Interest rate Manipulation Case must be heard by the supreme court, Politicians Claim

Senior politicians have insisted that the appeal of two former bankers, who were imprisoned for manipulating interest rates, should be heard by the Supreme Court.

Tom Hayes and Carlo Palombo were among 37 City traders prosecuted for manipulating rate benchmarks Libor and Euribor.

They were released from prison in 2021 and their attempt to overturn their convictions was rejected by the Court of Appeal last week.

Both Conservative Sir David Davis and Labour’s John McDonnell have expressed their belief that the ruling was unjust.

Former Lord Chancellor Lord Mackay of Clashfern has expressed serious concerns about the grounds on which the men were convicted, stating that he is deeply troubled by the situation.

Mr Hayes and Mr Palombo have expressed their intention to seek permission from the Court of Appeal to bring their cases before the Supreme Court.

The former traders have been convicted of manipulating Libor and Euribor, which are two benchmark interest rates that monitor the borrowing rates between banks.

Every day, 16 banks would provide an estimate of the cost of borrowing a significant amount of money from other banks. These estimates would be averaged to determine the Libor benchmark, and a similar process would be followed for Euribor.

The cash desks considering those rates would examine the interest rates offered by other banks in the market, which varied by a small margin, and choose a rate from that range to submit.

Hayes and Palombo requested the cash desk to provide the rates as either “high” or “low” to assist with their bank’s trades. They claimed it was a typical business practice.

Their legal team contended that they were simply choosing from a variety of precise interest rates available in the market. They contended that the prosecution had failed to provide any evidence to support their inability to borrow at the rates mentioned. Thus, there was no evidence to suggest that they had made any false requests. The Court of Appeal rejected the traders’ appeal, stating that they should have only provided quotes for the most affordable interest rates.

Nevertheless, that ruling has caused a great deal of uncertainty. During the appeal hearing, James Hines, the prosecutor from the Serious Fraud Office (SFO), informed the defendants’ legal team that it was never a component of their case to argue that banks are obligated to provide the lowest interest rate.

A significant portion of the evidence presented by the SFO against the traders consisted of requests for “low” rates. It seems that the judges’ ruling supports the legality of those requests.

‘Absolutely truthful’

Lord Mackay expressed his observation that, upon closely examining their cases, there appeared to be no indication of any dishonest behavior. They were doing their utmost given their understanding of the situation.

“While there are legal variations between the United States and our country regarding contracts, the decision to overturn convictions in the US court played a crucial role in this specific case.” And I believe it’s important for our Supreme Court to be given the opportunity to consider it.

Sir David expressed his disappointment with the judges’ decision, emphasizing that the focus should be on the core issues at hand rather than getting caught up in technicalities. Did the traders engage in dishonest behavior? Upon closer examination, it becomes evident that the answer is a resounding “no”.

Mr McDonnell expressed his strong disagreement with the convictions, describing them as a serious injustice. He also expressed his confusion and surprise at the decision made by the Court of Appeal judges.

In January 2022, a US court of appeal reached a verdict stating that the traders did not violate any regulations. As a result, all convictions were overturned, except in the UK where their actions are still considered criminal.

According to judges from the UK Court of Appeal, the case that resulted in the acquittal of former Deutsche Bank traders Matt Connolly and Gavin Black in the United States does not hold any relevance in the UK. The judges stated that the UK follows a different approach to contract law.