• Steve H. Hanke
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    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

36 UBS Bankers To Be Implicated In Liborgate, Criminal Charges To Be Filed

Tyler Durden's picture




 

As the fallout of Liborgate escalates, the next big bank to be impacted in the fallout started by Barclays civil settlement "revelation" is set to be troubled UBS, already some 10,000 bankers lighter, where as many as three dozen bankers are reported by the implicated in the fixing of the rate that until 2009 was the most important for hundreds of trillions in variable rate fixed income products. Only instead of attacking the US or even European jurisdiction, where the next big settlement is set to hit is Japan: a country whose regulators as recently as half a year ago promised there were no major issues with Libor, or Tibor as it is locally known, rate fixings. And while this most recent development will have little material impact on UBS' ongoing business model, the one difference from previous settlements is that it will likely include criminal charges lobbed against some of the 36 bankers.

From the FT: "UBS is close to finalising a deal with UK, US and Swiss authorities in which the bank will pay close to $1.5bn and its Japanese securities subsidiary will plead guilty to a US criminal offence. Terms of the guilty plea were still being negotiated, one person familiar with the matter said on Monday, adding that the bank will not lose its ability to conduct business in Japan. The pact between the bank and the US Commodity Futures Trading Commission, US Department of Justice, UK’s Financial Services Authority and UBS’s main Swiss supervisor Finma is expected to be announced on Wednesday, although last minute negotiations continue."

More:

Not all of the three dozen individuals will face criminal or civil charges and the level of alleged misconduct varies among them. While it also is not clear how many bankers will be criminally charged, people familiar with the investigation said the settlement documents will document an intercontinental scheme to manipulate the Yen-Libor interest rate over several years involving desks from Tokyo to London.

 

The UK FSA has also notified at least five individuals linked to UBS that they are being personally investigated in connection with Libor. The watchdog has the power to impose fines and ban people from working in London’s financial services industry.

 

Criminal and regulatory investigations of individuals often take significantly longer than cases against institutions. The global settlement reached with Barclays over the summer did not include any charges against individuals, but several bankers are under criminal investigation, according to people familiar with the matter.

To a big extent, the reason why so many banks have given up on Libor and are now eager to settle comparable allegations, is because in a world in which not banks are primary counterparties to other banks, but central banks onboard all the counterparty risk, especially in Europe, Libor is now an anachronism - an unsecured lending rate remnant from another time, a time when there was risk a bank may fail without dragging its host central bank. That time is now gone, and as a result the only relevant metric now is how effectively can banks flush to the gills with excess reserves courtesy of various central banks, use said capital to generate a return on (central bank) capital, and a high enough ROE to keep shareholders happy.

Which is why even as banks are settling Libor allegations left and right, and even willing to throw some low-level traders under the bus because just like Fabulous Fab Tourre, nobody else had any idea of the criminal rate manipulation that was going on, and certainly not the corner office, what banks are really doing is learning from the master of trading - that would be none other than Steve Cohen - and experimenting with becoming the best hedge fund out there. Because in the new zero NIM normal, where money can not be made by traditional lending verticals, the only option left is to outsmart the competition.

And with retail investors leaving the marketplace in droves, the only ones left to be outsmarted are other banks. In other words, the cannibalization phase is almost upon us. Which means that just like the Knight Capital "fat finger" led to the collapse of one of the biggest market makers, so more and more banks will soon set their sights on their peers (think Bear and Lehman circa 2008), in an attempt to turbocharge their returns in a field in which there are simply too many competitors for everyone to make the needed returns.

Of course, if in the meantime some lowly attorney general can score some brownie points by amputating a division that is no longer needed, and throwing some janitors in minimum security prison for 12-24 months, so much the better for their political career. Sadly, nobody at the top, certainly nobody at HSBC or any of the other big banks, will ever see true justice, at least not until they too suffer the fate of Dick Fuld and suddenly find themselves as the main dish at the ever shrinking predators' ball.

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Mon, 12/17/2012 - 17:53 | 3072757 SheepDog-One
SheepDog-One's picture

No doubt, 'info can no longer be found'...did you mean to type 'whatchoo talkin bout Willis'?

