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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

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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.

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