UBS AG’s $1.5 billion fine for rigging global interest rates expands the scandal to include bribery and highlights the influence of a trader in Tokyo who colluded with other banks to align their submissions.
The employee led efforts to influence Japanese Yen Libor submissions by paying brokers as much as 15,000 pounds ($24,400) a quarter and offering a payment to another for helping him keep that day’s rate low. The banker, identified by regulators as Trader A, worked at UBS in Tokyo from 2006 to 2009 and directly contacted employees at other banks to influence their submissions at least 80 times.
“I need you to keep it as low as possible,” Trader A wrote to the broker on Sept. 18, 2008, referring to six-month yen Libor. “If you do that ... I’ll pay you, you know, $50,000, $100,000... whatever you want ... I’m a man of my word,” according to transcripts released by the U.K. Financial Services Authority today.
UBS was ordered to pay about $1.5 billion to U.S., U.K. and Swiss regulators for trying to rig global interest rates, including the London interbank offered rate, over a six-year period. Regulators found that traders at the Zurich-based bank made more than 2,000 requests to its own rate submitters, traders at other banks and brokers to manipulate rate submissions through 2010.
The financial penalties are more than triple the 290 million-pound fine Barclays Plc agreed to pay in June in the first settlement of Libor-rigging allegations. Barclays Chief Executive Officer Robert Diamond and Chairman Marcus Agius resigned in the face of political outrage over the scandal. UBS CEO Sergio Ermotti joined the bank in April 2011, after the period covered during the rate-rigging investigations.
“UBS’s misconduct is, although similar in nature, considerably more serious than Barclays’ because it was more widespread within the firm,” the FSA said. “More individuals, including managers and senior managers, participated in or knew about the manipulation.”
UBS rose 1.3 percent to 15.44 francs at 3:05 p.m. in Swiss trading.
Libor, a benchmark for more than $300 trillion of financial products worldwide, is derived from a survey of banks conducted each day on behalf of the British Bankers’ Association in London. Lenders are asked how much it would cost them to borrow from one another for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and francs.