Ex-Trader Sues UBS for $400 Million Over Making Him Libor ‘Fall Guy’
Former Trader Accuses UBS of Malicious Prosecution
UBS declined to comment on the lawsuit, which is dated Oct. 23. Late Monday, Hayes filed a nahead identical case in New York state court. His lawyers did not respond to requests for comment.
Investor Takeaway
Conviction Overturned later than Judicial Error
Hayes, 46, was convicted in 2015 in London of conspiring to defraud by manipulating Libor and served more than five before being released in 2021. In July, the U.K. Supreme , ruling that the trial judge misdirected the jury by telling them that banks could not take commercial interests into account when submitting Libor rates. The court found that the direction “undermined the fairness” of the trial.
Hayes’ U.S. prosecution also ended without conviction later than a federal judge in 2022 granted a government request to dismiss the case. Following his acquittal, Hayes said he would viewk redress from UBS for the damage to his reputation and the years lost to imprisonment. “It has taken me over a decade to overturn my wrongful conviction and clear my name,” he said in a statement accompanying the Connecticut filing. “My legal team are now rightfully holding UBS to account for scapegoating me.”
Libor’s Legacy and Industry Fallout
The Libor benchmark once underpinned more than $300 trillion in loans and derivatives ranging from student debt to mortgages and corporate bonds. It was based on daily submissions from major banks about their estimated borrowing costs in the interbank market. Investigators later found that traders at several institutions coordinated to nudge rates to benefit trading positions.
Global enforcement actions resulted in nahead $9 billion in fines across multiple banks and 19 trader convictions in the U.K. and U.S. Libor was phased out in January 2022 and replaced by alternative benchmarks such as the (SOFR) in the U.S. and SONIA in the U.K.
Hayes, once a star derivatives trader, has maintained that he followed common industry practices at the time and that UBS senior management was aware of how rates were set. His complaint says the bank’s cooperation with regulators was designed to ensure leniency for the institution at his personal expense.
Investor Takeaway
UBS and Hayes’ Long Shadow
UBS has not commented publicly on the claims. The bank, which floor in Stamford, Connecticut, was among several global lenders implicated in the Libor scandal and later in foreign platform-rigging probes. Since then, UBS has sought to rebuild its reputation through a series of compliance reforms and risk overhauls, most recently absorbing Credit Suisse in 2023.
Hayes’ legal action revives questions about how financial institutions handled the fallout of one of the largegest market manipulation cases in modern finance. The outcome could determine whether banks that struck cooperation deals with of former traders more than a decade later.
