High Court Approves SFO Investigation into Soma Oil

Soma Oil sought, unsuccessfully, to judicially review the SFO’s approach to the investigation into its activities, specifically that the SFO were continuing to investigate despite representations being made as to the effect this would have.

The Company argued that the investigation would lead to its ruin and was, in any event, bound not to reveal any criminal conduct. This case does nothing to diminish the long-held view of criminal practitioners that the Administrative Court will seldom intervene to prevent law enforcement bodies’ suspicions of criminal conduct being exhaustively pursued. In Soma Oil’s case, notwithstanding that the Company appeared to have cooperated fully with the investigation.


In March 2016 the SFO announced that it was closing its investigation into the manipulation of FOREX, stating there was insufficient evidence to bring criminal charges. Tom Hayes, who was sentenced in August 2015 to 14 years in prison (reduced to 11 years on appeal) is continuing to try to challenge his conviction.

The SFO’s EURIBOR investigation continues, despite the setback in May this year that key individuals charged with conspiracy to defraud and due to stand trial in September 2017 cannot be extradited from Germany, leaving the SFO with no current prospect of securing the men’s return to the United Kingdom other than by voluntary surrender.

On 28th September 2016 the European Central Bank announced plans (to be implemented in 2017) to reform the calculation of the EURIBOR benchmark from a quote-based to a transaction-based index. In doing so the ECB aims to guarantee the integrity of reference rates which are of importance not only to direct market participants, but to the general public.

Further Convictions

In May, a US District Court judge rejected Barclays’ argument it should not hand over certain documents to three of its former traders on trial which could help them prove that senior employees of the bank were complicit in misconduct. Barclays argued that the documents were irrelevant to the lawsuit. The Court rejected Barclays’ arguments, stating that it was up to the Court, not the bank, to decide which documents were relevant.

Also of note is the manner in which the former Barclays traders have pursued their defences and the evidence given by them. Jay Merchant, one of the former traders on trial for conspiracy to manipulate LIBOR, told the court that he found it "difficult to believe" that senior bank staff were unaware of what the swaps desk was doing. Mr Merchant stated, "Everybody knew the banks set LIBOR to their own commercial interest", adding that requests to fix LIBOR were part and parcel of his job.

On 29th June 2016, all three traders were convicted of their parts in LIBOR manipulation. The jury reached a unanimous verdict for Mr Merchant and majority verdicts of 10-2 and 11-1 for Alex Pabon and Jonathan Mathew respectively, but was unable to reach verdicts for two other former Barclays traders, Stylianos Contogoulas and Ryan Reich.

Apparently buoyed by the success of the convictions, the SFO announced in early July 2016, that it would seek a retrial of Stylianos Contogoulas and Ryan Michael Reich.

"Flash Crash" Extradition Case

In our May 2015 newsletter we reported on the bid to extradite Navinder Singh Sarao, the ironically named "Hound of Hounslow" to face 22 charges of market manipulation. On 14th October 2016, Mr Sarao lost his High Court appeal and is due to be extradited to the US in the next 28 days.