R v Hayes and Palombo
The convictions of two traders for manipulating benchmark interest rates were quashed, because the juries had been wrongly directed that submitters could not take traders' commercial interests into account.
Facts
Tom Hayes had been convicted of conspiracy to defraud in relation to yen LIBOR, and Carlo Palombo of conspiracy to defraud in relation to EURIBOR, another benchmark rate. In each trial, the judge directed the jury, as a matter of law, that the rules of the benchmark required submissions to reflect the cost of borrowing, and that it was not legitimate to take into account the commercial interests of the bank's traders. After a referral by the Criminal Cases Review Commission in Mr Hayes's case, the Court of Appeal dismissed both appeals, and they appealed to the Supreme Court.
Legal principle
The Supreme Court allowed the appeals and quashed the convictions. The court held that the trial judges had wrongly treated the question of what the benchmark definitions required as a question of law, and had directed the juries in a way which effectively removed from them the essential question of whether the defendants had been dishonest. The definitions did not exclude the taking into account of the commercial interests of the bank, so long as the submission was a genuine estimate within the range of rates at which the bank could borrow. The juries should have been left to decide whether the submissions were dishonest, applying a correct understanding of the definitions.
Related cases on financial crime, sanctions and market misconduct
- Bank Mellat v HM Treasury (No 2) [2013] UKSC 39, [2014] AC 700
- Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, [2018] AC 391
- K Ltd v National Westminster Bank plc [2006] EWCA Civ 1039, [2007] 1 WLR 311
- National Crime Agency v Baker [2020] EWHC 822 (Admin)
- National Crime Agency v Hajiyeva [2020] EWCA Civ 108
- R v Da Silva [2006] EWCA Crim 1654, [2007] 1 WLR 303
- R v GH [2015] UKSC 24, [2015] 1 WLR 2126
- R v Hayes [2015] EWCA Crim 1944
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