UBS Pleads Guilty, Pays $1.5 Billion to Settle Rate LIBOR Probe (Update 1)
In the $1.5 billion UBS settlement, the Commodity Futures Trading Commission and DoJ will take in roughly $1.2 billion fines, while Britain's FSA will receive a $260 million fine. A remaining $65 million was taken by Swiss regulators, and was deemed the bank's gains from its multi-year manipulation.
"We discovered behavior of certain employees that is unacceptable," Sergio P. Ermotti, chief executive of UBS, said in a statement. "We deeply regret this inappropriate and unethical behavior," he added.
Wednesday's fine exceeds the amount UBS reserved for regulatory settlements, causing the bank to forecast a wider than previously estimated loss of $2.7 billion for the fourth quarter.
The bank had set aside $975 million for legal settlements and fines, and it faces a slew of restructuring charges after announcing in late-October it would cut 10,000 jobs worldwide and exit key trading businesses in the U.S. HSBC, by contrast, paid a fine roughly in line with provisions it set aside.
The DoJ also said on Wednesday two senior UBS traders, Tom Alexander William Hayes and Roger Darin, have been charged with conspiracy in a criminal complaint. Hayes was also charged with wire fraud and a price fixing violation from in an alleged rate-fixing scheme, the DoJ said in a statement.
UBS shares were little changed on Wednesday, falling 12 cents to $16.64 in afternoon trading.
Still, for UBS and HSBC, billion dollar-plus sized fines could have been worse. The New York Times reported in mid-December that U.S. lawmakers were considering a far more punitive enforcement of HSBC's money laundering violations that could have precluded the bank from operating in the U.S. Meanwhile, a guilty plea in the U.S. - UBS is alleged to have manipulated seven different rates - could have spelled a similar fate for the Swiss bank.
In 2009, UBS paid a then record a $780 million fine with U.S. tax authorities to settle a tax evasion scandal that landed former employees in prison and unveiled billions in unpaid taxes among thousands of wealthy Americans. Recently, a UBS trader, Kweku Adoboli, was given a seven year prison sentence for a multi-year rogue trading scheme that caused the bank a $2.3 billion loss.
Other European banking conglomerates have also come under scrutiny for violating U.S. controls, such as anti-money laundering regulations. On Monday, Standard Chartered (STAN) paid $327 million to federal and state authorities to settle allegations the bank transacted payments for restricted Iranian and Sudanese clients .
In June, ING settled with U.S. authorities over restricted payments to Iran and Cuba for $619 million.
Meanwhile, roughly a dozen global banks -- including many of the largest lenders in the U.S. -- face regulatory fines related to the manipulation of short-term interest rates.