Tom Hayes, the former UBS trader whose conviction made him the first banker jailed over the Libor interest rate rigging scandal, has filed a $400 million lawsuit against his former employer.
The legal action, lodged in a Connecticut court, alleges that UBS intentionally positioned Hayes as a scapegoat to shield senior executives and minimize regulatory penalties during the fallout from one of the most significant financial scandals of the past two decades.
Hayes, who worked at UBS from 2006 to 2009, was at the center of a global investigation into the manipulation of the London Interbank Offered Rate, or Libor. The rate, once a key benchmark for pricing trillions of dollars in loans and securities, became synonymous with market misconduct after regulators uncovered widespread efforts by banks to influence its calculation. The scandal resulted in nearly $10 billion in fines for a dozen financial institutions and led to a series of high-profile prosecutions.
Hayes was convicted in the UK in 2015 and sentenced to 11 years in prison, serving five and a half years before his release in 2021. In July, the UK Supreme Court overturned his conviction, citing “inaccurate and unfair” instructions given to the jury during his original trial. The court, however, stopped short of fully exonerating Hayes, noting there was “ample evidence” that could have led a properly directed jury to a guilty verdict.
The complaint filed by Hayes accuses UBS of conducting a “fundamentally flawed” internal investigation and providing misleading information to US authorities. According to the filing, the bank “offered Hayes up on a silver platter” to prosecutors in both the US and the UK, a move his lawyers argue was designed to insulate senior management and reduce the bank’s own exposure to regulatory fines.
“Hayes became UBS’s handpicked scapegoat,” his legal team stated in the court documents. “Though Hayes has finally cleared his name, UBS’s egregious conduct has irreversibly ruined Hayes’s life.”
Hayes himself described the personal toll he suffered, saying, “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 lawsuit seeks damages for lost earnings as well as emotional, physical, and mental distress. Hayes claims that senior UBS executives were aware of his efforts to influence Libor submissions and even rewarded him for his contributions, only to later wash their hands of it when regulatory scrutiny intensified.
UBS, which paid $1.5 billion to US, UK, and Swiss regulators to settle rate-rigging probes, has declined to comment on the lawsuit.
“Everyone will look at this as being about money but it’s not," Hayes said in an interview with Bloomberg. "It’s about making sure it doesn’t happen to other people in future, it’s about providing a deterrent.”
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