UBS Japan fined $100 million over Libor affair

UBS was penalised for the role played by its investment bankers in manipulating the Libor benchmark interest rates Keystone

A UBS Japanese investment banking subsidiary was fined $100 million (CHF91 million) by a US judge on Wednesday for its role in manipulating the London Interbank Offered Rate (Libor), a leading benchmark used in financial transactions worldwide.

This content was published on September 19, 2013

UBS Securities Japan had pleaded guilty on December 19, 2012 to secretly manipulating Libor benchmark interest rates, and had signed a plea agreement with the United States government in which it admitted its criminal conduct.

In addition, UBS, the parent company and Switzerland’s biggest bank, entered into a non-prosecution agreement with the US government requiring it to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct, and to cooperate with the Justice Department’s ongoing investigation, the US Justice Department announced.

“Through its guilty plea and sentence, UBS has been held to account for deliberately manipulating Libor, one of the cornerstone interest rates in our global financial system,” said the Acting Assistant Attorney General of the Criminal Division, Mythili Raman. 

The non-prosecution agreement “reflects UBS AG’s substantial cooperation in discovering and disclosing Libor misconduct within the financial institution and recognises the significant remedial measures undertaken by new management to enhance internal controls”, said the Department of Justice in a statement.

The total amount of fines that UBS has paid or will pay to various governments as a result of the Libor scandal is estimated at $1.5 billion.

“The $1.5 billion global resolution against UBS – of which this guilty plea and sentence are a critical element – is just one of several actions we have taken against financial firms throughout the world that sought to illegally influence Libor,” said Raman.

“Neither UBS, nor the individual UBS defendants we have charged in connection with this sophisticated scheme, nor any other bank or individual, is above the law,” she said.

UBS has not commented on the judgement.

Swiss investigation

In December 2012, the Swiss financial regulator Finma had released the findings of its own investigation.

“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 stated at the time.

The traders involved in the rate rigging scandal “were mainly acting in their own interest”, Finma said.

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

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