In a significant legal development, Tom Hayes has filed a complaint in a Connecticut state court, alleging malicious prosecution by UBS. The complaint, which became public on Monday, accuses the banking giant of placing the blame for a scheme to manipulate Libor rates squarely on Hayes instead of its senior management.
According to the details outlined in the complaint, UBS allegedly crafted a narrative that positioned Hayes as the "perfect fall guy." This strategy, Hayes claims, allowed UBS to evade criminal prosecution while simultaneously paying $1.5 billion to settle regulatory charges in the U.S., UK, and Switzerland back in December 2012, the same period during which Hayes was criminally charged.
The complaint suggests that UBS undertook a meticulously planned process to control the narrative surrounding the Libor scandal, deflecting attention away from its senior executives. Hayes describes this situation as akin to a well-orchestrated theatrical performance, with himself cast as the hand-picked villain.
UBS has chosen not to comment on the specifics of the complaint, which is dated October 23. In a parallel move, Hayes also filed a nearly identical case against UBS in a New York state court located in Manhattan late on Monday. As of now, Hayes's legal team has not responded to requests for comments regarding this new filing.
Tom Hayes, now 46 years old, has consistently denied any wrongdoing. He asserts that UBS's actions have severely damaged his career and reputation, leading to both emotional and physical harm. In his ongoing pursuit of justice, Hayes is seeking punitive damages as part of his legal claims against the bank.
The London Interbank Offered Rate, commonly known as Libor, was a crucial benchmark used to set interest rates on over $300 trillion worth of financial products, including credit cards, student loans, and mortgages. The rate was determined based on banks’ submissions regarding their anticipated borrowing costs. However, the integrity of this benchmark came under scrutiny, leading to its phase-out in January 2022 after banks collectively paid around $9 billion in fines to resolve Libor-rigging investigations. A total of 19 traders in both the UK and the U.S. faced convictions related to these manipulations.
Hayes himself was convicted in 2015 for conspiring to defraud by manipulating Libor rates and served approximately half of an 11-year prison sentence before his release in 2021. Notably, the UK Supreme Court overturned his conviction on July 23, citing an error by the trial judge, who misinformed jurors about banks' ability to consider their commercial interests when submitting Libor rates. This misstep, according to the court, compromised the fairness of the trial.
While Hayes faced prosecution in the U.S. as well, a judge granted a request from the U.S. government to dismiss that case on October 27, 2022. UBS maintains a presence in Manhattan and operates a trading floor in Stamford, Connecticut.
In a statement accompanying his lawsuit in Connecticut, Hayes expressed the emotional toll of his long legal battle, stating, "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."
This unfolding legal saga highlights the profound consequences of the Libor scandal and raises critical questions about accountability within major financial institutions.
