Rate-rigging convictions of five bankers referred to UK appeals court

Five former bankers convicted of manipulating key interest rates are poised for a potential legal reprieve. This development follows the Supreme Court’s overturning of the conviction of trader Tom Hayes last year, raising questions about the validity of related prosecutions.

The Core of the Issue

The convictions stem from allegations of manipulating the euro interbank offered rate (Euribor) and the London interbank offered rate (Libor). These rates, which have significantly impacted financial products worldwide – including pensions, mortgages, and savings – represent benchmarks used in transactions worth hundreds of trillions of pounds and euros.

A Flawed Trial?

The Supreme Court’s decision to clear Tom Hayes centered on concerns about the original trial. Specifically, the judge was found to have provided “inaccurate and unfair” instructions to the jury, leading to a guilty verdict on charges of conspiracy to defraud. Carlo Palombo, a former Barclays trader, also had his conviction quashed on the same day as Hayes.

Did You Know? Nine bankers were initially given fraud convictions, including Tom Hayes, related to the manipulation of these key interest rates.

The Current Reversal

The Criminal Cases Review Commission (CCRC) has now referred the cases of Alex Pabon, Jay Vijay Merchant, Jonathan Mathew, Philippe Moryoussef, and Colin Bermingham back to the Court of Appeal. This action came after the Serious Fraud Office, which originally brought the charges, acknowledged that the convictions “may be considered unsafe” in light of the Hayes and Palombo rulings.

Pabon, Merchant, and Mathew were convicted of conspiracy to defraud in 2016, receiving prison sentences ranging from two to six and a half years. Moryoussef was convicted in 2018 and sentenced to eight years, while Bermingham received a five-year sentence in 2019. All argued that the legal errors identified in the Hayes case also compromised their trials.

Expert Insight: The CCRC’s decision highlights the critical importance of accurate jury instructions in complex financial crime cases. A misdirection to the jury can fundamentally undermine the fairness and reliability of a conviction, even when the underlying allegations are serious.

What Happens Next?

The cases will now proceed to the Court of Appeal, which will determine whether the original convictions are unsafe. It is possible the Court of Appeal could uphold the convictions, order new trials, or quash the convictions entirely. The outcome will likely depend on whether the Court of Appeal finds the same legal errors present in the Hayes case also affected these five individuals.

Tom Hayes is currently pursuing a separate legal action, suing his former employer, UBS, for $400 million (£300m), alleging he was made a “hand-picked scapegoat” for the Libor scandal. He claims UBS misled authorities and falsely portrayed him as an “evil mastermind.”

Frequently Asked Questions

What were Libor and Euribor used for?

The Euribor and Libor rates affected the value of ordinary people’s pensions, mortgages and savings, as well as hundreds of trillions of pounds and euros worth of financial products around the world.

What led to Tom Hayes’ conviction being overturned?

The Supreme Court overturned Tom Hayes’ conviction after finding faults in the original trial, specifically that the judge gave “inaccurate and unfair” instructions to the jury.

What is the role of the CCRC?

The Criminal Cases Review Commission (CCRC) reviews potential miscarriages of justice and can refer cases back to the Court of Appeal if it believes a conviction may be unsafe.

As these cases move through the appeals process, will this renewed scrutiny of past convictions lead to broader questions about the handling of financial crime investigations?

Rate-rigging convictions of five bankers referred to UK appeals court | Banking