When security fraud is alleged, the fines assessed by federal agencies can be colossal. In the case of UBS, the Swiss banking company with branches in Connecticut, its Japanese subsidiary paid close to $1.5 billion in penalties concerning alleged felony wire fraud.
This may only be the start for the company as it's quite possible that Connecticut may subject the company to a number of London Interbank Offered Rate (Libor) probes concerning the manipulation of various rates. Many executives at various banks involved in these sorts of probes are facing criminal charges rather than just civil penalties.
UBS is currently involved in a structural settlement with the Justice Department in an effort to reduce its losses as much as is feasible. This is all part of a deferred prosecution agreement in return for a guilty plea by the company concerning various money laundering charges. The agreement has been entered in hopes that the federal investigation will be closed after a period of two years.
Large banks are often criticized by the media before the facts are even in. Banks have been easy marks for media critics since the financial meltdown that occurred close to five years ago. Though stories in the media are often backed with little to no proof that rate manipulation ever took place, the headlines regarding these dealings are often slanted.
Because it has been so difficult to predict the direction that the securities probes will take, banks often are not prepared for the regulatory penalties these lending institutions will face. Obviously, banks will require the most able of assistance from corporate and securities litigation attorneys under these sorts of circumstances. These attorneys will have to negotiate with government regulatory agencies that may not be sympathetic towards these banks.
Source: Deal Book, "UBS Settlement Minimizes Impact of Guilty Plea," by Peter J. Henning, Dec. 20, 2012
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