Latest news with #Euribor
an hour ago
- Business
UK Supreme Court quashes convictions of 2 bank traders after deciding their trials were unfair
LONDON -- Britain's Supreme Court on Wednesday quashed the convictions of two financial market traders accused of manipulating benchmark interest rates in one of the biggest scandals to come out of the global financial crisis in 2008. The charges against Tom Hayes, a former Citigroup and UBS trader, and Carlo Palombo, who worked for Barclays, centered around alleged efforts to influence the London Inter-Bank Offered Rate, or Libor, and its euro currency equivalent Euribor, which were used to set the interest rates on trillions of dollars of loans and other financial products around the world. The court ruled that the convictions of Hayes and Palombo were unfair because the judges in their separate cases gave inaccurate instructions to jurors. That effectively prevented jurors from considering the key question of whether the traders had acted dishonestly. 'That misdirection undermined the fairness of the trial,' Judge George Leggatt wrote in an 82-page decision backed by all five members of the panel that heard the case. Hayes was convicted in August 2015 and sentenced to a maximum of 14 years in prison, which was later reduced to 11 years. Palombo, convicted in March 2019, was sentenced to four years in prison. Both men were released in 2021. 'It destroyed my family, I missed most of my son's childhood,' Hayes told the BBC. 'For so long I've been an international fugitive … and now I can move on with my life, or try to,' he added. The decision came after the U.S. Second Circuit Court of Appeal in 2022 overturned the convictions of two traders charged with similar crimes in the United States. Hayes and Palombo, whose appeals were repeatedly rejected by British judges, were allowed to take their case to the U.K. Supreme Court after that ruling. The U.K.'s Serious Fraud Office began investigating alleged efforts to manipulate Libor in 2012. That ultimately led to the conviction of nine bankers. 'We have considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial,' the SFO said in response to the Supreme Court ruling. Libor and Euribor were critical benchmarks that were once used to set the interest rates on everything from business loans to home mortgages and credit card debts. As a result, they also became central to more complex financial transactions such as those used by banks and businesses to bet on interest rate fluctuations. The benchmarks were vulnerable to manipulation because they were set by banks that could profit from swings in interest rates. Each day, major international banks were asked to submit the interest rate at which they could borrow money from other banks. An average of those submissions was then used to set the daily Libor and Euribor rates. During the financial crisis, regulators became aware that some banks were making artificially low Libor submissions to make their institutions seem more creditworthy. Some traders also sought to influence the submissions made by their banks as even small moves in the benchmark rates could boost their profits. Those risks became even more pronounced during the financial crisis, when lending dried up and bankers had to base their daily submissions on a subjective assessment of the market rather than actual loans.
Winnipeg Free Press
2 hours ago
- Business
- Winnipeg Free Press
UK Supreme Court quashes convictions of 2 bank traders after deciding their trials were unfair
LONDON (AP) — Britain's Supreme Court on Wednesday quashed the convictions of two financial market traders accused of manipulating benchmark interest rates in one of the biggest scandals to come out of the global financial crisis in 2008. The charges against Tom Hayes, a former Citigroup and UBS trader, and Carlo Palombo, who worked for Barclays, centered around alleged efforts to influence the London Inter-Bank Offered Rate, or Libor, and its euro currency equivalent Euribor, which were used to set the interest rates on trillions of dollars of loans and other financial products around the world. The court ruled that the convictions of Hayes and Palombo were unfair because the judges in their separate cases gave inaccurate instructions to jurors. That effectively prevented jurors from considering the key question of whether the traders had acted dishonestly. 'That misdirection undermined the fairness of the trial,' Judge George Leggatt wrote in an 82-page decision backed by all five members of the panel that heard the case. Hayes was convicted in August 2015 and sentenced to a maximum of 14 years in prison, which was later reduced to 11 years. Palombo, convicted in March 2019, was sentenced to four years in prison. Both men were released in 2021. 'It destroyed my family, I missed most of my son's childhood,' Hayes told the BBC. 'For so long I've been an international fugitive … and now I can move on with my life, or try to,' he added. The decision came after the U.S. Second Circuit Court of Appeal in 2022 overturned the convictions of two traders charged with similar crimes in the United States. Hayes and Palombo, whose appeals were repeatedly rejected by British judges, were allowed to take their case to the U.K. Supreme Court after that ruling. The U.K.'s Serious Fraud Office began investigating alleged efforts to manipulate Libor in 2012. That ultimately led to the conviction of nine bankers. 'We have considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial,' the SFO said in response to the Supreme Court ruling. Libor and Euribor were critical benchmarks that were once used to set the interest rates on everything from business loans to home mortgages and credit card debts. As a result, they also became central to more complex financial transactions such as those used by banks and businesses to bet on interest rate fluctuations. Monday Mornings The latest local business news and a lookahead to the coming week. The benchmarks were vulnerable to manipulation because they were set by banks that could profit from swings in interest rates. Each day, major international banks were asked to submit the interest rate at which they could borrow money from other banks. An average of those submissions was then used to set the daily Libor and Euribor rates. During the financial crisis, regulators became aware that some banks were making artificially low Libor submissions to make their institutions seem more creditworthy. Some traders also sought to influence the submissions made by their banks as even small moves in the benchmark rates could boost their profits. Those risks became even more pronounced during the financial crisis, when lending dried up and bankers had to base their daily submissions on a subjective assessment of the market rather than actual loans. Libor and Euribor were phased out in recent years, in part because they were seen as worsening the financial crisis.
