UBS agrees to pay $545M in manipulation probes
UBS pleaded guilty to criminal charges Wednesday as the Swiss banking giant was hit with $545 million in penalties and forced to accept revival of previously-settled rate-rigging allegations as the price for resolving investigations of foreign-exchange currency market manipulation.
Kicking off a string of bank guilty pleas as the day unfolded, UBS said it had reached foreign-exchange settlements with the U.S. Department of Justice, the Federal Reserve and the Connecticut Department of Banking.
The bank said it received conditional immunity from U.S. prosecution because it was the first to report foreign-exchange misconduct to DOJ investigators and provided "full cooperation" to federal prosecutors and other authorities in Europe and around the world. UBS nonetheless said it agreed to pay $342 to the Fed and undertake corrective measures in its foreign-exchange business.
Additionally, DOJ made good on recent threats to deal harshly with banks accused as repeat offenders. Federal investigators tore up the 2012 non-prosecution agreement that had resolved UBS' role in rigging the London Interbank Offered Rate (Libor), a financial benchmark used to set rates on trillions of dollars in mortgages, loans and credit cards.
As a result, UBS said it agreed to plead guilty to one count of wire fraud, pay a $203 million fine and accept a three-year term of probation for Libor rate manipulation by its traders
"The conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions," UBS Chairman Axel Weber and Sergio Ermotti, the bank's CEO, said in a statement. "Our actions demonstrate our determination to pursue a policy of zero tolerance for misconduct and a desire to promote the right culture in our industry."
The penalties will have no impact on UBS' second-quarter financial results, the bank said.
Investors appeared to welcome the resolution, sending UBS shares up 2.89% to $21.74 in trading before U.S. financial markets opened Wednesday.
UBS's announcement came hours before five major U.S. and European banks agreed to plead guilty Wednesday to criminal charges and pay more than $5 billion in collective penalties in sweeping settlements of charges their traders manipulated the $5.3-trillion-a-day foreign exchange currency market for their own profit.
The Department of Justice and other U.S. and European authorities and regulators said the parent companies of Citicorp (C), JPMorgan Chase (JPM), London-based Barclays (BCS) and Royal Bank of Scotland (RBS) acknowledged their traders manipulated foreign exchange prices of U.S. dollars and euros for several years starting in December 2007.
Contributing: Kevin Johnson