FSA has imposed its largest ever fine of £160 million on UBS AG for significant and repeated misconduct relating to LIBOR and EURIBOR. It found a range of breaches spanning six years, several jurisdictions including Japan, Switzerland, the UK and the US and many employees (FSA found at least 45 senior individuals who were engaged in or aware of the manipulation attempts). These included:

  • traders routinely asking the individuals responsible for LIBOR and EURIBOR submissions to adjust them to benefit the traders’ trading positions;
  • giving traders whose positions’ profitability depended on the benchmark fixes the role of determining its submissions, thereby creating an inherent conflict;
  • colluding with interdealer brokers to try to influence Japanese Yen LIBOR submissions made by other panel banks, and making corrupt brokerage payments to reward brokers for doing so;
  • colluding with individuals at other panel banks to get them to make Japanese Yen LIBOR submissions that benefited UBS’s trading positions; and
  • prioritising protection of UBS’s reputation in its LIBOR submissions directives.

FSA found documented evidence of 2,000 requests for inappropriate submissions and was aware of an unquantifiable number of oral requests. Internal chat forums and email groups routinely discussed manipulation. Compliance and Group Internal Audit undertook five audits of the relevant business area but did not detect the breaches. FSA found that, even when UBS split the submitting and trading functions in 2009, manipulation continued. The result was that every submission UBS made in relation to tenors in which it traded could have been improperly influenced.

Tracey McDermott said the failings were all the more serious because they involved collusion with others and attempts to manipulate other banks’ submissions. UBS qualified for only a 20% reduction, as it did not settle during the first stage of the enforcement process. Without the discount, the fine would have been £200 million. (Source: FSA Fines UBS £160m for Benchmark Failings)