The trials over the manipulation of Libor, Euribor, and foreign exchange rates have occupied the financial industry since around 2012. Tom Hayes, the first trader ever imprisoned for interest rate manipulation, successfully overturned his conviction after roughly 11 years.

On 23 July, the UK Supreme Court ruled that certain directions given by the trial judge to the jury in the original proceedings had undermined the fairness of the trial.

According to the Financial Times (paywalled article), this case was not the first — and likely will not be the last — in which courts revisit previously handed-down verdicts.

By 2020, a total of 20 individuals had been convicted in Europe and the US for Libor, Euribor, and Forex manipulation. Of these, 12 convictions were later overturned. Eleven individuals were charged and acquitted.

Together with Hayes, the conviction of a Euribor trader was also quashed. In the US, a court overturned the conviction of a former HSBC Forex trader, and in another case, two Deutsche Bank traders were acquitted.

According to the newspaper, five further convicted individuals are seeking to appeal their cases.

High Burden of Proof

In US decisions, courts criticised prosecutors for failing to prove that the banks could not have borrowed money at the Libor rates they had reported.

«No one thought that was the standard you had to meet,» a former US prosecutor was quoted as saying. In a similar situation today, authorities might well decide that there is no case to pursue.

According to a British lawyer, it is becoming increasingly unlikely that bankers in the UK will be prosecuted under a specific criminal offence introduced in 2013, which makes interest rate manipulation a crime.

Not a Criminal Offence

The law had been a knee-jerk reaction to contemporary issues, intended to counter the perception that authorities were unable to prosecute benchmark manipulation. However, Hayes and the other traders were prosecuted under more general fraud statutes. In other countries, such manipulation was not classified as a criminal offence, with the UK being an exception.

The banks involved — Deutsche Bank, UBS, Royal Bank of Scotland, Rabobank, Société Générale, Barclays, Lloyds, J.P. Morgan, ICAP, and Citigroup — have reached settlements worth billions in various jurisdictions to resolve regulatory proceedings.