A former trader whose conviction for manipulating interest rates was overturned after a decade-long legal battle is now suing his former employer, UBS.
Tom Hayes has initiated a legal claim against the Swiss banking giant for malicious prosecution, alleging that he was the bank’s “hand-picked scapegoat” in one of the most significant scandals of the 2008 financial crisis.
In July, the Supreme Court overturned Mr. Hayes’ conviction, deeming it unfair. He had been imprisoned in 2015 for manipulating interest rates used for interbank lending.
According to a complaint filed in a US court, Mr. Hayes is seeking $400 million (£300 million) in damages. UBS has declined to comment on the case.
The filing states that Mr. Hayes is pursuing legal action to “deter and punish UBS for its role in intentionally directing the destruction of an innocent man’s life for their own selfish reasons.”
His legal representatives contend that the global banking firm misled US authorities to portray him as the “evil mastermind” behind alleged Libor misconduct, aiming to safeguard its senior executives and minimize regulatory penalties.
The complaint, filed in Connecticut, also asserts that UBS “gained control over the investigation into its own alleged misconduct” and conducted a “fundamentally flawed” investigation to attribute blame to Mr. Hayes.
It further alleges that UBS “offered Hayes up on a silver platter” for prosecution in both the US and the UK, and that these prosecutions were “engineered by UBS’s intentional false and misleading disclosures.”
The Serious Fraud Office originally brought the case against Mr. Hayes.
He was among 19 City traders convicted in the US and/or the UK for manipulating Libor and Euribor interest rates, which influence borrowing costs on various loans, including mortgages and car finance.
Mr. Hayes was the first banker to be jailed in connection with the scandal in 2015, labeled by prosecutors as the “ringmaster” of an international fraud conspiracy.
He was released in January 2021, and charges against him in the USA were dismissed in 2022. This past July, the UK Supreme Court overturned the convictions of Mr. Hayes and Carlo Palombo, a former Barclays trader who was also incarcerated.
The Supreme Court judges determined that the history of prosecutions for interest rate manipulation, involving 37 individuals charged and nine trials held in London and New York, raised serious questions about the capacity of the courts to rectify judicial errors.
“It has taken me over a decade to overturn my wrongful conviction and clear my name. My legal team are now rightfully holding UBS to account for scapegoating me in order to save billions in fines and protect its senior executives,” Mr. Hayes stated.
“My life was ruined by the bank’s actions – I lost my liberty and my marriage, missed out on my son’s childhood, and my physical and mental health suffered terribly.”
“UBS also destroyed my reputation and career.”
The Libor scandal emerged in 2012, revealing that banks were artificially inflating rates to profit from trading and lowering them to conceal the challenges they faced after the global financial crisis.
The financial crisis, which began in 2008, led to the collapse of US investment bank Lehman Brothers and sent shockwaves throughout the global financial system, causing recessions in numerous countries.
The BBC uncovered evidence of a much larger, state-led manipulation of interest rates, influenced by pressure from central banks and governments worldwide during the financial crisis.
In the US, the conduct for which Mr. Hayes was originally jailed in the UK is no longer considered a crime, as an appeal court ruled that the actions they were accused of did not violate any rules or laws.
“Nothing can give me back those lost years, or make up for the stress and trauma exacted on me and those close to me,” Mr. Hayes said.
“I hope to win my claim and make substantial donations to charities which seek to right miscarriages of justice.”
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