Securities Regulation Daily London jury acquits defendants of LIBOR manipulation
Wednesday, January 27, 2016

London jury acquits defendants of LIBOR manipulation

By Lene Powell, J.D.

Following a four-month trial, a jury in London found five defendants not guilty of all charges in connection with alleged manipulation of the London Interbank Offered Rate (LIBOR), a widely referenced interest rate benchmark. The U.K. Serious Fraud Office (SFO) had alleged that the defendants conspired with Tom Hayes, a derivatives trader convicted last year of fraud, to influence the submissions of panel banks in the Yen LIBOR setting process.

A sixth defendant was found not guilty on one charge, but the jury is considering an additional count against him.

“The key issue in this trial was whether these defendants were party to a dishonest agreement with Tom Hayes. By their verdicts the jury have said that they could not be sure that this was the case. Nobody could sensibly suggest that these charges should not have been brought and considered by a jury,” said SFO Director David Green CB QC in a statement.

LIBOR manipulation. LIBOR rates for various currencies are calculated as an average of submissions by panel banks. Yen LIBOR is the average interest rate at which banks on the London money market are prepared to lend each other unsecured funds denominated in Japanese yen. Hayes, a former derivatives trader at UBS and Citigroup, repeatedly asked traders and brokers at his own and other banks to adjust Yen LIBOR submissions up or down to benefit his positions. He often offered to reward the traders and brokers for doing this.

The Financial Services Act, which came into effect in 2013, put LIBOR administration under the jurisdiction of the U.K. Financial Conduct Authority and made it a criminal offense to knowingly or deliberately make false or misleading statements in relation to benchmark-setting. Hayes was convicted in 2015 and sentenced to 14 years in prison, though his sentence was later reduced to 11 years. SFO alleged that the six defendants, all employees at several interdealer brokers, agreed to help Tom Hayes influence the Yen LIBOR submissions at their firms, in violation of the Act.

Related proceedings. A trial of defendants accused of manipulating the U.S. Dollar LIBOR is scheduled to begin February 15, and a trial in connection with alleged manipulation of the Euro Interbank Offered Rate is scheduled for September 2017.

MainStory: TopStory Derivatives Enforcement FraudManipulation InternationalNews

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