Mon, 12/17/2012 - 16:46 | 3072490 Dr. Engali
Dr. Engali's picture

Did CNN report that? Because if they didn't it must not be true.

Mon, 12/17/2012 - 17:04 | 3072558 chunga
chunga's picture

That's correct. This has yet to be confirmed by The Ministry of Truth.

Connecticut Police Spokesman Newtown Will Prosecute Independant Journalist Whistleblowers

Mon, 12/17/2012 - 17:18 | 3072615 fijisailor
fijisailor's picture

Please explain the logic.  The kids dad was going to testify in LIBOR so the kid went out and killed 20 people and was the object of some conspiracy?  He didn't really do it or what?

Mon, 12/17/2012 - 17:55 | 3072758 SheepDog-One
SheepDog-One's picture

Patsy's.

Mon, 12/17/2012 - 17:18 | 3072617 Mi Naem
Mi Naem's picture

The only source I can see reporting that is David Icke of "the illuminati are actually alien reptilian shape-shifters" fame. 

I hope we can do better than that! 

Anyone have a more reliable source, such as The Onion?

Mon, 12/17/2012 - 17:40 | 3072712 Ginsengbull
Ginsengbull's picture

Genetic predisposition for sociopathic behavior is a dominant gene.

Mon, 12/17/2012 - 16:41 | 3072455 sessinpo
sessinpo's picture

10,000 bankers. LOL. You mean cashiers. All of a sudden tellers have become bankers as if they know where to invest $1million internationally with the currency and tax implications as well the specific fundamentals of the government or business. That is rich - LOL. I'll pass that one on to my teller when I make my next partial deposit. They'll probably ask their manager for a raise. Hey boss, I'm a banker, not a teller. LOL

Mon, 12/17/2012 - 17:32 | 3072670 Urban Redneck
Urban Redneck's picture

My understanding is that there was actually a large number of bankers in the group, plus a fuck-ton of support personnel, but the tellers mostly spared compared to how it normally works...

Mon, 12/17/2012 - 17:39 | 3072701 Ginsengbull
Ginsengbull's picture

Is the name Tyler derived from the job teller?

Mon, 12/17/2012 - 16:40 | 3072458 grunk
grunk's picture

I see some pretty tough fines and/or community service on the horizon.

 

Mon, 12/17/2012 - 16:40 | 3072461 centerline
centerline's picture

Once the big boys turn on each other, it is not long after that we see real sparks start to fly.

Mon, 12/17/2012 - 16:57 | 3072535 youngman
youngman's picture

Not going to happen..the tribe protects their own

Mon, 12/17/2012 - 17:22 | 3072616 centerline
centerline's picture

I could see that.  But, that would seem to imply they collectively pull the rug out at some point in time.

 

edit:  I still think TPTB are pure alpha.  Someone is going to eat someone along the way.  There might be a core group with a "don't skewer me" agreement, but I would wager it is smaller that the current group we see.  Also, the banks are just fronts.  Just speculating...

Mon, 12/17/2012 - 17:37 | 3072696 Ginsengbull
Ginsengbull's picture

The core group keeps some associates at the ready, to throw to the dogs if need be.

Mon, 12/17/2012 - 16:41 | 3072465 Chupacabra-322
Chupacabra-322's picture

Hmmmmm, I wonder whose Father's in the recent mass shootings were supposed to testify in the LIBOR scandal? I wonder.

Mon, 12/17/2012 - 16:55 | 3072522 francis_sawyer
francis_sawyer's picture

We'll prolly know by the next mass shooting... Either that, or after the next 'Hunger Games' movie gets released... & if you hear NOTHING... It means Kate Middleton's pregnancy is proceeding without problems...

Mon, 12/17/2012 - 16:43 | 3072471 Joebloinvestor
Joebloinvestor's picture

What does anyone expect from a country that has TEPCO in charge of electricity?

More bowing and apologizing and then back to business as usual.

No banker of any position will go to jail.

Mon, 12/17/2012 - 17:19 | 3072620 falak pema
falak pema's picture

nippon death wish...land of shogun.

