Courtesy of Pam Martens.
UBS, the global banking behemoth based in Switzerland, has agreed to settle charges over rigging the international interest rate benchmark known as Libor with U.K., U.S. and Swiss authorities. The total settlement with all regulators will total approximately $1.5 billion.
Later this morning, the U.S. Department of Justice and the Commodity Futures Trading Commission, which levied the bulk of the fines, will announce their findings. The U.K.’s Financial Services Authority (FSA) earlier today revealed the details of an expansive conspiracy to rig rates that involved traders, managers, chat rooms, standing orders, at least 2,000 documented efforts to rig rates, and bribes and payoffs to other brokers.
According to the FSA:
UBS, through four of its traders, colluded with interdealer brokers to attempt to influence the Japanese Libor submissions of other banks. The brokers were in regular contact with various panel banks that contributed Japanese Libor submissions. The UBS traders (one of whom was a manager) were directly involved in making more than 1000 documented requests to 11 brokers at six broker firms.
A UBS trader colluded with individuals at panel banks to make submissions in relation to Japanese Libor that benefited UBS’s trading positions. UBS, through this trader colluded with these individuals in his attempt to influence the Japanese Libor submissions of four other banks by making more than 80 documented external requests, as well as making such requests orally.
In the course of one campaign of manipulation, a UBS trader agreed with his counterpart that he would attempt to manipulate UBS’s submissions in “small drops” in order to avoid arousing suspicion. The trader made it clear that he hoped to profit from the manipulation and referred explicitly to his UBS trading positions and the impact of the Japanese Libor rate on those positions. He offered to “return the favour” and entered into facilitation trades and other illicit transactions in order to incentivise and reward his counterparts.
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