United States v. UBS Securities Japan Co. Ltd.
Court Docket Number: 3:12-cr-00268-RNC
Before the Honorable Robert N. Chatigny, Courtroom Three, United States District Court Judge for the District of Connecticut, United States Courthouse, 450 Main Street, Hartford, CT 06103.
On September 18, 2013, UBS Securities Japan Co. Ltd. (UBS SJ), an investment bank, financial advisory securities firm and wholly owned subsidiary of UBS AG was sentenced for its role in a long-running manipulation of the London Interbank Offered Rate (LIBOR), a leading benchmark interest rate used in financial products and transactions around the world. UBS SJ signed a plea agreement on December 19, 2012 in which it admitted its criminal conduct and agreed to pay a $100 million fine, which the court accepted in imposing sentence. In addition, UBS AG, the Zurich-based parent company of UBS Securities Japan, entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation.
Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of the Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of the U.K. Financial Services Authority (FSA) action; and $64.3 million as a result of the Swiss Financial Markets Authority (FINMA) action – the Justice Department’s penalties would bring the total amount of the resolution to more than $1.5 billion.
According to court documents, UBS SJ traded in interest rate derivatives that essentially consisted of bets against other traders on the direction in which Yen LIBOR would move. Beginning in September 2006, derivative traders at UBS SJ orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to UBS SJ’s trading positions, defrauding UBS’s counterparties and harming others with financial products referencing Yen LIBOR. UBS SJ traders endeavored to manipulate Yen LIBOR on numerous occasions, and during some periods on almost a daily basis. From November 2006 through September 2009, UBS SJ carried out this scheme by making efforts to manipulate: (a) the Yen LIBOR submissions that UBS transmitted to the British Bankers Association; and (b) the Yen LIBOR submissions that other banks transmitted. Because of the large size of UBS SJ’s trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.
- United States v. The Royal Bank of Scotland plc and United States v. RBS Securities Japan Limited: On February 6, 2013, RBS Securities Japan Limited (RBS Securities Japan), a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), signed a plea agreement with the government and has agreed to plead guilty to one count of wire fraud (Count 1: 18 U.S.C. § 1343) and pay a $50 million fine for its role in manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world.
The DPA and the guilty plea were filed with the Court on April 12, 2013. Sentencing on RBS Securities Japan’s guilty plea has been rescheduled for January 6, 2014, at 10:00 a.m. before Judge Shea in the North Courtroom, United States District Court, 450 Main Street, Hartford, Connecticut 06103. For more information on this case, please visit the case page at http://www.justice.gov/criminal/vns/caseup/rbssecurities.html.
- Charges Filed Against Two Former UBS Employees: On December 19, 2012, a criminal complaint (No. 1:12-mj-03229-UA) was unsealed in the U.S. District Court for the Southern District of New York charging two former UBS employees, Tom Alexander William Hayes of England and Roger Darin of Switzerland, with conspiracy to commit wire fraud. In addition, the complaint charges Hayes with one count of substantive wire fraud, based on the same scheme, and one count of violating the Sherman Act’s antitrust provisions arising from his collusive activity with a trader at another bank to manipulate Yen LIBOR. This case has not yet been assigned to a judge.
The written information on this webpage will be updated as new developments arise.
Statement of Facts