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Japanese Subsidiary of UBS Pleading Guilty to Fraud
On Wednesday, UBS made history by earning the dubious honor of becoming the first global bank in the last two decades to have a subsidiary plead guilty. Despite frantic efforts by bank authorities, and even with the bank’s chairman flying to Washington, the Swiss bank failed to gain any leniency, either on the $1.5 billion in fines, or in matters of criminal conduct.
The UBS has announced that to settle matters, its Japanese subsidiary would be pleading guilty to one count of felony wire fraud related with rate rigging. The only other bank so far caught in rate rigging, Barclays, had got off by paying almost one-third the fines levied on UBS.
Last week, HSBC could avert its fate by agreeing to pay $1.9 billion over allegations of money laundering. But with UBS, prosecutors have decided to set an example. Your size does not make you tough.
However, the DOJ allowed the parent company of UBS to keep its charter, as long as the subsidiary pleaded guilty. Lanny A. Breuer, the head of the criminal division of the DOJ said, “We are holding those who did wrong accountable … We cannot, and we will not, tolerate misconduct on Wall Street.”
The rate rigging enquiry over the Libor rates has so far caught more than a dozen big banks minting money by rigging London interbank rates. Others waiting in the line after UBS includes both US and foreign banks like the Royal Bank of Scotland, which has already stated it would pay fines before February, and JPMorgan Chase.
While, at the beginning of negotiations with UBS a conditional immunity deal had been made with the antitrust division, the criminal division denied letting go after examining thousands of e-mails and hours of phone calls. The conduct was just too much for them to take.Japanese Subsidiary of UBS Pleading Guilty to Fraud by Scott