Tom Hayes ("the appellant") was convicted on eight counts of conspiracy to defraud in relation to the manipulation of the Japanese Yen London Interbank Offered Rate ("Yen LIBOR").
On 3 August 2015, he was sentenced to a
total of 14 years imprisonment.
The Court of Appeal (Criminal Division) has dismissed Mr Hayes' appeal against conviction. His sentence was reduced from 14 years to 11. Read the judgment of the Court of Appeal.
The prosecution case was that,
between 2006 and 2010, the appellant together with others, agreed to manipulate Yen LIBOR in order to advance his trading interests, the
profits of the bank for which he worked and indirectly the rewards which
he would receive in the form of bonuses and status, to the disadvantage
of the counterparties to the trades. Counts 1-4 related to the
appellant's period of employment between August 2006 and December 2009
at UBS Securities Japan Limited ("UBS Japan"); counts 5-8 related to the
appellant's period of employment between December 2009 and December
2010 at Citigroup Global Markets Japan Inc. ("Citigroup Japan"). The
counts related not only to his alleged conspiracy with persons working
within UBS Japan and its associated entities (together "UBS"), and
Citigroup Japan and its associated entities (together "Citigroup"), but
also with employees of other banks and inter-dealer brokers involved in
the fixing of Yen LIBOR.
The LIBOR issue was looked at in this earlier post.
From a criminal law viewpoint, the judgment is of importance regarding the test to be applied by a jury when considering DISHONESTY. This is the test set out by Lord Lane CJ in R v Ghosh  1 QB 1053. The test has two elements (or limbs): an objective limb and a subjective limb. In the objective limb the jury has to ask whether the conduct of the defendant was dishonest by the ordinary standards of reasonable and honest people. If the answer to that is Yes then the jury has to go on to the subjective limb and ask whether the defendant knew that what he agreed to do was dishonest by the ordinary standards of ordinary and reasonable people.
Much of the argument in the Court of Appeal turned on whether the actual practices in banking at the time could be taken into account in deciding the objective limb. The Court of Appeal held that it could not. At paras. 32 and 33 the Lord Chief Justice said:
"32. Not only is there is no authority for
the proposition that objective standards of honesty are to be set by a
market, but such a principle would gravely affect the proper conduct of
business. The history of the markets have shown that, from time to time,
markets adopt patterns of behaviour which are dishonest by the
standards of honest and reasonable people; in such cases, the market has
simply abandoned ordinary standards of honesty. Each of the members of
this court has seen such cases and the damage caused when a market
determines its own standards of honesty in this way. Therefore to depart
from the view that standards of honesty are determined by the standards
of ordinary reasonable and honest people is not only unsupported by
authority, but would undermine the maintenance of ordinary standards of
honesty and integrity that are essential to the conduct of business and
33, Thus although the evidence to which we
have referred was irrelevant to the determination of the objective
standards of honesty, it was plainly relevant to the second subjective limb. The judge expressly directed the jury to have regard to
it and summarised the evidence at length ....."
The Ghosh test is discussed at some detail in Law Commission Consultation Paper No. 155
Regarding sentencing, the Court of Appeal clearly sends out a deterrent message with the Lord Chief Justice saying at para. 109 - " .... this court must make clear 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 which, depending on the circumstances,
may be significantly greater than the present total sentence."