UBS Investigated For LIBOR Manipulation

About a year ago, when Zero Hedge was nothing but a monocultured, bearish, conspiracy theory-based blog, we wrote a post titled: "Is The Swiss National Bank Using UBS To Launder Its Euro Purchases?" The reason for this allegation stemmed from some dramatic observations in the reporting of LIBOR to the BBA by member banks. To wit: "The Libor reporting dispersion among BBA member banks has actually
tightened marginally from last week, with one notable outlier: UBS. Of
the 15 banks that report both USD and EUR-based LIBOR, all disclose a
higher offer rate for EUR Libor except for UBS! The Swiss bank is a
blatant outlier, in that its disclosed EUR Libor rate of 0.4850% is in
fact 10% lower than its USD Libor." Out explanation for this anomaly was that the Swiss Bank, most likely in concert with the ECB, were manipulating intercurrency unsecured funding reporting in order to mitigate FX mismatch: "SNB buys EUR in the open market (causing massive destruction in the EURCHF and GBPCHF pairs), then the excess euro holdings are funneled back into the market via a much cheaper EUR lending rate in the 3M funding market (LIBOR) compared to all other banks: the UBS 3M EUR Libor rate is a whopping 30% below the average EUR Libor rate of 0.6344%, nearly double the spread from average of the next lowest EUR Libor offer, that of RBS at 0.56%." Once again our monocultured perspective appears to have served us well - per Dealbook "UBS said Tuesday that United States and Japanese regulators were investigating whether the Swiss bank tried to manipulate a key benchmark used to set interest rates around the world." We can't wait to see what the Mainstream Media does with this one, as usual with its roughly one year delay.

As a reminder for those who do not read Zero Hedge often because "it's too bearish, too conspiratorial and too much of an intellectual monoculture", here is the evidence that was glaringly obvious for anyone, so inclined, to see:

Below is the 3M USD Libor by BBA bank:

And here is the 3M EUR Libor by BBA bank:

Note the material variation of UBS EUR Libor from the average:

And here is the critical difference between a BBA bank's EUR and USD libor fixing. Something is certainly off with UBS.

So here is what has just been uncovered:

UBS, based in Zurich, said it had received subpoenas from the Securities and Exchange Commission, the Commodity Futures Trading Commission  and the Justice Department in the United States in connection with an investigation into whether the bank tried to improperly influence the London Interbank Offered Rate, or Libor.

UBS said that the Japan Financial Supervisory Agency is pursuing a similar line of inquiry and has ordered the bank to provide information. UBS suggested that other institutions or suspects may be involved, but did not name them.

Libor is a measure of how much banks charge each other for loans, and is hugely important as a barometer of market interest rates and the health of the financial system.

It is used as a reference for setting adjustable rate mortgages and other loans. Fluctuations in Libor affect the payments made by millions of homeowners and other borrowers.

A UBS spokesman, who said he was not authorized to be quoted by name, said the bank had nothing to add beyond a one-paragraph disclosure in the annual report, which was published on Tuesday. “UBS is conducting an internal review and is cooperating with the investigations,” the bank said in the statement.

The Libor is calculated by the British Bankers’ Association, which polls global banks on how much it would cost them to borrow. The association said in a statement that it observed “rigorous standards” and that its calculations were “fully transparent.”

Next up: the MSM is stunned, STUNNED, to uncover not only LIBOR manipulation by UBS, but by a cash-starved ECB itself in the aftermath of the first Greek crisis.

Comments

[bania]

"About a year ago, when Zero Hedge was nothing but a monocultured, conspiracy theory-based blog..."

That's gold Tyler, gold.

[66Sexy]

uh, it still IS a monocultured, conspiracy theory-based blog... although the best damn blog on the web.

and todays market action? reinforces a 'stay the course' policy for the fed. QE, low rates, BTFD.

[NotApplicable]

ThatsTheJoke.jpg

[EB]

The reference is to Paul Kedrosky's review of ZH as one of the top 25 financial blogs (sayeth TimeMag).  

http://paul.kedrosky.com/archives/2011/03/the_25_best_fin.html

Here is how I can tell when I've been reading Zero Hedge too much. I find myself rolling my eyes at CNBC or the Wall Street Journal while saying things like "There's more to it than that!" or "Suuuure, it may seem that way." I know Canadian equity strategist David Rosenberg's latest perma-bearish musings, and the same from the preternaturally gloomy Albert Edwards of Société Générale. After prolonged exposure, I have to turn off my wi-fi not to sell all my U.S. dollars for physical gold, start an anti–Goldman Sachs blog and buy a Kansas soybean farm protected by a moat.

But here is the crazy thing: Zero Hedge — a morning zoo of pessimistic financial blogging — is fun. Granted, you (O.K., I) can't read it for long without the aforementioned soybean-farmer effect, but the downbeat site has found an entertaining niche at the intersection of The X-Files, finance and tireless anti–Goldman Sachs–ishness.

So while I don't read Zero Hedge regularly — it's too bearish, too conspiratorial and too much of an intellectual monoculture — I like knowing that it exists. Any time I'm feeling like things might just turn out O.K. on planet Economic Earth, I know where to turn to be disabused of that stupid idea.

 
Read more: http://www.time.com/time/specials/packages/article/0,28804,2057116_2057343_2057267,00.html #ixzz1GgfIYWc1

[scythian empire]

blatantly not bullish enough

[chinaguy]

"We can't wait to see what the Mainstream Media does with this one"

Ummm, nothing....

[aint no fortuna...]

