The SFO’s Libor Investigation And The Full Code Test

With the Serious Fraud Office having closed its Libor investigation, Rahman Ravelli outlines how the Full Code Test is applied when deciding whether to bring charges.

An investigation into the rigging of Libor has been unexpectedly closed by the Serious Fraud Office after what it says was a detailed review of the evidence.

Thirteen traders and money brokers were prosecuted over four years by the SFO in connection with rigging Libor, which is the banks’ lending rate. But only four convictions resulted.

In a statement, the SFO said the decision was taken in line with the test in the Code for Crown Prosecutors. The Code for Crown Prosecutors is issued by the Director of Public Prosecutions (DPP) under section 10 of the Prosecution of Offences Act 1985.

The Full Code Test, which must be applied when charging decisions are made, has two stages -  the evidential stage and the public interest stage - and should be applied when all outstanding reasonable lines of inquiry have been pursued.

In most cases, prosecutors should only consider whether a prosecution is in the public interest after considering whether there is sufficient evidence to prosecute.

Prosecutors must be satisfied that there is sufficient evidence to provide a realistic prospect of conviction against each suspect on each charge, based on the prosecutor’s objective assessment of the evidence. The prosecution must consider whether the evidence can be used in court and its reliability and credibility.

If there is sufficient evidence to justify a prosecution prosecutors must consider whether a prosecution is required in the public interest. A prosecution will usually take place unless the prosecutor is satisfied that there are public interest factors tending against prosecution which outweigh those tending in favour. In deciding this, prosecutors should consider the seriousness of the offence committed, the suspect’s level of culpability, the circumstances of and the harm caused to the victim, the suspect’s age and maturity, the impact on the community, whether prosecution is a proportionate response and if sources of information require protecting.

While there may be sufficient evidence for the SFO to bring more charges regarding Libor, given the number of acquittals of those against whom charges have been brought, the public interest may well have been considered diminished by the low conviction rates.

Read our guide: SFO Investigations - A Brief Explanation.

This article was also featured on Lexology and can be viewed here.