The Serious Fraud Office and LIBOR: The End of the Line

Neil Williams

Neil Williams

Here, Neil Williams explains why nobody should be surprised that, seemingly out of the blue, the Serious Fraud Office (SFO) recently ended its lengthy investigation into the suspected rigging of LIBOR – the London Interbank Offered Rate and the benchmark interest rate that tracks the cost of borrowing cash.

LIBOR and the alleged manipulation of it for profit had been under SFO investigation for more than seven years. It was an investigation that the public – or at least sections of the media – showed an appetite for from time to time.

Yet now we’ve reached a stage where the investigation is history. Nobody will be prosecuted in the UK for what is referred to as “low-balling” (which is where banks understate interest rates that they pay to borrow cash). An investigation that grabbed headlines has now come to a rather humble conclusion.

As far as the SFO’s concerned, it’s pointing to the fact that it has carried out a detailed review of the evidence and made a decision to end the investigation that’s in line with the test in the Code for Crown Prosecutors. This states that the evidence must support a realistic prospect of conviction and that the prosecution process itself must be in the public interest.

After seven years, it appears that the SFO doesn’t think it can gain more convictions. It’ a decision that comes after the investigation has seen 13 traders and money brokers prosecuted by the SFO for rigging LIBOR but, when the number of individuals charged is considered alongside the number of convictions, the SFO can only be said to have had a very modest level of success.

Something of a mixed bag

The outcomes have proved to be something of a mixed bag. Five convictions were achieved, including the high-profile 11-year-sentence handed down to former UBS and Citigroup trader Tom Hayes.

However, the fact that eight individuals charged with manipulating LIBOR were acquitted between January 2016 and April 2017 is a stark indicator of the SFO’s lack of success. There have been successful prosecutions and very large fines have been imposed on some very big banks, yet the difficulties in proving cases against individuals have been all too apparent.

Without wanting to play the amateur psychologist, the SFO has decided it’s prepared to settle for its limited success and look elsewhere to find cases it would much rather pursue in the manner it wants to pursue them.

The SFO has made it clear that what it called aspects of its investigation into EURIBOR – the Euro Interbank Offered Rate – remain open. Yet it may well be that a similar announcement for EURIBOR will follow the one we’ve had regarding LIBOR, given once again the decidedly mixed results thus far.

Given the degree of co-operation and insight required to obtain sufficient evidence to truly identify those who’ve breached the law in relation to LIBOR or EURIBOR (or those who’ve merely followed policy at the time), the difficulty in securing convictions is perhaps unsurprising.

For all the media interest in the huge sums involved and for all the major institutions that came under scrutiny, we should not be amazed that what began with a bang has now ended with a whimper.

Neil Williams is Legal Director at Rahman Ravelli

*For a brief explanation on Serious Fraud Office investigations visit the Rahman Ravelli website

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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