Does Libor Manipulation Deserve The Death Penalty?

Tyler Durden's picture

Bloomberg's William Cohan released a provocative piece last night, headlined by the even more provocative "UBS Libor Manipulation Deserves the Death Penalty." We can only assume that Cohan is being metaphorical - after all, despite the rare occasional recent criminal charge no one has still gone to prison for the biggest coordinated manipulation of a benchmark fixed income market for years: something previously relegated to the fringes of crackpot conspiracy theories - after all, so many people were in on it, how can they possibly all keep their mouths shut - you know, the usual excuse against massive conspiracy theories, at least until they become conspiracy fact. Yet one wonders: will current and future ongoing market manipulations ever cease when there is no real deterrent: after all spending a few years in jail is certainly worth a few million in ill-gotten proceeds, even assuming the termination of a career in finance. Is Cohan being rhetorical? Or has the time for some true vigilante justice finally come? Because in a world increasingly best portrayed by the 2009 movie "The International" where one has to "go outside" a captured legal system to get real justice, is vigilantism eventually coming to every town near you, once the money illusion ends? And a bigger question - is this the main preemptive reason for the gun control push seen so vividly in recent days and months?

Via Bloomberg:

There is no point in mincing words: UBS AG (UBSN), the Swiss global bank, has been disgracing the banking profession for years and needs to be shut down.


... On Dec. 19, the bank paid $1.5 billion to global regulators -- including $700 million paid to the CFTC, the largest fine in the agency’s history -- to settle claims that for six years, the company’s traders and managers, specifically at its Japanese securities subsidiary, manipulated the London interbank offered rate and other borrowing standards.




The same day of UBS’s global settlement, which included the Japanese subsidiary pleading guilty to fraud, two former UBS traders, Tom Hayes and Roger Darin, were sued by the Justice Department and charged with “conspiring to manipulate” Libor.


Benchmark Manipulation


... “They defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves.”


To see the level to which UBS employees descended, one need look no further than their written communications, as per U.S. prosecutors’ document dump. “Mate yur getting bloody good at this libor game,” one broker told a UBS derivatives trader. “Think of me when yur on yur yacht in monaco wont yu.”


But, then again, UBS and bad behavior have become nearly synonymous. During the financial crisis, UBS took writedowns totaling some $50 billion, prompting the company to produce a 76-page, single-spaced, Orwellian transparency report. ...


In February 2009, UBS entered into a deferred-prosecution agreement with the Justice Department and admitted to helping American taxpayers defraud the Internal Revenue Service. UBS agreed to provide the names of some clients whom it had helped to avoid U.S. taxes and to pay a fine of $780 million.


Then, last month, came the conviction of former UBS “rogue” trader, Kweku Adoboli, on charges that he hid trading losses totaling more than $2.3 billion. The U.K.’s Financial Services Authority fined UBS some $47 million and charged that its oversight of London traders was too trusting. The bank seems more than a little out of control.




‘Wash Trades’


It found that unidentified UBS traders entered into “wash trades” -- described as “risk-free trades that canceled each other out” and had no commercial rationale -- in order to “facilitate corrupt brokerage payments” to three individual brokers at two other firms.


In a Sept. 18, 2008, telephone conversation, Hayes promised that if one broker kept the six-month Japanese yen Libor unchanged for the day, he would in exchange “pay you, you know, 50,000 dollars, 100,000 dollars ... whatever you want ... I’m a man of my word.” Lovely.




Hayes repeated his request for a “low” submission on the three-month Japanese yen Libor. Darin messaged back: “as i said before - i dun mind helping on your fixings, but i’m not setting libor 7 [basis points] away from the truth i’ll get ubs banned if i do that, no interest in that.” Darin eventually submitted a Libor rate two basis points less than the “unbiased” figure of 0.69 percent.


In levying the record $700 million fine, David Meister, the CFTC’s director of enforcement, said that “when a major bank brazenly games some of the world’s most important financial benchmarks, the CFTC will respond with the full force of its authority.” That’s good as far as it goes, and the CFTC is to be commended for rooting out the global Libor manipulation scandal.


