Coincidence or Not:  UBS Will Pay Fines Totaling $1.5 Billion - the Same Amount Sought by the U.N. to Address the Syria Crisis.  Hmmm!

[ by Howard Haykin ]

Switzerland's largest bank, UBS AG, will pay fines totaling $1.5 billion to settle with global authorities over charges that it participated in a multiyear scheme to manipulate interest rates.  The U.S. Department of Justice also filed criminal charges against 2 former UBS traders and secured a guilty plea from the bank’s Japanese subsidiary, sending a warning shot to other big banks currently negotiating Libor settlements - i.e., that regulators are taking no prisoners in the Libor manipulation case. 

The UBS subsidiary agreed to plead guilty to a single count of wire fraud - marking the first time in over a decade that a unit of a big bank agreed to criminal charges.

While UBS's negotiated penalties of $1.5 billion greatly exceed the $452 million in penalties that Barclays had negotiated last spring with the CFTC and the U.K.'s FSA, UBS fell short of the record sanctions ever levied by U.S. and U.K. authorities against a financial institution.  That distinction is held by HSBC, which agreed last week to pay $1.9 billion to settle money laundering charges.over money laundering accusations.

Severity of UBS Penalties.   The size and severity of the UBS sanctions reflect the extent of problems at the Swiss bank - including a pattern of abuse that authorities uncovered while conducted their multi-year investigation into rate-rigging.  Government complaints detailed a scheme that ran from 2005 to 2010, showing how the bank reported false rates to squeeze out extra profits and deflect concerns about its health during the financial crisis.  [For a sampling of communication between UBS traders and their counterparts at other banks, read our BTN post, "UBS Traders Laughed All the Way to the Bank".

“The findings we have set out in our notice today do not make for pretty reading.  The integrity of benchmarks are of fundamental importance to both U.K. and international financial markets.  UBS traders and managers ignored this.” -- Tracey McDermott, Enforcement Director for the U.K. Financial Services Authority.

The investigation has ensnared more than a dozen big banks, and is focused on the London interbank offered rate, or Libor, as well as other key benchmarks.  

For further details, go to:   [ Dealbreaker, 12/19/12 ]. 

Also refer to:    [F.S.A. Report Documentation]     and   [UBS E-Mails Show How Traders Gamed the System]