Ex-City traders Tom Hayes and Carlo Palombo, who were both jailed for manipulating interest rate benchmarks, have lost a Court of Appeal bid to clear their names.
Hayes, 44, a former Citigroup and UBS trader, was found guilty of multiple counts of conspiracy to defraud over manipulating the London Inter-Bank Offered Rate (Libor) between 2006 and 2010.
He was jailed for 14 years – reduced to 11 years on appeal – and served five and a half years behind bars before being released.
Palombo, 45, an ex-vice president of euro rates at Barclays bank, was found guilty of conspiring with others to submit false or misleading Euro Interbank Offered Rate (Euribor) submissions between 2005 and 2009. He was jailed for four years.
Both of their cases was referred to the Court of Appeal by the Criminal Cases Review Commission (CCRC), which investigates potential miscarriages of justice.
Following a three-day hearing earlier this month, Lord Justice Bean, Lord Justice Popplewell and Mr Justice Bryan dismissed both men’s appeals against their convictions.
Hayes’ lawyers previously argued that the convictions of the two former bankers were “unsafe” and should be quashed.
They said, in arguments backed by Palombo’s lawyers, that the judge overseeing Hayes’ 2015 trial was wrong to tell jurors that there was a ban on commercial considerations during the Libor setting process.
Hayes’ legal team also argued the judge’s directions to the jury had a “catastrophic” impact on his defence and made his trial “extraordinarily unfair”.
But delivering their ruling, the Court of Appeal judges said the argument was “without merit given that the LIBOR and EURIBOR codes were binding contracts, resembling legislation”.
“Asking a jury to decide on the meaning of such documents could result in inconsistent decisions”, they said.
“The jury in these cases could not address whether the submissions were, or would be, an honest and genuine assessment without being given an answer to the question ‘an assessment of what?’. The answer to that question depended upon the true construction of the LIBOR and EURIBOR definitions.”
Judges were also told that they should follow the approach of a US appeals court in January 2022 which found there was no ban on taking into account commercial interests when making rate submissions.
The Serious Fraud Office (SFO) opposed the appeals which it said “reveal no new reason for questioning the approach and findings of this court on several prior occasions”.
Its lawyers said the Libor definition and Euribor code “prohibit a panel bank from considering its own financial interests when deciding on the rates to be submitted”, that jurors were not misdirected and that the US ruling was “irrelevant” to the fairness of Hayes’ trial.
According to the SFO, Hayes was one of 19 people prosecuted for trader manipulation and one of nine convicted – all of whom have since brought unsuccessful appeal bids.
The Libor rate was previously used as a reference point around the world for the setting of millions of pounds 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.
At his 2015 trial, Hayes was described by prosecutors as the “ringmaster” at the centre of an enormous fraud to boost his own six-figure earnings.
Palombo, who denied acting dishonestly, lost a bid to overturn his conviction at the Court of Appeal in December 2020.
