LIBOR acquittals are a blow to the SFO, but not a fatal one

LIBOR acquittals are a blow to the SFO, but not a fatal one

Blog WilmerHale W.I.R.E. UK

This week, all six brokers accused of conspiring with Tom Hayes to manipulate the LIBOR benchmark were found not guilty at Southwark Crown Court.

At first glance, this looks like a humiliating defeat for the SFO. Following the successful prosecution of Tom Hayes in August 2015, a conviction against the six brokers would have galvanised the SFO going forward, and sent a clear and unequivocal signal to the industry. Instead, two juries with inconsistent findings on the same conspiracy strikes a discordant note.

Despite this, the impact of this verdict on the SFO’s benchmark manipulation investigation should not be overstated. Optically, a clean sweep of not guilty verdicts after just two days of deliberation following a fifteen-week trial is a major loss for the SFO. However, a trial of the brokers, who were one step removed from the rate-setting itself, was always going to be more challenging. The SFO’s case against the brokers centred around their allegedly facilitating a scheme to manipulate the Yen LIBOR rate, masterminded by Hayes. By contrast, the key to the SFO’s success in securing a conviction against Hayes lay in his proximity to, and alleged influence over, the benchmark submission process. Although the six brokers and Hayes were tried as co-conspirators, from the SFO’s point of view the Hayes case represented the core of the matter, and a conviction against the brokers would have been a collateral win.

The SFO ended 2015 on a determined note. The message was clear: the SFO is willing and able to come down hard on financial crime in the Square Mile. The broker trial verdict is unlikely to dampen significantly the SFO’s enthusiasm; it might be a setback, but it is certainly not the death knell for future investigations of this nature.