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Libor Scandal Update: UBS GUILTY of FRAUD!!!

Posted by Larry Doyle on December 19, 2012 6:54 AM |


Why would anybody want to do business with an institution that systematically participated in a widespread fraud over a period of years? I guess that very statement could likely be said of many global banks in regard to the scandal encompassing the manipulation of Libor.

Today, though, the scarlet letter is applied to the Union Bank of Switzerland as it pleads guilty to fraud in the manipulation of Libor and other benchmark interest rates. This bucket shop has agreed to pay a $1.5 billion fine.

Adding to the drama is the fact that, according to The Wall Street Journal, some individuals connected to UBS in this scandal are likely to be arrested today in the United States. Who and how many will make for riveting theatre. Let’s navigate as the WSJ writes, UBS to Pay $1.5 Billion to Settle Libor Charges:

As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS’s unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud.

Authorities on Wednesday painted a picture of “routine and widespread” attempts by UBS employees to rig Libor and the euro interbank offered rate, or Euribor. The U.K. Financial Services Authority said it had identified more than 2,000 such attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives.

Adding to the severity of the allegations, the FSA said UBS engaged in collusive efforts with other financial institutions to rig the benchmarks. Among other things, the Swiss bank made “corrupt brokerage payments” to so-called inter-dealer brokers to reward them for helping to coordinate attempted manipulation among multiple banks, the FSA said.

In the U.S., law-enforcement authorities on Wednesday are expected to arrest people with ties to UBS, likely representing the first time that anyone faces criminal charges stemming from the long-running rate-fixing investigation, according to people familiar with the case.

2,000 attempts to manipulate? 45 UBS traders and executives? Collusive efforts to rig the benchmarks?

How is it that this scandal does not rise to the level of a racketeering violation?

Who were the senior executives at UBS during this time frame? I have long maintained that this scandal operated with the knowledge and blessing of those charged with running the banks. The names and levels of responsibility of those arrested today will be very telling in terms of seeing how high the blanket of political protection runs in this organization. Very telling.

As a longstanding friend of mine once said about shops like this, if they took the trading monitors out and replaced them with sewing machines, the place would have been shut down a long time ago.

GUILTY of FRAUD!! Need I say more?

Sense on Cents/Libor Scandal

Larry Doyle

Isn’t it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Captain Louis Renault

    Round up the sheep, let the wolf play through.

    • robertsgt40

      Yup. Don’t look for Bernanke or Geithner to be jailed any time soon.

  • fred


    Regulators seem affraid or unwilling to pierce or even approach the corporate veil; are they corrupt or are they inept?

    In terms of the prosecution of corporate executives, why is white collar crime treated differently than violent crime?

    What about this notion of too big to fail, does this make criminal bankers personally untouchable rather than liable?

  • LD


    The preponderance of evidence indicates that the regulators, government (prosecutors and legislators) and industry are all in bed with each other ….BUT … it is the investors and public who are really “getting screwed.”

    Captain Lou leaves an interesting link there.

    • Peter Scannell

      If in fact we are a consumer driven economy, its informative blogs such as yours LD that will help the consumer drive in the opposite direction of white collar liars, cheats, and thieves.

      It is time the American consumer puts their money where their mouth is!

      • LD

        Keep spreadin’ the “Sense on Cents” and spread it thick…!!

  • fred


    Speaking of scandals, interesting how the gov’t will likely lose $$B on it’s GM stake, but was able to turn a profit on AIG.

    Maybe execs were more concerned with votes than profits?

  • Peter Scannell

    Dear Gary

    Per our conversations:

    “What Are The Odds” that David Smyth’s leaving the SEC Enforcement Division only a few months after being promoted to assistant director is related to the overwhelming evidence I provided Mr. Smyth and others in the enforcement division that former and current fund board directors executed extraordinary breaches of fiduciary duty, dishonest services, aided and abetted securities fraud, and obstructed justice.

    Sounds familiar?

    This is the New and Improved SEC!

    If the regulators perform their duty, and nail the dirty fund directors – other bastards get nailed too; which includes your nemeses and mine – the former SEC Directors Cutler/Thomsen/Roye, as well as disgraced CEOs Lasser and Haldeman.

    The three former SEC Directors alone, are solely responsible for either allowing, or turning a blind eye (wink, wink), for literally billions, and billions, of unwitting investors hard earned investment money and retirement funds being looted or stolen!


    Peter Scannell

  • Peter Scannell

    Dear Gary,

    Though true – in my case it’s even worse than imagined!

    It’s what they covered-up, and which ultimately cost shareholders billions more, that remains my concern!


  • Peter Scannell

    Sent: Wednesday, April 14, 2010 4:03:50 PM
    Subject: RE: SEC Enforcement Division

    Dear Mr. Scannell,

    On November 6, 2009, we issued a report to the Enforcement Division which included the findings of our inquiry. The report also included a complete transcript of your testimony as well as copies of all other relevant documents. Since that date, we have been in touch with Mr. Smyth and have provided him copies of all testimony, documents, and emails that he requested that could be useful in the Enforcement Division’s analysis of the allegations you are raising, including the documents that you recently sent us. You can be assured that we are doing everything we can to assist and encourage the Enforcement Division to take your allegations seriously and conduct an appropriate investigation.


    Natasha Dandridge
    Legal Assistant
    On behalf of the Office of Inspector General
    of the U.S. Securities and Exchange Commission

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