UBS again bids for rigging probe mercy

PUBLISHED : Tuesday, 25 February, 2014, 1:24am
UPDATED : Tuesday, 25 February, 2014, 1:24am

UBS, trying to repeat its success in limiting fines in a probe of interest-rate rigging, is seeking immunity in the United States and European Union as part of the global investigation of currency markets, two sources said.

The Zurich-based bank saved itself billions of euros in fines in December by disclosing to the EU its role in manipulating the London interbank offered rate. Now, the bank aims to be the first to report its own conduct in currency markets to European and American regulators, the sources said.

It is making its bid for leniency as at least 12 regulators probe allegations that traders colluded to rig benchmarks in the US$5.3 trillion-a-day currency market. The world's biggest banks are under scrutiny, and at least 21 people have been fired or suspended as a result.

"They've been through the drill and understand the benefits of co-operation," said Douglas Tween, a lawyer at Baker & McKenzie and a former lawyer with the US Department of Justice. "You want to limit your exposure as much as you possibly can."

UBS said in a filing last year that it began a review of its currency operations in June after media reports on potential manipulation of the WM/Reuters rates used by companies and investors around the world.

UBS, Switzerland's biggest lender, is among the top four currency-trading banks, according to a May survey by Euromoney. UBS spokesman Gregg Rosenberg declined to comment on any contacts with regulators involving the probes. The firm said in a regulatory filing it was co-operating with all investigations connected to currency trading.

An EU spokesman declined to comment on whether UBS would be offered immunity in the foreign exchange probe.

Lenders have an incentive to self-report to the EU, where penalties are forgiven for the first company to disclose its own misconduct and reveal that of competitors. UBS dodged a €2.5 billion (HK$26.6 billion) fine by the EU in December by revealing the existence of cartels in yen interest-rate derivatives.

In the US, a company can also get immunity from convictions and fines if it is first to report antitrust violations and co-operate with a government investigation. But this immunity does not protect a bank from potential charges from the justice department's fraud division, which have to be negotiated separately.