but these were dismissed after two other men involved in a similar case had their convictions reversed in 2022.
