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