But an even more emphatic message needs to be sent to UBS by its prudential regulator in the U.S.: You are finished in this country. We are padlocking your Stamford, Connecticut, and Manhattan offices. You need to pack up and leave. Now.

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TPTB_r_TBTF's picture

That young man is now manufacturing something.  Not all manufacturing jobs were exported.  Cheap labor can be had in the US as well.

Apeman's picture

Jailtime would be preferable because it's more civilized. However, if the justice department won't punish the ones responsible, then yes, they should be killed.

Kastorsky's picture

...helping American taxpayers defraud the Internal Revenue Service.

for that they deserve a round of applause

Snakeeyes's picture

What a tool.

I mark my books every night. I have to call around and get "levels" or "marks." Am I rigging my books?

e_goldstein's picture

I can think of a couple of banksters who deserve death by internal burning. Molten silver would be the appropriate metal.

mercenaryomics's picture


I like it except that then you have to clean the silver up.

I'll take my bankers burned with faggots of bundled fiat.  
Bernanke-bucks used like the 1930s retro Dmarks; only this time we can use them to heat the banksters.  

Bastiat009's picture

All of a sudden, an American news organization wants to rid the US of a foreign bank. I am not going to shed a tear for UBS, but where was Bloomberg when NY banks manage to take over the US government in the 2008 coup? (if you don't bail us out we kill the us economy!!!)

Joebloinvestor's picture

Brought to you by that world financial hub, the UK, which (since it doesn't manufacture jack shit anymore except "super cannons") now manufactures SCAMS.

Notice how the UK regulators were right on top of this one?

Notice how none of them are fired?


Drachma's picture

From Law360 (Evan Weinberger):

"New York (December 21, 2012, 5:12 PM ET) -- A U.K. parliamentary committee said Friday that regulators should have the power to split up banks if they violate the so-called ring-fence meant to separate a bank's commercial and investment banking units, saying the fence should be “electrified.”

In light of the still-burgeoning scandal over rigging of the London Interbank Offer Rate, the Parliamentary Commission on Banking Standards said the current proposal for putting a wall between a banks' operations was not strong enough to withstand intense lobbying from banks..."


Go figure.

ILikeBoats's picture

Rip off goyim, no problem, ha-ha laughs all around.  See Bernanke make all the goyim chumps for saving, while handing out ZIRP cash to Self-Chosen cronies.

Rip off the Self-Chosen, they take it upon themselves to be all Mosaic-medieval on your @%%.

Notarocketscientist's picture

Was trying to understand why Hitler murdered millions..... this is what I came up with

Tango in the Blight's picture

That' why Bernie Maddof is in jail. He ripped off the likes of Elie Weasel and other rich well connected Jews.

Radical Marijuana's picture

This is all a grossly over-simplistic understanding of the paradigm shifts which are necessary.

There is a combined money/murder system, where the debt controls depend on the death controls. The international bankers became the supreme organized criminals, the biggest gangsters, the banksters, that were able to take control of governments. Through that process sovereign powers were effectively privatized, and therefore, the banksters are collectively a group of trillionaire mass murderers, which are controlling the world, because they control the money supply, which power they gained by controlling governments. Thus, the sovereign powers of the people to be able to rob and to kill were captured and controlled by the banksters, and most of the biggest countries in the world are effectively directed to work for those international banksters, to advance the banksters global agenda.

That is the forest, and copping down a few big trees would be the wrong idea. What is needed are radical changes in the paradigms regarding militarism and the monetary system. What is needed is a process whereby the death controls are democratized, through a greater use of information and higher consciousness. What is needed is for the 99% plus of the population that acted like Zombie Sheeple, that do not understand and do not want to understand, and therefore, have allowed a tiny minority of less than 1% to use the power of the people, in the people's name, to rum amok, to want to understand, and to understand, the realities of human ecology. What is needed is a higher consciousness of human ecology, wherein the roles of the murder systems and death controls are recognized to be the central features. In fact, the money system does pay for the murder system, and then the murder system backs up the money system in return. Metaphorically speaking, We should all be better Wolves, not better Sheep.

