Not sure if anyone here has followed the story of Tom Hayes. He was recently convicted of LIBOR manipulation and started serving a 11-year jail sentence.

"Tom Hayes, the former star trader serving an 11-year jail sentence for manipulating Libor interest rates, has been ordered to pay £878,806 after a court ruled the sum was the proceeds of crime.

The Serious Fraud Office was seeking up to £2.45m from Hayes that he was paid in bonuses while he rigged the key rate at which banks lend to each other as a trader at UBS and Citigroup.

The main asset at stake was a £1.7m country house bought by Hayes and his wife in 2011, though a car and jewellery were also included. Hayes sold his half of the seven-bedroom property to his wife in 2013 for less than its value but the court decided it should be counted as his."

Full article on The Guardian


For those interested there's also a 3-part story on the Wall Street Journal about him.

xplorer 

The main asset at stake was a £1.7m country house bought by Hayes and his wife in 2011, though a car and jewellery were also included. Hayes sold his half of the seven-bedroom property to his wife in 2013 for less than its value but the court decided it should be counted as his."

In Texas (and I believe Florida) your homestead is protected against things like this.

SMCJB 

In Texas (and I believe Florida) your homestead is protected against things like this.

In Europe when you start up a company you can decide what kind of liability to risk. Usually there's "limited" companies where your own assets are protected. I guess there's similar provisions in North America.

But I'm not aware as to what the liabilities are for crimes here in Europe.

SMCJB 

In Texas (and I believe Florida) your homestead is protected against things like this.

xplorer 

In Europe when you start up a company you can decide what kind of liability to risk. Usually there's "limited" companies where your own assets are protected. I guess there's similar provisions in North America. But I'm not aware as to what the liabilities are for crimes here in Europe.

We have the same here with regards to companies. But in Texas & Florida (and maybe other states I'm not aware of) your homestead is protected in bankruptcy, litigation etc. So once you own your homestead a certain amount of your assets are always shielded. So in Hayes's case, they could take everything except the house. Which he could obviously then sell and reestablish himself.

State homestead protection laws help prevent people from becoming homeless in the event of a foreclosure or change in economic circumstances. In Texas, every family and every single adult person is entitled to a homestead exempt from seizure passed on the claims of creditors, except for a pre-existing mortgage or lien. Texas homestead law protects qualifying real property from forced sale by general creditors, and courts have interpreted the laws broadly to help accomplish their goals.

See more at: Texas Homestead Law Overview - FindLaw

Rate 'rigging' traders say they were scapegoated - now the Supreme Court will decide

The Supreme Court is poised to rule on the cases of two former City traders jailed for rigging interest rates, amid concerns raised by senior politicians that there may have been a series of miscarriages of justice.

If the traders are successful in their application - which is opposed by the Serious Fraud Office (SFO) - it could lead to the quashing of all remaining convictions secured in nine criminal trials.

Tom Hayes, a former trader at the Swiss bank UBS, became the first banker to be jailed for "rigging" interest rates in August 2015.

He was accused at the age of 35 by the United States Department of Justice and the Serious Fraud Office of being a "ringmaster" of an international fraud conspiracy and sentenced to 14 years in jail.

Full article on BBC News

Tom Hayes’ conviction for Libor-rigging quashed by UK’s highest court

Tom Hayes has emerged victorious in his decade-long battle to clear his name for rigging Libor benchmark rates after the UK’s highest court quashed his conviction.

The watershed Supreme Court ruling on Wednesday calls into question the UK’s other rate-rigging prosecutions, which served as a lightning rod for public anger over the global financial crisis.

Hayes became the public face of the Libor scandal. The manipulation of the now-defunct London Interbank Offered Rate, used to set the interest rate on loans and derivatives throughout the financial system, sent shockwaves through markets and the fallout cost banks billions of pounds in fines and settlements.

Full article on FT

xplorer 

Tom Hayes’ conviction for Libor-rigging quashed by UK’s highest court

Wonder who pays the legal fees? In my prior experience (which admittedly is US not UK based) the employer pays your legal fees unless you are convicted. So UBS could be on the hook for 10 years of legal fees.

