A New York judge has dismissed criminal charges against Tom Hayes, a former UBS and Citigroup trader who served more than five years in a UK prison for conspiring to manipulate the Libor benchmark interest rate.
The scandal surrounding Libor — the London interbank rate — sent shockwaves through global financial markets more than a decade ago. Several banks were forced to pay fines for falsifying the benchmark in their favor.
At issue was the way the interest rate was set based on bank filings rather than actual transactions, potentially allowing traders to raise or lower the rate and profit from influencing derivatives contracts.
British and American prosecutors accused Hayes of being a key player in a global conspiracy to manipulate Libor, which was used to price hundreds of trillions of dollars in assets around the world.
The decision to drop the US charges against Hayes follows a decision by an appeals court in a separate US case that overturned Libor rigging convictions two former Deutsche Bank traders. That ruling found that the government “failed to show that any material made under the influence of the trader was false, fraudulent or misleading.”
Prosecutors in the Hayes case said Thursday that the preliminary ruling cast doubt on their ability to seek a conviction. Charges against another former trader, Roger Darin, were also dropped.
Hayes was convicted in the UK in 2015 of conspiring to rig Libor and sentenced to 14 years in prison, suspended to 11 on appeal. He was released in In January of last year after departure five and a half years and continued to fight against conviction. He is awaiting a final decision from the Criminal Justice Review Commission, which is investigating possible miscarriages of justice.
The CCRC told Hayes that it had made an interim decision not to refer his case, but would now hear further submissions from his legal team before making a final decision.
In a statement on Monday, he said: “The US Department of Justice saw fit to dismiss the charges based on the same facts, evidence and case law used by the UK courts to justify my 11-year prison sentence. That alone should be reason enough to send these cases back to the UK Court of Appeal and, if necessary, to the Supreme Court, which has yet to hear the case.”
Hayes claimed he was made a scapegoat for his managers and the banks themselves, which he said supported his actions.
From 2006 to 2009, Hayes was a star derivatives trader at UBS in Tokyo and claimed to have generated more than $280 million in profits for the bank. Citigroup tapped him with a $4.2 million bonus, but he was fired after 10 months as the Libor scandal gathered pace.
The UK’s Serious Fraud Office has completed its investigation into bid rigging in 2019. Thirteen individuals were charged with conspiracy to defraud, and four were convicted.
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