UBS Securities Japan pleaded guilty in December in federal court in Hartford, Connecticut, to one count of wire fraud and agreed to pay the fine, according to court filings. U.S. District Judge Robert N. Chatigny accepted the plea agreement today, the U.S. Justice Department said in a statement.
The agreement is part of a global resolution of criminal, civil and regulatory actions brought by prosecutors against Zurich-based UBS in connection with alleged rate manipulation, according to a joint sentencing memorandum.
“This action, and the resulting sentence, prove that no individual or firm is above the law -- no matter what,” U.S. Attorney General Eric Holder said in the statement. “The Department of Justice will continue to stand vigilant against corporations or individuals who threaten the integrity of our financial markets, undermine the stability of our economy, or jeopardize the well-being of our citizens.”
UBS entered into a non-prosecution agreement in December with the Justice Department covering itself and all its subsidiaries and affiliates, except for UBS Securities Japan. Fines by U.S., U.K. and Swiss regulators against UBS total about $1.5 billion, including $700 million to the Commodity Futures Trading Commission, $259.2 million to the U.K. Financial Conduct Authority and $64.3 million to the Swiss Financial market Supervisory Authority, the Justice Department said.
UBS agreed to pay a $400 million penalty as part of the non-prosecution agreement, to admit and accept responsibility for misconduct and to continue cooperating with the probe, the Justice Department said in today’s statement.
Global authorities are investigating claims that more than a dozen banks altered submissions used to set benchmarks such as the London interbank offered rate, or Libor, to profit from bets on interest-rate derivatives or make the lenders’ finances appear healthier than they were.
Libor is published by the London-based British Bankers’ Association and is calculated based on submissions from banks around the world based on the rates the lenders believed would be charged for borrowing, according to the Justice Department. The rate is calculated for 10 currencies at 15 borrowing periods ranging from overnight to as much as a year.
According to the Justice Department, UBS Securities Japan and a senior trader in Tokyo planned a “sustained, wide-ranging and systematic scheme” to move the yen Libor in a direction benefiting the trader’s positions, defrauding UBS counterparties and “harming others with financial products referencing yen Libor who were unaware of the manipulation.”
For almost three years starting in November 2006, the trader or a colleague manipulated the yen Libor on at least 335 of 738 trading days and sometimes daily, the Justice Department said. Two former UBS traders have been charged by U.S. prosecutors in connection with the alleged manipulation.
“Because of the large size of the senior trader’s positions, even slight moves of a fraction of a percent in yen Libor could generate large profits,” the department said in today’s statement. “For example, the senior trader once estimated that a 0.01 percent movement in the final yen Libor fixing on a specific date could result in a $2 million profit for UBS.”
The case is U.S. v. UBS Securities Japan Co. Ltd., 3:12-cr-00268, U.S. District Court, District of Connecticut (Hartford).
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