The problem with these kinds of goofy articles, and suggestioned "solutions" such as this article, and most of the comments above, is that they do not understand any of that, and do not want to understand any of that There is practically zero understanding of human ecology as a whole, but only adherence to one faction or another within that overall system. We should all do what the banksters did better than they did that. Picking on a few scapegoats will only make things worse. It is not useful to blame a few people operating within the system, when it is the whole system itself that is the bigger problem. I tend to blame the masses of Zombie Sheeple more than I blame the Vicious Wolves. First of all, from a practical point of view, the Zombie Sheeple are mostly too incompetent to take out the Vicious Wolves. Secondly, from a theoretical point of view, IF the People were able to wake up enough, and become effectively active, then they should understand their whole system better, and, in that context, punishing a few who exploited the system is nowhere remotely close to what should be done to change the fundamental structure of the system as a whole.

Anusocracy's picture

The problem is government, not how various groups use government.

To think otherwise is like being one of the blind men examining an elephant.

Radical Marijuana's picture

"THE" problem is the nature of life, of which government is indeed the elephant in the room! Sovereignty is based on the power to rob, with the ultimate form of robbery being the power to kill. Everyone has some degree of power to rob and to kill. In that sense, power is always distributed. However, that power can be assembled and channelled. The history of militarism was the way that states, and their governments, developed. States, and their governments, were generated in the crucible of conflicts. Selection pressures created the best organized groups, which could rob and kill better than other groups. Governments ARE the concentrations of the power to rob and to kill, which are self-organizing and self-justifying. They are theoretically supposed to be restrained by a democratic republican system, or something else like that, however, as President George Washington stated, government is like fire. Government can get out of control and burn down everything, which is what appears to be happening at the present time! Two recent articles, reposted on Zero Hedge, also by someone named George Washington, have done an excellent job of summarizing the numerous ways in which the Federal govenment of the USA has obviously gone out of control, and jumped the rails of the "rule of law," and therefore, that is rapidly turning into a conflagation!

The Lie that Prosecuting Bank Fraud Will Destabilize the Economy Is What Is REALLY Destroying the Economy

It’s Not a “Fiscal Cliff” … It’s the Descent Into Lawlessness

Both those articles provide a good summary of the background context for the particular questions about rigging something as important LIBOR deserve drastic punishments, as a deterrent. However, as my comment stated above, the bigger picture is the fundamental fact that people can rob and kill other people, and that some do, and those who do force everyone else to adapt to that fact. Moreover, those who were the best at being dishonest, and backing that up with violence, tended to be the ones that won the wars, and therefore, civilizations developed to make War King, which then developed further to make Fraud King.

The BASIC PROBLEM is how to assemble and channel the power to rob and to kill. Those who suggest stopping the robbery, and stopping the killing, are proposing impossible things. The only realistic solutions are developing systems of checks and balances, in dynamic equilibria of the rates of robberies and murders. ... However, what we are watching today is the historical systems which sort of did that in the past degenerating, due to too much "success" by the best professional liars and immaculate hypocrites being able to fool enough of the people, enough of the time, to have enabled the biggest gangsters, the banksters, effectively take control of the powers of government, and to more and more use those powers against the people as whole.

The deeper problem, in my opinion, is that the massess of muppets, the Zombie Sheeple, have been so brainwashed to believe in bullshit, and to bleat the "morality" taught to them by the deceitful Wolf-People, that the vast majority of people are way too clueless, and therefore, are being overwhelmed by the dominant predators. Indeed, that has become so extremely unbalanced that the top carnivores in the human ecology, the predators, are degenerating more and more into merely parasites, which has bad longer term consequences for everyone, including them too!

