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Benchmark fraud


Former UBS trader charged in Libor case




UBS headquarters in London (Keystone)

UBS headquarters in London

(Keystone)

City of London police have charged a former UBS trader with eight counts of conspiracy to defraud, as part of the investigation into the manipulation of the London interbank offered rate, or Libor, uncovered last year.

Britain’s Serious Fraud Office says the 33 year old, who also worked for Citigroup, was charged in London on Tuesday with conspiracy to defraud in connection with the rigging of the benchmark rate. UBS was not immediately available for comment.

The former UBS employee specialised in products pegged to Libor and worked in offices in London and Tokyo. He will appear before City of Westminster Magistrates' Court at a later date.

Whether the charges relate to the trader’s time at UBS or Citigroup is still unclear. The man is the first person to be charged as part of the investigation.

In December 2012, UBS paid a $1.5 billion penalty for taking part in a scheme over several years to manipulate Libor and other benchmark interest rates.

Other major European banks were also involved in the scandal, including Barclays, Royal Bank of Scotland and Deutsche Bank.

Banks report on a daily basis the benchmark rate, which is based on the average of credit conditions the larger banks are offered by other institutes. The rate determines the price of more than $300 trillion worth of loans including mortgages, credit cards, business and students’ loans as well as derivatives such as options and more complex instruments.

Traders of these Libor-linked financial products are suspected of having collaborated to generate false information to nudge the reference rate for their own profit.

"Misconduct"

In the findings into its investigation, released in December, the Swiss financial regulator Finma said that the traders involved in the rate rigging scandal “were mainly acting in their own interest”.

“At different stages during the years 2007 and 2008, UBS managers inappropriately gave guidance to those employees charged with submitting interest rates, the purpose being to positively influence the perception of UBS’s creditworthiness,” Finma added.

The Swiss regulatory body said “numerous employees and a limited number of managers were involved in the misconduct.” Around 40 people reportedly left UBS or were asked to leave the bank as a result of the investigation.

swissinfo.ch and agencies



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