Antitrust Law Daily Wrap Up, ANTITRUST NEWS: UBS Fined $1.5 Billion by Global Regulators for LIBOR Manipulation, (Dec 28, 2012)
Organizations Mentioned:UBS Securities Japan Co., Ltd. | UBS, AG
By Sarah Borchersen-Keto
The U.S. Justice Department has announced that Swiss banking group UBS AG has agreed to pay penalties totaling $1.5 billion to U.S., U.K., and Swiss regulators for its part in a multi-year attempt to manipulate the London Interbank Offered Rate, the premier benchmark for short-term interest rates. UBS AG has entered into a non-prosecution agreement with the Justice Department, while its subsidiary UBS Securities Japan Co. Ltd. has agreed to plead guilty to wire fraud.
Two former senior UBS traders also have been charged in a criminal complaint filed by the Justice Department under seal on December 12 and unsealed on December 19 (U.S. v. Hayes, Criminal No. 12 MAG 3229 (SD N.Y.)).
“The bank's conduct was simply astonishing,” Assistant Attorney General Lanny Breuer said December 19. He noted that hundreds of trillions of dollars in mortgages, student loans, credit card debt, financial derivatives and other financial products worldwide are tied to LIBOR. “UBS, like Barclays before it, sought repeatedly to fix LIBOR for its own ends--in this case, so UBS traders could maximize profit on their trading positions, and so the bank wouldn't appear vulnerable to the public during the financial crisis,” Breuer said.
In a statement, UBS CEO Sergio Ermotti said “we deeply regret this inappropriate and unethical behavior. No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity.”
According to the Justice Department's allegations, from 2006 to 2009 the two former UBS traders arranged to move UBS' yen LIBOR submissions in directions that would maximize profit on the trading positions taken on behalf of the bank. The complaint charges that one of the traders contacted brokers to influence them to disseminate false information about LIBOR and made efforts to coordinate with traders at other banks to try to move their LIBOR submissions in directions that would help his trading positions.
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