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December 21, 2012

Another Questionable Bank Settlement

The Department of Justice would like you to believe it has finally gotten tough with a too-big-to-fail bank. As part of the global investigation into interest-rate-rigging at the world’s biggest banks, it has extracted a guilty plea for felony wire fraud from UBS Securities Japan, a subsidiary of UBS, the Swiss bank.

It has also charged two former UBS traders with crimes that include conspiracy, wire fraud and violation of antitrust laws. The subsidiary will pay a $100 million fine, and the traders, if extradited and convicted, could go to jail. But the deal leaves UBS itself relatively unscathed. In all, it will pay $1.5 billion to settle allegations of rate-rigging that span nearly a decade and implicate the bank and its bankers far beyond the wrongdoing of two rogue traders. According to the investigation by the Financial Services Authority, the British regulator, 40 individuals at UBS, including 11 managers, were directly involved in rate-rigging that was carried out to boost trading profits, while at least two more managers and five senior managers were aware of the practice.”

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Read full New York Times editorial here

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