Supreme Court overturns convictions of traders for interest rate rigging
- The UK Supreme Court found the convictions of Tom Hayes and Carlo Palombo were flawed due to misdirections in their trials.
- Both traders were previously implicated in manipulating benchmark interest rates during the financial crisis period.
- This ruling provides a significant precedent for future cases involving financial misconduct and fairness in judicial processes.
In the United Kingdom, Tom Hayes and Carlo Palombo, former financial market traders, had their convictions for manipulating benchmark interest rates overturned by the Supreme Court on July 23, 2025. This decision followed a lengthy legal battle, with both men previously found guilty in separate trials for their roles in rigging the London Inter-Bank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) in the years surrounding the global financial crisis of 2008. Hayes was initially sentenced to 14 years imprisonment in 2015, while Palombo received a four-year sentence in 2019. The Supreme Court ruled that both men had been denied a fair trial due to incorrect jury instructions provided by the trial judges. The judges had failed to properly direct the jurors on key factors such as dishonesty and intent, which are essential in determining guilt in such cases. The justices highlighted that had the jurors been accurately directed, it was likely they would have considered the defendants' defenses more thoroughly, leading to different outcomes. The appeal was allowed unanimously by a panel of five justices, who clearly indicated that the legal misdirections resulted in unsafe convictions. As a consequence of this ruling, the Serious Fraud Office (SFO), which brought the original prosecutions, stated they would not pursue a retrial of either trader. This decision by the SFO comes after both traders maintained their innocence throughout their legal battles and Hayes, after spending over five years in prison, expressed his relief at the ruling, reflecting on the personal toll it took on his life. Both men’s cases were significant as they emerged during a broader investigation into the manipulation of benchmark interest rates that impacted financial institutions and markets around the world. Overall, this ruling marks a significant moment in the ongoing scrutiny of financial regulations and legal proceedings in the banking sector, where government entities face growing pressure to ensure fair trials for professionals accused of financial misconduct. The cases of Hayes and Palombo were part of a wider initiative where numerous bank employees were prosecuted over similar allegations after the 2008 financial crisis raised alarms about banking practices and market integrity.