UBS Libor traders face criminal charges

‘Pervasive’ Practice

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.

Trader A set up a complex system of payments to fellow UBS employees, counterparts at other banks and interdealer brokers to facilitate the manipulation of yen Libor, according to the FSA settlement.

Thirty to 40 people have left the bank as a result of the investigations, Ermotti told reporters on a conference call, adding that behavior of some employees was “unacceptable.” He said he doesn’t expect any more departures.

The fine is another blemish on UBS, which is scaling back its investment bank to concentrate on wealth management. UBS said in October it may post a loss for 2012 after taking an impairment charge of 3.1 billion francs related to goodwill and other non-financial assets at the securities unit, in addition to costs tied to firing 10,000 people by 2015.

Loss Expected

The bank said it expects to report a fourth-quarter loss of between 2 billion francs and 2.5 billion francs, primarily as a result of litigation provisions and regulatory matters.

“We want to move forward and I think we’re showing our determination in the bank to move forward and to change the bank for good,” Ermotti said.

One year ago, Japanese regulators penalized UBS’s Japanese operations, curtailing the bank’s ability to participate in the Tokyo interbank derivative market for a week, and ordering the bank to improve its regime of compliance and internal controls.

UBS was fined 29.7 million pounds last month by the FSA and told by the Swiss regulator it may have to increase capital levels for operational risks after a $2.3 billion loss from unauthorized trading by Kweku Adoboli. The former trader in UBS’s London office was sentenced to seven years in jail on Nov. 20 for fraud in relation to the loss, the largest from unauthorized trading in British history.

Bloomberg News

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