In the Matter of: 

UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

UBS AG and UBS Securities Japan 

Co., Ltd., 

) 

) 

) 

) CFTC Docket No. 13-09 

) 

Respondents. ) 

) 

___________________________ ) 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTIONS 6(c) AND 6(d) OF THE COMMODITY EXCHANGE ACT 

MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS 

I. 

The Commodity Futures Trading Commission (the "Commission" or the ''CFTC") has 

reason to believe that UBS AG and UBS Securities Japan Co., Ltd. (collectively, "Respondents" 

or "UBS") have violated Sections 6(c), 6(d) and 9(a)(2) ofthe Commodity Exchange Act (the 

"Acf' or the "CEA"), 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). Therefore, the Commission deems 

it appropriate and in the public interest that public administrative proceedings be, and hereby are, 

instituted to determine whether Respondents engaged in the violations set forth herein, and to 

determine whether any order shall be issued imposing remedial sanctions. 

II. 

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. 

Without admitting or denying the findings or <;onclusions herein, except to the extent 

Respondents admit those findings in any related action against UBS by, or any agreement with, 

the Department of Justice or any other governmental agency or office, Respondents herein 

consent to the entry and acknowledge service of this Order Instituting Proceedings Pursuant to 

Sections 6( c) and 6( d) of the Commodity Exchange Act Making Findings and Imposing 

Remedial Sanctions ("Order"). 1 

Respondents consent to the entry of this Order and to the use of these findings in this proceeding and 

in any other proceeding brought by the Commission or to which the Commission is a party; provided, 

however, that Respondents do not consent to the use of the Offer, or the findings or conclusions in this 

Order, as the sole basis for any other proceeding brought by the Commission, other than in a proceeding 

·in bankruptcy or to enforce the terms of this Order or where Respondents have admitted findings as set 

forth above. Nor do Respondents consent to the use of the Offer or this Order, or the findings in this 

Order consented to in the Offer, by any other party in any other proceeding. 
III. 

The Commission finds the following: 

A. Summary 

For more than six years, since at least January 2005, UBS, by and through the acts of 

dozens of employees, officers and agents located around the world, engaged in systemic 

misconduct that undermined the integrity of certain global benchmark interest rates, including, 

but not limited to, the London Interbank Offered Rate ("LIBOR") for certain currencies, the Euro 

Interbank Offered Rate ("Euribor") and the Euroyen Tokyo Interbank Offered Rate ("Euroyen 

TIBOR"), that are critical to international financial markets. 

UBS engaged in two overarching courses of misconduct. First, from at least January 

2005 to at least June 2010, UBS made knowingly false submissions to rate-fixing panels to 

benefit its derivatives trading positions or the derivatives trading positions of other banks in 

attempts to manipulate Yen, Swiss Franc, Sterling and Euro LIB OR and Euribor, and, 

periodically, Euroyen TIBOR. UBS, through certain derivatives traders, also colluded with 

traders at other banks and coordinated with interdealer brokers in its attempts to manipulate Yen 

LIBOR and Euroyen TIBOR. For certain currencies and benchmark interest rates, this conduct 

occurred on a regular basis and sometimes daily. UBS was, at times, successful in its attempts to 

manipulate Yen LIBOR. 

Second, from approximately August 2007 to mid-2009, UBS, at times, used false 

benchmark interest rate submissions, including U.S. Dollar LIBOR, to protect itself against 

media speculation concerning its financial stability during the financial crisis. 

Manipulative Conduct for Profit 

Throughout the period, UBS routinely skewed its submissions to interest rate-fixing 

panels for Yen, Swiss Franc, Sterling and Euro LIBOR and Euribor and, at times, Euroyen 

TIBOR, to benefit UBS's derivatives trading positions that were tied to those particular 

benchmarks. UBS used a flawed submission process that relied on inherently conflicted 

employees to make submissions. UBS made derivatives traders responsible not only for trading 

their derivatives books for a profit, but also for determining UBS's benchmark interest rate 

submissions. As a result, when determining the rates to submit to the official panels, UBS's 

submitters for these currencies and benchmarks often took into consideration how the 

submissions might benefit their trading positions. These UBS submitters also accommodated 

requests of other UBS derivatives traders for submissions that would be beneficial to their 

trading positions, by either maximizing their profits or minimizing their losses. (see pp. 10-37 

for Yen LIBOR andEuroyen TIBOR, p .. 38 for Swiss Franc LIBOR, pp. 38-39 for Sterling 

LIBOR, and pp. 39-41 for Euro LIBOR and Euribor, infra.) 

This profit-driven conduct spanned from at least January 2005 through June 2010 and, at 

times, occurred on an almost daily basis. It involved more than three dozen traders and 

submitters located in multiple offices, from London to Zurich to Tokyo, and elsewhere. The 

2 
misconduct included several UBS managers, who made requests to benefit their trading 

positions, facilitated the requests of their staff for submissions that benefited their trading 

positions, or knew that this was a routine practice of the traders and did nothing to stop it. UBS 

traders inappropriately viewed their benchmark interest rate submissions, such as UBS's LIBOR 

submissions, as mere tools to help the traders increase the profits or minimize losses on their 

trading positions. To be sure, UBS's benchmark interest rate submissions frequently were not a 

reflection ofUBS's assessment of the costs ofbonowing funds in the'relevant interbank markets, 

as each ofthe benchmark definitions required. 

In this environment, UBS, primarily through the acts and direction of a senior Yen 

derivatives trader, orchestrated a massive, multi-year course of unlawful conduct to manipulate 

Yen LIB OR on, at times, an almost daily basis and, periodically, Euroyen TIBOR. This senior 

Yen trader, known as one of the largest traders in the entire Yen market, took on significant, 

high-risk derivatives trading positions that generated hundreds of millions of dollars for UBS. 

He implemented at least three manipulative strategies, which he often used simultaneously to 

increase the likelihood that he would be successful: (i) he had UBS Yen LIB OR and Euroyen 

TIBOR submitters make submissions for particular maturities ("tenors") reflecting his prefened 

rates (see pp. 12-17, infra.); (ii) he cultivated prior working relationships and friendships with 

derivatives traders from at least four other banks and had them make requests of their Yen 

LIBOR submitters based on his preferred rates (see pp. 17-20, infra.); and (iii) he used at least 

five interdealer brokers, who intermediated cash and derivatives transactions for clients, 

including other banks that made benchmark interest rate submissions, to disseminate false 

market information relating to Yen LIBOR to multiple panel banks in order to impact their 

submissions to his benefit. (see pp. 20-29, infra.) 

The UBS senior Yen trader had the interdealer brokers utilize various methods to try to 

affect the submissions of other banks, including: (i) disseminating false "run-throughs" of 

suggested Yen LIBOR to many, if not all, ofthe panel banks (see pp. 22-24, infra.); (ii) 

contacting directly other banlc submitters (see pp. 24-26, infra.); (iii) publishing false market 

cash rates over certain dedicated electronic screens available to clients (seep. 26, infra.); and (iv) 

"spoofing" or making fake bids and offers, all tailored to drive the submissions of the other 

banlcs to the rates that benefited the senior Yen trader's derivatives positions. (see pp. 26-27, 

infra.) To secure the cooperation of the brokers and, at times, other derivatives traders, the 

senior Yen trader found ways to compensate them, including by executing additional trades or 

wash trades to generate commissions for the brokers and by negotiating an extra UBS-paid fee or 

bonus to one interdealer broker, totaling about $216,000 over ah approximately two-year period. 

UBS, through the senior Yen trader and others, made approximately 2,000 written 

internal and external requests in attempts to manipulate Yen LIBOR in just a three-year period, 

accounting for 75% ofthe days in which Yen LIBOR submissions were made by UBS during 

that period? Sometimes, the senior Yen trader sought to manipulate particular tenors on one 

2 For purposes of this Order, the term "request" means a request for a preferential submission for a 

·particular tenor. For example, if a UBS derivatives trader asked a UBS submitter that preferential rates be 

submitted for three tenors, then the Commission views that as constituting three separate requests made 

on that particular day. 

3 
day, and sometimes he looked ahead and conducted sustained manipulative operations for weeks 

to move Yen LIBOR in the direction he needed, even coining names for these longer-term 

schemes, such as "the Turn Campaign" and "Operation 6m." (see pp. 29-36 infra). At times, 

UBS was successful in its attempts to manipulate Yen LIBOR for certain tenors. 

UBS, through certain Yen traders, continued to use these strategies to attempt to 

manipulate Yen LIBOR and Euroyen TIBOR, even after the senior Yen trader departed UBS in 

late 2009, as UBS managed the massive trading positions he had accumulated for the firm: 

False Reports to Protect Reputation 

During the financial crisis, certain UBS managers issued directions for making UBS 

benchmark interest rate submissions in order to protect against what UBS perceived as unfair and 

inaccurate negative public and media perceptions about UBS. UBS first directed that UBS's 

submissions should "err on the low side" of the panel banks' submissions, a direction its 

submitters generally followed. UBS subsequently directed that UBS's submissions be "in the 

middle of the pack" ofthe panel banks' submissions, and the submitters followed the direction 

again. These directions at times improperly influenced submissions for U.S Dollar LIB OR, as 

welJ as LIBORs for other currencies, and Euribor and Euroyen TIBOR, and at times resulted in 

submissions that did not solely reflect UBS 's assessment of the borrowing costs of unsecured 

funds in the relevant interbank markets, as required. At times, these directions resulted in UBS 

knowingly making false, misleading or knowingly inaccurate LIBOR, Euribor and Euroyen 

TIBOR submissions from early August 2007 to at least mid-2009. (see pp·. 41-52, infrai 

A bank's concerns about its reputation, negative market or press reports, or its trading 

positions and related profits are not legitimate or permissible factors upon which a bank may 

base its daily benchmark interest rate submissions. Benchmark interest rate submissions convey 

market information aboutthe costs of borrowing unsecured funds in particular currencies and 

tenors, the liquidity conditions and stress in the money markets and a banlc's, such as UBS's 

ability to borrow funds in the particular markets. By basing its submissions, in whole or in part, 

on UBS's trading positions and at times its reputational concerns, UBS knowingly conveyed 

false, misleading or knowingly inaccurate reports that its submitted rates for LIBOR, Euribor, 

and Euroyen TIBOR were based on and solely reflected the costs of borrowing unsecured funds 

in the relevant interbanlc markets and were truthful and reliable. Thus, UBS's false submissions 

contained market information that affected or tended to affect LIBOR, Euribor and Euroyen 

TIBOR, commodities in interstate commerce. 

The Conduct Continued After UBS Was on Notice of the CFTC Investigation 

UBS continued to engage in all of the conduct described above, particularly the trader 

manipulative conduct, long after it was on notice that the CFTC was investigating UBS in 

connection with its U.S. Dollar LIBOR practices. UBS received a demand for documents and 

These directions to be "in the middle of the pack," by definition, resulted in UBS's submissions at 

times being part of the calculation of the official published LffiOR. However, the Commission has not 

found evidence that UBS issued or acted upon the directions with the intent to manipulate the official 

published LIDOR for any currency or other benchmark interest rates. 

4 
information from the CFTC's Division of Enforcement in October 2008; yet the conduct of the 

traders and submitters, including the collusive conduct, occurred well into 2010. The rampant 

misconduct across benchmarks at UBS only came to light as a result of the CFTC's subsequent 

request in April2010 that UBS conduct an internal investigation relating to its U.S. Dollar 

LIBOR practices. 

*************** 

Commencing in or about late December 2010, Respondents provided substantial 

assistance to the Division of Enforcement in its investigation, including information and analysis. 

In accepting UBS's Offer, the Commission recognizes Respondents' cooperation as of late 

December 2010. 

B. Respondents 

UBS AG is a Swiss banking and financial services company headquartered in Zurich and 

Basel, Switzerland that provides investment banking, asset management and wealth management 

services for private, corporate and institutional clients worldwide. It has operations in over 50 

countries, including the United States. The Investment Banking division ofUBS is responsible 

for making submissions for benc]:unark interest rates. 

UBS Securities Japan Co., Ltd. is the successor company to UBS Securities Japan, Ltd., 

which, at all times during the periods covered by this Order, was a wholly-owned subsidiary of 

UBS AG and engaged in investment banking operations and was a securities broker-dealer. It 

had a branch office in Tokyo, Japan. 

C. Facts 

1. UBS Made False Reports and Attempted to Manipulate LIBOR and Other 

Benchmark Interest Rates, at Times Successfully, to Benefit UBS's 

Derivatives Positions 

From at least January 2005 through at least June 2010, UBS, through the acts of its 

derivatives traders, benchmark interest rate submitters and managers, made false benchmark 

interest rate submissions in an effort to manipulate the official fixings of Yen, Swiss Franc, 

Sterling and Euro LIBOR, Euribor and Euroyen TIBOR. The goal was simple: to profit. UBS 

held significant derivatives positions whose value depended on benchmark interest rates fixed by 

rate-setting panels. As more fully described below, the panels fixed and issued the respective 

benchmarks based on rates submitted by banks on the respective panels, such as UBS, that were 

supposed to reflect an assessment of the costs of borrowing unsecured funds in the relevant 

interbank money markets. UBS, however, made false submissions intended to manipulate these 

. benchmarks to make its derivatives positions more profitable or to minimize losses. 

Interest rate swaps traders ("Derivatives Traders"), located in UBS's London, Zurich and 

Tokyo offices, routinely asked their UBS colleagues who determined UBS's submissions to 

make certain submissions to affect the daily fixings for certain tenors of various LIB OR 

5 
currencies, Euribor and, at times, Euroyen TIBOR. The Derivatives Traders' purpose was to 

benefit their respective derivatives trading positions. The UBS submitters often based their 

submissions on the traders' requests. Making matters even worse, for most of the period, until 

approximately September 2009, UBS's submitters wore two "hats"- they were also derivatives 

traders themselves ("Trader-Submitters") - and they also based UBS' s submissions on their own 

desk's trading positions. 

Accordingly, throughout the six-year period, UBS, through its Trader-Submitters and 

others, made benchmark interest rate submissions as set forth below reflecting rates that 

benefitted UBS's derivatives trading positions, rather than their assessment of the costs of 

borrowing funds in the relevant markets. As detailed below, for certain benchmark interest rate 

submissions, this occurr-ed on an almost daily basis. The conduct of the dozens of Derivatives 

Traders and Trader-Submitters occurred openly and was pervasive at UBS on certain trading 

desks, even involving the participation or lmowledge of desk managers and senior managers. 

