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‘A powerful message of deterrence’: Court of Appeal dismisses Libor scandal trader Hayes’ appeal, while reducing sentence

In a decision that will provide little comfort for those facing similar charges, the Court of Appeal has refused the appeal of former derivatives trader Tom Hayes, who in August was found guilty of manipulating the London Interbank Offered Rate (Libor).

After being convicted on eight counts of conspiracy to defraud, Hayes appealed, saying in making its decision the jury should have been able to consider the activities of the market at the time.

While refusing Hayes’ appeal, the Court of Appeal reduced his sentence from 14 to 11 years. In reaching its decision the panel, comprised of Lord Thomas, Sir Brian Leverson and Lady Justice Gloster decided the penalty was too harsh given all the circumstances, in particular Hayes’ age, his non-managerial positions at the banks he worked at, and his mild Asperger’s condition.

The decision said: ‘However, this court must make clear to all in the 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 sentence.’

The original conviction was a win for the under-fire Serious Fraud Office (SFO) as it was an archetype of the kind of complex cases that the watchdog’s director David Green QC is pushing the agency towards.

City partners who declined to be named said while the decision about the appeal came as no surprise, many had expected Hayes’ sentenced to be reduced by more than three years.

One City partner who had observed the Court of Appeal proceedings said it was obvious the judges felt the argument put forward for Hayes was ‘bollocks, to use a technical term.’

Wilmer Cutler Pickering Hale and Dorr (WilmerHale) counsel Elly Proudlock said: ‘Those currently standing or awaiting trial on similar charges may be feeling slightly comforted by the reduction in Hayes’ sentence. That said, it remains a high sentence by UK standards and has arguably raised the bar. Not bound by precedent due to the novel nature of the benchmark rigging allegations, the Court of Appeal has sent a powerful message of deterrence.’

Hayes was represented in court by Charter Chambers’ Neil Hawes QC, who was instructed by Cartwright King. Serving as chief prosecutor on the case was 9-12 Bell Yard’s Mukul Chawla QC, who was instructed by the SFO to advise on any criminal conduct arising out of Libor manipulation and to prosecute cases arising out of the investigations.

To read about how financial institutions are coping with the twin threats of regulation and litigation subscribers can read: ‘The end of the tunnel – litigation and regulatory challenges in financial services’