LONDON: A British trader jailed for rigging the Libor lending rate while working for UBS and Citibank had his sentence cut by three years on Monday by Britain’s Court of Appeal.
Tom Hayes, 35, was jailed in August for 14 years in what the judge described as a landmark sentence after becoming the first person to be found guilty by a jury of rigging the benchmark inter-bank lending rate, a key reference for financial products globally.
However, judge Roger Thomas on Monday announced that a panel of senior appeal judges had cut the jail term after ruling that mitigating circumstances had not been sufficiently considered, but rejected Hayes’s appeal against his conviction.
His age, his non-managerial position in the two banks, and his mild Asperger’s condition meant that “the overall sentence was longer than was necessary to punish the appellant and to deter others,” said the ruling.
Despite reducing the sentence, the appeal judges stressed “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.”
Hayes played ‘leading role’
Many of the world’s top banks have been hit by scandals over the rigging of the Libor rate, which is estimated to underpin some $500 trillion of contracts including mortgages and consumer loans.
Following his arrest in December 2012, Hayes admitted his crimes to Britain’s Serious Fraud Office (SFO) in a bid to avoid extradition to the United States, where he also faces charges.
However, he later pleaded not guilty, insisting his actions were “commonplace” in the banks.
When issuing his original sentence at London’s Southwark Crown Court, judge Jeremy Cooke told Hayes that an example had to be set.
“The conduct involved here must be marked out as dishonest and wrong and a message sent to the world of banking accordingly,” he said.
Cooke said the fact that others were doing the same was “no excuse”, saying Hayes played a “leading role” in exerting pressure on and training colleagues in how to rig the rates, and making corrupt payments to brokers for their help.
The London interbank offered rate is calculated daily using estimates from banks of their own interbank rates.
However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.
Banks including Barclays, UBS, Royal Bank of Scotland and Deutsche Bank have been fined billions of dollars for manipulating the rates.
Hayes joined UBS in Tokyo in 2006, where he was paid an annual salary of £1.3 million ($2 million, 1.85 million euros) before tax.
He then moved to Citigroup, where he earned £3.5 million before tax for nine months’ work before being sacked for “compliance” issues.