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The judge who oversaw Tom Hayes’ conviction for conspiring to rig the Libor interest rate denied him a fair trial by giving “extraordinarily unfair” directions to a jury, the former trader’s barrister argued in a fresh appeal on Thursday.
Adrian Darbishire KC told the Court of Appeal in London that the former UBS and Citigroup trader’s conviction in 2015 — for which he served five and a half years in prison — was “unsafe”.
Hayes’ lawyer argued that directions given by the judge in the original trial to the jury about the rules governing the Libor rate, which once underpinned some $350tn of financial instruments, were “not only wrong in law” but “extraordinarily unfair”, in written submissions.
Darbishire also pointed to a 2022 court judgment in the US that overturned the convictions of two former Deutsche Bank traders, Matthew Connolly and Gavin Black, for their part in an alleged Libor rigging scheme, and led to all charges against Hayes in the US being dropped.
Darbishire told the judges in London on Thursday that the appeals court in Manhattan had followed the “correct approach” to issues that were also important in Hayes’ case.
Hayes’ fresh appeal comes over a decade after the scandal erupted over Libor — the London Interbank Offered Rate — which resulted in banks paying major fines for rigging the benchmark in their favour.
The Serious Fraud Office, which brought the case against Hayes, is resisting the appeal. In written arguments the SFO said “the fact that an American court came to a different determination as to the proper construction of the Libor question as a matter of American law and in a different context is irrelevant” to the case before the English courts.
The Court of Appeal heard Hayes’ case on Thursday alongside that of Carlo Palombo, an ex-Barclays trader similarly convicted of manipulating Euribor, another benchmark rate, who received a four-year sentence.
Both have been given the chance to clear their names after a review by the Criminal Cases Review Commission, which investigates potential miscarriages of justice.
Traders who were individually prosecuted have argued that they were made scapegoats for the Libor scandal, which sent shockwaves through financial markets and went on to cost banks billions in fines and settlements.
Hayes was initially sentenced to 14 years, the toughest sentence handed down in the UK for financial fraud. A previous hearing by the Court of Appeal reduced his sentence to 11 years but declined to reverse the conviction.
At issue in the new appeal is whether traders were allowed to take commercial considerations into account when submitting Libor rates. In a series of hearings running up to Hayes’s 2015 trial, Mr Justice Jeremy Cooke said it was clear that Libor rules prevented any consideration of commercial interests in rate submissions. But Hayes disputes that definition.
Darbishire told the Court of Appeal that it was not in dispute that Hayes’ Libor submissions were “intended to advantage [his] trading” but he did not think he was in breach of the rules.
The jury had been “invited to convict” Hayes, Darbishire said, as the judge told them that submitting rates that procured a trading advantage necessarily meant — as a matter of law — that these submissions “were neither ‘honest’ nor ‘genuine’”.
Hayes, a former yen derivatives trader nicknamed “Rainman” because he was deemed awkward and obsessed with numbers, argued during his trial that he was only trying to do his job well and did everything with the knowledge of his superiors.
Hayes was a derivatives trader at UBS in Tokyo from 2006 until 2009. He was poached by Citigroup, which let him go 10 months later.
The SFO said in a statement on Thursday: “All our prosecutions are based on evidence and the applicable law. We are supporting the Court of Appeal as it considers this referral.”