"Be a hero," trader tells "Superman" in UBS Libor fix

LONDON Wed Dec 19, 2012 12:16pm GMT

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LONDON Dec 19 (Reuters) - "Be a hero today," a UBS trader told "Superman" in July 2009. The response "I'll try mate ... as always" came from a broker taking orders from the Swiss bank.

This exchange was one of 39 requests made by a UBS trader at the centre of an interest rate rigging scandal to just one broker in one month, showing a regular and cavalier approach to rigging global Libor interest rates.

It is among dozens of emails and instant messages published by Britain's financial regulator on Wednesday as it and its U.S. and Swiss counterparts fined UBS $1.5 billion for its role in the scandal.

Other traders involved in the widespread manipulation are referred to as "the three muscateers" (sic). A broker involved said in July 2009: "putting the captain caos (sic) outfit on as we speak".

Similar emails released in June when Barclays was fined for rigging Libor prompted a furious public and political backlash against industry standards and culture.

Over a six year period from 2005 to 2010 more than 2,000 requests were made within UBS and to outsiders to rig rates for Yen Libor and other Libor and Euribor interest rates, the Financial Services Authority said.

About 40 people at UBS were involved, including traders managers and senior managers. More brokers and traders were involved at other firms.

UBS made corrupt payments of 15,000 pounds per quarter to brokers over at least 18 months to reward them for their assistance, the FSA said.

In one 2008 email a trader wrote: "I need you to keep it as low as possible ... if you do that .... I'll pay you, you know, 50,000 dollars, 100,000 dollars... whatever you want ... I'm a man of my word".

The FSA said UBS entered into at least nine trades using this broker's firm, generating illicit fees of more than 170,000 pounds for the brokers.

Traders at other banks were asked to rig their rates and co-operated, and the FSA said senior people at UBS were involved.

They wanted to signal UBS was able to borrow money more cheaply than it could, which would suggest it was financially more robust than it was during a time of market turmoil when there was intense scrutiny on the health of banks.

In August 2007, a UBS manager sent an email to three senior managers and two other managers stating: "It is highly advisable to err on the low side with fixings for the time being to protect our franchise in these sensitive markets.

"Fixing risk and PNL (profit and loss) thereof is secondary priority for now".

Other correspondence indicated it came from UBS's group Treasury. In April 2008, a manager told another manager if the bank submitted its true price of borrowing "then GT (Group Treasury) will rip our boys a new one for being the highest bank in the poll".

The employees at times acknowledged the wrongdoing.

In March 2007, a manager replied to a request from a trader for a low submission to be put in.

"As i said before - i dun (sic) mind helping on your fixings, but i'm not setting libor 7bp away from the truth i'll get ubs banned if i do that, no interest in that," the manager said.

UBS submitted its rate 2 basis points lower than it should have been.

Libor benchmarks are used to help price trillions of dollars worth of loans around the world, and tiny shifts can bring a bank millions of dollars.

But every dollar a bank benefits could mean an equal loss by another bank, hedge fund or investor on the other side of the trade, and evidence of manipulation is likely to be seized upon by class action lawyers.

The documents show traders at other banks who were outside the rigging ring also suffered.

In July 2009, a broker referred in a conversation with a UBS trader to a position a trader at another bank was building in the expectation that Libor rates would rise in the future.

That trader "could be in for a shock going into august ... the three muscateers could do him a fair bit of damage", the broker said.

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