Bloomberg News

UBS Said to Apply for Immunity in Libor Probe, Suspend Traders

February 21, 2012

Feb. 16 (Bloomberg) -- UBS AG, Switzerland’s biggest bank, sought immunity from prosecution by Canadian regulators probing a potential conspiracy to rig the price of derivatives globally, three people with knowledge of the inquiry said.

The lender is the cooperating party referred to by Canada’s Competition Bureau in court papers filed by the regulator with the Ontario Superior Court in May, said the people, who declined to be identified because the identity of the firm hasn’t been made public.

The papers, shown this week to Bloomberg News by court clerks, indicate a bank told the regulator that traders and cash brokers conspired to influence the Yen London interbank offered rate from 2007 to 2010 to profit on interest-rate derivatives linked to the benchmark. Regulators worldwide are investigating whether banks attempted to manipulate the London, Tokyo and euro interbank offered rates, known as Libor, Tibor and Euribor.

UBS has also suspended a number of employees including Yvan Ducrot, co-head of rates, and Holger Seger, global head of short-term interest rates trading, as part of an investigation of its rate submissions, said a person briefed on the matter who declined to be identified because the decision is private.

The bank has already been given conditional immunity by the Swiss Competition Commission as part of an investigation into suspected manipulation of the Yen Libor, Tibor and Swiss franc Libor rates. The Zurich-based lender was granted similar immunity by the U.S. Department of Justice last year as part of its probes of Yen Libor and Euroyen Tibor rates.

Trader Suspensions

Dominik von Arx, a spokesman for UBS in London, declined to comment on the court case. Alexa Keating, a spokeswoman for the Competition Bureau, declined to comment on the identity of the cooperating party.

“There is no conclusion of wrongdoing at this time and no charges have been laid,” Keating said in an e-mailed statement.

Neither Ducrot nor Seger were reachable through their office telephone numbers and neither responded to e-mails through LinkedIn. A profile under Seger’s name says he oversees 70 traders worldwide. The Financial Times reported the suspensions earlier today. Von Arx declined to comment on the report.

According to the affidavit filed by the bureau, Canadian officials were informed that HSBC Holdings Plc, JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG, Royal Bank of Scotland Group Plc, ICAP Plc and RP Martin Holdings Ltd. took part in the scheme. Employees at the banks agreed to make artificially high or low submissions for Yen Libor to improve the outcomes of trades tied to the rate, the Canadian regulator said, citing information it received under the immunity program.

Daily Survey

Libor rates are generated through a daily survey of firms conducted on behalf of the British Bankers’ Association in London. The lenders are asked how much it would cost them to borrow from one another for 15 different time periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs.

According to the Competition Bureau’s filings, the cooperating party said one of its derivatives traders described his bets to an ICAP broker, and the trader explained how he wanted the Yen Libor to move. The broker said he would try to arrange for other ICAP brokers to influence banks that submit data for the benchmark rate, the bureau said. ICAP is the world’s largest broker of transactions between banks.

HSBC, JPMorgan

The documents also describe similar communications involving traders at other banks. For instance, Peter O’Leary, a trader at HSBC, allegedly instructed cash brokers on how to influence the benchmark rate, the bureau said. It also described communications involving London-based traders Guillaume Adolph at Deutsche Bank, Stuart Wiley at JPMorgan and Brent Davies at RBS, as well as former RBS employee Will Hall and former JPMorgan employee Paul Glands. The bureau hasn’t brought claims against any of them.

Wiley and Glands declined to comment. Davies didn’t return calls to his mobile phone. There was no response to an e-mail sent to an address found for O’Leary. Contact information for Adolph and Hall couldn’t be located through directory assistance and in an Internet search.

Spokesmen for New York-based JPMorgan and Citigroup, Frankfurt-based Deutsche Bank, Edinburgh-based RBS and London- based ICAP have declined to comment on the affidavit. A spokeswoman for London-based HSBC didn’t respond to requests for comment.

‘No Formal Allegations’

Tavistock Communications, which handles media inquiries for RP Martin, issued a statement saying, “RP Martin has received requests from certain regulators to provide information on a voluntary basis to assist them with their preliminary inquiries but no formal allegations have been made against RP Martin by any regulator.”

Not all attempts to manipulate the rate were successful, according to an affidavit filed by the bureau.

--With assistance from Andrew Mayeda in Ottawa, Ambereen Choudhury in London and Elena Logutenkova in Zurich. Editors: Maura Reynolds, Edward Evans.

To contact the reporters on this story: Lindsay Fortado in London at lfortado@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net; Joshua Gallu in Washington at jgallu@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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