Mon, 12/17/2012 - 16:44 | 3072480 azusgm
azusgm's picture

Dick Fuld? When was he arrested? What is his prisoner number?

Publicly ridiculed by us little people and punched at the company gym. Never had a handsome face anyway. Big deal.

Hard time or nothing happened.

Mon, 12/17/2012 - 16:47 | 3072496 JonNadler
JonNadler's picture

and the punishment? A week without caviar?

Mon, 12/17/2012 - 17:12 | 3072591 JonNadler
JonNadler's picture

Did anything happen to me? And am a small fish compared to these bad boyz

Mon, 12/17/2012 - 17:01 | 3072548 NEOSERF
NEOSERF's picture

Not that the banks are blameless and shouldn't have this happen to them but is it just me or does the pace and size of the settlements seem to have picked up so that we can start to put this down as a government line item of multi-billions every year...what exactly happens to these "settlements" anyway?

Mon, 12/17/2012 - 17:30 | 3072662 jayman21
jayman21's picture

I know one place you will not find them, with the people who suffered damages.

Mon, 12/17/2012 - 17:03 | 3072560 imbrbing
imbrbing's picture

I was just today wondering what ever happened to "that LIBOR thing". I guess they were taking their time picking out who was to take the fall. I don't see this causing any problems in the future. Many hand slappings around.

Fine them 1 cent for every 100 mill, maybe throw the janitor in jail for the sheeple. a year from now nothing really happened.

Mon, 12/17/2012 - 17:14 | 3072596 fijisailor
fijisailor's picture

SO will any big US banks ever be called on this?

Mon, 12/17/2012 - 17:14 | 3072604 Miss Expectations
Miss Expectations's picture

I just got back from the supermarket.  There was an older woman behind me with a few items in her basket.  I told her that the express line was open, and I pointed to the other line.  She told me she had 11 items and didn't want to cheat.  American's like this don't understand the enormous fraud that's taking place.  It's beyond their ken.

Anyway, it was a nice moment.

Mon, 12/17/2012 - 17:26 | 3072649 imbrbing
imbrbing's picture

I love hearing things like this. A person like this is welcome to my preps. It really is the little things that matter.

Mon, 12/17/2012 - 17:32 | 3072674 jayman21
jayman21's picture

My guess is that she would score pretty low on the psychopath test.

Mon, 12/17/2012 - 17:25 | 3072639 Kastorsky
Kastorsky's picture

KILL THEM!

Mon, 12/17/2012 - 17:43 | 3072718 nasa
nasa's picture

36 will surely findout that today was a tough day to be brown at UBS....

Mon, 12/17/2012 - 19:02 | 3072985 ForTheWorld
ForTheWorld's picture

This snippet is interesting...

"...in a field in which there are simply too many competitors for everyone to make the needed returns."

These banks (where are legally defined as "individual), operating under and within the guise of a capitalist economy, where the weak ones will pass away, and the strongest, most robust and competitive entities should survive, appear to now only exist because they have received copious funds from the public, much like a blood transfusion, and any illegal activity they attempt and complete is simply disregarded. However, if individual humans, without the full backing of governments or other corporate entities were to pursue the same rate fixing, they'd receive one hundred years in prison and perhaps the death penalty for good measure - just to make sure the right message has been sent (which is, get into a corporation, fleece the world for money, and then spend it, keeping it in a corporate loop).

I don't know whether to laugh or cry at just how ridiculous this whole thing is.

Mon, 12/17/2012 - 19:18 | 3073025 israhole
israhole's picture

Oooooo, charges are going to be filed?  Big fuckin' deal.  Stupid GOYIM will lap it up so they can get screwed again tomorrow.

Mon, 12/17/2012 - 20:12 | 3073174 yogibear
yogibear's picture

The  guilty ones with power and clout never are prosecuted. Only the small people are prosecuted  and thrown in jail.

Corzine is one example.

 

Mon, 12/17/2012 - 23:16 | 3073644 Sandmann
Sandmann's picture

http://www.staffordshire.police.uk/info_advice/op_campaigns/poca/

 

So when will the UK apply POCA to Bankers and sequestrate ALL their assets as proceeds of crime ?

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