Euronews
2 hours ago
- Business
- Euronews
Ex-star trader Tom Hayes cleared as rate-rigging convictions quashed
Former trader for UBS and Citigroup Tom Hayes and ex-Barclays trader Carlo Palombo were both jailed in 2015 and 2019, respectively, for manipulating benchmark interest rates that underpinned $350 trillion (€298.5tr) of loans and securities at the time. They were among a group of traders prosecuted at the time for rigging interest rates. Ten years after Mr Hayes went to jail, the UK Supreme Court (UKSC) cleared both of their names by ruling that they had unfair trials and overturned their convictions. Hayes served five-and-a-half years in prison for rigging Libor, the London Inter-Bank Offered Rate, which is now a defunct benchmark interest rate. It was an average calculated from estimates submitted by the leading banks in London and Hayes was one of the traders on the panel, submitting rates. He was found to be intentionally submitting rates to his own advantage. Mr Palombo was jailed later for rigging the Euribor, an average rate also influenced by a large panel of European banks that borrow funds from one another. The UK Supreme Court said on Wednesday, that the juries were misdirected by judges in both cases. 'There was ample evidence on which a jury, properly directed, could have found the appellant guilty of conspiracy to defraud. But the jury was not properly directed,' the UKSC statement read. 'That made the trial unfair and leads to the conclusion that Mr Hayes' convictions must be quashed.' In Mr Palombo's case, the court ruled similarly — 'essential errors' and 'ambiguities', adding that the 'conviction is also unsafe and must be quashed'.
South Wales Guardian
3 hours ago
- Business
- South Wales Guardian
Judicial system needs ‘shake-up' after trader convictions, says Sir David Davis
Tom Hayes and Carlo Palombo were found guilty over benchmark interest rate rigging in 2015 and 2019 respectively, but had their convictions quashed at the Supreme Court on Wednesday. The former UBS trader and the ex-vice president of euro rates at Barclays bank were said to have manipulated the London Inter-Bank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor). Speaking at a press conference following the Supreme Court judgment, Sir David described the two men as 'scapegoats for the sins that led to the financial crisis'. He said: 'The implications are far-reaching and of course have been devastating for those caught up in it. 'There were several other people convicted of rate rigging, dozens of others who were either prosecuted, acquitted or not prosecuted. Their lives were upended too. 'This scapegoating exercise happened as a result of collusion between the banks and government agencies, including the SFO (Serious Fraud Office) and FCA (Financial Conduct Authority) and we're not done with that. 'This scandal also highlights the need for urgent reform within our justice system on a range of issues – the handling of expert witnesses right through to the rigidity of the appeals system.' In an 82-page judgment, with which Supreme Court president Lord Reed, Lords Hodge and Lloyd-Jones and Lady Simler agreed, Lord Leggatt said judges' misdirection to the juries had led to the men's wrongful convictions. He said: 'The history of these two cases raises concerns about the effectiveness of the criminal appeal system in England and Wales in confronting legal error.' Sir David said the Supreme Court justices 'did not unpack' why the appeal system fell into error in these cases. He said: 'I think the judicial system needs a shake-up, and this is the latest demonstrator of it, and we will be returning to it in the future.' Mr Hayes said he believes the trials of the two men became caught up in the politics of the financial crisis, adding that there was a 'big desire from institutions and politicians, acting in their own interest largely', for traders to go to prison. Asked about his thoughts on what role juries play in cases like his and Mr Palombo's, he said it was a 'dangerous idea' for complicated fraud and financial cases to be heard only by a judge. The former trader added: 'The jury is the last defensive barrier that every citizen in this country has between them and a wrongful conviction. 'And are juries perfect? No, they're not. Do they make mistakes? Yes, they do. And you know, it's the best of a whole load of options, none of which is perfect.' Ben Rose, part of Mr Palombo's legal team, said Wednesday's Supreme Court judgment is 'likely to offer a route' by which others who have been convicted in similar circumstances 'can right the wrong that has been done to them'. He also said there was a 'fundamental error' in the way the case was prosecuted and that the role of the jury was 'overridden and usurped' by the judges. The lawyer added: 'That should not happen in a country that abides by the rule of law.'
