LONDON Dec 19 "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
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
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
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
UBS submitted its rate 2 basis points lower than it should
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.