UK Court Quashes Convictions of 5 Traders in Libor Scandal
The decision follows similar rulings for two other traders, citing unfair jury instructions.
LONDON – A British court has overturned the convictions of five traders who were accused of manipulating benchmark interest rates in a scandal that emerged from the 2008 global financial crisis. The Court of Appeal ruled on Wednesday that the fraud convictions of former Barclays employees Jonathan Mathew, Jay Merchant, Alex Pabon, Philippe Moryoussef, and Colin Bermingham were unsafe.
These five traders were sentenced between 2016 and 2019 for offenses related to influencing the London Inter-Bank Offered Rate (Libor) and its euro currency equivalent, Euribor. These benchmark rates were used to set interest rates on financial products valued at trillions of dollars worldwide.
The decision to quash the convictions aligns with a July ruling by the U.K. Supreme Court, which similarly overturned the convictions of two other traders, Tom Hayes and Carlo Palombo. In those cases, the Supreme Court determined that the judges in their trials provided inaccurate instructions to the juries, rendering the convictions unfair.
Lawyers representing the five former Barclays employees argued that their clients' trials were also unfair because the juries received nearly identical instructions as those in the cases of Hayes and Palombo. The U.K.'s Serious Fraud Office had previously stated that it would not pursue retrials for Hayes and Palombo and did not oppose the appeals from the other five defendants.
Libor and Euribor served as critical financial benchmarks that influenced interest rates on a wide range of products, including business loans, mortgages, and credit card debt. These rates were derived from daily submissions made by major international banks regarding the interest rates at which they could borrow funds from other banks.
During the 2008 financial crisis, regulators discovered that some banks had made artificially low Libor submissions to project an image of greater creditworthiness or to manipulate the rates to their advantage. The Serious Fraud Office initiated its investigation into alleged Libor manipulation in 2012, which led to the convictions of nine bankers and the acquittal of eleven others.
The benchmark rates have been phased out in recent years, a move partly prompted by concerns that they exacerbated the financial crisis.