4 

a. The Fixing of BBA LIBOR, EBF Euribor and JBA Euroyen TIBOR 

LIB OR and its Fixing 

LIB OR is the most widely used benchmark interest rate throughout the world. LIBOR is 

intended to be a barometer to measure strain in money markets and is often a gauge of the 

market's expectation of future central bank interest rates. Approximately $350 trillion of 

notional swaps and $10 trillion of loans are indexed to LIBOR. LIBOR also is the basis for 

settlement of interest rate futures and options contracts on many ofthe world's major futures and 

options exchanges, including the one-month and three-month Eurodollar futures contracts on the 

Chicago Mercantile Exchange ("CME"). Moreover, LIBOR is fundamentally critical to 

financial markets and has an enormously widespread impact on global markets and consumers. 

Daily LIBORs are issued on behalf of the British Bankers' Association ("BBA"i for ten 

currencies, including Yen, Sterling, Euro and Swiss Franc, with fifteen tenors ranging from 

overnight through twelve months. According to the BBA, LIBOR "is based on offered interbanl<: deposit rates contributed in accordance with the Instructions to BBA LIBOR Contributor 

banks." The BBA requires that: 

4 The term "Senior Manager" generally references UBS employees with responsibilities (either 

. formally or informally delegated) broader than management of trading desks, although their 

responsibilities may have at times included managing trading desks. The term "Senior Manager" does not 

include executive managers or the board of directors ofUBS. 

The BBA is a United Kingdom trade association for the United Kingdom banking and financial 

services sector and is comprised of member banks. The BBA is not regulated. 

6 
"[a]n individual BBA LIBOR Contributor Panel Bank will contribute the rate at 

which it could borrow funds, were it to do so by asking for and then accepting 

inter-bank offers in reasonable market size just prior to [11 :00 a.m. London 

time]."6 

Every business day shmily before 11 :00 a.m. London time, the banks on the LIBOR 

panels submit their rates to Thomson Reuters. A trimmed averaging process is used to exclude 

the top and bottom qua1iile of rates and then average the remaining rates for each currency and 

tenor. That average rate becomes the official BBA daily LIBOR (the "LIBOR fixing"). The 

BBA then makes public the daily LIBOR fixing for each currency and tenor, as well as the daily 

submissions of each panel bank, through Thomson Reuters and the other data vendors licensed 

by the BBA. This information is made available and relied upon by market participants and 

others around the world, including in the United States. 

Euribor and its Fixing 

Em·ibor is the predominant money market reference interest rate for the Eurocurrency 

and is used internationally in derivatives contracts, including interest rate swaps and futures 

contracts.7 At the end of2011, according to the Bank for International Settlements ("BIS"), 

over-the-counter interest rate derivatives in the Eurocurrency, such as swaps and forward rate 

agreements ("FRAs"), comprised contracts worth over $220 trillion in notional value. Euribor is 

fixed every business day for fifteen tenors, ranging from one week to twelve months. 

Euribor is defined by the European Banking Federation (''EBF")8 as the rate "at which 

Euro interbank term deposits are offered by one prime bank to another prime banlc" within the 

Economic and Monetary Union of the European Union at 11:00 a.m. Central European Time 

("CET") daily. According to the EBF instructions, panel banlcs "must quote the required euro 

rates to the best of their knowledge." The panel banlcs are to observe the market and base their 

submissions on where the Euro is trading in that market. 

The daily official fixing of EBF Euribor ("Euribor fixing") is also calculated based on a 

trimmed averaging methodology. On behalf ofEBF, Thomson Reuters issues the daily Euribor 

fixing and the submissions of each panel banlc to its subscribers and other licensed data vendors. 

Through these licensing agreements, this information is made available and relied upon by 

market participants and others around the world, including in the United States. 

6 This definition ofLIBOR has been used by the BBA from 1998 to the present. 

In October 2011, the CME launched the Euribor Futures contract, which settles based on the threemonth Euribor. 

The EBF, an unregulated non-profit association of the European banking sector based in Brussels, 

Belgium, oversees the publication of Euribor. 

7 
Euroyen TIBOR and its Fixing 

Euroyen TIBOR is used internationally in derivatives contracts, including interest rate 

swaps and futures contracts on exchanges around the world, including the CME's Euroyen 

TIBOR futures contract.9 Yen traded in a money market outside of Japan is referred to as 

Euroyen. Euroyen TIBOR reflects the prevailing money market rates in the Japan offshore 

market. At the end of2011, according to the BIS, over-the-counter interest rate derivatives in 

the Yen currency, such as swaps and FRAs, comprised contracts worth over $66 trillion in 

notional value referenced to Yen rates. Euroyen TIBOR is fixed daily for thirteen tenors. 

According to the Japanese Bankers Association's ("JBA'') instructions, 10 the contributing 

panel banks quote rates where they believe a prime banlc would transact in the Japan offshore 

market as of 11:00 a.m. Tokyo time. These quotes should not be representative of the banlcs' 

own positions in the marketplace. Further, the rates quoted by reference banlcs are not intended 

for use in trading by the reference banlcs. The daily fixing of JBA Euroyen TIBOR ("Euroyen 

TIBOR fixing") is also calculated based on the trimmed averaging methodology. Through 

licensing agreements, this information is made available and relied upon by market participants 

and others around the world, including in the United States. 

*************** 

By their definitions, LIB OR, Euribor and Euroyen TIBOR require that the submitting 

panel banlcs exercise their judgment to determine the rates at which, depending on the 

benchmark, they or a prime banlc may obtain unsecured funds in the respective London, Euro 

and Tokyo interbanlc markets. These definitions require that submissions relate to funding and 

do not permit consideration of factors unrelated to the costs ofborrowing unsecured funds, such 

as derivatives trading positions or concerns about reputational harm or negative media attention. 

b. UBS Used Derivatives Traders to Make UBS's Submissions 

UBS made Trader-Submitters who worked in UBS's Investment Banldng Division 

responsible for making all benchmark interest rate submissions that are subject to this Order. 

From at least January 2005 through September 2009, Derivatives Traders, who sat on Short 

Term Interest Rate ("STIR") trading desks in Zurich and traded short-term derivatives products, 

made submissions for all LIBOR currencies (except U.S. Dollar and Euro), Euribor and Euroyen 

TIBOR. The submissions for U.S. Dollar and Euro LIBOR were made by Derivatives Traders 

who sat on the U.S. Dollar and Euro desks in the London office of the Rates Division ("Rates"). 

The Rates Division consisted of derivatives traders in London, Zurich, Tokyo, Connecticut and 

elsewhere, who traded derivatives products with a duration or maturity of more than a year. 

UBS's Derivatives Traders traded LIBOR, Euribor and Euroyen TIBOR-based swaps, FRAs, 

and futures contracts. Many of their derivatives contracts settled or reset on International 

9 The CME Euroyen TIBOR futures contract had active trading volumes during the relevant periods 

discussed infra. (see pp. 10-37); at present, it has no trading volume. 

10 JBA is an industry banking association and oversees the publication ofEuroyen TIBOR. 

8 
Monetary Market ("IMM") dates, making the benchmark interest rates on these particular dates 

especially important. 11 

In October 2008, responsibility for U.S. Dollar and Euro LIBOR submissions was 

transferred from the London Rates desk to the STIR desk in Zurich. The STIR and Rates desks 

were part ofthe Global Fixed Income, Currency and Commodities Division ("FICC"). 

The STIR and Rates desks were profit centers for UBS and generated significant income 

for UBS based on trading derivatives products, such as interest rate swaps whose value depended 

on LIBOR, Euribor, Euroyen TIBOR and other benchmark interest rates. STIR also managed 

UBS's short-term cash position and engaged in cash trading in the money markets for each 

currency, primarily through traders located in Connecticut, Zurich and Singapore. STIR was 

also responsible for hedging UBS 's interest rate risk. 

In September 2009, UBS transferred responsibility for determining all LIBOR 

submissions to the Asset and Liability Management ("ALM") group within FICC, located in 

Zurich. In October 2009, ALM also became responsible for Euribor submissions, and in January 

2010, for Euroyen TIBOR submissions. ALM was also responsible for determining the size and 

price, lmown as the external issuance levels, at which UBS would issue commercial paper 

("CP") and certificates of deposit ("CDs") to fund the banlc ALM did not trade derivatives 

products. 

Prior to September 2009, ALM provided input at times into the determination of various 

benchmark interest rate submissions to the Trader-Submitters and eventually provided the actual 

rates to be submitted. After ALM assumed such responsibility, UBS Derivatives Traders on 

occasion still made requests for preferential submissions. 

c. Conflicts of Interest and Lack of Internal Controls Allowed Misconduct to 

Flourish For Years 

UBS's dual role of traders acting as submitters created a conflict of interest that 

compromised the integrity of UBS' s submission process, thus establishing an environment ripe 

for the Derivatives Traders and Trader-Submitters to abuse. UBS's Trader-Submitters had an 

inherent interest in making submissions that benefited their derivatives trading positions. This 

interest conflicted with UBS's responsibility to make honest and reliable assessments of the costs 

of borrowing unsecured funds in the relevant markets, and ensure its benchmark interest rate 

submissions were made in accordance with the relevant definitions and criteria. Until August 

2008 at the earliest, UBS had no specific internal controls or procedures governing its 

benchmark interest rate submissions to manage the conflicts of interest and ensure that its 

submissions did not take into account impermissible faqgrs, such as UBS's derivatives trading 

positions. UBS provided no training concerning the benSf.illlark interest rate submission process 

or how to manage the inherent conflict between making such submissions and the fact that the 

Trader-Submitters were supposed to make money for UBS. 

11 · IMM dates are standard quarterly settlement dates in March, June, September and December. 

9 
Even after conducting a limited review and developing some procedures for its 

submission process in the wake of an April 2008 Wall Street Journal ("WSJ") article critical of 

the accuracy of banks' LIBOR submissions, UBS did not remove the inherent conflict of interest 

described above or provide meaningful guidance or any training to the Trader-Submitters. 

Rather than strengthening its internal controls and removing the conflict of interest embedded in 

the submission process, UBS instead delegated oversight responsibility for the benchmark 

interest rate submissions to managers who not only knew that Derivatives Traders arid TraderSubmitters were engaged in efforts to manipulate the official fixings ofLIBOR, Euribor and 

Euroyen TIBOR, but who also made their own requests for submissions to benefit their 

individual derivatives trading positions. At least certain Derivatives Traders, Trader-Submitters 

and managers disregarded the few procedures UBS eventually implemented in August 2008. 

UBS's lack of specific internal controls and procedures and overall lax supervision 

concerning its submission processes for benchmark interest rates, allowed this misconduct to 

occur across multiple benchmarks and currencies and in several offices around the world. This 

environment enabled certain Derivatives Traders to engage in widespread, long-term systematic 

misconduct to manipulate Yen LIBOR and, at times, Euroyen TIBOR, alone and in concert with 

other banks and interdealer brokers. 

d. The Manipulation and False Reporting of Yen LIBOR and Euroyen TIBOR 

Over a period of approximately six years, from at least January 2005 through at least June 

2010, UBS Derivatives Traders and Trader-Submitters routinely attempted to manipulate the 

daily fixings of Yen LIBOR and, at times, Euroyen TIBOR to benefit UBS's derivatives trading 

positions. At times, UBS's attempts to manipulate Yen LIBOR were successful. 

Many UBS Yen Derivatives Traders and managers were involved in the manipulative 

conduct and made requests to serve their own trading positions interests. But the volume of 

unlawful requests submitted by one particular senior Yen Derivatives Trader in Tokyo ("Senior 

Yen Trader") dwarfed them all. 12 The Senior Yen Trader spearheaded a massive effort, 

attempting to manipulate the Yen LIB OR fixings, at times nearly daily, and periodically the 

Euroyen TIBOR fixings, by making and directing requests to alter UBS's submissions to benefit 

his derivatives trading positions and thereby maximize his profits or minimize his losses. 

The Yen Derivatives Traders' requests, including the Senior Yen Trader's, typically were 

for the one, three, and six-month tenors for Yen LIBOR and Euroyen TIBOR. The TraderSubmitters on many occasions acquiesced to those requests and made Yen LIB OR and Euroyen 

TIBOR submissions with the purpose of benefiting UBS's derivative trading positions. The 

requests were made over UBS's email or chat networks and additional requests were made orally 

12 In fact, some UBS Yen Derivatives Traders made requests at times to Yen LIBOI\ Trader-Submitters 

to adjust their Yen LIB OR submissions to benefit derivatives trading positions long before the Senior Yen 

Trader joined UBS. A year before, for example, on November 28, 2005, a Yen Derivatives Trader 

referred to her derivatives trading position when she asked a senior Yen LIB OR Trader-Submitter, "re 6m 

libor we want higher fixing as we 'have long 177 bio fra fix today." The senior Yen LIBOR TraderSubmitter replied, "ok." 

10 
by traders who sat near to or spoke by telephone with Trader-Submitters, with traders at other 

banks or with brokers. In addition, certain Trader-Submitters based submissions at times on his 

or her own or the desk's trading positions, without consulting with anyone else. 

The UBS Yen Derivatives Traders making the requests and the Yen LIB OR and Euroyen 

TIBOR Trader-Submitters were located in Tokyo and Zurich. Over one dozen Yen Derivatives 

Traders and Trader-Submitters were involved, including at least two desk-level managers who 

were involved or aware of the conduct. At times, the desk-level managers made requests for 

beneficial submissions themselves or facilitated the conduct of the traders and submitters that 

they supervised. Moreover, senior managers ofUBS above the desk-level managers had 

knowledge of the conduct. 

The Yen LIBOR and Euroyen TIBOR Trader-Submitters considered several factors in 

making their submissions, but frequently gave weight and priority to the Yen Derivatives 

Traders' requests for specific rates or directional moves to benefit their derivatives trading 

positions. The Yen LIBOR Trader-Submitters also took into account their own derivatives 

trading positions. At times, to accommodate the Yen Derivatives Traders, the Yen LIBOR and 

Euroyen TIBOR Trader-Submitters submitted rates that were one or more basis points in the 

direction requested by the Yen Derivatives Traders, or submitted a specific rate depending on the 

particulars of the traders' requests. 

The Senior Yen Trader's Illegal Manipulative Conduct 

The Senior Yen Trader conducted his extensive, systematic course of unlawful conduct to 

manipulate Yen LIBOR and periodically, Euroyen TIBOR, from shortly after he joined UBS in 

early July 2006 until his departure in the fall of2009, following a dispute with UBS over his 

compensation. Indeed, the Senior Yen Trader started making the unlawful requests during his 

"probationary" period as a new employee when, pursuant to UBS policy, he was not permitted to 

trade except under supervision. 

