Regulators Prove UBS Employees Engaged in Rigging Rates
Hong Kong regulators found there was fire beneath the smoke that prompted an investigation of UBS (NYSE:UBS) and other banks that have an influence on international interest rates. According to a Bloomberg report, the Hong Kong Monetary Authority identified nearly 100 messages sent via internal chat by UBS employees that violate rules set for traders, though the impact on rates was insignificant. The central bank has ordered UBS to discipline its employees, most of whom no longer work at the Switzerland-based institution.
It took over a year for investigators to identify the messages that sought to fix the Hong Kong Interbank Offer Rate (HIBOR) used for mortgages and other loans. Much of that time was spent deciding whether UBS employees colluded with traders from other banks. Bloomberg reports the Hong Kong Monetary Authority found no evidence of collusion between UBS and other banks. For this reason, the central bank declared the impact of the fixing scheme inconsequential.
Nonetheless, Hong Kong central bank officials publicly chided UBS for not reporting the violations to authorities. It has asked UBS to discipline the employees. According to The New York Times, six of the employees who sent messages to the banker submitting rates have left UBS, as has the employee who dispatched the UBS recommended rates. No fines were levied against UBS as a result of the Honk Kong central bank’s findings.
UBS has not been involved in setting the Hong Kong interbank rate since 2010. In 2012, the result was far different when UBS employees were found trying to rig the LIBOR and other rates.