UBS Suspends Traders in Libor Probe
UBS has suspended some of its most senior traders in connection with an international probe into the possible manipulation of interbank borrowing rates, in the latest controversy to hit the Swiss bank since the financial crisis.
Regulators in North America, Europe and Japanhave been investigating whether traders at big US and European banks colluded to influence the London interbank offered rate, or Libor , and other benchmark lending rates.
That probe has widened in recent weeks, with more than a dozen traders fired, suspended or placed on administrative leave at banks including UBS , Royal Bank of Scotland , Deutsche Bank , JPMorgan Chase and Citigroup in connection with the investigation.
People familiar with the investigation told the Financial Times that Yvan Ducrot, the co-head of UBS’s rates business, and Holger Seger, the global head of short-term interest rates trading, are among a group of Zurich-based traders who have been suspended pending further inquiries into the bank’s rate-setting processes.
Some were suspended last year and another batch followed in late January, according to those people. UBS and Mr Ducrot declined to comment, while Mr Seger did not respond to attempts to contact him.
As the probe gathers pace, national enforcement agencies have begun to reveal additional information about their investigation into the setting of Libor rates , which serve as the reference for $350 trillion of financial products.
Regulators have also expanded their inquiries to hedge funds that place big bets on movements in Libor and other key borrowing rates, as well as the interdealer brokers that serve as go-betweens with bank trading desks.
UBS is one of a handful of institutions that have already come forward to authorities with information about possible abuses of rate-setting processes. The bank first disclosed last year that it had been granted so-called “conditional immunity” from the US Department of Justice and the Swiss competition watchdog in connection with potential antitrust law violations related to its submissions for the London rate for yen , known as yen Libor, and the Tokyo interbank offered rate, or Tibor.
However, at least two traders that have been suspended at UBS told the FT they were unclear about the reasons for their suspension.
The investigation, pursued by at least ten enforcement agencies worldwide, is examining whether traders at different banks tried to coordinate the submissions made to the panels that determine the benchmark borrowing rates in various jurisdictions.
In December, Japanese regulators sanctioned UBS and Citigroup over past attempts by Tokyo-based traders at both banks to influence yen Libor and Tibor to boost their trading results.
UBS is also reeling from one of the industry’s largest-ever alleged rogue trading scandals.
Kweku Adoboli , a relatively low-level trader in London accused of gambling away more than $2 billion last summer through unauthorized positions on various futures indices, has pleaded not guilty to four counts of fraud and false accounting in connection with those losses. He is expected to stand trial later this year.