The Senior Yen Trader employed multiple methods in his attempts to manipulate Yen 

LIBOR and Euroyen TIBOR. He made internal requests of the UBS Yen LIBOR and Euroyen 

TIBOR Trader-Submitters. But, not satisfied with altering UBS's submissions alone, he went 

outside UBS in an effort to influence the submissions of other banks and increase the likelihood 

that his attempts would be successful. Thus, he not only coordinated requests with derivatives 

traders at several other panel banks, but he also used several interdealer brokers to disseminate 

false information about Yen LIBOR and Euroyen TIBOR to other panel banks, expecting that 

the other banks would rely on that information when they made their own submissions. At 

times, he was successful in his efforts to manipulate the official Yen LIB OR fixing for a 

particular tenor. 

The Senior Yen Trader and others at UBS made approximately 2,000 written requests of 

UBS's Trader-Submitters, traders at other panel banks and interdealer brokers to try to achieve 

their manipulative goals. The written requests of the Senior Yen Trader and others occurred on 

approximately 570 trading/reporting days, mostly between late 2006 and late 2009, which is 

approximately 75% ofthe time. 

11 
The Senior Yen Trader was widely considered the dominant trader in the Tokyo Yen 

swaps market because he traded in enormous volumes and accepted large trading risks. In fact, 

his trades were so large and aggressive, he reputedly contributed substantially to developing the 

Yen Swaps market into a robust derivatives market. Historically, the Yen swaps market was 

relatively stable. From 2000 to 2006, Yen LIBOR rates remained relatively flat, evidencing 

minimal fluctuations up or down. Given the lack of volatility in the Yen markets, there were 

fewer traders who focused exclusively on Yen products, and, therefore, less liquidity for traders 

interested in such products. All of this changed when UBS hired the Senior Yen Trader and 

permitted him to take large positions in the Yen market. His trades immediately injected 

significant liquidity in a previously illiquid market. Not surprisingly, brokers were eager to 

develop relationships with the Senior Yen Trader in an effort to obtain a piece ofhis business. 

UBS highly valued the Senior Yen Trader because his trading generated nearly $260 

million in revenue for UBS. Each year, he increased the revenue he reaped compared to the year 

before. In 2007, he generated approximately $40 million; in 2008, he generated approximately 

$80 million, and in 2009, before he stopped trading for UBS in late summer, he generated 

approximately $116 million, about three times what he generated in 2007. At the height of his 

trading at UBS, the Senior Yen Trader was given a risk limit of $2 million to $3 million per basis 

point. While concerns were raised at times within UBS about the amount of risk that the Senior 

Yen Trader was taking in the market, UBS never curtailed his trading or lowered his risk limits 

until near the end of his employment when he was cautioned to reduce the risk in his positions. 

Internal Requests to Adjust Submissions 

The Senior Yen Trader regularly made internal requests, either directly or through other 

traders and his manager at UBS, to the Yen LIBOR and, periodically, Euroyen TIBOR TraderSubmitters for adjustments in the UBS submissions that benefitted the Senior Yen Trader. 

Multiple UBS traders and submitters, including the Senior Yen Trader's supervisor ("Yen 

Desk Manager"), were aware of the Senior Yen Trader's attempts to manipulate Yen LIBOR and 

Euroyen TIBOR through his internal requests to the submitters. UBS managers in Tokyo and 

Zurich also were aware ofthe Senior Yen Trader's requests. The UBS managers allowed the 

Senior Yen Trader to engage in his conduct, which ended only when he decided to leave UBS 

over a pay dispute. No one involved in or aware of the misconduct reported it as wrongful to 

more senior management, or to UBS's compliance or legal departments. On the contrary, some 

of these individuals, including the Yen Desk Manager in Tokyo, engaged in the same misconduct 

by making their own requests to UBS's Trader-Submitters for the manipulation of Yen LIBOR 

and Euroyen TIBOR, or facilitating the Senior Yen Trader's requests. 

The Senior Yen Trader, directly or indirectly, made at least 800 requests in writing, on 

UBS's email and chat systems, to the Trader-Submitters for adjustments to UBS's Yen LIBOR 

submissions, usually focused around the one, three and six-month tenors. The Senior Yen 

Trader and others on his behalf also made similar requests for adjustments to the Euroyen 

TIBOR Trader-Submitters to benefit his trading positions, albeit on a significantly smaller scale. 

Sometimes, the Senior Yen Trader made requests to benefit the trading positions of other UBS 

12 
Yen Derivatives Traders on the desk, if it happened that Yen LIBOR or Euroyen TIBOR fixings 

would not impact his own positions. 

In making requests, the Senior Yen Trader at times identified the tenor and/ or direction 

for which he sought assistance, using terms such as "low 1m" (indicating that he wanted a low 

submission for the Yen LIBOR one-month tenor submission), "high 3m" (for the three-month 

Yen LIBOR submission) or "unchanged." Often, the Senior Yen Trader's requests focused on 

key benchmark rate fixing dates for his swap transactions around the IMM dates (quarterly 

settlement dates in March, June, September and December) or the turn of the calendar year. The 

requests were so common that the Senior Yen Trader sometimes merely asked for the "usual axe 

on libors," meaning his typical requests. Certain Trader-Submitters also understood that the 

Senior Yen Trader had a "standing order," meaning the Senior Yen Trader had a preference for a 

higher or lower submission and that this preference remained in operation for a period of several 

days. Moreover, the Trader-Submitters sometimes initiated contact with the Senior Yen Trader 

to see if he needed any adjustments made to the Yen LIBOR submissions. 

The Trader-Submitters regularly accommodated the Senior Yen Trader's requests. In 

fact, one Yen Trader-Submitter indicated that he would at times adjust his submissions by up to 

several basis points to accommodate the requests of the Senior Yen Trader. The requests and 

accommodations occurred on a regular basis even after UBS had received the CFTC Division of 

Enforcement's demand in October 2008 for information and documents relating to UBS's U.S. 

Dollar LIB OR practices. 

The following are a few typical examples of the Senior Yen Trader or other Derivatives 

Traders, including the Yen Desk Manager, asking in electronic chat rooms for submissions and 

the Trader-Submitters readily acquiescing, including an early request made soon after the Senior 

Yen Trader began to trade for UBS: 

November 14, 2006: (Emphasis added.) 13 

Senior Yen Trader: "hi . . . who sets our libors?" 

Senior Yen Trader-Submitter: "me (or the guy in zurich) we use the cash to 

derive them" 

Senior Yen Trader: "ok cld really do w 6m up pls if poss ... " 

Senior Yen Trader-Submitter: "we been on the high side for aw bile" 

Senior Yen Trader: "or on the fair side" 

Senior Yen Trader-Submitter: "fair side .. exactly my thoughts but will give it 

an extra notch today" 

Senior Yen Trader: "cheers most of my fixing roll off on friday for 4 days or so 

thanks for that" 

Senior Yen Trader-Submitter: "no prob" 

13 The communications quoted in this Order contain shorthand trader language and many typographical 

errors. The shorthand and errors are explained in brackets within the quotations only when deemed 

necessary to assist with understanding the discussion. 

13 
December 5, 2006: (Emphasis added.) 

Senior Yen Trader: "tibors still low the question is which will move first cash or 

futures?' 

Senior Yen Trader-Submitter: "yes, trying to push those up a bit without 

affecting Iibors but not sure it'll work re what's first- thought about it y'day after 

u brought it up ... think odds are for fixings to move cause it's them being wrong" 

Senior Yen Trader: "yes have lots of 1m fixes up till imm so am trying to hold 

1m down!" 

Senior Yen Trader-Submitter: "we not touching 1mos tibor 1mos libor we keep 

lower and try to up 2mos tib & out ... " 

Senior Yen Trader: "thanks for that" 

February 8, 2007: 

Senior Yen Trader: "hi [Senior Yen Trader-Submitter] could really do with a low 

1m over the next few days as have 17.5m fixings if ok with you?" 

Senior Yen Trader-Submitter: "np" 

Senior Yen Trader: "thx guess you'll be trying to get 3m down for 1/t [i.e., 

libor/tibor] as well?" 

Senior Yen Trader-Submitter: "unless u specicy otherwise i will have 1 and 

3mos low." 

Senior Yen Trader: "yes am all out of 3m but am long 1/t like you so suits both 

of us." 

March 16, 2007: 

Senior Yen Trader: "strange request i know but can we go for a high 6m fix but a 

low 7m fix pis" 

Senior Yen Trader-Submitter: "7mos .... sep turn ?" 

Senior Yen Trader: "have a big interp fix today between 6m and 7m offset by 

straight 6m" 

Senior Yen Trader-Submitter: "but can be done" 

Senior Yen Trader: "if suits, assume you don't have a 7m fix? :)" 

Senior Yen Trader-Submitter: ":-)" 

February 4, 2008: 

Yen Trader 1: "Hi . . . . . My name is [Yen Trader 1] and I work with [Senior Yen 

Trader] in Tokyo. [Senior Yen Trader] (in Sydney) asked me to ask you, if it is 

possible that you could kindly set 1mL and 3mL higher." 

December 24,2008: 

Yen Trader 2: "Can we pis go for lower Libors tonight, across all tenors (1m 3m 

and 6m) much appreciated" 

Yen Trader-Submitter 1: "Will do" 

July 24, 2009: 

Senior Yen Trader: "[Senior Yen Trader-Submitter] talking again about lowering 

3m tibor please can you head it off ... is that smied ... ?" 

14 
Yen Desk Manager: "yep." 

Senior Yen Trader: "thx" 

Yen Desk Manager: "all ok on the fix?" 

Senior Yen Trader: "y" 

The Senior Yen Trader sometimes emphasized to the Trader-Submitters when one of his 

requests was particularly important, such as by saying he had a "big fix" or even a "massive fix." 

At times, the Senior Yen Trader was more specific, quantifying the potential benefit to the 

Derivatives Traders' position: "have 385b 6m fix today. so really need it low ... half a point is 

10mjpy!" As the Senior Yen Trader once exclaimed to the Senior Yen Trader-Submitter: "I live 

and die by these libors, even dream about them." (Emphasis added). 

Reconciliation of Conflicting Internal Trading Positions. 

To ensure that the Trader-Submitters implemented his requests, the Senior Yen Trader 

was careful not to cause a conflict with the Trader-Submitters' trading positions. At times, the 

Senior Yen Trader asked the Trader-Submitters whether his request would help or hurt the 

latter's derivative positions. For example, in the following chat, the Senior Yen Trader's request 

served both of their interests: 

January 31,2007: (Emphasis added.) 

Senior Yen Trader-Submitter: " ... as we move into February, we'll struggle a bit 

on keeping the 3mos fixings high we need t/1 back into +ve area well positive" 

Senior Yen Trader: "sure i have my last big 3m fix on feb 6th is that ok? can we 

last till then?" 

Senior Yen Trader-Submitter: "that's fine ... no prob keeping it up till then" 

Senior Yen Trader: "after that am mixed on 3m need 6m high tho, are you 

worried about 6m 1/t?" 

Senior Yen Trader-Submitter: "not at this stage" 

Senior Yen Trader: "ok i am v long 3m 1/t too so suits" 

Senior Yen Trader-Submitter: uone happy family then :-)" 

However, sometimes the Trader-Submitters' own derivatives positions stood to suffer if 

they accommodated the Senior Yen Trader's request. To manage that problem and make sure 

his preferred submissions were made, the Senior Yen Trader would enter into a separate 

transaction with the Trader-Submitter that would help offset any negative impact on the TraderSubmitter's position from a submission that was made to benefit the Senior Yen Trader's 

position. Such a solution was the subject of the following chats: 

November 17, 2006: (Emphasis added.) 

Senior Yen Trader: "thx for libory/day i have 25m of fixes in 6m the next few 

days so any help gratefully received, if you are the other way round at all let 

me lrnow and we can try to do what we did y/day which worked out well for 

both of us!" 

15 
Senior Yen Trader-Submitter: "mrng mate it did work indeed your man for 

the next few days is [Yen Trader-Submitter 2] the guy coming from Zurich to 

cover while i'm on leave will pass it on re fixings" 

Senior Yen Trader: "thanks for that" 

Senior Yen Trader-Submitter: "good chance we're same way round on most 

days" 

Senior Yen Trader: "yes i seem to be long 6m libor till next thursday then i'm 

quite clean thereafter" 

Senior Yen Trader-Submitter: "noted" 

February 23, 2007: (Emphasis added.) 

Senior Yen Trader: "hi do you have any 6m fixes today? if not can we set low 

today pis along with 1m and 3m!" 

Senior Yen Trader- Submitter: "think i got some fixings, actually let me check 

which way round they r i'm long a 6m fra 50 yds ntg 3s" 

Senior Yen Trader: "ok where do you see 6m today unch? ie you need 6m 

high?" 

Senior Yen Trader-Submitter: "a higher fixing gwould suit me let's see if i can 

sell it in mid today ... " 

Senior Yen Trader: "which wd be your mid" 

Senior Yen Trader- Submitter: "seeing it L +0.5 from y'day so .70125 for today 

?" 

Senior Yen Trader: "if i can get the . 7 bid i'll deal then write a tck with you at 

.70125? SOb?" 

Senior Yen Trader- Submitter: "50 yds .... dun worry abt the 0.125" 

Senior Yen Trader: "no appreciate the help so happy to write it there ... " 

Senior Yen Trader-Submitter: "FRA or SPS [single period swap]?" 

Senior Yen Trader: "whatever suits" 

Senior Yen Trader- Submitter: "FRA then pis i'll send the ticket" 

Senior Yen Trader: "ta" 

Senior Yen Trader- Submitter: "tnx ... low fixing it is then low 1,3,6 mos" 

Senior Yen Trader: "ta" 

The Senior Yen Trader-Submitter's Knowledge that the Conduct Was Improper 

From the outset, the Senior Yen Trader-Submitter knew that requests to alter Yen LIBOR 

or Euroyen TIBOR were inappropriate and could impact the ultimate Yen LIBOR and Euroyen 

TIBOR fixings. Shortly after the Senior Yen Trader joined UBS in the last quarter of2006 and 

started making his requests, the Senior Yen Trader-Submitter recognized that his submissions on 

behalf of the Senior Yen Trader were false and would be difficult to justify or explain, absent the 

influence of the Senior Yen Trader. 

November 8, 2006: 

Senior Yen Trader: "have put some pressure on a few people i know to get libors 

up today, mailnly 6m as i am paid that one, let me know if that doesn't suit or if 

16 
there are any particularly you need up .... only did a few lyr trades, wish i'd done 

a lot more now!" 

