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London - As the four former Barclays traders convicted of rigging Libor await sentencing this week, a new type of benchmark set by Tom Hayes may haunt them.
The sentencing hearing for Jonathan Mathew, 35, Jay Merchant, 45, and Alex Pabon, 38, will start on Wednesday after the men were found guilty of conspiring to manipulate the London interbank offered rate by a jury last week.
Former colleague Peter Johnson, 61, will also be in the dock after pleading guilty in 2014.
Hayes, the former UBS Group trader who was the first man convicted of rigging the key rate tied to trillions of dollars in securities and loans, was sentenced last year to 14 years in prison.
Even when an appeals court cut the term by three years in December, it warned that behaviour of this kind "will result in severe sentences of considerable length."
"There has previously been a clear message from the courts that financial markets crime is seen in the same light as any other type of crime," said Simon Hart, a lawyer at RPC in London.
“While there are fewer precedents, as we saw with the Hayes trial, we would expect the court’s attitude to the sentencing of these individuals to be robust."
The traders’ hearing comes amid a crackdown on white-collar crime that was triggered by the financial crisis. In May, a London court meted out the longest-ever UK sentence for insider trading, with a 4 1/2-year term handed to a former Deutsche Bank AG managing director. Last year, hedge fund founder Magnus Peterson was sentenced to 13 years in jail for fraud.
Not ‘victimless crimes’
"There is a recognition these are not victimless crimes even when the losses are less tangible," said Neil Saunders, a U.K. criminal trial lawyer.
"These kinds of behaviour can have a real impact on both people’s pension pots, as well as the reputation of London as a financial centre."
While the traders face a maximum of 10 years in prison, it’s unlikely they would receive that much, according to lawyers.
The judge must consider, among other things, whether the individuals had a leading role and breached their duty of trust, according to a copy of the sentencing guidelines.
Johnson should have about one third shaved off his sentence for pleading guilty.
The UK penalties have been much harsher than those related to Libor in the US Two British men who worked at Rabobank Groep received one- and two-year sentences from a court in New York, which they’re appealing.
