UBS pays for conduct of small number of employees

Sergio Ermotti Interview Pic

It could have been a lot worse.

UBS has announced has that it has approved entering into resolutions with the US Department of Justice (DOJ), the Board of Governors of the Federal Reserve System (Fed) and the Connecticut Department of Banking (CT DOB) in their investigations of the global foreign exchange (FX) markets. This follows the firm's resolutions last November with the Swiss Financial Market Supervisory Authority, UK Financial Conduct Authority and the US Commodity Futures Trading Commission. The bank continues to cooperate with ongoing investigations by other authorities in this industry-wide matter, which include investigations of individuals.

As a result of the resolutions, UBS has not been criminally charged for FX conduct. The DOJ will also not file any charges concerning its investigations into the firm's V10 FX-related structured products and its precious metals business. In resolving the FX matter with the DOJ, UBS received conditional immunity from prosecution for Euro/USD collusion from the Antitrust Division, which will also not prosecute UBS for any other FX conduct. This immunity reflects UBS's role as the firm that first reported potential misconduct to the DOJ, and the full cooperation provided to the DOJ and other authorities throughout the world.

The DOJ used its sole discretion to terminate its 2012 Non-Prosecution Agreement with UBS related to LIBOR. As a consequence, UBS AG has agreed to plead guilty to one count of wire fraud for conduct in the LIBOR matter, pay a $203m fine and accept a three-year term of probation. This guilty plea for LIBOR by UBS relates to the same conduct that was the basis of the plea by the firm's Japanese subsidiary when the firm resolved its LIBOR issues in 2012.

 The Fed and the CT DOB jointly issued a cease and desist order finding that UBS engaged in unsafe and unsound business practices relating to its FX business. UBS will pay a penalty of $342m to the Fed and has agreed to undertake a series of remedial measures.

The firm is fully provisioned for these resolutions. As a consequence, they will have no financial impact on second quarter 2015 results.

 UBS Chairman Axel A. Weber and Group Chief Executive Officer Sergio P. Ermotti said: 'The conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions. We made significant investments to strengthen our control framework and compliance programs. We self-detected this matter and reported it to the US Department of Justice and other authorities. Our actions demonstrate our determination to pursue a policy of zero tolerance for misconduct and a desire to promote the right culture in our industry'.

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