Senior Yen Trader-Submitter: "thanks mate ... wouldnt mind fixings all backup 

but not due to positions, rather to get things back in line with reality there shud be 

an obligation to deal on those fixings" 

Senior Yen Trader: "yes that will be the day!" 

February 27, 2007: (Emphasis added.) 

Senior Yen Trader: "hi ... can we go low lm and 3m again pls" 

Senior Yen Trader-Submitter: "we'll try ... but there's a limit on to how much 

[w]e can shade it i.e. we still have to be within an explainable range" 

March 29, 2007: (Emphasis added.) 

Senior Yen Trader: "hi ... can we go low 3m and 6m pls? 3m esp." 

Senior Yen Trader-Submitter: "ok" 

Senior Yen Trader: "... FYI [Yen Banks A, B, C, D] are setting .66 and [Yen 

Banlc E] .67 what are we going to set? got tols cash was 64/62 in 3m?" 

Senior Yen Trader-Submitter: "too early to say yet ... prob .69 would be our 

unbiased contribution" 

Senior Yen Trader: "ok wd really help if we cld keep 3m low pls" 

Senior Yen Trader-Submitter: "thinlc [Yen Banlc D] paying .6675 I [Yen Banlc B] 

66.25 bid out there as i said before - i dun mind helping on your fixings, but i'm 

not setting libor 7bp away from the truth i'll get ubs banned if i do that, no 

interest in that" 

Senior Yen Trader: "ok obviousl;y no int in that happening either not asking for 

it to be 7bp from reality anyway any help appreciated" 

On one occasion, the Senior Yen Trader-Submitter even commented to the Senior Yen 

Trader about feeling sorry for those traders whose trades are based on '"fair' fixings."' 

UBS's Collusion witlt Other Banks and Interdealer Brokers 

The Senior Yen Trader augmented his internal efforts to manipulate Yen LIB OR and, on 

occasion, Euroyen TIBOR for multiple tenors by coordinating with derivative traders at other 

panel banlcs and by using interdealer brokers who intermediated Yen transactions to influence, 

directly or indirectly, submitters at other panel banks. Thus, the Senior Yen Trader wanted to 

better exploit the averaging methodology used to calculate fixings by increasing the likelihood 

that more than one corrupted submission would be included in, or could impact, the official daily 

fixing of Yen LIBOR and Euroyen TIBOR. 

Collusion with Other Panel Banks 

As with his internal requests, the Senior Yen Trader began coordinating regularly with 

derivatives traders at other panel banlcs by January 2007. The Senior Yen Trader coordinated 

with traders primarily at four panel banks whom he knew or had worked with previously. The 

17 
Senior Yen Trader, or others acting on his behalf, made about 100 requests of traders at the other 

panel banks. 

The Senior Yen Trader generally made requests of the other banks' traders, who regularly 

agreed to pass his requests to their Yen LIBOR or, on occasion, Euroyen TIBOR submitters. 

The Senior Yen Trader also made requests directly of the submitter of at least one banl(. The 

other traders often conveyed success with comments such as, "done" and "we normally do well 

for u!! !" 

For their own manipulative purposes of benefiting their derivatives trading positions, 

ce1iain of the derivatives traders at the other banl(s sought reciprocating assistance from the 

Senior Yen Trader to make requests on their behalfto UBS's submitters. The Senior Yen Trader 

readily agreed to help the other traders. In fact, he often encouraged them to ask for help as a 

way to curry favor and ensure his requests were accommodated. 

The following small sampling of the numerous communications between the Senior Yen 

Trader and derivatives traders at the other panel banl(s reveal: 

o descriptions of the Senior Yen trader's strategy and his success in keeping rates 

"artificially high;" 

o how, as with the internal requests, the Senior Yen Trader pressed traders at the 

other banks for assistance particularly on key fixing dates around the IMM dates 

or the turn of the calendar year; 

o how routine the requests were and how the traders believed that LIBOR was 

vulnerable to manipulation at their whim and for their benefit; 

o that the requests covered a number of days ofLIBOR submissions at times, such 

that one request could result in multiple days of false LIB OR submissions 

potentially affecting the fixing for the same period; 

o the pressure the Senior Yen Trader felt to keep making money for UBS; and 

o that the traders believed that they succeeded at times. 

January 19, 2007: (Emphasis added.) 

Senior Yen Trader: "hi [ ... ] , bit cheeky but if you know who sets your libors 

and you aren't the other way I have some absolutely massive 3m fixes the next 

few days and would really appreciate a high 3m fix, [Yen Bank C] were one of 

the lowest y/day at .51. Anytime i can return the favour let me know as the 

guys here are pretty accomodating to me ... " 

Yen Banl( C Trader: "I will try my best, but really fed up with my guys, wanted a 

high 6m yesterday, but came in really low (our guys one of the main culprits)-

got quite badly hit on that" 

Senior Yen Trader: "you and me both, you need 6m high? if so will get my 

guys to set high for you today, yesterday they set 3m up at 57 for me!" 

18 
Yen Banlc C Trader: "got nothing significant for next 7 days - so will try to get 

high for you- just really gutted about yesterday cost me a lot." 

February 2, 2007: (Emphasis added.) 

Senior Yen Trader: "if not the spread may fix round 15 at the worst, but 3m 

libor is too high cause i have kept it artificially high" 

Yen Banlc B Trader 1: "how?" 

Senior Yen Trader: "being mates with the cash desks, [Yen Bank C] and i 

always help each other out too" 

Yen Banlc B Trader 1: "ok thats useful to know so i assume come 1 s4s it will be 

soft" 

Senior Yen Trader: "well i am long lib or in 1 v4m so will try to keep high then 

but basically is 1 bp too high right now adn come may i'll get it 1 bp too low net 

net a 2bp swing in the fix" 

Yen Banlc B Trader 1: "good man" 

February 15,2007: (Emphasis added.) 

Yen Banlc B Trader 1: "u heard where this 1 mth libor is being called" 

Senior Yen Trader: "yes doing everthing i can to keep it low aiming for .4 7 fix or 

better ... i have lost about lm usd in the last 3m on crap lm fixes will try too 

keep low" 

Yen Banlc B Trader 1: "me too but our cash guy is not here today so [Yen Banlc 

B Submitter] will be putting them in and he wants a high 3s ... " 

Senior Yen Trader: "GREAT ! ! ! what about lm? can you ask him to keep 

that really low? wd really help me" 

Yen Banlc B Trader 1: "i did but he will put it wherever suits his and [Yen 

Bank B Trader 2] 's book and i thinlc they have paid all these spreads ! ! ... how 

many people can u get to put this lm libor low" 

Senior Yen Trader: "well us [Yen Bank C] and a few others i think" 

April20, 2007: (Emphasis added.) 

Senior Yen Trader: "i know i only talk to you when i need something but if 

you could ask your guys to keep 3m low wd be massive help as long as it 

doesn't interfere with your stuff tx in advance ... mate did you manage to spk 

to your cash boys?" 

Yen Banlc B Trader 1: "yes u owe me they are going 65 and 71" 

Senior Yen Trader: "thx mate yes i do in facti owe you big time mater they 

set 64! thats beyond the call of duty!" 

June 29, 2007: (Emphasis added.) 

Yen Banlc B Trader 1: "yeah sorry the usual guy is not here at the moment the 

trainee is doing it we normally do well for u ! ! !" 

Senior Yen Trader: "no worries mate, if you could go high from monday for 

next week that wid be graet as i have 1.5t notional fixings in 6m next week! 

ie 75m jpy a point" 

Yen Banlc B Trader 1: "wow ok then" 

19 
November 1, 2007: (Emphasis added.) 

Senior Yen Trader: "hello mate, real big favour to ask. could you try for low 6m 

fix today pis wid be most appreciated. thx mate" 

Yen Bank B Trader 1: "will try my best dude hows u 77" 

Senior Yen Trader: "ok, trading like an idiot today, to be honest just want to take 

some risk off my book before i come back in dec, have had ok year but 

management still pushing me for more, have huge 6m fix so if you could help 

out today would really really reall_y appreciate it! how are you?" 

September 18, 2008: (Emphasis added.) 

Senior Yen Trader: "you got any ax on 6m fix tonight?" 

Yen Banlc F Trader-Submitter: "absoluetly none but i can help" 

Senior Yen Trader: "can you set low as a favour for me?" 

Yen Banlc F Trader-Submitter: "done" 

Senior Yen Trader: "i'll return favour when i can just ask have 75m mjpy a 

bp tonight" 

Yen Banlc F Trader-Submitter: "np" 

Senior Yen Trader: "thanlcs so much" 

Coordination with Interdealer Brokers to Manipulate Yen LIBOR 

From the outset of his employment with UBS, the Senior Yen Trader also coordinated on 

almost a daily basis with several interdealer brokers employed by at least five different brokerage 

firms to try to impact the Yen LIBOR and, on occasion, Euroyen TIBOR submissions of other 

panel banks. The Senior Yen Trader asked the interdealer brokers to utilize various means of 

influencing the other panel banlcs, including by asking the brokers to: (i) disseminate false "runthroughs" of suggested Yen LIBORs to many, if not all, ofthe panel banlcs; (ii) contact directly 

other banlc submitters; (iii) publish false market cash rates over certain dedicated electronic 

screens available to clients; and (iv) "spoof' or make fake bids and offers. As set forth below, in 

exchange for their help, the Senior Yen Trader saw to it that the brokers were compensated in 

various ways such as by directing to brokers commission-generating business including "wash 

trades," and even by having UBS structure fees to carve out cash bonuses for brokers. He also 

kept them in line by sometimes threatening to move his considerable volume of business to 

another broker. During this period oflate 2006 to late 2009, the Senior Yen Trader made 

approximately 1 ,200 such requests to brokers. 

Interdealer brokers, sometimes known as voice brokers, act as intermediaries between 

buyers and sellers in the money markets and derivatives markets. The brokers match buyers and 

sellers in return for commissions, and also can be an important source of market information for 

banlcs. Typically, commissions are based on a percentage of the notional value of consummated 

transactions, which means that brokers get paid more by brokering larger trades. Within a 

brokerage firm, there are brokers for different currencies who intermediate derivatives 

transactions ("Derivatives Brokers") and brokers who intermediate cash transactions ("Cash 

Brokers"). In order to find matching counterparties, brokers provide bid or offer prices for a 

financial transaction. Those prices are conveyed in multiple ways. Brokers use "squawk boxes," 

20 
which are speakerphones that can speak simultaneously to numerous trading desks of their bank 

clients at once, to broadly disseminate bid and offer prices. Brokers also frequently use 

Bloomberg instant message chats and other messaging platforms, email, and dedicated telephone 

lines. 

Interdealer brokers provide ban1c traders their views on pricing and market trends, known 

as "market color," and the ban1cs rely on brokers for such information. For example, some 

brokers circulate each morning daily "run-throughs" of the actual rates they expect to be 

published for key benchmark interest rates that day, such as LIBOR in various currencies and 

tenors. Some also share such information directly with benchmark interest rate submitters by 

telephone. 

Through the brokers, the Senior Yen Trader was able'to influence potentially all of the 

other fifteen ban1cs on the Yen.LIBOR panel. Even unwitting submitters at panel ban1cs that tried 

to make benchmark interest rate submissions that reflected their honest assessment of the costs of 

borrowing funds may have had their submissions improperly influenced because they relied upon 

the brokers' purported unbiased market information. Reflective of the importance of the brokers 

in his scheme, the Senior Yen Trader heralded certain of the brokers with such laudatory terms 

as "Hero" and "SUPERMAN." 

Generally, the Senior Yen Trader contacted Derivatives Brokers with unlawful requests 

for beneficial rates, who would then convey the requests to and pressure their Cash Broker 

colleagues to implement the Senior Yen Trader's requests by going to other panel ban1cs. 14 

Because this was such a standard practice and the brokers were eager to retain UBS's business, 

the brokers anticipated or even solicited the Senior Yen Trader's requests at times. 

The following are examples of typical communications between the Senior Yen Trader 

and the brokers, indicating how Derivatives Brokers pressured Cash Brokers to make sure the 

wishes of the Senior Yen Trader were met, that the Senior Yen Trader often wanted the requests · 

to stay in place over a number of days or weeks, and that the Senior Yen Trader recognized when 

the brokers had accommodated him. 

September 10, 2007: (Emphasis added.) 

Senior Yen Trader: "once again thx libors" 

Derivatives Broker A1: "no problem just starting to worry about how i am going 

to push them lower next week!!" 

Senior Yen Trader: "no just leave em high need high at start of oct" 

Derivatives Broker A1: "ok mate" 

Senior Yen Trader: "then we can make a push for lower fixes" 

Derivatives Broker A1: "gotcha ... just give me a 'wish list' at the start of each 

day and i will compose a beeging letter to [Cash Broker A] after lunch." 

14 At one such brokerage firm, the Derivatives Broker was also the Cash Broker. 

21 
Senior Yen Trader: "ok thx mate.one thing which i don't think you can do is push 

them one then the other way need to be consistent ie allllower every day or vice 

versa" 

Derivatives Broker Al: "no smalls maybe but you are better looking at the bigger 

picture and basing your requests on the macro outlook rather than the micro :-)" 15 

May 29, 2008: (Emphasis added.) 

Derivatives Broker Al: "if [Senior Yen Trader-Submitter] his marking his 0/6's 

there you are going to have to work hard on his libor sets ...... if [Cash Broker A] is 

doing his best to get them low and your own banl( fixes high!" 

Senior Yen Trader: "i knoww mate we are holding 6m but bring 3m down" 

Derivatives Broker A1: " ... [Cash Broker A] has knocked 3m down small 

(already v low and says if it goes any further he will lose credibility) and 6m 

down another 1/2bp" 

February 9, 2009: (Emphasis added.) 

Senior Yen Trader: "do you know your cash desk? ie the guy who covers yen on 

your cash desk" 

Derivatives Broker C/D 1: 16 "yes mate i do" 

Senior Yen Trader: "right from now on I need you to ask him a favour on the 

fixes i will make sure it comes back to you i alrteady do it with [Brokerage 

A] basically can you ask him to broke 3m cash ie libor lower for me today i will 

look after you off the back of it i do that for [Brokerage B] too so emphasise 

the importance to you just suggest it looks a little softer to his accounts" 

Derivatives Broker C/D 1: "ok mate I understand i will go and speak to him" 

Senior Yen Trader: "stuff like that thanks mate is very important to me today" 

Derivatives Broker C/D 1: "just spoke to them and they are on the case" 

Senior Yen Trader: "ok mate much appreciated if we do this going forwards 

it will come back to you in spades did you emphasise the importance?" 

