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Fraud Sentencing

Document Cited in Related
AuthorDavid Kirk
Published date01 October 2015
Date01 October 2015
DOIhttp://doi.org/10.1177/0022018315603609
Opinion
Fraud Sentencing:
The Tom Hayes Effect
David Kirk
McGuireWoods London LLP, London, UK
For years, fraud offences seemed to be egregiously undersentenced. If you held up a bank—at some
personal risk—and got away with £20,000 you might expect to be caught, and on conviction to get
an 18-year sentence. If you conned the general public out of £100,000 from the comfort of your armchair
you were unlikely to be caught and, if you were, a prosecution was not inevitable, but even in the
unlikely event of a conviction you might get two or three years.
All that has changed, and a sign of the times was the sentence handed down to Tom Hayes, the star
trader at UBS and Citibank who was convicted at Southwark Crown Court on 3 August of eight counts of
conspiracy to defraud by manipulating LIBOR (the London Inter-Bank Offered Rate). He received a
total sentence of 14 years for a course of conduct over several years which Mr Justice Cooke described
as arrogant, unethical and dishonest. The sentence was made up of 9.5 years for each of the four counts of
conspiracy to defraud that related to his time at UBS, to run concurrently, and 4.5 years for each count
for his Citibank activities, also to run concurrently, but consecutive to the UBS counts. Therefore Hayes
faces the prospect of seven years in jail, most of it in uncomfortable surroundings, and seven years on
licence. In addition, he will face a confiscation order, suffer a lifetime prohibition from employment in
the financial services sector, and have to find a new way of earning a salary to support his family when he
eventually emerges from prison.
The conviction of Hayes will have come as a great relief to the Serious Fraud Office. It was a signif-
icant result, showing that the agency can tackle the most serious and complex City frauds of the kind
which it was always meant to prosecute. The 14-year sentence will have strongly justified the SFO’s
actions. But more than that, it has sent shock waves through the City. No doubt the learned Judge had
this very much in mind when calculating the sentence he was going to pass. Like Admiral Byng, who
failed to prevent the French taking over Minorca in 1757, and was executed by firing squad as a result,
Hayes was dealt with by means of a deterrent punishment that would, as Voltaire put it, ‘encourager les
autres’.
One may, as Hayes’ father perhaps understandably did, describe the punishment as being ‘cruel and
unusual’ and thus flouting human rights principles. Another view is that it is about time that it is recog-
nised that serious and serial dishonesty in financial markets deserves to be punished much more severely
than has traditionally been the case, and that therefore the Hayes sentence paves the way for a tougher
regime that will genuinely encourage other financial professionals to behave better. Take your pick.
However, one may predict that future convictions in complex fraud cases will be more severely
Corresponding author:
David Kirk, McGuireWoods London LLP, 11 Pilgrim Street, London EC4 V 6RN, UK.
Email: DKirk@mcguirewoods.com
The Journal of Criminal Law
2015, Vol. 79(5) 301–303
ªThe Author(s) 2015
Reprints and permissions:
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DOI: 10.1177/0022018315603609
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