UBS Libor fine soars as traders bribed brokers to fix rate

Trader A Boasts

Trader A boasted that he was able to rig the benchmark because he was “mates with the cash desks” at one unnamed bank and that they “always helped each other out,” a transcript of a Feb, 2, 2007 chat showed, according to the FSA.

At least 45 bank employees, including some managers, knew of the “pervasive” practice and a further 70 people were included in open chats and messages where attempts to manipulate Libor and Euribor were discussed, the FSA said.

During the six-year period, four of UBS’s traders, one of whom was a manager, made more than 1,000 written requests to 11 interdealer brokers at six brokerage firms, asking them to influence other panel banks that contributed to Japanese Yen Libor submissions.

U.S. Fine

The findings are part of settlements with regulators in three countries over allegations UBS colluded to manipulate Libor and at least five other benchmarks. UBS will pay $1.2 billion in the U.S. and the bank’s unit in Japan agreed to enter a guilty plea to wire fraud for manipulating benchmark interest rates including yen Libor, UBS said. It was fined 160 million pounds by the FSA and must disgorge 59 million francs ($64 million) in estimated profits to the Swiss Financial Market Supervisory Authority.

As part of the case, U.S. prosecutors are planning to file charges against multiple bankers associated with UBS’s rigging of Tokyo interbank lending rates, according to a person with knowledge of the matter. The charges would be the first brought by the Justice Department against individuals alleged to have manipulated Libor and comparable benchmarks in Europe and Japan.

During 2007, Trader A made more than 450 requests to manipulate Yen Libor submissions as he held large trading positions tied to the rate that matured at different times that year.

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