Derivatives Broker C/D 1: "i did" 

Senior Yen Trader: "ta" 

Using False "Run-Throughs" of Predicted Yen LIBORs 

The Senior Yen Trader repeatedly had at least one broker distribute false Yen LIBOR 

predictions that were skewed to benefit the Senior Yen Trader's derivatives trading positions by 

15 To avoid detection, the Senior Yen Trader and at least one broker used code words at times. But 

undermining their efforts to conceal, they blatantly discussed the need to use code words in electronic 

chats. In late 2007, Brokerage A told the Senior Yen Trader that they both needed to "be a little more 

subtle in [their] views" and his emails "needed to be worded more carefully." The Senior Yen Trader and 

Derivatives Broker Al decided to use code words to mask the requests by using words such as "political 

correctness," "arbitrage," "arb," or "arbi." Despite the agreed-upon code words, as evidenced above, for 

the most part the UBS Senior Yen Trader spoke plainly about his desire to manipulate rates. 

16 During the course of the Senior Yen Trader's employment at UBS, Derivatives Broker C/D 1 moved 

from Brokerage C to Brokerage D, where he continued to broker the Senior Yen Trader's transactions and 

assist him in his manipulative schemes. 

22 
means of lists known as "run-throughs" that brokers would send to numerous, if not all, of the 

Yen LIB OR panel banks. As a service, cash brokers at the brokerage firms disseminated daily 

run-throughs to inform the banks oftrading ranges observed by brokers for certain types of Yen 

transactions over the prior 24 hours as well as Yen LIBOR fixings anticipated or "suggested" by 

the brokers. These broker predictions became increasingly influential during the financial crisis 

that commenced in August 2007, as discussed infra, when the number of observable interbank 

transactions diminished. At least several panel banks relied on the run-throughs for making their 

Yen LIB OR submissions and, at times, some banks simply submitted the very rates suggested by 

the brokers. The Senior Yen Trader knew that panel banlc submitters frequently used brokersuggested rates in making their own Yen LIB OR submissions. 

To exploit the run-through process to his advantage, the Senior Yen Trader regularly 

asked that Brokerage A's run-throughs reflect "suggested rates" that would benefit the Senior 

Yen Trader's position. He communicated with Derivatives Broker Al, who then conveyed the 

request to Cash Broker A, intending for the rest of the panel banlcs to follow Cash Broker A's 

suggestions. Derivatives Broker Al typically confirmed back that he had sent the request on to 

Cash Broker A. The Derivatives Broker Al often made such comments as: 

o "i'll get [Cash Broker A] to send what we need and we will just have to hope they 

follow his lead;" 

o "yes he knows what we need need .. thats where he reckons they will come in 

though even with his massaging;" and 

o "[Cash Broker A] sending out higher than he thinlcs so hopefully the sheep will 

just copy." (Emphasis added.) 

The Senior Yen Trader frequently succeeded in getting Brokerage A to send false LIBOR 

predictions, and sometimes even to change already distributed run-throughs to his advantage. 

For example, on June 28, 2007, Cash Broker A had already sent his daily run-throughs with sixmonth Yen LIBOR "suggested" at a rate of0.86. Derivatives Broker Al pressured Brokerage A 

management to have the run-throughs re-sent with a higher six-month rate, 0.865, that was more 

skewed toward the Senior Yen Trader, along with the added instruction that Cash Broker A "get 

his banlcs setting high." Derivatives Broker Al emphasized that "[Senior Yen Trader] is not 

happy." Cash Broker A dutifully re-sent his "suggested Libors" with six-month Yen LIBOR set 

at 0.865, as demanded. 

In another similar example, on September 4, 2007, the Senior Yen Trader and Derivatives 

Broker Trader Al discussed the need to send a revised "run-through," which Brokerage A 

management accommodated: 

Derivatives Broker Al: "[Cash Broker A's] libors lm 81...3m unchanged (though 

he says the yen bids are still very high for $) ... 6mos unchanged you ought to be 

able to help yourself in 3mos, [Senior Yen Trader-Submitter] moved down from 

99 to 96 yetserday and in 6mos if you want that higher ... " 

Senior Yen Trader: " ... can we try to get 6m up today pis mate" 

23 
Derivatives Broker A1: "think flat will be the best looking at the cash rates but 

will ask [Cash Broker A] to send out another run higher" 

Senior Yen Trader: "thx." 

(Emphasis added.) 

****** 

Derivatives Broker A1: "try and get [Cash Broker A] to send out a revised libor 

run with 3m and 6m higher please .... " 

Brokerage A Yen Manager: "will do ... on the back of his revised libors, sent at 

your request but he thinks it might be nearer 107 than 1 06" 

(Emphasis added.) 

In statements made to the Senior Yen Trader, Derivatives Broker A1 often claimed 

success in getting panel banks to contribute advantageous submissions to the Yen LIB OR panel: 

o " ... [Cash Broker A] has been doing a number on some of the contributors 

because a couple of them were edging their libors slightly lower yesterday before 

he intervened;" 

o "morning mate ... seems [Cash Broker A's] cover does have some influence, 

people actually took notice of his 87 libor! will be back on his case again today;" 

o "i hope that 6m libor has got me back in your good books!! used all my powers 

of persuasion on that one;-) .. think [Yen Banks G and H] must have looked at 

[Cash Broker A's] first suggestion .... they both moved up 11bps to 1.10;" and 

o "you have a really big fix tonight i believe? if [Cash Broker A] sends out 6m at a 

more realistic level than 1.1 0 i reckon [Yen Banks G and H] will parrot him, it 

might mean 6m coming down a bit." 

Using Interdealer Brokers to Help Pressure Other Banks 

The Senior Yen Trader routinely requested that the brokers use their bank relationships to 

help pressure banks to make submissions in his favor. Set forth below are examples of 

communications within brokers or between brokers and the Senior Yen Trader concerning their 

respective efforts with specific banks. The discussions reveal how the Senior Yen Trader and the 

brokers worked together as a team to ensure that he got the rates he wanted. 

September 4, 2007: 

Derivatives Broker A1: "hi mate,see you dropped your 3m and 6m libors 

yesterday making you one of the lowest fixers! ! " 

Senior Yen Trader: " ... ok i'll have a word on 3m they are getting pressure from 

above" 

Derivatives Broker A1: " ... you are just about the lowest now" 

Senior Yen Trader: "yes i know .... [Yen Banlc B] shifted down 5bp too will ask 

[Yen Banlc B Trader 1] if he can do me a favour with a high fix" 

Derivatives Broker A1: "ok i'll see if [Yen Banlc B Submitter] is doing libors at 

the mom,he never seems too bothered ... though not sure he is" 

Senior Yen Trader: "thx" · 

24 
November 1, 2007: (Derivatives Broker A1 to Brokerage A Yen Manager) 

Derivatives Broker AI: "[Senior Yen Trader] WOULD LIKE YOU TO ASK 

[Yen Bank B Submitter] (Yen Bank B) IF HE'S NOT FUSSED TO TRY AND 

KNOCK HIS LIB OR A BIT LOWER. HE HAS SOLD A LOAD OF 1 Y WITH 

ME TODAY AND HE HAS A LOT OF FIXES COMING UP. THANKS." 

February 26, 2009: (Emphasis added.) 

Senior Yen Trader: "right mate i really need 2 things 1 low 3m 2 high 6m i 

know 1m goes over turn but try to keep that down too pls high 6m is v v v 

important" 

Derivatives Broker B 1: "high 6s ok mate let me bid that up and ill have another 

word i did get couple people to change em in 3s yesterday but that tossser ay 

[Yen Banlc I] put em up im sure he did such an a holen he is." 

March 19, 2009: (Emphasis added.) 

Senior Yen Trader: "need low everything pls try really hard to get [Yen Banlc J] 

down" 

Derivatives Broker B 1: "ok did he put them down yesterday 7" 

Senior Yen Trader: "nah same" 

Derivatives Broker B 1: "ok" 

Senior Yen Trader: "[Yen Banlc I] too for 3m the people are [Yen Banlc I] at 63 

[Yen Banlc J] 62 [Yen Banlc H] 62 [Yen Banlc B] 62 [Yen Banlc K] 63 he def 

should be lower [Yen BanlcA] 62 [Yen Banlc G] 63 all those we can get down · 

to 60 or 61. .. " 

Senior Yen Trader: "ok try for [Yen Panel Banlc J] and the Japanese [panel 

banlcs] and [Yen Banlc I] as priority pls" 

Derivatives Broker B 1: "lddc" 

Senior Yen Trader: ""thx ... pls push really hard." 

Derivatives Broker B 1: "yes already had a word with a couple of them 

[Yen Banlc J] n [Yen Banlc B] said they should be lower workin on [Yen Bank A] 

n [Yen Banlc K]" 

Senior Yen Trader: "ta." 

March 23, 2009: (Sent as a blind message simultaneously to Derivatives Broker B1 and 

Derivatives Broker C/D 1.) 

Senior Yen Trader: "Hi need LOW 3m and 1m HIGH 6M, 3m is most important 

[Yen Banlc A] and [Yen Banlc K] both setting 62 they should be lower [Yen Banlc 

A] is setting lower in 3m tibor [Yen Banlcs I, H and G] both at 62 , they can go 

to 617 For 6m push for higher thanlcs" 

March 31, 2009: 

Senior Yen Trader: "mate we have to get 1m and 3m down 1m barely fell 

yesterday real important" 

Derivatives Broker C/D 1: "yeah ok" 

25 
Senior Yen Trader: "banks to have a go win lm are [Yen Banks A, I, D, H, L, 

C, B, K and G] pls" 

Derivatives Broker C/D 1: "got it mate" 

Publishing False Market Rates to Panel Banks on Broker Screens 

The Senior Yen Trader asked certain brokers to falsify the purpmied prevailing market 

rates that brokers displayed on electronic screens made available to clients, such as the panel 

banks. The screens were intended to show prices of actual cash or derivatives trades, which 

panel banks then could take into consideration in determining Yen LIBOR submissions. The 

Senior Yen Trader wanted brokers to report false prices on the screens in an effort to skew other 

banks' Yen LIBOR submissions. Because these screens were available to several, if not all, of 

the panel bank members and the submitters used this information at times in determining 

submissions, dissemination of false market rates had the potential of improperly influencing 

many of the Yen LIBOR submissions on any given day. 

Below are examples of Derivatives Broker Al and the Senior Yen Trader discussing how 

Derivatives Broker Al would falsify the screen rates to assist the Senior Yen Trader's fraudulent 

influence on other panel banlc submissions: 

September 15, 2008: (Emphasis added.) 

Senior Yen Trader: "hi mate i am going to be super busy, can you do me a 

favour and keep the lyr screen as low as reasonably possible .. .libors were 

good." 

Derivatives Broker Al: "OK MATE NO WORRIES WILL DO ALL I 

CAN .... SA W THE LIBORS, GOOD NEWS" 

June 3, 2009: (Emphasis added.) 

Senior Yen Trader: "can you get the swasp [swaps] on the screen all lower 

lyl8m2y3y ... " 

Derivatives Broker Al: " ... will move the screen as the futures open , you lioke 

low everything?" 

"Spoofing:" Publication of False Bids and Offers 

The Senior Yen Trader also asked certain brokers to post false bids and offers for cash 

trades to further disseminate false pricing information to the market and other Yen panel banlcs 

and thereby benefit his positions. This is sometimes known as "spoofing the market." Cash and 

Derivatives Brokers, as intermediaries in the market, disseminate bids and offers they receive 

from clients, in search of counterparties. As the Senior Yen Trader knew, panel banlcs took these 

bids and offers into consideration when determining their submissions because they help 

measure borrowing costs. Seeking to exploit that process for his own benefit, the Senior Yen 

Trader encouraged brokers to provide false bids and offers to certain Yen LIBOR submitters to 

influence their submissions. For example: 

26 
July 7, 2008: (Emphasis added.) 

Senior Yen Rates Trader: "1m lib or is causing me a real headache .. i need it 

to start coming lower" 

Derivatives Broker Bl: "yeah i know mate ... ill try and push a few fictitious 

offers ard this mng see if tahts helps" 

March 30, 2009: (Emphasis added.) 

Senior Yen Trader: "i REALLY REALLY need lm down to 35 and 3m down to 

59 6m i'd prefer unchanged ... use the turn to push lm and 3m down as much as 

you can ... but neeed 3m lower pls by 2bp or so" 

Derivatives Broker B 1: "ok mate ustd ill get on the case ... ok im gonna get 

some spoof offers on the baord 1 3s" 

Senior Yen Trader: " ... you working hard for me?" 

Derivatives Broker Bl: "sure mate of course i know the rules" 

The Senior Yen Trader Ensured Interdealer Brokers Were Compensated for Assisting the 

Manipulative Scheme 

Throughout the period, the Senior Yen Trader sought to ensure the cooperation of brokers 

by compensating them in various ways, from offering drinks and bottles of champagne to 

steering them additional commission-generating business, to ensuring at least one broker 

personally received large cash bonuses. The Senior Yen Trader also used his financial leverage 

with at least one broker for whom UBS generated significant commissions by threatening to cut 

offUBS's business with the brokerage if the firm did not comply with his requests. 

Extra Trades to Generate Commissions 

The Senior Yen Trader routinely offered brokers at Brokerages B, C and D extra 

transactions or other business, and thus UBS-paid commissions, to ensure they would provide 

needed assistance. For example, the Senior Yen Trader told them: 

o "I still owe you some deals;" 

o "we'll do some big tix soon i promise;" 

o "do the bisness and i'll sort you out MASSIVE;" 

o "if you get 3m down you'll get a decent deal from me tomorrow;" 

o "if you manage that for the next 2 weeks you will see the benefits;" 

o "make sure they know that it pays for them to help out;" and 

o "i need to pay .. to give u a trade." 

"Wash" Trades to Generate Commissions 

For at least one of the brokers, the Senior Yen Trader used "wash" or "switch" trades to 

generate additional commissions in return for the broker's assistance. Generally, a "wash" trade 

is a pair of offsetting trades that are intended to negate risk or price competition and that result in 

a financial nullity. The trades, however, generate commissions. For example, on September 18, 

27 
2008, the Senior Yen Trader offered Derivatives Broker Bl $50,000 or $100,000 or more in 

commissions for his assistance in the Senior Yen Trader's attempts to manipulate Yen Libor: 

"if you keep 6s unchanged today I will do fucking one humongous deal with 

you ... Like a 50,000 buck deal whatever. I need you to keep it as low as possible 

... I'll pay you, you know, 50,000 dollars, 100,000 dollars ... whatever you 

want. .. I'm a man of my word." 

