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FEDS: Libor Trader 'Captain Caos' Dangled $100,000 Bribe

'Captain Caos' was so challenged he couldn't spell his own name.



In its $1.5 billion settlement with various countries’ authorities, UBS admitted to thousands of instances of interest- rate manipulation, involving more than 100 employees and managers, in currencies including the Japanese yen, the British pound, the Swiss franc, the U.S. dollar and the euro. The actions affected the London interbank offered rate, the global benchmark that influences the value of hundreds of trillions of dollars in mortgages, corporate loans and derivatives.

What sets UBS apart is not only the sheer extent of the behavior, but also the level of collusion with traders at other banks and the outright bribery of brokers who helped coordinate the manipulation.

One instance, which we call the “captain caos” scheme, deserves its place in the hall of fame of financial chicanery. According to the final notice from the U.K.’s Financial Services Authority, traders at UBS colluded with their peers at other banks “by entering into facilitation trades that aligned their respective commercial interests,” so they could all benefit from manipulating interest rates in Japanese yen.

A UBS trader, according to the FSA notice, promised this to a broker aiding in the rigging effort: “I’ll pay you, you know, 50,000 dollars, 100,000 dollars ... whatever you want ... I’m a man of my word.” The spelling-challenged traders and brokers who took part in the scheme came to address one another with monikers such as “the three muscateers” and “captain caos.”

The yen manipulation stands out in another significant way: In a deal with the U.S. Justice Department, UBS’s Japanese subsidiary admitted to wire fraud.  As we previously noted, wire fraud is one of the primary statutes U.S. prosecutors could use in pursuing criminal charges against individuals involved in Libor manipulation.  The statute prohibits the use of any interstate or international communication in furtherance of an effort to deceive for personal gain.  It carries a sentence of as much as 30 years in prison.

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Reader Comments (11)

Dec 20, 2012 at 11:14 AM | Registered CommenterDailyBail
Dec 20, 2012 at 11:14 AM | Registered CommenterDailyBail
An anonymous insider from one of Britain's biggest lenders – aside from Barclays – explains how he and his colleagues helped manipulate the UK's bank borrowing rate. Neither the insider nor the bank can be identified for legal reasons.

Dec 20, 2012 at 11:25 AM | Registered CommenterDailyBail
Dec 20, 2012 at 11:32 AM | Registered CommenterDailyBail
Dec 20, 2012 at 11:33 AM | Registered CommenterDailyBail
Neil Barofsky On Libor Fraud: "Regulators Are Owned By The Banks"

Dec 20, 2012 at 11:36 AM | Registered CommenterDailyBail
New York Fed Transcript: "We Know That We're Not Posting Um, An Honest Libor"

Dec 20, 2012 at 11:37 AM | Registered CommenterDailyBail
"Dude... You're Killing Me": How Emails Nailed Barclays - Reuters

Dec 20, 2012 at 11:38 AM | Registered CommenterDailyBail
Libor Manipulation Cost Fannie Mae, Freddie Mac $3 Billion, Watchdog Says

Dec 20, 2012 at 11:45 AM | Unregistered CommenterDaily Bail
I am amused that people are acting like O is finally getting tough on the banks roflmao UBS gave O's buddy a hard time to me this is just a warning of what happens to those who don't play by his Chi Town rules notice those who could pay big did and will not get criminally prosecuted...

Quelle Surprise! UBS Gets a Cost-of-Doing-Business Fine for “Epic” Libor Fraud (Updated)

After the media uproar about HSBC’s deep involvement in the dirtiest sort of money-laundering, UBS’s mere Libor-fixing might look a tad pale. But the notice by the FSA clearly states that it regarded UBS’s conduct as far worse than that of Barclays, where the chairman, CEO, and president all stepped down. Of course, that was mainly because they dared try to shift blame to the Bank of England, claiming they’d gotten tacit approval, and the Bank would have none of it. But the severity of the sanctions against Barclays set a bar that hasn’t been met in subsequent regulatory actions. And Barclays is important because it shows the idea that you can’t go after top executives is a fiction. Barclays soldiers on despite the loss of its three top officers. Clemenceau was right: “The graveyards are full of indispensable men.”

By contrast, UBS is paying $1.5 billion in fines among three regulators: the FSA, the CFTC, and Finma, a Swiss regulator. The Department of Justice’s Lanny Breuer called the fraud “epic” yet only two staffers are targeted for prosecution: the apparent main actor, trader Mark Hayes, and his colleague Roger Darin, who are charged with mail fraud, price fixing, and conspiracy. Yet the FSA’s notice says that 40 individuals at the bank were involved in Libor manipulation, including 4 senior managers, and another 70 individuals were aware of it.

Read more at http://www.nakedcapitalism.com/2012/12/quelle-surprise-ubs-gets-a-cost-of-doing-business-fine-for-epic-libor-fraud.html#HvW4eff3jejRsMj6.99

UBS’s lies


The Justice Department's criminal division, which arranged the guilty plea and a $100 million fine from the Japanese subsidiary, also struck a non-prosecution agreement with the parent company. That deal included a $400 million fine.


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Wolf is hanging his own shingle just a month after the Times reported that he had angered his bosses at UBS by golfing and going on vacation with the president.


Attorney General Eric Holder Speaks at the UBS Press Conference

"The company has agreed to plead guilty to this charge, to admit to its criminal conduct, and to pay a $100 million fine."


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Dec 20, 2012 at 12:31 PM | Unregistered CommenterLadyLiberty
These fines and prosecutions are tantamount to service medals. Such unchecked bribery implies safety from on high. Like the Coutt's Branch of The Bank of Scotland 'on high'. Who else could provide an extended environment for two of the top potential LIBOR witnesses while fostering the cultivation of such corrupted trade. Who and what is GE up to? Why no taxes? Is there a secret Grand Jury in session? The cat is out of the bag on that one or there should be one. Who better to explain the computerized fraud better than Dr. Robert Holmes. Open flat-out corruption with trillions of dollars on the line and no one at the top even blinks. Can you say, "Aiding and abetting?" I knew you could. Motive. Opportunity. Alibi.
A hundred years ago, military aircraft were made up of a few hundred parts and square yards of muslin and a pot of glue. The mechanic could explain the whole thing in a few hours. Likewise with Henry Ford's Model-T. A few hundred parts and the whole thing is explained in an hour or two. Today's space shuttle (yesterday's) program required a room full of engineers months to enlighten the uninitiated to the complex problems to be addressed before a successful mission could be attempted. The same as the noisy rough and slow model -T compared to a 2012 Lexus delivering a sustained 70 mph in total comfort, safety, and dependability for a few hundred thousand miles, given recommended maintenance.
This trend of advancement in sophistication and results is reflected in clandestine economic and military warfare. The resources available and matters at stake motivate the science of deception. Card tricks and counterfeit coinage evolved to MASSIVE embezzlements with an occasional mass killing while all this new criminal activity is taking extensive planning and budgets. Cui bono? Who picked, and who kept, the CJ SEC and FTC? Easy one. Bush43 and the Obummer.
This recent LIBOR theft of many billions puts spice on the Fed Fraud. Follow the money trail. Timmy Geithner/Richard Perle neocons>Treasury>LIBOR>Bank of Scotland>[Coutt's Branch=queen lizard/Bush41?] . So near and yet so far. I wonder if they knew each other. Who would have thought? 10XGDP of debt. On top. None. Hang 'em high.
Dec 21, 2012 at 9:11 PM | Unregistered CommenterHoward T. Lewis III

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