Regulators and prosecutors in the UK, US and Switzerland have hit UBS with $1.5bn (£920m) in fines as they adopt an increasingly aggressive approach in cracking down on banks that manipulated the Libor interest rate, the benchmark for pricing trillions of dollars of financial contracts.
The US Justice Department also charged two former UBS traders in connection with conspiring to manipulate the key rate. As the Swiss bank's Japanese unit pleaded guilty to wire fraud for engaging in a scheme to skew the key rate, US prosecutors charged Tom Hayes of the UK, a former Tokyo-based trader at the bank, and Roger Darin of Switzerland in what were the first criminal sanctions brought against individuals in the scandal.
Mr Hayes, who is understood to be among the three men arrested by the Serious Fraud Office and the City of London police and later bailed last week, was also charged by the Justice Department with wire fraud and an antitrust violation.
"There was nothing subtle about these traders' alleged conduct," the US Assistant Attorney General, Lanny Brewer, said at a Washington DC press conference yesterday, adding that the US would seek to extradite the two men.
"In one instance, according to the complaint, Hayes explained to a junior rate submitter that he and Darin 'generally co-ordinate' and 'skew the libors a bit'.
The US Attorney General, Eric Holder, said that by causing UBS and other banks to "spread false and misleading information about Libor these alleged conspirators – and others at UBS – manipulated the benchmark interest rate upon which many consumer financial products – including credit cards, student loans, and mortgages – are frequently based."
"They defrauded the company's counterparties of millions of dollars," he added. "And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves."
The Swiss bank, which employs 6,500 people in the City, was found by regulators to have manipulated key interest rates many hundreds of times between 2006 and 2010.
The Swiss regulator Finma, which ordered UBS to hand over Sfr59m of profits it made from Libor fixing, found that much of the rigging could be traced a Tokyo trader.