Less than a week later, on September 24, 2008, upon the apparent success of Derivatives 

Broker B 1, the Senior Yen Trader used this broker to engage in a series of "wash" trades with 

several derivatives traders at other panel banks to generate the promised $50,000 in commissions 

and fees for Derivatives Broker B 1. In fact, from September 2008 to August 2009, the Senior 

Yen Trader used Derivatives Broker B 1 to engage in at least eight "wash" trades with various 

panel banks, generating approximately $286,000 i~ commissions for Derivatives Broker Bl, all 

as a payoff for the Derivative Broker B 1 's manipulative efforts on behalf ofUBS's Senior Yen 

Trader. 

UBS Paid a Special Bonus for Cash Broker A 

The Senior Yen Trader steered a significant volume ofUBS business to his favored 

brokers. i.e., those that helped him in the manipulative scheme. For example, he singlehandedly 

accounted for approximately twenty percent of Brokerage A's Yen Desk's business, making him 

that desk's biggest client. In return, as described above, Derivatives Broker A1 was one of the 

Senior Yen Trader's key contacts for his collusive efforts and they worked as a team in the 

manipulative scheme. 

The Senior Yen Trader considered Cash Broker A very effective in the scheme, 

particularly Cash Broker A's provision of false information via "run-throughs" to influence panel 

banks. However, at times, Cash Broker A resisted the Senior Yen Trader's requests and 

complained internally that he was not adequately compensated for his "services" to the Senior 

Yen Trader. 

To maintain Cash Broker A's valuable assistance, the Senior Yen Trader not only 

encouraged Brokerage A to pay Cash Broker A bonuses, he also secured a special compensation 

package through UBS to pay Cash Broker A as well as the other individual brokers at Brokerage 

A who helped the scheme. During the time UBS was renegotiating UBS' s fee structure with 

Brokerage A because of all the business UBS generated for Brokerage A, the Senior Yen Trader 

lobbied UBS to pay Brokerage A an additional quarterly payment of approximately $27,000 for 

the "fixing service," amounting to approximately $110,000 annually. The payment was 

ultimately shared by several other individuals at Brokerage A, with Cash Broker A receiving 

approximately $9,000 quarterly. This special compensation package was in place for · 

approximately two years totaling more than $216,000. 

After securing this special compensation for Brokerage A, the Senior Yen Trader became 

even more demanding, and expected the brokers at Brokerage A to implement all of his unlawful 

requests for false Yen LIB OR suggestions and incorporate them into the run-throughs. On 

occasions when Cash Broker A did not honor such requests, the Senior Yen Trader became 

28 
angry and threatened to take away his business. Those threats were taken seriously. The Senior 

Yen Trader's primary contact there, Derivatives Broker Al, and Brokerage A Yen Manager 

pressured Cash Broker A to honor the Senior Yen Trader's requests. For example, on June 28, 

2007, Cash Broker A resisted sending a revised "run-through" reflecting the Senior Yen Trader's 

preferred six-month rate. Derivatives Broker Al and Brokerage A Yen Manager had the 

following exchange (all caps in original): 

Derivatives Broker Al: " ... THIS IS GETTING SERIOUS [Senior Yen Trader] 

NOT HAPPY WITH THE WAY THINGS ARE PROGRESSING HE IS GOING 

TO HAVE A WORD WITH [Derivatives Broker El] TO RECTIFY THE 

SITUATION. CAN YOU PLEASE GET HOLD OF [Cash Broker A] AND GET 

HIM TO SEND OUT 6 MOS L IBOR AT 0.865 AND TO GET HIS BANKS 

SETTING IT HIGH. THIS IS VERY IMPORTANT BECAUSE HE IS 

QUESTIONING MY (AND OUR) WORTH ..... GET 6MOS HIGH PLEASE." 

Brokerage A Yen Manager: "mailed him spoke to him, he realises that the 

carrot might go if this carries on." 

Ultimately, Cash Broker A sent the demanded revised run-through with the six-month 

suggested Yen LIBOR at the level requested by the Senior Yen Trader. 

Summer 2009 Schemes: the ururn Campaign" and uoperation 6M" 

Throughout his tenure at UBS, the Senior Yen Trader routinely employed each of his 

means of manipulation- internal requests, collusion with other panel banks, and coordination 

with brokers. At times, he used all three means simultaneously for a longer period to achieve his 

objective. This is illustrated by two long-term efforts from June through August 2009, which 

were dubbed the "turn campaign" and "operation 6m," respectively. 

By June 2009, the Senior Yen Trader had amassed significant positions in Yen interest 

rate swaps tied to one, three and six-month Yen LIBOR, in spreads between the various tenors of 

swaps (such as the spread between three-month yen swap and six-month yen swap), and in 

spreads between swaps tied to Euroyen TIBOR and Yen LIBOR. The Senior Yen Trader's 

positions became so large at various points that the Senior Yen Trader was close to exceeding 

internal risk limits imposed by UBS. The largest positions were tied to six-month Yen LIBOR. 

Rather than entering into legitimate hedging positions that would offset his risk, however, the 

Senior Yen Trader made two coordinated and sustained pushes, to manipulate the official fixings 

of six-month Yen LIBOR and Euroyen TIBOR in ways that would benefit his massive positions. 

The Turn Campaign 

The Turn Campaign commenced in early June 2009. The Senior Yen Trader's 

derivatives positions tied to six-month Yen LIBOR were due to reset or mature on June 29, 2009 

and would benefit from a high six-month Yen LIBOR. A single basis point move in Yen LIBOR 

was worth approximately $2 million to him. The Senior Yen Trader coordinated with the UBS 

Yen Trader-Submitter 1, the primary four brokers he used, and his friend, the Trader-Submitter 

at Yen Bank F, to try to keep six-month Yen LIB OR high. He explained how they should 

29 
accomplish his objective. He quantified and emphasized for them the potential impact on his 

derivatives trading positions. He encouraged the brokers to push submitters at other panel banks 

for high six-month Yen LIBOR submissions and to provide "spoof bids" to the market so market 

participants believed the rates were rising. At times, some of the brokers agreed to enforce the 

plan by confronting other banks that acted against his interests. 

The following are examples of Turn Campaign communications: 

June 10, 2009: (Emphasis added.) 

Senior Yen Trader: "LOW 1m LOW 3m HIGH 6m 6m is important today mate 

pls spoof bids." 

Derivatives Broker B 1: "rite ole mate ill make a special effort" 

June 12, 2009: (Emphasis added.) 

Senior Yen Trader: "i have such big positions on monday i have 1.5m usd a bp 

6m fix will ask [Yen Banlc F Trader/Submitter] for a one day favour we will 

move up for one day too" 

Derivatives Broker A2: "i know mate, i'm trying to keep on top of it, if it moves 

out of line for 10 sees you know i'll see it and pull it back." 

June 16, 2009: (Emphasis added.) 

Derivatives Broker A1: "Good morning mate ..... ,the "turn campaign" begins 

today. Will put an e-mail together at lunchtime to [Cash Broker A]." 

Senior Yen Trader: "thx." 

June 17, 2009: (Emphasis added.) 

Senior Yen Trader: "can you start having chats with your boys about 6m over 

the turn? i'd be interested to see what they think it'll go up by anyway low3, 

low 1m] high 6m" 

Derivatives Broker B 1: "ole mate will do" 

Senior Yen Trader: "but to be honest am quite happy with them all unchanged so 

don't bust a gut main thing now is to start planting the seed of the turn just 

casual chatting you lmow" 

Derivatives Broker B1: "yep sure thing mate ill start having the converstaion 

with some guys here" 

Senior Yen Trader: "just ask em what they thinlc it'll move by ... and say other 

people think maybe 3bp ie talk it up lots" 

Derivatives Broker B 1: "yes ole mate understood ill do what i can to help" 

Senior Yen Trader: "u da man" 

Derivatives Broker B 1: "aim to please mate" ' 

June 24, 2009: (Emphasis added.) 

Senior Yen Trader: "6m is huge for me on monday ... " 

Derivatives Broker Al: "i have been putting arbi pressure on [Cash Broker A] 

and [Brokerage A Yen Manager] ... would help your cause to also speak to 

30 
[Brokerage A Yen Manager] on friday regarding the turn squeeze and its 

importance ... i will remind you." 

Senior Yen Trader: " ... thanks i will get [Derivatives Broker B 1] on the case too 

remind me to get in touch with [Yen Bank F Trader-Submitter]." 

Derivatives Broker AI: uyeah need to pull out the big guns for this one, don't 

let [Yen Banlc F Trader-Submitter] forget either. :-)es" 

June 25, 2009: 

Senior Yen Trader: "can you put 6m up on monday when we go through the turn 

just for a week or so? ... you did say you'd try to help me out!" 

Yen Banlc F Trader-Submitter: "yes have eno fixing untill 06/07 so i can" 

Senior Yen Trader: "thanlcs mate" 

June 26, 2009: (Emphasis added.) 

Senior Yen Trader: "pis tell your cash boys i need a high 6m is v v important" 

Derivatives Broker C2: "what lvl shall I suggest? .. yesterday's drop was a bit 

of a shocker (in 6m lib or) any idea why that happened? ... " 

Senior Yen Trader: "2 people moved it 11bp between them" 

. Derivatives Broker C2: "the cheek who was it?" 

Senior Yen Trader: "[Yen Bank M] and [Yen Bank N]. if you can have a 

word" 

Derivatives Broker C2: "will do mate" 

******* 

Senior Yen Trader: "i need you to move 6m up for 2 weeks mate ... but please 

move 6m up on monday." 

Yen Banlc F Trader/Submitter: "understood" 

Senior Yen Trader: "thx i need you in the panel on Monday" 

Yen Banlc F Trader/Submitter: "ok enough" 

On the day ofthe fixing, June 29, 2009, the Senior Yen Trader made one final push to 

manipulate higher the six-month Yen LIBOR fixing. He confirmed his expectations of a high 

submission with the UBS Yen Trader-Submitter 1 and Yen Banlc F Trader-Submitter. He also 

ensured that Derivatives Broker A1 would contact each panel banlc. They discussed the expected 

submission by each banlc and what strategy Brokerage A would employ to try to get each 

submission higher to meet Senior Yen Trader's goal, such as a "few spoof bids" or direct urging 

of the various submitters. The following are excerpts from the numerous conversations the 

Senior Yen Trader had that day with Yen Banlc F Trader-Submitter, UBS Yen Trader-Submitter 

1 and the brokers: 

June 29, 2009: 

Internal Request: (Emphasis added.) 

Senior Yen Trader: "hi .... 6m cash crosses the year end today we have huge 

fixings" 

Yen Trader-Submitter 1: "indeed" 

Senior Yen Trader: "can we set 6m libor high pls? ... " 

Yen Trader Submitter 1: " ... we dont have any fix at mom" 

31 
Senior Yen: Trader: "can we go 74 or 75? we have 2m usda bp fix for the next 

week i think a lot of people are going to move it up today well i hope" 

Yen Trader-Submitter 1: "yes sure will. i go with 0. 75 for you." 

******* 

External Request to Yen Bank F: (Emphasis added.) 

Senior Yen Trader: "pls remember 6m today ... " 

Yen Banlc F Trader-Submitter: ·"yah no worries ... 6m libor today good contrib?" 

Senior Yen Trader: "high pis as high as you can manage we are going 75 

anyway whatever you can do thx." 

Yen Banlc F Trader-Submitter: "sure np ... " 

******* 

Request to Broker: (Emphasis added.) 

Senior Yen Trader: "ok lets go thru em one by one." 

Derivatives Broker B 1: "sure" 

Senior Yen Trader: "first up try to get alllibors up i don't care if 1m and 3m go 

up too lets go for 3bp on 6m also tibors were up pls use that with the japanese 

banl(s" 

Derivatives Broker B 1: "ok" 

Senior Yen Trader: " ... make sure [the banks) all know its the turn ... " 

Derivatives Broker B 1: "yeah thats needed bevcasuse sometimes poepel forget 

and set them the same ... " 

Senior Yen Trader: " ... do your best and i'll smi u out." 

Derivatives Broker B 1: "[Yen Banlc K] rite i know him he speak to my dolla desk 

thats where r orders come from ill have a word with him amnd ask to get it up ok 

mate" 

Senior Yen Trader: "v v v important. pls try extra extra hard mate" 

Derivatives Broker B 1: "i will mate i know yu need it." 

Senior Yen Trader: "ok mate i going in 3m pis pis pis try we are going 75 so 

is [Yen Bank F)" 

Derivatives Broker B 1: "ok cheers." 

Senior Yen Trader: "get em up mate" 

Derivatives Broker B 1: "ill trying really hard" 

Although the Yen LIBOR fixing began to drop slowly over the month of June 2009, the 

fixing actually rose by three quarters of a basis point on June 29, as compared to the previous 

fixing on June 26. UBS increased its submission on June 29 by 3 basis points, and Yen Banlc F 

increased its submission by 6 basis points. Five other banlcs in the panel, all of which were 

discussed by the Senior Yen Trader and Derivatives Broker B1 in their planning call on June 29, 

also increased their submissions two to five basis points. 17 While the move in the fixing was not 

as great as needed for his positions, the increase was sufficient enough to reduce the losses 

experienced by the Senior Yen Trader. 

17 The Commission finds that other panel banks made submissions that were consistent with the Senior 

Yen Trader's requests. The Commission does so without addressing whether or not such banks made 

such submissions as a result ofthe Senior Yen Trader's requests. 

32 
Operation 6M 

During the Turn Campaign, the Senior Yen Trader began his second effort to push sixmonth Yen LIBOR high after June, in an effort he dubbed, "Operation 6m." Operation 6m was a 

campaign by the Senior Yen Trader to manipulate the six-month Yen LIB OR fixing upwards 

over several weeks through July, and then to cause the six-month Yen LIBOR fixing to drop 

dramatically in mid-August. The Senior Yen Trader also remained focused on the Euroyen 

TIBOR fixing, which would impact his derivatives trading positions on the spread between 

Euroyen TIBOR and Yen LIB OR. 

The motivation for this effort was clear. If the Senior Yen Trader was successful in 

causing an increase to the six-month Yen LIBOR between the end of July and then a drop in the 

fixing in mid-August, the UBS Yen Desk stood to gain hundreds of millions of dollars. 

