Tom Hayes Libor Jail Sentence Cut to 11 Years, Conviction Upheld

Tom Hayes

Photographer: Simon Dawson/Bloomberg

  • Ex-UBS trader's sentence reduced to 11 years by U.K. court
  • Judges take his `mild Asperger’s' condition into account

Tom Hayes, the former UBS Group AG and Citigroup Inc. trader dubbed “Rain Man” by ex-colleagues, had his jail sentence for rigging Libor cut to 11 years after judges said his punishment was too harsh.

A panel of three of the U.K.’s most senior judges reduced the 14-year sentence, one of the country’s longest for a non-violent criminal, following a two-day hearing. The court upheld Hayes’s conviction for conspiracy to defraud.

“We are of the view that taking into account all the circumstances -- in particular his age, his non-managerial position in the two banks, and his mild Asperger’s condition -- that the overall sentence was longer than was necessary to punish the appellant and to deter others,” the judges said in a written statement.

Elaborate Campaign

Hayes was the first individual to face trial for rigging the London interbank offered rate since investigators started probing the benchmark seven years ago. He was accused of masterminding an elaborate four-year campaign to rig the yen variant of Libor that involved more than 20 individuals at half a dozen firms in three countries.

Hayes said in a statement on Facebook that he looks forward to “pursuing every avenue available” to clear his name.

“Whilst I have enormous respect for the criminal justice system, I continue to maintain my innocence,” he said. “I never asked for a dishonest or inaccurate Libor rate to be submitted. I was at secondary school when these practices started -- I am not the ‘ringmaster’.”

Socially awkward, but highly gifted, Hayes became the public face of a scandal that brought the reputation of the banking industry to a low ebb. A dozen banks and brokerages have been fined about $9 billion for the activities and similar abuses by regulators around the world.

‘Exculpatory Evidence’

Hayes was found guilty of eight counts of conspiracy to defraud and sentenced to prison in August. Lawyers for the 36-year-old former derivatives trader appealed the conviction on six grounds, including that the trial judge had improperly instructed jurors to ignore the conduct of other bankers in regard to Libor and had refused to allow potentially exculpatory evidence.

That position was rejected by a three-judge appellate panel led by Lord Chief Justice John Thomas at the Royal Courts of Justice in London.

“There is no authority for the proposition that objective standards of honesty are to be set by a market” and “such a principle would gravely affect the proper conduct of business,” the judges said.

While Hayes was granted leave to challenge the conviction and the sentence, the judges said they believed grounds for appeal were “misconceived.”

Monday’s ruling will have been closely watched by the more than a dozen individuals scheduled to stand trial for manipulating the $350 trillion benchmark over the coming months.

“Those currently standing or awaiting trial on similar charges may be feeling slightly comforted by the reduction in Hayes’s sentence,” said Elly Proudlock, a London-based lawyer at WilmerHale.

‘High Sentence’

“That said, it remains a high sentence by U.K. standards and has arguably raised the bar,” Proudlock said. “Not bound by precedent due to the novel nature of the benchmark-rigging allegations, the Court of Appeal has sent a powerful message of deterrence.”

The judges emphasized that the sentence reduction should not be misconstrued as a softening in the legal system’s approach to white-collar crime.

"The court must make clear to all in the financial and other markets in the City of London that conduct of this type, involving fraudulent manipulation of the markets, will result in severe sentences of considerable length," the panel said.

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