Eric Holder announces UBS fines, criminal charges for fraud in global LIBOR scandal

Eric Holder at today’s press conference [link in the article]

UBS AG will pay about $1.5 billion and two former traders face prison as the bank settled charges with U.S. and U.K. authorities for manipulating interest rates in a global conspiracy to boost profits and bonuses.

Tom Alexander, William Hayes and Roger Darin were charged with conspiracy in a criminal complaint unsealed today, the U.S. Justice Department said. Hayes also was charged with wire fraud and a price-fixing violation for manipulating the London Interbank Offered Rate at another bank, the department said…

The charges are the first brought by U.S. officials against individuals alleged to have manipulated Libor and comparable benchmarks in Europe and Japan.

The U.S. Commodity Futures Trading Commission’s $700 million fine is the largest in the agency’s history, David Meister, the commission’s head of enforcement, said at the news conference. The total penalties of $1.5 billion represent about one-third of the bank’s 2011 net income.

The U.S. government said the two men were part of a conspiracy to commit wire fraud from September 2006 to 2009. Hayes, 33, served as a senior yen swaps trader at UBS in Tokyo, while Darin, 41, worked as a short-term interest rates trader at UBS in Singapore, Tokyo and Zurich, the U.S. said.

Prosecutors allege that Hayes and Darin “conspired with others known and unknown within UBS to cause the bank to make false and misleading yen Libor submissions to the British Bankers’ Association…”

At least 45 bank employees, including some managers, knew of the “pervasive” practice and a further 70 people were included in open chats and messages where attempts to manipulate Libor and Euribor were discussed, the FSA said…

The bank said it expects to report a fourth-quarter loss of between 2 billion francs and 2.5 billion francs, primarily as a result of litigation provisions and regulatory matters.

These crooks really believed the old adage, “Never steal anything small!” Problem for them is that an administration cam along that considered the corruption attendant upon the economic meltdown that became the Great Recession to be something that could be prosecuted.

Eric Holder’s DOJ – led by US Attorneys like Preet Bharara – have been prosecuting inside traders and their corrupt associates right and left. Setting records for convictions for economic crimes unseen in decades. The CFTC did the grunt work – and didn’t have a problem turning the case over to a department with a rep for prosecuting the big boys of banking.

3 thoughts on “Eric Holder announces UBS fines, criminal charges for fraud in global LIBOR scandal

  1. List of X says:

    I would not praise Eric Holder conviction record so much: for a conspiracy involving multiple banks and multiple traders in each, only 3 people are facing criminal charges. In the recent HSBC money laundering case – no one. In the Goldman Sachs CDO case – no one.

    • god says:

      Seven more banks to go in the LIBOR case.

      Though, there is a quote within the article that affirms the DOJ position that fines are the sanction they prefer.

      More than anything else, you needn’t have the task of winning to get to that resolution. You needn’t have as provable a case. Remember, we’re also confronting American courts. Just as corrupt as any other part of the crew at the top.

      By comparison with what preceded this administration – he’s Teddy Roosevelt.

      And the cases prosecuted by Bharara, the number of convictions is almost up to 60 – mostly for insider trading.

      • List of X says:

        Yes, Holder probably has a better record than Ashcroft and Gonzales on economic crimes. And yes, these fines are huge and represent noticeable punishment. However, when the fine is the only (or main) punishment, it comes out of the company’s profits, and the only people who are punished are the shareholders, not the people actually committing the crimes. Even those huge fine often represent just a fraction of the company’s annual net income, and in addition to that these companies get to deduct these fines from their taxes.

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