Econintersect: On 19 December 2012 the editors at Bloomberg called for the prosecution of executives at UBS for roles in the LIBOR (London Interbank Offered Rate) scandal. The Swiss bank paid fines totaling $1.5 billion this week for their role in the multi-year practice that involved at least 16 mega banks manipulating the widely used reference interest rate. The editors stated that the "pervasiveness of the misbehavior and the length of time it went on, it’s hard to imagine that they were clueless."
The executives of banks which systematically committed fraudulent acts are susceptible to criminal prosecution in the U.S. under the RICO section of the Organized Crime Control Act of 1970. RICO Act, which stands for Racketeer Influenced and Corrupt Organizations Act, provides that leaders of a syndicate be tried for the crimes which they ordered others to do, or assisted them, or had knowledge of the crimes.
Bloomberg points out that the UBS Japanese subsidiary admitted to wire fraud in the settlement, which is a specific statute that could be applied in felony prosecutions. According to Bloomberg, wire fraud can carry prison sentences of up to 30 years.
Yesterday GEI News pointed out that UBS CEO Sergio Ermotti and UBS Chairman Axel Weber made carefully worded statements to distance themselves from the criminal operations and to throw employees involved "under the bus." The two men decried the "unacceptable" and " inappropriate and unethical" behavior of "certain employees."
Perhaps it is time for some executives to receive a ceremonial kiss on the cheek.
- UBS’s ‘Captain Caos’ Breaks New Ground in Libor Scandal (Bloomberg editorial, 19 December 2012)
- UBS: $1.5 Billion LIBOR Settlement (GEI News, 19 December 2012)