As with the Turn Campaign, the Senior Yen Trader's key contacts at certain brokerages 

and his friend Yen Banlc F Trader-Submitter were critical to his plan. The Senior Yen Trader 

emphasized that he was trying to benefit his derivatives trading positions and manage his 

massive risk position. He explained he was under pressure from UBS to reduce his substantial 

risk position. 

The following are examples of the communications surrounding the beginning of 

Operation 6m in late June and July. 

June 24, 2009: (Emphasis added.) 

Derivatives Broker AI: "Morning ... , [Yen Banlc B] must have had some fixings, 

not helping" 

Senior Yen Trader: "he on drugs for once i just want them static and they are 

falling! ... pis try to keep ly low on screen mate yeah i just need thgis 6m gap 

for 2weeks" 

Derivatives Broker AI: "will do my best mate" 

Senior Yen Trader: "then they can all go down· hopefully tibor will stay high 

operation 6m." 

Derivatives Broker AI: ";-) ... " 

June 26, 2009: 

Senior Yen Trader: " ... but for the next 2weeks i really really need you to put 6m 

higfher" 

Yen Bank F Trader-Submitter: "what is the adte just that i know?" 

Senior Yen Trader: "july 14 ... after that i need 6m to crash off like you." 

Yen Banlc F Trader-Submitter: "that is no problem for me, i do nothing with the 

cash guys until then. . .. " 

Senior Yen Trader: " ... i will then get our 6m way down after july 18th it is 

Yen Banlc F Trader-Submitter: "ok" 

Senior Yen Trader: "and will try to get everyone else down too" 

33 
Yen Banlc F Trader-Submitter: "when is the lest fixing date? ... the last july fixing 

date??" 

Senior Yen Trader: "18th ... then i a need low low low ... sry 17th ... i happy for all 

libors off after that date ... only reason ion bid is i have huge huge position that 

way so am happy for to come lower after the 17th" 

Yen Banlc F Trader-Submitter: "ok enough enopugh ... " 

July 1, 2009: 

Senior Yen Trader: "hi . . . . are we planning on moving libors or just going 

unch?" 

Yen Trader- Submitter 1: "i would have gone slightly lower in 6s but if you wish 

i can leave it unchanged" 

Senior Yen Trader: "thx really need it unch for next 2wk then low as you want" 

Yen Trader- Submitter 1: "ok 0.71 unc" 

Senior Yen Trader: "ta." 

July 7, 2009: (Emphasis added.) 

Senior Yen Trader: "mate u gotta help with [Yen Banlc J]" 

Derivatives Broker B 1: "ill do my best to ask amte ok" 

Senior Yen Trader: "pis if he only goes up 2bp that brings em back 0.25 no 

one will notice" 

Derivatives Broker B 1: "sure ok mate ill try ill run him thru a bit higher this 

mng aswell to try and show it small higher" 

Senior Yen Trader: "just bid him some as well then he can tell his bosses look 

its bid here thats all he needs to do say well its bid here and we can't offer 

it" 

Derivatives Broker B 1: "ok sure mate i can only ask not tell him as yu know ok" 

Senior Yen Trader: "y but he loves you mate he told me." 

Derivatives Broker B 1: "hahahah rite ill try and be his friend nomn juts his 

broker" 

July 14, 2009: 

Senior Yen Trader to Yen Banlc F Trader-Submitter: " ... just fyg after eom [end 

of month] will get 6m down a lot. we will move from top to bottom and so will 

[Yen Panel Banlc J]" 

July 15, 2009: (Emphasis added.) 

Derivatives Broker C/D 1: " ... ha ha ok mate i can see you as captain chaos 

cash still looking a touch easier but nothing much going on arbi are starting to 

produce bids so hopefully the offers may go back" 

Senior Yen Trader: "ok i only need 6m high this month then you MUST get it 

lower a lot lower pls keep 3m and 1m unch." 

Derivatives Broker C/D 1: "ok ... " 

34 
Avoiding Conflict with Yen Bank F Trader-Submitter's Interests 

During Operation 6m (and at other times), the Senior Yen Trader offered to enter into 

trades with Yen Banlc F Trader-Submitter to ensure that their respective interests aligned and 

Yen Banlc F Trader would not have a conflict that prevented him from helping the Senior Yen 

Trader with his attempt to manipulate the Yen LIBOR fixing. 18 The Senior Yen Trader urged 

Yen Banlc F Trader: "tell me what you need to see. i have a vested interest in making sure our 

fixings match." As he was so concerned that Yen Banlc F not make a competing submission, the 

Senior Yen Trader offered such trades even at prices that were not beneficial to him to entice 

Yen Banlc F Trader-Submitter, and the latter often accepted. For example on July 21, 2009, the 

Senior Yen Trader outlined his plan, the size of his positions, the need to reduce his risk and how 

Yen Banlc F Trader-Submitter could benefit from an attractive trade: 

Senior Yen Trader: "i been asked to reduce risk a bit" 

Yen Banlc F Trader-Submittet: "ok" 

Senior Yen Trader: "i still going for lower 6m next month but position is huge if 

you want to do some 1y 1/t 1 wid help me on risk limits obviously i am still very 

much paid and need a low 6m from next week" 

Yen Banlc F Trader-Submitter: "me paying 1 in 1 y?" 

Senior Yen Trader: "y i don't want to do it but risk are going nuts position is v 

v big i told them already 6m will be lower next month problem is all my 6m 

fixes this month rolled and i am left too 1 way completely up to you if not i'll 

give some 3m 1/t." 

Yen Banlc F Trader-Submitter: " ... does not suit me taht much today need high 

6m libor today ..... " 

Senior Yen Trader: "same how about we do Ov6 spot as well? so no fix today 

i just need to keep the risk guys at bay 200b ly will bring me in limit i will 

pay you .665 for Ov6 today in same amount to knock the fix out if you need i 

thinlc it does nothing today the fix that is wid be a massive favour ... if you do 

200b 1y then what net fix are you left with? i will hedge the balance so you are 

neutral" 

Yen Banlc F Trader-Submitter: "can i do 200 and lower my 6m quote? oor we 

cross fra up to you mate" 

Senior Yen Trader: "rahter just cross the fra pis" 

Yen Banlc F Trader-Submitter: "that is fair ok we done" 

Senior Yen Trader: "thanlcs" 

(Emphasis added.) 

The Last Phase of Operation 6M 

As Operation 6m moved from the end of July, the Senior Yen Trader shifted his efforts 

from attempting to increase the six-month Yen LIBOR higher, to ensuring that the fixing would 

be lower in August to benefit his derivative trading positions that were due to reset in mid18 The Senior Yen Trader offered similar offsetting trades to UBS Trader-Submitters when their 

positions stood to be negatively impacted by a manipulation that favored the Senior Yen Trader. (see 

pp. 15-16.) 

35 
August. Derivatives Broker Al advised the Senior Yen Trader to be careful with his efforts and 

to avoid too obvious changes in the rate. The Senior Yen Trader assured him not to worry, and 

that he was coordinated with Yen Panel Banks F and J: 

July 22, 2009: (Emphasis added.) 

Senior Yen Trader: "11th aug is the big date i still have lots of 6m fixings till 

the lOth" 

Derivatives Broker Al: "christ keeps getting extended started off as 14th of this 

month:-)" 

Senior Yen Trader: "i know" 

Derivatives Broker Al: "ifyou drop your 6m dramatically on the 11th mate, 

it will look v fishy, especially if [Yen Bank J] and [Yen Banlc F] go with you I'd 

be v careful how you play it, there might be cause for a drop as you cross into a 

new month but a couple of weeks in might get people questioning you." 

Senior Yen Trader: "don't worry will stagger the drops ie 5bp then 5bp" 

Derivatives Broker Al: "ole mate, don't want you getting into sh it" 

Senior Yen Trader: "us then [Yen Bank F] then [Yen Bank J] then us then 

[Yen Bank F] then [Yen Bank J]" 

Derivatives Broker Al: "great the plan is hatched and sounds sensible" 

In August 2009, when the Senior Yen Trader was on an extended absence from the 

office, he ensured that in his absence the brokers and UBS Yen Trader 2 had instructions on how 

to attempt to move the six-month Yen LIBOR. Derivatives Broker Al followed through and 

worked closely withY en Trader 2 to accomplish the objectives of the Senior Yen Trader. In his 

conversations with Yen Trader 2, Derivatives Broker Al assured him, "I know what you need in 

terms of libors and will let you know what my cash guru in london honestly feels as to their 

movements each day .... he has his 'arbitrage' instructions!" 

In July, the submissions ofUBS and Yen Banlc F both moved higher consistent with the 

plan. In August, the submissions of all three banks, UBS, Yen Banlc F and Yen Banlc J, all 

moved lower consistent with the plan. By August 11, the day of the Senior Yen Trader's desired 

· drop in the fixing, the submissions of all three banlcs dropped, such that Yen Banlcs F and J were 

in the bottom quartile of the submitting banlcs while UBS ·was included in the fix calculation. 

Specifically, from late July through mid-August, UBS's submission felll2 basis points, and Yen 

Banks F and J's submissions fell by 14 and 15 basis points, respectively. 19 In contrast, the 

largest change in any other submitting banlc's submission during this time was a drop of eight 

basis points and the average change among the other thirteen banlcs was a decrease of about four 

basis points. 

19 Again the Commission finds that other panel banks made submissions that were consistent with the 

Senior Yen Trader's requests. The Commission does so without addressing whether or not such banks 

made such submissions as a result of the Senior Yen Trader's requests: 

36 
UBS Continued Manipulative Conduct Concerning Yen LIB OR and Euroyen TIBOR After 

the Senior Yen Trader Left UBS 

Traders on UBS' s Yen Desk continued, at times, to attempt to manipulate Yen LIB OR 

and Euroyen TIBOR to benefit UBS's derivatives trading positions after the Senior Yen Trader 

left UBS in September 2009.20 These traders utilized some of the same methods- internal 

requests, use of interdealer brokers and attempts to coordinate with other banks. At least one 

broker reached out shortly after the Senior Yen Trader's departure to assure a UBS Yen 

Derivatives Trader that he would continue to help UBS influence how the rates were submitted 

by other banks. For example, on September IO, 2009, UBS Yen Trader 2 reminded Derivatives 

Broker AI that "Monday is the d-day" due to big fixes on swap transactions tied to three and sixmonth LIBOR, both of which he needed low. Derivatives Broker AI, who by then was deeply 

experienced with the manipulative scheme, assured the Yen Trader 2 that they could influence 

the three-month fix, and that the broker stood ready to help: 

" ... you realise that you have the ability to influence the 3m fix, you are currently 

sitting at the upper end of the range. The 6m will have to come down to others as 

you are already v low .. .i'll remind you to chase your cash boys as well:-)" 

UBS Yen Trader 2 also reached out for help to Derivatives Broker BI, who similarly 

reassured him that he regularly spoke to at least seven other panel bank submitters and he would 

try to help Yen Trader 2, if he needed the help. 

The UBS Yen Derivatives Traders, on their own and at the direction of the Yen Desk 

Manager, also on occasion continued to try to manipulate the Yen LIBOR and Euroyen TIBOR 

through UBS 's submissions in order to manage the Senior Yen Trader's positions and minimize 

UBS's losses as it attempted to trade out of those positions he left behind, or to benefit their own 

derivatives trading positions. For example: 

February I9, 20IO: 

Yen Trader 3: "need it to not go up in jpy basically unchanged for our lib or 

suggestions pls" 

Yen Trader-Submitter I: "yes especially 6m agreed" 

March 23, 20IO: 

Yen Trader-Submitter I: "[Yen Trader 2] doesnt really want us to move 6s lib 

lower as other market players might figure out our posi when we are too extreme. 

for the mom he suggested to leave it unch. last time i lowered it was when we 

discussed it a few weeks back. since then always unch fyi" 

Yen Trader 3: "ok unch is a good idea" 

20 Prior to the Senior Yen Trader's departure, as he was trying to renegotiate his compensation, at least 

one UB S manager elevated concerns about the "embarrassing" practices of the Senior Yen Trader to . 

higher level managers. Despite such concerns being elevated, those at UBS who had been unaware of the 

misconduct made no meaningful efforts to determine whether the Senior Yen Trader had engaged in 

inappropriate or unlawful behavior. 

37 
e. UBS's Attempts to Manipulate Other LIBOR Currencies and Euribor 

Numerous UBS derivatives traders attempted to manipulate the official fixings of 

LIBORs for currencies other than Yen, including Swiss Franc, Sterling and Euro, and other 

benchmark interest rates, including Euribor, to benefit their derivatives trading positions?1 

Moreover, the Trader-Submitters for certain benchmark interest rates regularly made 

submissions to benefit their trading positions. With respect to at least some currencies during 

certain periods, this occurred on a daily basis. 

Swiss Franc LIBOR 

From at least January 2005 through at least September 2009, on a regular basis, UBS's 

Swiss Franc Trader-Submitters adjusted UBS's Swiss Franc LIBOR submissions to benefit 

UBS's trading positions. The Swiss Franc Trader-Submitters' standard practice was to round 

their Swiss Franc LIBOR submissions by a quarter or a half of a basis point to benefit UBS 's net 

Swiss Franc LIBOR position based on STIR's Swiss Franc trading book and other Swiss Franc 

LIBOR-related positions that were reported to them. This was known on the desk as the "fixing 

interest." 

The Swiss Franc LIBOR Trader-Submitters also accommodated the requests of other 

Swiss Franc Derivatives Traders. For example, on July 5, 2006, a Swiss Franc Derivatives 

Trader told a Swiss Franc Trader-Submitter that he was on the receiving end of a large fixing 

tied to one-month Swiss Franc LIBOR at the end of July, and, therefore, he wanted a high onemonth fixing. The Trader-Submitter agreed to make his submission high, stating that it would 

not be a problem. Such requests were either in written, in chats, or oral. 

Sterling LIBOR 

From at least November 2007 through at least September 2009, UBS Sterling Derivatives 

Traders responsible for Sterling LIB OR submissions received at least ninety requests from 

Derivatives Traders to adjust UBS's Sterling LIBOR submissions in a manner that would benefit 

their derivatives trading positions. The focus of requests, as with other currencies, was greatest 

when the Derivatives Traders had significant fixings on their swaps positions. UBS's Sterling 

Trader-Submitters regularly acknowledged and followed these requests. On occasion, the 

Trader-Submitters contacted the Derivatives Traders before making submissions to determine if 

the Derivatives Traders had any preferences as to the rates UBS would submit for Sterling 

LIBOR. In addition, the Sterling Trader-Submitters at times would consider the STIR desk's 

own derivatives trading positions, and adjust the Sterling LIBOR submissions to benefit those 

trading positions. For example, in February, 2008, a Sterling Trader-Submitter and a manager 

had the following communications: 

21 Through its internal investigation, UBS identified evidence of similar misconduct involving 

submissions for at least the Hong Kong Interbank Offered Rate ("HIBOR"), the Singapore Interbank 

Offered Rate ("SIBOR"), the Singapore Swap Offer Rate ("SOR") and the Australian Bank Bill Swap 

Rate ("BBSW"). 

