UBS admits fraud, to pay $1.5B to settle interest rate case
ASSOCIATED PRESS December 19, 2012 1:38AM
GENEVA — Swiss banking giant UBS AG said Wednesday it has admitted to fraud and agreed to pay some $1.5 billion to U.S., British and Swiss authorities in a probe into the rigging of global benchmark interest rates.
The settlement caps a tough year for Switzerland’s biggest bank, which is one of several leading banks that has been under investigation over allegations of manipulating the benchmark LIBOR interest rate, short for London interbank offered rate. It is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.
The rate is a self-policing system and relies on information that global banks submit to a British banking authority. American and British regulators have already fined Britain’s Barclays $453 million for submitting false information between 2005 and 2009 to keep the interest rate low.
In a proposed agreement with the U.S. Department of Justice, UBS Securities Japan Co. Ltd. has agreed to enter a plea to one count of wire fraud relating to the manipulation of LIBOR rates for the Japanese yen.
The statement from the UBS board of directors said some of its personnel had “engaged in efforts to manipulate submissions for certain benchmark rates to benefit trading positions.”
The bank also said that some of its employees had “colluded with employees at other banks and cash brokers to influence certain benchmark rates to benefit their trading positions” or had given “inappropriate directions to UBS submitters that were in part motivated by a desire to avoid unfair and negative market and media perceptions during the financial crisis.”