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The UBS Libor-Fraud E-mails Are a Gift for Regulators

The documents come as UBS is fined $1.5 billion for rigging Libor rates.
UBS headquarters on Paradeplatz in Zurich
UBS headquarters on Paradeplatz in Zurich Photograph by Adrian Moser/Bloomberg

Just a week before Christmas, the Libor scandal is a gift that keeps on giving. The Swiss bank UBS has been fined $1.5 billion and two of its former traders were charged with conspiracy in the United States, while U.K. regulators released a report (PDF) that captures the bank’s employees engaging in routine, casual, and brazen manipulation of what has been called the world’s most important number.

“Libor” is an acronym for the London Interbank Offered Rate, a key interest rate that affects borrowers, small and large, around the world. It’s a measure of how much banks pay to borrow from each other, as measured and submitted by themselves. That self-reporting aspect makes it ripe for distortion, as banks have sought to adjust it by fractions of a point up or down to eke greater profits out of their trading activities. UBS was far from alone in rigging the numbers—in June, Barclays was fined about $450 million over Libor-fixing allegations, and its chairman, chief executive, and chief operating officer all resigned.