'Rain Man' trader Tom Hayes fails to overturn conviction

Tom Hayes, the British former investment banker who was the first person to be found guilty by a jury of manipulating interbank exchange rates, has failed to overturn his conviction.

Three Court of Appeal judges ruled that "none of the grounds of appeal on conviction had any merit", according to the BBC. Lawyers acting on behalf of Hayes had "argued that the High Court judge Jeremy Cooke made legal errors in the way he handled the case and that the sentence was wrong in principle and excessive", The Guardian says.

Hayes had initially admitted to the Serious Fraud Office that he acted "dishonestly" in seeking to influence the London interbank rate (Libor) to benefit his trading positions. He has since argued that he only complied with the SFO to avoid extradition to the US, where he faced similar charges, and that he should not be held accountable because his actions were undertaken in the full knowledge of managers, were common practice, and were transparently signalled in emails and other messages.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

But the judges said those who "act dishonestly in these markets must receive severe sentences to deter others from criminality that is often hard to detect and has such a damaging effect not only on the markets, but more broadly on the general prosperity of the state".

Hayes was successful in having his sentence reduced, from 14 years to 11. This was not least because of his confirmed diagnosis of Asperger's Syndrome, which lay behind behaviours that led to him being branded "Rain Man" by colleagues.

The BBC's Kamal Ahmed says, however, that the sentence is still one of the harshest ever for a white-collar crime and it "will serve as a wake-up call to any in the City that may still believe financial crime is somehow not as serious as other crimes". Libor manipulation is serious because it is the basis for the rates charged on $450trn (£300trn) of financial contracts worldwide.

Hayes said in a statement he is "immensely disappointed with this result" and that he will "look forward to pursuing every avenue available to me to clear my name".

Tom Hayes: who is the 'Rain Man ringmaster' of Libor

04 August

Name

Tom Hayes, 35

Why is he in the news?

He has just been convicted by a jury in London of conspiring to fix an interest rate known as Libor, which is used to set rates at which banks lend to each other and indirectly determines the cost of much global borrowing and lending. This was the first trial of its kind anywhere in the world and comes more than three years after the widespread manipulation of rates first came to light. This, says the New York Times, made it a critical test for authorities seeking to pursue further cases.

Is he going to prison?

Yes, for 14 years. If that sounds a hefty sentence, it's because it is: as a comparison the Wall Street Journal notes it is significantly longer than the sub-two years handed down to Jordan Belfort, the so-called 'Wolf of Wall Street', after he admitted securities fraud and money laundering in 1999. On the other hand, it could have been much worse. Libor manipulation is seen as particularly damaging because it has such wide implications for billions of pounds of lending to consumers. Hayes was found guilty of eight counts, each carrying a maximum ten-year sentence.

In another case where large sums were involved, Bernie Madoff, who ran one of the world's largest Ponzi schemes worth around $10bn, received sentences totalling 150 years in 2009.

What is Hayes' background?

He lives in Fleet in Hampshire and is married with one child. He graduated from the University of Nottingham in 2001 with a degree in maths and engineering and worked for Royal Bank of Scotland and Royal Bank of Canada, before joining UBS in 2006 as a trader in Tokyo. He stayed with the bank for three years and it is here that he engaged in the manipulation for which he was eventually convicted. He joined Citibank in 2009 as he felt that UBS, which rewarded him with an annual salary before bonuses of £1.3m, was "not paying him enough".

So just another greedy banker, then?

That was the word used by the prosecution, which also claimed he was the "ringmaster" of a manipulation ring. However, Sky News says Hayes "doesn't fit the fat-cat, champagne-quaffing, banker stereotype". He has been diagnosed with a mild form of Asperger's syndrome – which led to him being dubbed "Rain Man" by colleagues – and he says he was mocked by fellow traders for "ordering cocoa in the pub while his colleagues downed beers" and sleeping with a superheroes' duvet cover he has had since he was eight years old.

Are other trials likely to follow?

Yes. The Daily Mail notes Hayes was one of 13 people arrested by the Serious Fraud Office in relation to the scandal. One has already pleaded guilty, with the trial of the remaining 11 ex-traders likely to take place either later this year or early next.

What else has happened to prevent future fixing?

Following an independent review, the Government legislated to bring the setting of Libor rates under the oversight of the financial regulator and created new criminal offences specifically to cover manipulation activities. This was later extended to cover other global benchmarks after rigging of foreign exchange rates came to light.

Elsewhere, significant reforms to the authorisation regime for senior banking staff have been finalised to make managers and others directly responsible for wrongdoing on their watch, amid complaints that too few misdeeds have resulted in individual punishment to act as a significant deterrent.