LIBOR (London Interbank Offered Rate) was a benchmark interest rate used in pricing an estimated $300trn-worth of financial contracts, in up to ten currencies and over periods of up to a year. It was a trimmed average of banks' estimates of the rates at which they could supposedly borrow from each other. Much of it was guesswork: actual lending could be thin or non-existent, giving bankers leeway.
In the aftermath of the global financial crisis of 2007-09, LIBOR became a symbol of all that was wrong with banks and bankers. The Serious Fraud Office (SFO) prosecuted 20 people for rigging rates; nine were convicted. Tom Hayes, formerly of UBS and Citigroup, was convicted in 2015 of conspiring to manipulate LIBOR and initially sentenced to 14 years in prison—the same as the maximum for blackmail. Carlo Palombo, once of Barclays, was given four years in 2019 for fiddling EURIBOR, another benchmark. Both were released in 2021.
On July 23rd 2025 Britain's Supreme Court quashed the convictions of both men, ruling that the trial judge, Sir Jeremy Cooke, had misdirected the jury by telling it that rate submitters, if acting honestly, should not take commercial interests into account at all. The Supreme Court held that the question of honesty was for the jury, not the judge, to decide. Lord Leggatt, who drew up the court's decision, raised "concerns about the effectiveness of the criminal-appeal system in England and Wales in confronting legal error": it had taken ten years to correct the misdirection. The Court of Appeal had upheld both convictions twice and did not grant permission to appeal to the top court. The ruling should give hope to the remaining seven people convicted in related cases.
LIBOR has been replaced by new benchmarks based on overnight rates.
We are so fond of each other because our ailments are the same.