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At UBS, rate manipulators called each other 'Superman', 'Hero'

Last Updated: Wednesday, December 19, 2012 - 14:01

London: In their manipulation of global reference interest rate LIBOR, traders and brokers of Swiss banking major UBS referred to each other as 'Superman', 'Hero' and 'Captain Chaos', a joint probe by the British and Swiss regulators found on Wednesday.

UBS was today fined 160 million British pounds by the UK's Financial Services Authority and the Swiss Financial Market Supervisory Authority (FINMA) has asked the bank to disgorge 59 million Swiss francs in profits to the government.

The two authorities said the probe revealed that the individuals involved in the manipulative activities of the reference rate "referred to each other in congratulatory and exhortatory terms such as 'the three muscateers (sic)', 'Superman', 'Be a Hero today' and 'Captain Caos' (sic)".

These are part of documented electronic communications between traders and brokers involved in the case.

FINMA said the traders working at UBS made numerous requests to bank employees to submit interest rates of higher or lower values so as to benefit UBS proprietary trades.

The London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) are benchmark reference rates used in both the UK and international financial markets.

FSA said that some managers and employees of UBS sought to manipulate certain LIBOR currencies and EURIBOR between 2005 and 2010, by way of wrong submission of rates that formed part of the calculation of LIBOR and EURIBOR.

The FSA said the penalty could have been much higher at USD 200 million, but UBS got a 20 per cent "discount" as it agreed to settle the investigation at an early stage.

Various traders offered illicit fees to the brokers for their cooperation in the rate manipulation, while UBS also made additional payments of 15,000 British pounds per quarter as a reward for the provision of a "fixing service" for a period of at least 18 months, FSA said.

"A number of UBS managers knew about it and in some cases were actively involved in UBS' attempts to manipulate rates. In total, improper requests directly involved approximately 40 individuals at UBS, 11 of whom were Managers.

"At least two further Managers and five Senior Managers were also aware of the practice of the manipulation of submissions to benefit trading positions," FSA said.

In one conversation, a trader made certain requests to a broker, calling him to "be a hero today" and be a 'Superman'.

The broker replied by saying he will "try... As always."

In another electronic chat, a broker replied to a rate instruction from a trader by saying he was "putting the captain caos (sic) outfit on as we speak."

One trader openly solicited several colleagues for rate submissions in a public chat group, but later on the same day a manager told the trader "Just be careful, dude".

"I agree we shouldn't have been talking about putting fixings for our positions on public chat," the trader replied.


First Published: Wednesday, December 19, 2012 - 13:43
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