Anyway, OF COURSE, I agree with you Anusocracy, that the basic problem is government. As I said, in my view the basic problem is that people live as gangs of robbers and killers. Governments are the direct expression of those basic facts, and the degenerations of the rule of law, so that the biggest banksters, effectively controlling governments, are able to legalized their own lies, and have those lies backed up by the legalized violence of governments, is now running OUT OF CONTROL ... BUT, BUT, BUT, the idea that killing a few banksters would make things better is a gross over-simplification, and quite mistaken!

As an aside, it is an obvious truism that "everything is connected," and therefore, I tend to believe that it is NOT a coincidence that natural events appear to be doing unprecedented things, at the same time as man made events do! Here is a LINK to two and a half hours of wild predictions, which indicate the basic theme that as our society goes insane, nature goes nuts, and indeed, as civilization is becoming so crazy, that could be trumped by nature going nuts to an even greater degree! Besides that LINK providing a lot of discussion of the world's financial affairs, and the struggles between the major players in that arena, this podcast audio recording discussed the prediction of major earthquake and tsunami on the West Coast of North America in the Spring of 2013. Of course, I have no way to verify any of that, except to say that it is entirely possible that there could be such events ...  I would say that IF such events wiped out the ability of the current system of government to function, one of the first priorities would be to develop some new system of government, given those new conditions.!

Clif High ~ TMRN 2012 12 ~ 21 Time Monk Radio Interviews

debtor of last resort's picture

In this casino, profits will go to the elites, losses to the taxpayer. The same with rewards like the Nobel peace, it goes to the elites, the punishments are to be socialized. But this time WILL be different.

Bogdog's picture

bullish on rope!

ZFiNX's picture

Any fraud over $100 million warrants the death penalty - that's 2,000 people (average salary 50k) who just got their lives ruined.

Never One Roach's picture

Slap them with a financial penalty (that shareholders will pay) and then reward the Wrongdoers with ultra high bonuses.


That's the New Paradigm.

Toobigtofoil's picture


Its not the first time Mr. Cohan has put his balls on the line for the cause of free markets. To the amazement of silver market observers almost 2 years ago on March 2, 2011 Cohans Conspiracy with a Silver Lining called the CFTC to account on LIBORS much smaller but infinitely more manipulated cousin:

It’s getting harder and harder to continue to brush off Andrew Maguire’s claims as the rantings of a rogue trader with a nutty online following. The Commodities Futures Trading Commission should immediately release the files from its investigation into the supposed manipulation of the silver market so the public can determine whether JPMorganChase and HSBC did anything illegal, with or without the help of the Fed. In addition, the commission should start enforcing the 10 percent threshold on silver positions it has proposed to comply with Dodd-Frank law. Basically, the other commissioners must join with Bart Chilton to do the job they are required to do: Protecting the sanctity of the markets and preventing the sorts of manipulation we’ve seen all too often.

One wonders at Cohans determination to see bodies dangling on Boot Hill. A very long twenty two months after his silver investigation urging, there is nothing from the CFTC but confirmation of the longest market investigation in history, a crushing loss in the position limit reform, repeated bull-dozing of the silver markets, a sidelined Chilton, and no retraction or repeat of his op-ed. One wonders if in 2 years time when everything is back to 'business as usual' in the world of central/ commercial bank interest rate rigging, whether the LIBOR scandal was indeed scandalous enough for Cohan to follow up or quietly fold and move on, as he and the outspoken blonde regulator seem to have done on silver?


BanjoDoug's picture

Hanging - ABSOLUTELY NOT.......    First take their wealth, then CRUCIFY EVERY ONE OF THEM,  just like the Romans did....

seataka's picture


suckerfishzilla's picture

Put them in the FEMA camps that they built.  Feed them the GMO foods that they designed for US.  Let them break rocks.  

vachon's picture

Yeah, I'd go there.  Give them 1 year to unwind their business, pay every American employee $25k all in return for not kicking the officers and board into Rikers.