The £940m fine is made up of a £160m fine from the FSA, the largest fine ever imposed by the regulator, £40m from the Swiss Financial Market Supervisory Authority and £740m in fines from two US regulators.
According to the FSA, UBS traders routinely made requests to the individuals responsible for determining its Libor and Euribor submissions to adjust their submissions to benefit their positions, between 1 January 2005 and 31 December 2010.
UBS traders were also given the role of determining Libor and Euribor submissions. The FSA says: “This combination of roles was a fundamental flaw in organisational structure given the inherent conflict of interest between these two roles.”
The regulator says there were corrupt brokerage payments were made to reward brokers for their efforts to manipulate the Libor submission of panel banks and collusion with individuals at other panel banks to get them to make Libor submissions that benefited UBS’ trading positions.
Misconduct was “extensive and widespread”, according to the FSA, with at least 2,000 requests for inappropriate submissions documented and an “unquantifiable” number of oral requests. Manipulation was also discussed in internal open chat forums and group emails and was widely known.
At least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice of attempting to influence submissions. The “routine and widespread” manipulation of the submissions was not detected by compliance or by group internal audit, which undertook five audits during the period.
The FSA found that every Libor and Euribor submission during the period was “at risk of having been properly influenced to benefit derivatives trading positions”.
The misconduct occurred in various locations around the world, including Japan, Switzerland, the UK and the US.
FSA director of enforcement and financial crime Tracey McDermott says: “The findings we have set out in our notice today do not make for pretty reading. The integrity of benchmarks such as LIBOR and EURIBOR are of fundamental importance to both UK and international financial markets. UBS traders and managers ignored this.
“They manipulated UBS’s submissions in order to benefit their own positions and to protect UBS’s reputation, showing a total disregard for the millions of market participants around the world who were also affected by LIBOR and EURIBOR.
“UBS’s misconduct was all the more serious because of the orchestrated attempts to manipulate the JPY LIBOR submissions of other banks, as well as its own, and the collusion with interdealer brokers and other panel banks in coordinated efforts to manipulate the fix.”
UBS received a 20 per cent discount for early settlement. Without the discount the fine would have been £200m.