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UBS Admits Role in Massive Libor Interest Rate Scandal, Will Pay $1.5 Billion Fine

By George Miller of Shustak Reynolds & Partners, P.C. posted on Thursday, December 20, 2012.

UBS has agreed to pay a $1.5 billion fine after after regulators in the United States, United Kingdom and Switzerland alleged the firm had lead a huge conspiracy to artificially inflate the Libor interest rate. In somewhat of a rare move, the firm acknowledged the regulators’ allegations and one of the firm’s subsidiaries has flat-out admitted its role in what has been described as an “epic” interest rate rigging scheme tied to trillions of dollars in loans and other financial products.

But will paying yet another billion dollar fine actually deter the firm from future misconduct? UBS, like many large financial instutitons, has avoided prosecution in the past by agreeing to pay massive fines to regulators. In recent years, UBS has paid billions of dollars in fines and restitution in connection with charges of committing conspiracy to defraud the United States of tax revenue and rigging bids in the municipal bond derivative market. In 2008, the firm also escaped prosecution by agreeing to reimburse over $22 billion dollars to clients whom the firm was alleged to have defrauded in connection with the sale of auction-rate securities.

UBS’s fine may be just the tip of the iceberg, as other banks may soon be charged for their role in the scandal.

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