Traders Rigged a Benchmark Behind $300 Trillion in Contracts. A UK Court Just Ruled the Only Man Convicted of It Didn't Get a Fair Trial.

Until 2023, a benchmark called Libor set the interest rate underneath an estimated $300 trillion in mortgages, student loans, corporate debt, and derivatives contracts worldwide. It wasn't calculated from actual transactions — it was calculated by asking a panel of employees at major banks each morning what they estimated their bank would have to pay to borrow money from other banks, and averaging their answers. For years, several of those employees simply typed in whatever number benefited their own trading positions that day, and told each other so over email.

Regulators eventually fined the banks themselves more than $9 billion combined. Almost none of the people who actually sent those emails faced personal consequences that stuck. The one trader who went to prison for it had his conviction thrown out by the UK's highest court a decade later, on the grounds that his original trial hadn't been fair.

A Number Anyone Could Move

Because Libor submissions were estimates rather than verified transactions, a trader holding derivatives tied to Libor could ask a colleague on the rate-submission desk to nudge the number up or down by a fraction of a percentage point, with no external transaction required to justify it. Internal messages later published by regulators showed traders treating the process as a running favor system.

• "Coffees will be coming your way either way, just to say thank you for your help," one Barclays trader wrote to a rate submitter in 2006. The submitter replied: "Done...for you big boy."
• Other exchanges referenced "an expensive bottle of champagne" and traders telling submitters they'd "get killed" without a favorable rate.
• During the 2008 financial crisis, some banks separately lowballed their Libor submissions to appear more creditworthy than they were, since a high borrowing-cost estimate signaled market distress.

The Fines

Barclays settled first, in June 2012, paying regulators in the UK and US roughly $450 million. CEO Bob Diamond resigned days later, under pressure from the Bank of England, and gave up $31 million in bonuses he was otherwise entitled to. Other banks followed over the next several years.

• UBS: approximately $1.5 billion, December 2012.
• RBS: approximately $610 million, February 2013.
• Rabobank: a $325 million criminal penalty to the U.S. Department of Justice, part of roughly $1 billion in total global penalties, October 2013.
• Deutsche Bank: approximately $2.5 billion, April 2015 — at the time, the largest Libor-related fine of any single bank.

"The Ringmaster"

Of the dozens of traders implicated across multiple countries, one former UBS and Citigroup trader, Tom Hayes, became the face of the prosecutions. The UK's Serious Fraud Office described him as the "ringmaster" of a scheme to coordinate submissions across several banks. In August 2015, Hayes was convicted on eight counts of conspiracy to defraud and sentenced to 14 years in prison — reduced to 11 on appeal, still among the longest sentences ever handed down by a British court for a white-collar offense. He served roughly five and a half years before release on license in 2021.

Ten Years Later, the Supreme Court Disagreed

On July 23, 2025, the UK Supreme Court unanimously quashed Hayes's conviction, along with that of former Barclays trader Carlo Palombo, who had been convicted in 2019 over Euribor submissions and given a 12-month suspended sentence. The court found that trial judges in both cases had misdirected juries — instructing them to treat a factual question (whether a submission reflected the trader's genuine view of borrowing costs) as a legal one the judge could resolve directly, rather than letting the jury weigh it. The ruling did not find either man innocent; it found the trials that convicted them procedurally unfair.

The Bill Comes Due Again

In October 2025, Hayes filed a $400 million lawsuit against UBS in Connecticut and New York state courts, alleging the bank's internal investigation had deliberately cast him as the sole architect of the scheme to protect senior executives from regulatory scrutiny. "It's about stopping corporations screwing over their employees," Hayes told reporters, "and the only language that they speak is money." The case, along with the losses Hayes attributes to his prosecution — including a multiple sclerosis diagnosis he says was brought on by the stress of eleven years fighting the conviction — remains pending. UBS has declined to comment.

Libor itself no longer exists; regulators phased it out between 2022 and mid-2023 in favor of benchmarks like SOFR and SONIA, calculated from actual transaction data rather than self-reported estimates. The number that priced hundreds of trillions of dollars in contracts for over three decades was retired rather than fixed. The banks that ran it paid nine figures and, in most cases, kept their executives. The one man convicted of rigging it can't get his money back from the years he spent proving that he shouldn't have been the only one who did.

Filed from public reporting:

• CFTC — Order: CFTC v. Barclays PLC, et al.
• CNN Business — Barclays Bank CEO Diamond Resigns Amid Scandal
• CNN Business — Barclays' Ex-Boss Diamond Gives Up $31 Million Bonuses
• Al Jazeera — UBS Fined $1.5bn for Interest Rate Rigging
• NPR — Germany's Largest Bank Fined $2.5 Billion in Rate-Fixing Scandal
• Council on Foreign Relations — Understanding the Libor Scandal
• Bloomberg — Hayes Libor Jail Sentence Cut to 11 Years, Conviction Upheld (2015)
• Bloomberg — Tom Hayes Wins UK Supreme Court Bid to Overturn Decade-Old Libor Conviction
• Wikipedia — R v Hayes; R v Palombo
• CNN Business — Tom Hayes: Court Overturns Ex-Citi Trader Criminal Conviction for Interest Rate Rigging
• Fortune — A $400 Million Lawsuit Against UBS Is Designed to Punish Banks Who Throw Employees to the Wolves
• Bank of England — Transition From Libor to Risk-Free Rates