UBS faces no criminal charges from DOJ on FX


A long-awaited update on the progress of talks between UBS AG (SWX:UBSN) and US regulators was published earlier today. The bank announced that it has agreed to enter 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 comes after in November 2014 the firm settled investigations with the Swiss Financial Market Supervisory Authority, UK Financial Conduct Authority and the US Commodity Futures Trading Commission. UBS will keep collaborating with continuing investigations by other authorities in this matter, which involve investigations of individuals too.

Under the terms of today’s resolutions:

  • UBS has not been criminally charged for FX conduct.
  • The DOJ will also not file any charges regarding its investigations into the firm’s V10 FX-related structured products and UBS’s precious metals business.
  • UBS received conditional immunity from prosecution for Euro/USD collusion from the Antitrust Division of DOJ, which will also not prosecute UBS for any other FX conduct. This immunity reflects the fact that UBS was the first to report potential misconduct to the DOJ, and provided cooperation provided to the regulators.
  • The DOJ, at its sole discretion, has decided to terminate its 2012 Non-Prosecution Agreement with UBS related to LIBOR. As a result, UBS AG has agreed to plead guilty to one count of wire fraud for conduct in the LIBOR matter, pay a $203 million fine and accept a three-year term of probation.
  • 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 $342 million to the Fed and has agreed to undertake a series of remedial measures.

The bank insisted that it 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.”

To view the official regulatory filing, click here.

Some background on the topic can be obtained from LeapRate’s earlier articles on the progress of talks between UBS and DOJ and on the possibility of DOJ tearing up its 2012 agreement with UBS.

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UBS faces no criminal charges from DOJ on FX

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