Earlier this week, Tom Hayes and Carlo Palombo had their convictions for Libor manipulation quashed. This ruling has opened the floodgates to discussions—some are serious, some are rhetorical—about accountability and the eventuality of reparations. Their cases emerged from decisions made during a fraught period in banking history. These unfolding chapters have raised a host of questions about the soundness of the country’s financial system and the course of justice itself.
In 2015, Hayes was convicted for his role in a conspiracy. This plan artificially adjusted the go-to interest rates that banks set for loans. After an exceptionally publicized trial, he was convicted. All of the brokers alleged to have conspired with him were found not guilty in an unrelated trial. In 2016, Hayes and Palombo were each sentenced to terms of imprisonment of two years, nine months to six years. With their extraordinary exoneration has come some shaming inquiry about how we ever found them guilty in the first place. This striking development has led to a renaissance of Libor scandal scrutiny.
On Tuesday, that same Court of Appeal ruled in favor of Hayes and Palombo, reversing their convictions. This latest decision has sparked a tsunami of commentary, analysis, and debate among legal scholars, policymakers, and ordinary Americans concerned about what this ruling means. Hayes expressed a desire for accountability, stating, “I want to see a public inquiry into how what happened to us happened.”
The controversy surrounding Libor manipulation is far-reaching. Hayes and Palombo’s convictions were overturned. In 2016, three former Barclays traders—Jay Merchant, Jonathan Mathew, and Alex Pabon—were just convicted for doing just that. Seven other traders convicted of rigging interest rates have recently announced their appeals of sentences. This action follows a recent District Court ruling in the case.
Political leaders have previously called for more scrutiny of Libor manipulation. Leading figures such as David Davis, John McDonnell and Lord Tyrie have called for a public inquiry. We could not agree more with Rep. Their involvement reminds us of even more recent issues with the integrity of our financial institutions and regulatory agencies.
In the wake of their convictions being overturned, both Hayes and Palombo are still figuring out what’s next. Palombo asserted that he “100%” believes he was a scapegoat for the anti-bank backlash that followed the 2008 financial crash. This position reflects a more common sentiment among those affected by the scandal. They don’t feel that they were treated fairly based on the facts of the situation.
In the UK, defendants are entitled to receive compensation when they have been wrongfully convicted. These people are eligible for cash assistance to help them recover and rebuild their lives. Despite this, Hayes expressed that he does not foresee any monetary compensation coming from the British government. “It would be great to get some compensation,” he noted during an interview with BBC’s Newsnight. “But I won’t get any from the British government.”
The controversy doesn’t stop with Hayes and Palombo’s cases. Matt Connolly and Gavin Black, former Deutsche Bank employees, likewise took their ex-employer to court for malicious prosecution. They all ultimately settled confidentially with Deutsche Bank. As one US judge recently noted, prosecutors at Department of Justice have effectively “outsourced” their investigation to Deutsche Bank. The comment brings to light critical allegations that could muddy the waters for the accurate and fair adjudication of all financial wrongdoing.
As these events play out, countless Americans are left wondering how justice is served in cases of complex, high-dollar financial crime. These overturned convictions have very significant implications beyond individual cases. They undermine the very core trust that we the people place in the entire financial system.
