Another JOKE Enforcement Action (UBS)


The Market Ticker – Another JOKE Enforcement Action (UBS)

Eric “Place” Holder is at it again…

Today, the Justice Department is filing a criminal information charging UBS Securities Japan – a subsidiary of the multinational financial institution UBS AG – with felony wire fraud for engaging in a scheme to manipulate the London Interbank Offered Rate, or LIBOR – a key benchmark for financial products and transactions around the world.  The company has agreed to plead guilty to this charge, to admit to its criminal conduct, and to pay a $100 million fine.

Wow man.  That sounds like a lot of money.  Is it?

That’s the cash part of the balance sheet from today, according to Yahoo Finance.

$100 million is 0.1 billion, and the company has 916.6 of those.

To put this in perspective if you had $10,000 to your name and got fined an equivalent amount for doing something really heinous, let’s say, you robbed a bank, or you screwed an old lady out of her life savings, or you swindled the entire damned world on an interest rate deal you would be fined…..


That’s right: One dollar and nine cents.

That would be your fine.

A speeding ticket is often two hundred times that much money.

That’s how “seriously” Eric Holder and the US Just-US (not you!) department takes such frauds.

Additionally, in a separate complaint, two former UBS traders have been charged with conspiracy for their alleged roles in this scheme – which allowed UBS to boost its trading profits by placing bets on the movement of benchmark interest rates, and then manipulating those rates.  One of these individuals has also been charged with wire fraud and an antitrust violation in connection with these activities.

Oh well now that’s an improvement.  An actual criminal complaint?  My oh my, that’s a new one.

By causing UBS and other financial institutions to spread false and misleading information about LIBOR, these alleged conspirators – and others at UBS – manipulated the benchmark interest rate upon which many consumer financial products – including credit cards, student loans, and mortgages – are frequently based.  They defrauded the company’s counterparties of millionsof dollars.  And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves.

And for doing so they got fined an amount that is approximately 1/200th of what you would be fined for speeding, when one looks at comparable levels of cash available.

Sounds like UBS made a fairly standard and profitable business decision to me.

The prosecution we announce today is emblematic of the critical work that’s being led by the Financial Fraud Enforcement Task Force.  Launched by President Obama in 2009 – in order to fight against fraud, manipulation, and other forms of criminal conduct in the financial sector – the Task Force represents the biggest and broadest coalition of investigators, law enforcement officials, and regulatory agencies ever assembled to combat fraud.  I am honored to chair this group.  And I’m proud of the progress it has enabled us to make – in strengthening relationships across federal agencies and with relevant authorities around the world; in streamlining our investigative and enforcement efforts across multiple offices and agencies; and in implementing cutting-edge strategies for recovering – and more effectively utilizing – precious taxpayer resources.

Thanks to the Task Force’s extraordinary efforts, our approach in identifying and combating financial fraud has never been smarter, more systematic, or more effective.  In recent years, this has enabled us to execute the largest financial and health-care fraud takedowns on record; to carry out the biggest bank fraud prosecution in a generation; and to secure charges – and record sentences of more than 100 years – in a range of cases against CEOs, CFOs, corporate owners, board members, presidents, general counsels, and other executives of Wall Street firms, hedge funds, and banks that engaged in fraudulent activities.

Between the infamous SEC porn-watching and the over 200 Mexicans (and 2 US officers) murdered as a consequence of your department’s gun-running, a death toll nearly 20 times that of the crazed lunatic in Connecticut, I’d say your efforts are “extraordinary” all right.

But I bet you didn’t think of it the same way I do when you used that word.

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