BBC News
3 hours ago
- Business
- BBC News
Why have bankers had convictions quashed and what happens next?
Two former City traders, Tom Hayes and Carlo Palombo, have had their convictions for rate-rigging overturned by the UK's Supreme were convicted and jailed for manipulating the interest rates used for loans between banks, which dictate borrowing costs for the likes of mortgages and car finance what is rate-rigging and what happens next? Why were the Tom Hayes and Carlo Palombo jailed? Mr Hayes and Mr Palombo were among 37 City traders prosecuted for manipulating the rate benchmarks, Libor and were used to track the cost of borrowing cash between banks and to set the interest rates on millions of mortgages and commercial part they were accused, by their actions, of adding to the 2008 financial crisis, which Mr Hayes said after his conviction was quashed that they had "literally nothing to do with".Libor has now been discontinued, while Euribor is being Hayes was accused of being the "ringmaster" of an international fraud conspiracy to influence these rates to benefit the banks' was the first banker to be jailed for rate-rigging in 2015, and was initially given a 14-year sentence, later reduced to 11 years, of which he served Palumbo was jailed for four years in 2019. What did they argue? Mr Hayes did not deny that while at UBS, and subsequently at Citibank, he attempted to manipulate the Libor he said that it was common practice at the banks where he worked and that his superiors were aware of what he was argued he was being made the scapegoat for the actions of an Palombo, a former Barclays trader, also argued that it was normal commercial practice. How wide-spread were rate-rigging convictions? In criminal trials on both sides of the Atlantic from 2015 to 2019, 19 people were convicted of conspiracy to defraud and nine were sent to they served their time, evidence emerged that central bankers and government officials across the world, including a top adviser at Downing Street at the time, had pressured banks such as theirs to engage in very similar conduct to what they were jailed for - but on a much greater scale. No central banker or government official was after they were released after serving their full jail terms, a US appeal court decided such conduct was not a crime after all; nor even against any US Department of Justice revoked the charges against Tom Hayes, and the US courts then threw out all similar in the UK, they remained convicted criminals. What did Supreme Court rule? After a 10-year legal battle, the Supreme Court ruled that the trials of Mr Hayes and Mr Palombo were unfair and overturned their the UK, the traders' cases had been blocked from reaching the Supreme Court by the Court of Appeal five times between 2015 and the Supreme Court exonerated Mr Hayes and Mr Palombo, ruling that directions given to the jury at the end of Mr Hayes and Mr Palombo's trials were incorrect, meaning their convictions were found to be Serious Fraud Office, which had brought the case against the traders, said it would not be in the public interest to seek a retrial. What happens next? Mr Hayes told a press conference he might be able to recoup the money confiscated from him. He said he will take advice over claiming compensation."I've lived for the last ten years on a 24-hour basis, because I've been unable to plan any aspect of my life," he said. He was prosecuted, then jailed, then on licence."Now suddenly the vista of freedom and choice and what I might do has been opened up to me."Conservative MP David Davies said the "scape-goating exercise happened as a result of collusion between the banks and government agencies... and we're not done with that - we'll come back to that in Parliament in the autumn."Mr Hayes' solicitor, Karen Todner, called for a full public inquiry into the convictions, and for the justice system to be reformed."Tom has missed out on formative years with his son, time with his family, and the loss of his career and his home," she said. "Time he will never get back".She said the charge against Mr Hayes had been "hopelessly vague", the case had taken too long to come to said the Serious Fraud Office, alongside bodies such as the Post Office and the RSPCA, should not be able to bring criminal prosecutions, because the "dual role of investigator and prosecutor creates a substantial conflict of interest, which creates miscarriages of justice".Ben Rose, the solicitor for Carlo Palombo, said other traders may now be able to "right the wrong done to them".
