UBS To Pay $1.5 Billion To Settle Allegations Of Bid Rigging

(Plea agreement available. Document #88-130128-215X.)

UBS Japan agreed to the guilty plea in the criminal action the U.S. government filed Wednesday in the U.S. District Court for the District of Connecticut. 

Penalties 

Together with approximately $1 billion in regulatory penalties and disgorgement — $700 million as a result of a Commodity Futures Trading Commission (CFTC) action, $259.2 million as a result of a U.K. Financial Services Authority (FSA) action and $64.3 million as a result of a Swiss Financial Markets Authority (FINMA) action — the U.S. Department of Justice’s criminal penalties bring the total amount of the resolution to more than $1.5 billion, the Justice Department said in a press release. 

“By causing UBS and other financial institutions to spread false and misleading information about LIBOR, the alleged conspirators we’ve charged — along with others at UBS — manipulated the benchmark interest rate upon which many transactions and consumer financial products are based. They defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves,” Holder said in the press release. “[Wednesday’s] announcement — and $1.5 billion global resolution — underscores the Justice Department’s firm commitment to investigating and prosecuting such conduct, and to holding the perpetrators of these crimes accountable for their actions.” 

The Justice Department on Wednesday also announced that UBS traders Tom Alexander William Hayes of England and Roger Darin of Switzerland have been charged with conspiracy in a criminal complaint in the Southern District of New York. Hayes is also charged with wire fraud based on the same scheme and price-fixing violation “arising from his collusive activity with another bank to manipulate LIBOR benchmark rates,” the Justice Department said. 

LIBOR 

LIBOR, published by the British Bankers’ Association (BBA), is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks. 

Between 2005 and 2010, UBS traders routinely asked co-workers and brokers at other institutions to make LIBOR submissions to the BBA that would benefit the UBS’s trading positions, the Justice Department said. Frequently those requests were accompanied by promises of future business, according to the Justice Department. The largest number of rigged bids was in relation to yen-dominated LIBOR, with more than 800 separate internal requests, according to the Justice Department. 

The Justice Department press release can be viewed at www.justice.gov/opa/pr/2012/December/12-ag-1522.html.