UBS Subsidiary to Pay $100M to Settle Libor Manipulation Claims

UBS Subsidiary to Pay $100M to Settle Libor Manipulation Claims

 NEW HAVEN, Conn. — (Mealey’s) UBS Securities Japan Co. Ltd. will pay a $100 million fine as part of a plea agreement with the U.S. government to end a criminal suit alleging that UBS Japan illegally manipulated the London Interbank Offered Rate (Libor), according to court documents filed on Sept. 18 in a Connecticut federal court (United States of America v. UBS Securities Japan Co. Ltd., No. 12-cr-0268, D. Conn.).

U.S. Judge Robert N. Chatigny of the District of Connecticut issued a sentencing memorandum accepting the terms of the plea agreement, which also includes a nonprosecution agreement in which UBS Japan parent company UBS AG will admit and accept responsibility for its role in manipulating the Libor and continue to cooperate in the Department of Justice’s ongoing investigation in the Libor manipulation.

The Justice Department charged UBS Japan with one count of wire fraud on Dec. 19, alleging that “the defendant, unlawfully, willfully, and knowingly, having devised and intending to devise a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, did transmit and cause to be transmitted by means of wire, radio, and television communication in interstate and foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such scheme and artifice, to wit, the defendant devised and engaged in a scheme to defraud counterparties to interest rate derivatives trades executed on its behalf by secretly manipulating benchmark interest rates to which the profitability of those trades was tied, and in furtherance of that scheme, on or about February 25, 2009, the defendant transmitted or caused the transmission of electronic communications — specifically, (1) an electronic chat between a derivatives trader employed by the defendant and a broker employed at an interdealer brokerage firm, (2) a subsequent Yen LIBOR submission from a bank to Thomson Reuters, and (3) a subsequent publication of a Yen LIBOR rate — through international and interstate wires, at least one of which passed through, among other locations and facilities, servers located in Stamford, Connecticut.”

Counsel

The Justice Department is represented by Daniel A. Braun, Thomas B.W. Hall and Sandra L. Moser of the Department of Justice in New Haven, Conn.

UBS Japan is represented by David P. Burns of Gibson, Dunn & Crutcher in Washington, D.C., Gary R. Spratling of Gibson Dunn in San Francisco and Meredith C. Braxton of Greenwich, Conn.

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