Wednesday, December 19, 2012

UBS Pleads Guilty, Fined $1.5 BILLION

Three keys logo by Warja Honegger-Lavater.
When does this end? Another major fine - in fact, a historic fine - against UBS as it pleads guilty to allegations that it engaged in a multiyear scheme to manipulate interest rates.
According to the New York Times, the cash penalties represented the largest fines to date related to the rate-rigging inquiry. The fine is also one of the biggest sanctions that American and British authorities have ever levied against a financial institution, falling just short of the $1.9 billion payout that HSBC made last week over money laundering accusations.
The UBS case reflects a pattern of abuse that authorities have uncovered as part of a multi-year investigation into rate-rigging. The inquiry, which has ensnared more than a dozen big banks, is focused on key benchmarks like the London interbank offered rate or Libor. Such rates are used to help determine the borrowing rates for trillions of dollars of financial products like corporate loans, mortgages and credit cards.
According to the NYT story, the wrongdoing occurred largely within the Japanese unit, where traders colluded with other banks and brokerage firms to tinker with Yen denominated Libor and bolster their returns. During the 2008 financial crisis, UBS managers also “inappropriately gave guidance to those employees charged with submitting interest rates, the purpose being to positively influence the perception of +UBS’s creditworthiness,” according to authorities.
UBS Pleads Guilty, UBS Pays $1.5 Billion Over Rate Rigging -

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