Mon, Dec 17, 2012 - Page 15 News List

UBS to pay up to US$1.6bn for rate rigging, sources say

ACCOMMODATING:UBS has been ‘granted conditional leniency or conditional immunity’ by the US Justice Department’s antitrust division, a recent report showed

Bloomberg

US prosecutors are planning to file charges this week against multiple bankers associated with UBS AG’s rigging of Tokyo interbank lending rates, a person with knowledge of the case said.

The charges would be the first brought by the US Department of Justice against individuals alleged to have manipulated the London interbank offered rate, or LIBOR, and comparable lending rates in Europe and Japan.

GUILTY PLEA

The prosecution is slated to begin in tandem with an announcement that UBS Securities Japan Ltd, the Japanese unit of the Zurich-based bank, would plead guilty to manipulating Japanese interest rates starting in 2007, said the person, who asked not to be named because the matter is private.

UBS is set to pay as much as US$1.6 billion to settle charges of interest rate manipulation with the Justice Department, the US Commodity Futures Trading Commission, the UK Financial Services Authority and the Swiss Financial Market Supervisory Authority, another person familiar with the probes said.

ANNOUNCEMENT

The announcement could come as early as tomorrow, added the person, who asked not to be identified because they are not authorized to speak publicly about the matter.

That US$1.6 billion figure would be more than three times the £290 million (US$469 million) that Barclays PLC agreed to pay last June to settle allegations that its employees conspired to manipulate LIBOR.

Unlike the pending settlement with UBS, the Justice Department did not require Barclays to enter a guilty plea to a specific charge.

In deciding against a charge in June last year, prosecutors praised Barclays’ “timely, voluntary and complete disclosure of facts.”

UBS has been “granted conditional leniency or conditional immunity” by the Justice Department’s antitrust division in connection with potential antitrust violations related to submissions for interbank lending rates in Tokyo, the Swiss bank’s most recent annual report showed.

According to Justice Department guidelines, a corporation can secure favorable treatment from prosecutors if it is the first to pledge full cooperation in an antitrust investigation.

ADMISSION

Yet in order to win that leniency, the corporation has to include an admission that it was part of an antitrust conspiracy, and help identify other participants in the scheme.

One year ago, Japanese regulators sanctioned 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.

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