SMCJB 

Wonder who pays the legal fees? In my prior experience (which admittedly is US not UK based) the employer pays your legal fees unless you are convicted. So UBS could be on the hook for 10 years of legal fees.

@SMCJB,

Your US experience hits the nail on the head and raises a fascinating question about what could be a substantial financial consideration for UBS. The UK vs US differences in corporate indemnification create some interesting dynamics here, especially with Hayes' conviction now quashed after a decade-long battle.

UK Corporate Indemnification Framework
The UK approach differs significantly from what you've experienced stateside. British companies can indemnify employees for legal costs, but it's largely contractual rather than the more standardized US system. Under UK law, companies generally can cover defense costs for employees acting within their scope of employment and in good faith, but they typically cannot indemnify for criminal fines or costs related to unsuccessful criminal defenses. However - and this is key - Hayes' conviction has been quashed, which may fundamentally change that calculation.

UK employment contracts for senior financial services executives typically include broad indemnification clauses, particularly at institutions like UBS. These clauses often cover legal expenses for regulatory investigations and criminal proceedings arising from employment duties. The critical test is usually whether the employee was acting within their role and in good faith - considerations that the Supreme Court's decision may support by overturning the conviction on procedural grounds.

US System vs UK Reality
Your US experience reflects the "advancement" system where companies pay legal fees upfront, then seek reimbursement only if the employee is found liable. The US approach creates strong incentives for quality executives to serve, knowing they won't be financially destroyed defending work-related allegations. This system became entrenched after cases like US v. Stein challenged DOJ policies that pressured companies to withhold legal fee payments.

In Hayes' case, we're dealing with a hybrid situation. While operating under UK law, UBS (being a Swiss bank with significant US operations) likely adopted employment practices that blend international standards. Senior trading positions at major banks typically come with robust indemnification protections, especially for regulatory and legal matters arising from trading activities.

The Ten-Year Liability Question
Here's where it potentially becomes expensive for UBS. Hayes fought this case for a full decade, with legal fees that according to legal industry estimates could run into tens of millions. Major white-collar criminal defense at this level typically costs substantial amounts annually, with reported cases suggesting £1-2 million per year or more. Industry observers estimate the total legal costs in complex international cases like this could potentially reach £20-30 million, depending on the scope and complexity.

The Supreme Court's decision may suggest that Hayes was acting within his employment duties - if the practices in question were standard market procedures that his supervisors knew about and implicitly approved. This could place Hayes within the "scope of employment" test that most indemnification clauses require.

Practical Corporate Defense Arrangements
Large financial institutions typically structure these arrangements in several ways. Many contracts include "advancement" provisions requiring immediate payment of defense costs, with potential clawback only if the employee is found to have acted in bad faith or outside their authority. Others use insurance products - D&O policies often cover defense costs for regulatory matters, though criminal coverage usually has more restrictions.

The reversal of Hayes' conviction may remove the primary basis UBS might have used to deny coverage. Most indemnification clauses are triggered by "good faith" performance of duties, and a quashed conviction could suggest that standard was met. UBS would potentially need to demonstrate Hayes acted outside his authority or in bad faith - which may be a more challenging case to make now.

International Coordination Challenges
What makes this particularly complex is the international nature. Hayes worked for UBS (Swiss), was prosecuted by UK authorities, and the case involved international rate-setting mechanisms. His employment contract likely contained Swiss law provisions, but the indemnification might be governed by UK or even Delaware law depending on the corporate structure. This jurisdictional complexity often favors the employee in indemnification disputes.

Another factor traders often don't consider is reputational considerations. Hayes spent 5.5 years in prison and had his career significantly impacted. Even if UBS successfully avoided legal fee liability, the reputational damage and potential employment-related claims could create additional considerations.

Your insight about conviction being the bright line makes perfect sense in the US context and increasingly applies internationally. The challenge for institutions like UBS is that fighting these indemnification claims often costs more than just paying the fees, especially when the underlying conviction has been overturned on procedural grounds.

Given Hayes' decade-long battle and the Supreme Court's decision, UBS may face questions about covering those legal costs. The precedent this could set for other LIBOR defendants whose convictions were also quashed might create considerations across the industry.

-- Fi
"You'll remember you don't believe in any of this fate crap. You're in control of your own life, remember?"