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Friday 19 September 2014

Ex-UBS traders charged over Libor

Published 19/12/2012 | 18:09

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Former UBS traders Tom Hayes and Roger Darin have been charged with conspiracy to manipulate the Libor rate

Two former UBS traders have been charged by United States prosecutors in connection with efforts to manipulate Libor interest rates.

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The move comes after the Swiss bank was fined £940 million by regulators for "extensive and widespread" attempts to rig interbank lending rates.

Former traders Tom Hayes and Roger Darin have been charged with conspiracy to manipulate the interbank lending rate. Mr Hayes has also been charged with wire fraud and an antitrust violation. The US criminal charges are the first to be brought in the worldwide scandal.

The charges against Hayes, a former trader who has worked in London and Tokyo, and Darin, from Switzerland, were revealed in a district court in New York today, according to the US Department for Justice.

US attorney general Eric Holder said: "By causing UBS and other financial institutions to spread false and misleading information about Libor, the alleged conspirators we've charged - along with others at UBS - manipulated the benchmark interest rate upon which many transactions and consumer financial products are based. They defrauded the company's counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves."

Libor is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars of contracts from mortgages to the cost of corporate lending.

UBS agreed a record £160 million penalty from the UK's Financial Services Authority (FSA) earlier after admitting to fraud and corrupt payments to brokers.

As well as the FSA fine, UBS said it had also agreed to pay 1.2 billion US dollars (£737 million) in combined fines to the US Department of Justice and the Commodities Futures Trading Commission, and 59 million Swiss francs (£40 million) to UBS's main Swiss supervisor, the Swiss Financial Market Supervisory Authority.

The bank also admitted committing wire fraud through its office in Japan relating to rate manipulation.

UBS said the fines were likely to see it report a loss of around 2 billion to 2.5 billion Swiss francs (£1.3 billion to £1.7 billion) for the fourth quarter. The Zurich-based bank, which has around 6,500 staff in London, has endured a turbulent year after the jailing of rogue trader Kweku Adoboli.

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