Why have bankers had their convictions overturned and what are the next steps?

Background on Their Jail Time

Hayes and Palombo were among a group of 37 traders accused of tampering with rate benchmarks like Libor and Euribor. These benchmarks play a significant role in determining how much banks charge each other for loans, subsequently affecting millions of mortgages and commercial loans. It’s worth noting that they were also implicated in contributing to the financial crisis of 2008, although Hayes has claimed that the two issues aren’t really connected.

Libor is currently being phased out, while reforms are in place for Euribor. Hayes, who was described as the “ringmaster” of this alleged conspiracy, was the first banker sentenced under these charges in 2015, initially receiving a 14-year sentence, later reduced to 11 years, of which he served about half. Palombo received a sentence of four years in 2019.

Their Defense

While Hayes acknowledged that he attempted to manipulate Libor rates during his time at UBS and later at Citibank, he argued that such practices were commonplace at these institutions and that his superiors were aware of his actions. He maintains that he became a scapegoat for broader industry misconduct. Similarly, Palombo contended that the actions he took were standard for the business at that time.

Overview of Rate Rigging Convictions

Across trials in both the UK and US from 2015 to 2019, 19 individuals were convicted of fraud conspiracy related to rate rigging, with nine receiving prison sentences. While some went to jail, evidence later indicated that central bankers and government officials were encouraging similar practices on a larger scale, although none of those officials faced charges. After serving full sentences, some convicts had their charges dismissed, but in the UK, Hayes and Palombo remained labeled as criminals.

Supreme Court’s Decision

After a prolonged legal struggle, the Supreme Court concluded that the trials faced by Hayes and Palombo were unjust, ultimately quashing their convictions. Between 2015 and 2019, appeals prevented many trader-related cases from reaching the Supreme Court, but this ruling indicated that the jury instructions during their trials were flawed. The Serious Fraud Office, which originally brought the case against them, stated that retrials wouldn’t serve the public interest.

Future Implications

Following the ruling, Hayes expressed hope about possibly reclaiming assets that were seized, stating he might pursue compensation. He shared how the last decade was a constant struggle, stating, “I lived on a 24-hour basis for the past 10 years, because I couldn’t plan every aspect of my life.” He now feels a newfound sense of freedom and opportunity.

Conservative MP David Davis commented on the situation, mentioning that the issue of collusion between banks and governmental bodies is far from over and hinted at future discussions in Parliament. Hayes’ attorney, Karen Toddner, has called for a comprehensive public inquiry into the case, emphasizing the personal toll the ordeal has taken on Hayes and his family. She criticized the seriousness of the charges and noted the lengthy legal process that contributed to the difficulties they faced.