+1 yup

[prophet]

OT:

Batista on Bloomberg: "Voila".

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aIsh0vcAy3a0

Still looking for full video and transcript but he endorses "peak oil" and expects his net worth to about triple in the next four years.

[WALLST8MY8BALL]

Libor Libor pants on Fibor!

[Mercury]

Nice one ZH.  But isn't LIBOR calculated by (what amounts to) an informal survey of dealers?  And I thought the high and low quotes were thrown out anyway...

Also today, WSJ cathes up with ZH re: clueless NY Fed head...

http://online.wsj.com/article/SB10001424052748704893604576199113452719274.html

[velobabe]

i heard or read this same story last week, some time. so the WSJ just got some balls and put this story up just today. i wonder who let them grow some?

[Alienated Serf]

you don't think one bank putting in low bids is going to drag the whole avg down?  the other guys need to keep up appearances, can't be looking weak. 

[Alienated Serf]

yeah bitchez!!!!  i have been blabbing about what a blatant fraud libor is!!!  look though my posts.  this is gonna be huge!

[Alienated Serf]

oh, and UBS isn't the only bank being investigated. 

[Going Loco]

And not one person in a hundred thousand will ever hear about this, and of those only 1% will understand it, and of those only 1% will care - until the results of all the fixing and manipulating and lying come to the surface. I wonder if Fukushima is Providence giving us a glimpse of how the coming crash will look - everything solid on the outside but a few very scared people running around firefighting, then an almighty explosion that instantly destroys all confidence in the thing for a generation, followed by more lies, fallout, more explosions, sickness and a pile of crap that glows in the dark. 

[plocequ1]

Investigate this

[Spalding_Smailes]

The IDF seized a freighter ship with dozens of tons of weaponry from Iran headed for Hamas in the Gaza Strip on Tuesday.

The ship, known as Victoria, was flying a Liberian flag, and was seized by the navy in the Mediterranean Sea, 200 miles off of Israel's coast.

http://www.jpost.com/VideoArticles/Video/Article.aspx?id=212234

[zaknick]

Occupiers and zionists need an ass whooping. The vast majority of countries in the world condemn the zionist land grab. If it wasn't for zionist bootlickers (ehem) the joos would have been ostracized and boycotted into forced decency like apartheid (which the US and the joos backed). Imagine that: the banksters branded Mandela a terrorist up until a couple of years ago. No shame whatsoever which is why they need an ass whooping.

[Abitdodgie]

+1

[Ahmeexnal]

Another JPMorgan/Rockefeller/Rotschild troll.

Your master's plans aren't going as expected, eh?

Teheran denies weapons on the Victoria originated from Iran.

That much is true. Those weapons originated from France, Germany, Italy.

Iran is just the puppet the nazi catholics are using now to pursue their agenda.

[zaknick]

You know, I usually try to keep an open mind when I hear something off the wall like that but since I know you defend the joooooos in your prior comments I'll just jot you down to a petit Baruch Goldstein (now there's an oxymoron) in the making.

In other reality based news, the pedo pope (i was brought up catholic) issued a formal defense of the jooooos in the case of the murder of joshua ( the MESSIAH!). I guess it wouldn't have anything to do with the Batican's request that the Batican Banksters be "certified in their anti-money laundering standars" by.....other banksters!

You're a loser with you has- barra!

[Ahmeexnal]

Thanks for confirming everyone that you are a JPMorgan/Rockefeller/Rotschild lackey.

Your relentless effort to divest blame from your masters has failed this time.

"muder of the messiah" you say? Did you know he was also a "joooo"?

Did you know the prophet Muhammad was also a "joooo"?

You know nothing. 

[spanish inquisition]

Wow, I thought I was up on all my conspiracy theories and new world order domination themes. Please, tell me more.

[SDRII]

how many trillions set off libor? bury like position limits guaranteed

[NotApplicable]

Who are these fabled US regulators? Investigating?

My bet is they were "in the know" long ago, as UBS has been hollowed out, and primed for a takedown.

I may have to pull out Ferdinand Lips book "Gold Wars" and refresh my memory.

[zaknick]

It always pisses me off that Mr Durden is not a monocultured conspiracy theorist. For instance, the blatant omission in this post is:

if the SEC and the CFTC are bankster controlled and UBS is a Warburg/Rothschild front, then what the hell is really going on. Rule of law, puh-leeze.

Bankster v Bankster

[Abitdodgie]

UBS, based in Zurich, said it had received subpoenas from the Securities and Exchange Commission, the Commodity Futures Trading Commission     There is something very wrong with this story which leads me to belive it cannot be true, when does the SEC ever do anything

[glenlloyd]

My guess is that the Japan situation will be used to air all sorts of dirty laundry

[The Axe]

UBS must be buying the SP     computers rule again

[topcallingtroll]

Ok tyler

Maybe there is a lot more manipulation than i previously believed.

Keep up the mostly good work.

Now back to my two chickies.

[gwar5]

The head of UBS played golf with O'Bummer in Martha's Vineyard. Guilty on Libor. It was a perk from the prez.

I  presumed the outing also involved handing over the list of names of the 50,000 persons with Swiss bank accounts that could then be politically coerced and blackmailed.

[mark mchugh]

"UBS is conducting an internal review and is cooperating with the investigations...."

I think that means they're all going to Scores.

[Vint Slugs]

"...conspiracy theory-based blog..."

Was?  How about "still"?

[economists_do_i...]

Damn ZH is amazing!  Great article!!!

[PulauHantu29]

"Why steal Less, when you can steal More, much More."

Wall Street Mantra