Ten years ago, Tom Hayes became the face of the LIBOR scandal—a trader cast as the ringleader, sentenced to 14 years, later reduced to 11, ultimately serving five and a half years.
Today, the Supreme Court has overturned that conviction, ruling that the jury had been misdirected—and that justice was denied. Alongside him, Carlo Palombo’s conviction for affecting EURIBOR has also been quashed.
Why now? Because the court recognised that a fundamental legal error was made: the jury was told that considering trading advantage—or even the bank’s commercial interests—automatically made a rate dishonest.
But rates like LIBOR were never singular truths. They reflected a range of plausible submissions, often influenced by real economic pressures—pressures emphasised not only by traders, but by regulators themselves.
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|So here's the uncomfortable question: were Hayes and Palombo scapegoats—fall guys thrown before the public to satisfy fury over a broken system? After all, low LIBOR rates suited everyone: banks, governments, borrowers, and financial markets. In the midst of post-crisis panic, the narrative needed villains. And amid that hysteria, the Serious Fraud Office—under pressure from past failures and driven by public and political demands—chose to pursue criminal prosecutions without fully grappling with the complexity of benchmark economics.
The court today acknowledged there was sufficient evidence to go to a jury—but crucially, that the legal framing was wrong. And their convictions are now considered "unsafe."
Today, Hayes says his faith in the justice system—'destroyed' by the original trial—has been restored.
Imagine: a trader sent to maximum-security prison, branded dishonest, separated from his family—all based on a jury never allowed fully to weigh the commercial realities of their world.
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|Jacob Rees-Mogg says the scandal was a miscarriage of justice
Commercial complicity, contextual nuance, systemic regulatory pressure—these were treated as evidence of dishonesty rather than circumstances. That one judge’s misdirection led to a decade of ruin.
Today should be a moment of reckoning: not just for the men who lost their liberty, but for a system that too often responds to outrage with the blunt instrument of criminal justice.
Let’s not forget: LIBOR was manipulated to the benefit of the whole financial sysetem—but so was public perception. And it’s entirely fitting to ask: were these convictions ever about truth—or were they looking for a scapegoat for the financial crisis?
It raises new questions, cui bono? To whose benefit did the manipulation take place and is it credible that much more senior people all the way up the regulatory ladder had no suspicion of a manipulation that suited them all? Did relatively junior people go to jail to save the blushes of a deliberately ignorant hierarchy?