City traders have rate-rigging convictions quashed

Two former City traders who were at the centre of one of the biggest scandals of the financial crisis have had their convictions quashed.

Tom Hayes and Carlo Palombo were jailed following trials for manipulating the interest rates used for loans between banks.

They were among 19 City traders convicted in the US and UK for manipulating so-called Libor and Euribor interest rates, which are used to set borrowing costs on mortgages and commercial loans.

After serving their time, the US courts threw out the convictions but they remained convicted criminals in the UK.

On Wednesday, the Supreme Court ruled that the trials of Hayes and Palombo were unfair and overturned their convictions.

The ruling represents a vindication for the traders who have said for 10 years that they were victims of a series of miscarriages of justice.

They argued they were wrongly prosecuted for what were normal commercial practice in order to appease public anger towards the banks over the financial crisis.

In a judgment highly critical of the judges at their trials and the Court of Appeal, the Supreme Court said their cases raised concerns over the effectiveness of the criminal appeal system in England and Wales.

A former trader with UBS, in 2015 Hayes became the first banker to be jailed for “manipulating” Libor. He was accused of being the “ringmaster” of an international fraud conspiracy and initially sentenced to 14 years in prison.

Over the next four years, 19 traders were convicted with nine jailed on both sides of the Atlantic.

But in 2022, US courts said there was no evidence traders had broken any laws or rules and all the American convictions were quashed – leaving the UK the only country in the world where what they were accused of was criminalised.