In what was seen as a big victory for the Serious Fraud Office (SFO), on August 3 2015 Tom Hayes was found guilty, following a trial at the Southwark Crown Court, of eight counts of conspiracy to defraud relating to his role in the manipulation of the London Interbank Offered Rate (Libor). He was a former derivatives trader at UBS and Citigroup, and is the first individual to be charged and stand trial in the United Kingdom as a result of the SFO's ongoing investigation.

The offences took place between August 2006 and December 2009 (when Hayes was an employee of UBS) and between December 2009 and September 2010 (when he was an employee of Citigroup). He had conspired with numerous other individuals to procure or make submissions of rates into the yen Libor-setting process that were false or misleading, thereby intending to prejudice the economic interests of others. He had sought to change the published rate from what it would otherwise have been in order to gain an advantage for his bank's trading profit, while also getting benefits for himself, including bonuses.

The trial judge sentenced(1) Hayes to a total of 14 years' imprisonment, stating that "[t]he conduct involved here must be marked out as dishonest and wrong and a message sent to the world of banking accordingly". The judge had regard to the Sentencing Guidelines and, although the maximum sentence for conspiracy to defraud is 10 years' imprisonment, made the sentences passed for the four offences committed while at UBS (nine years and six months) and the four offences committed at Citigroup (four years and six months) consecutive of each other, thereby passing the total sentence of 14 years' imprisonment.

However, on December 21 2015 the Criminal Division of the Court of Appeal (R v Hayes [2015] EWCA Crim 1944(2)) reduced this to 11 years' imprisonment (eight years for the UBS offences and three years for the Citigroup offences). The Court of Appeal stated in the final paragraph of the judgment:

"[T]his court must make it clear to all in 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 which, depending on the circumstances, may be significantly greater than the present total sentences."

On October 6 2015 the trial of six former brokers for conspiracy to defraud relating to Hayes's Libor manipulation started at the Southwark Crown Court. The prosecutor described the six as "middlemen willing and enthusiastic to lend themselves to Mr Hayes' dishonest scheme". The trial concluded on January 28 2016 and each individual was acquitted of all charges.

For further information on this topic please contact Kathleen Harris at Arnold & Porter LLP by telephone (+44 20 7786 6100) or email ([email protected]). The Arnold & Porter website can be accessed at


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