38 
February 27, 2008: (Emphasis added.) 

Sterling Trader-Submitter 1: "do u guys have any axe?" 

Rates Manager A: "let me check as high as possible pis sir" 

Sterling Trader-Submitter 1: "ok i go 70... u shd let me know ur [daily] axes for 

fixings mate" 

Rates Manager A: "will do on days we have big fixings" 

February 28, 2008: 

Rates Manager A: "hey mate we want a really low fixing tomorrow in 3m" 

Sterling Trader-Submitter 1: "i have no axe mate so that fine ... " 

Rates Manager A: " ... try and get the fixing lower have a £lOOk fixing 

tomorrow" 

Sterling Trader-Submitter 1: "wow ok k" 

Commencing in or around the summer of2008 and continuing until September 2009, a 

member ofUBS's STIR management also sought to ensure that derivatives trading positions 

were consistently being taken into account. Senior STIR Manager A instructed the TraderSubmitters who were based in Zurich to consult each morning with the UBS Sterling Derivatives 

Traders in London to determine their net risk with respect to the derivatives trading positions and 

to adjust UBS's Sterling LIBOR submissions accordingly to benefit those positions. The TraderSubmitters complied with the instruction and at that point adjusted their Sterling LIBOR 

submissions each day based on information obtained daily from the London-based traders about 

their net positions tied to Sterling. For example, on March 16, 2009, a Sterling Trader-Submitter 

and a Derivatives Trader had the following communication: 

Sterling Trader 1: "ive got a big 6m fix rec 11 Ok gbp of the fix so a nice high 

one will be nice" 

Sterling Trader-Submitter 2: "so very high 6m" 

Sterling Trader 1: "yes pls!" 

Sterling Trader-Submitter 2: "ok" 

Euro LIBOR and Euribor 

Over an approximately four-year period, from at least September 2005 through at least 

October 2009, UBS's Euro LIBOR and Euribor submissions were based, at times, in whole or in 

part, on UBS's Euro-based derivatives positions. 

UBS Euro Trader-Submitters considered UBS's net Euro positions on the Rates desk that 

were valued or priced off of Euro LIB OR or Euribor. To determine the rates to submit that 

would be beneficial to UBS's trading positions, the Trader-Submitters reviewed UBS's 

derivatives transactions and consulted with and obtained information from other UBS Euro 

Derivatives Traders. Based on that information, UBS's Euro Trader-Submitters adjusted UBS's 

Euro LIBOR and Euribor submissions to benefit the derivatives trading positions. This occurred 

on a regular, if not daily, basis. 

39 
Moreover, senior managers made their own requests for specific Euribor submissions that 

would benefit their trading positions and, at times, communicated with each other about their 

requested submissions. For example: 

August 7, 2007: 

Senior Rates Manager B: "hi [Senior STIR Manager B], what you putting in for 

3mth and 6mth euribor fixing today?" 

Senior STIR Manager B: "goo[d] question ... need a low fix personally in 3s" 

Senior Rates Manager B: " .. .i have a 2bn fixing today and i'm also looking to 

sell1 bn of the 6mth at about 4.42 fun times with the fixings at the moment" 

Senior STIR Manager B: "i'll shoot for low then and hope some other do too and 

we dont fall out .. " 

Senior Rates Manager B: "if i don't sell the 6mth before the fix, i need a high 

fixing 3mth i'm now flat over the next few weeks we've got a lot of 6mtth fixing 

coming off' 

Senior STIR Manager B: "ill stick 4.42 in for 6s then" 

Senior Rates Manager B: "we are receiving the fixing" 

Senior STIR Manager B: "gotscha" 

Multiple UBS Euro Derivatives Traders also occasionally made requests to the Euro 

Trader-Submitters for submissions that would benefit their derivatives trading positions. The 

Euro Trader-Submitters agreed to the requests and solicited the Derivatives Traders for their 

preferences for submissions. The Trader-Submitters took the specific requests into account 

when determining UBS's Euro LIBOR and Euribor submissions. 

On June 25, 2009, more than eight months after the CFTC had launched its investigation 

ofUBS and demanded information and documents from UBS in October 2008, a senior manager 

warned the Euro Derivatives Traders and the Trader-Submitters not to make requests for 

beneficial LIBOR and Euribor submissions on a "public chat." 

June 25, 2009: (Emphasis added.) 

Euro Trader-Submitter 1: "u need low 3s and/or 6s? we need low 6s ... boys, we 

send the fixings in about 1hr, so let us know pls" 

Euro Trader 1: "low 6s high 12s please" 

Euro Trader-Submitter 1: "noted" 

Rates Manager A: "JUST BE CAREFUL DUDE" 

Euro Trader-Submitter 1: "yeah [Sterling Trader-Submitter 1] gave me ur call 

update i agree we shouldnt ve been talking about putting fixings for our 

positions on public chat just wanted to get some transparency though otherwise 

we end up with the same talks afterwards why we fixed it low or high, from u 

boysinldn" 

However, neither the UBS senior managers in the chat above nor any other UBS 

managers instructed UBS 's Derivatives Traders and Trader-Submitters to stop the practice of 

taking into account trading positions. Instead, the conduct continued unabated. In fact, a written 

40 
request for a specific Euribor submission involving a senior STIR manager occmTed as late as 

June 30, 2010. 

f. By Such Conduct, UBS Made Knowingly False Reports 

UBS, through its Derivatives Traders, Trader-Submitters and/or managers, knew it was 

improper to consider derivatives trading positions in determining the banlc'.s benchmark interest 

rate submissions. A banlc's financial derivatives trading positions are not legitimate or 

permissible factors on which to base a banlc's daily LIBOR, Euribor or Euroyen TIBOR 

submissions. By basing its benchmark interest rate submissions on rates that benefited UBS's 

derivatives positions, UBS's submissions were not made in accordance with the BBA, EBF or 

JBA's definitions and criteria for benchmark interest rate submissions. Instead, UBS knowingly 

conveyed false, misleading or knowingly inaccurate reports that its submitted rates for LIBOR, 

Euribor and Euroyen TIBOR were based on and solely reflected its assessment of the costs of 

borrowing unsecured funds in the relevant interbank money markets. Accordingly, UBS 

regularly attempted to manipulate the official fixings of and knowingly delivered false, 

misleading or knowingly inaccurate reports concerning Yen LIB OR, Swiss Franc LIB OR, 

Sterling LIBOR, Euro LIBOR, Euribor and Euroyen TIBOR, which are all commodities in 

interstate commerce. 

2. During the Financial Crisis, UBS Made Submissions Based in Whole or in 

Part on Certain UBS Managers' Directions That Reflected Concerns for 

UBS's Reputation 

During the financial crisis, commencing in early August 2007, certain managers of 

UBS's Group Treasury and ALM issued directions concerning the determination of its U.S. 

Dollar LIB OR and other benchmark interest rate submissions arising out of a concern of 

protecting UBS's reputation and avoiding what it perceived as unfair and inaccurate negative 

media speculation about UBS's fundraising ability and creditworthiness.22 

The key directions were, at first, to "err on the low side" of the submissions of the panel 

banlcs, and, later, to make submissions in the "middle of the pack" of the panel banlcs. Certain 

Group Treasury and ALM managers issued the broad directions without ascertaining or requiring 

the Trader-Submitters to ascertain the costs of borrowing unsecured funds in the relevant 

markets or ensuring that such directions were in accord with the definitions and criteria ofthe 

benchmark interest rates. These Group Treasury and ALM managers did not provide any 

guidance to its submitters as to how to implement these directions, other than simply to follow 

them. When the submitters followed the directions, they impacted UBS 's submissions. As a 

result, at times during the financial crisis, UBS's submissions did not accurately or solely reflect 

or relate to UBS' s assessment of the costs of borrowing funds in the relevant interbanlc 

markets. 23 

22 UBS 's directions also impacted other LIBOR submissions and its Euribor and Euroyen TIBOR 

submissions. 

23 Consistent with UBS 's lack of internal controls over its benchmark interest rate submissions, the 

Group Treasury and ALM managers did not have a formal role or supervisory responsibility over the 

41 
Prior to August 2007, LIB OR and other benchmark interest rates were generally steady 

day-to-day with little variance among the submissions from panel banks, which led to a relative 

predictability of benchmark interest rates. UBS's LIBOR submissions also were relatively 

stable. UBS's submissions for at least U.S. Dollar LIBOR were frequently included in the 

calculated average for the BBA's LIBOR fixings. With the onset of the financial crisis, liquidity 

in the London interbank market began to diminish dramatically and severe dislocations in the 

relevant unsecured cash markets developed. The media focused on the loss of liquidity in the 

markets and the financial well-being of the major financial institutions. The media analyzed 

LIBOR submissions, among other market indicators, to ascertain each panel banlc's strength and 

ability to borrow funds. Questions arose in the media about the integrity of the panel banks' 

submissions. 

The rapidly diminishing interbanlc transactions affected the panel banlcs' ability to make 

submissions. However, the panel banlcs were nonetheless required to adhere to the benchmark 

definition and criteria and submit rates based on their evaluation of the costs of borrowing 

unsecured funds in the interbanlc markets, namely, for LIBOR, the London interbanlc market. 

The definitions and criteria did not permit panel banlcs to base their submissions, in whole or in 

part, on a banlc's desire to avoid negative media attention or reputational harm. 

The Beginning of the Financial Crisis- August 2007 through early April 2008: The "Err on the 

Low Side" Direction 

On August 9, 2007, Bloomberg published an article about rising LIBOR submissions for 

the overnight tenor entitled, "Lending Rates Rise, Overnight Dollar Surges." The Bloomberg 

article highlighted a 65-basis point jump in UBS's LIBOR submission for the overnight tenor 

from the prior day's submission, as well as similar jumps by other panel banks. The article 

suggested that the jump in LIBOR submissions reflected an elevation ofbanlc borrowing costs as 

losses at banlcs mounted based on exposures to subprime mortgages. The article further 

suggested that a banlc's borrowing costs reflected its creditwmihiness relative to other panel 

banlcs. 

Prior to the publication of the article, an inquiry from Bloomberg reverberated within 

UBS, causing concern as the press sought further comment from UBS and as UBS was to 

announce quarterly results the following week. In alerting senior Group Treasury members 

about the media inquiry, an employee commented, "Given that we are announcing our results 

next week this will need urgent attention." 

UBS concluded that the 65-basis point spike in its U.S. Dollar overnight LIBOR 

submission was the result of an error. On August 9, 2007, the same day as the Bloomberg 

LIBOR submissions; yet, as set forth above, they became part of the process and at times had an impact 

on UBS's submissions. 

42 
article, an ALM manager sent the following direction by email to senior managers and others in 

UBS's Group Treasury and derivatives trading divisions:24 

"After the happenings of today with the [overnight] Libor fixings, can you pls 

advise whoever contributes fixings on the rates derivs side to co-ordinate the 

numbers with the STIR desk in Zurich. It is highly advisable to err on the low 

side with fixings for the time being to protect our franchise in these sensitive 

markets. Fixing risk and PNL thereof is secondary priority for now." 

(Emphasis added). This direction stemmed from a desire to ensure that UBS's LIBOR 

submissions did not convey to the media or market what UBS believed to be an inaccurate 

message about UBS's financial stability or otherwise harm UBS's reputation in the increasingly 

uncertain environment created by the financial crisis. The idea was that, going forward, UBS's 

submissions were to portray a view that UBS was more creditworthy than other panel banks and, 

therefore, UBS should not make higher submissions and be an outlier as compared to other panel 

banks. Neither Group Treasury nor ALM managers took any steps to ensure that the "err on the 

low side" direction for making LIBOR submissions complied with the BBA's definition and 

criteria for making LIBOR submissions or that it related to UBS's costs of borrowing in the 

London interbank market. 25 

UBS promptly disseminated the direction to err on the low side. That same day, August 

9, Rates Manager A confirmed that the necessary coordination was in place: "We have already 

co-ordinated our efforts with [Senior Rates/STIR Manager] and [U.S. Dollar Trader-Submitter 1] 

on the usd libors will be speaking to [U.S. Dollar Trader 1] and [Euro Trader 1] will be liaising 

with [Senior STIR Manager B] on the eurolibors before our numbers are input." U.S. Dollar 

Trader 1 in Zurich and U.S. Dollar Trader-Submitter 1 in London discussed the "err on the low 

side" direction, and their submissions immediately started reflecting the directions. For example, 

on August 10, 2007, the traders had the following communication: 

24 During this time, UBS's U.S. Dollar LIBOR submissions were made by a U.S. Dollar swaps trader 

("U.S. Dollar Trader-Submitter 1") who traded medium tenor derivatives. Prior to August 9, 2007, UBS 

did not provide the Trader-Submitter with access to UBS's money market transactions or other 

information about UBS's costs of borrowing. Following the August 9, 2007 direction, a U.S. Dollar Stir 

Trader provided U.S. Dollar Trader-Submitter 1 with the rates he should submit for the short end tenors. 

25 The email's last sentence also reflects that UBS's Trader-Submitters otherwise were taking into 

account UBS's risk and profits and losses ofUBS's derivatives trading positions in making UBS's 

submissions. Here, this senior manager was directing that the franchise protection concerns trumped 

those other improper considerations. However, as noted herein and as demonstrated by the numerous 

examples of Derivatives Traders and Trader-Submitters communications set forth above, UBS's TraderSubmitters continued to regularly account for UBS's derivatives trading positions in the determination of 

its submissions throughout the financial crisis, as they had before and would do so after. 

43 
U.S. Dollar Trader 1: "o;/njust trading way lower ... so I would go for a pretty 

low run ... aim should really be to be on the lower side of range" 

U.S. Dollar Trader-Submitter 1: "just looking for early indications for o/n 1 wand 

2wks - understand mkt dropping fast- so early indies for now then true [levels] 

at 11 am - pls" 

U.S. Dollar Trader 1: "o/n would go for 5.70 ... 1wk 5.70 ... 2wk 5.60 ... this 

seems probably a tad low right now, but recon thats what we should try to 

be" 

U.S. Dollar Trader-Submitter 1: "kk-will check back at ll[when the 

submissions had to be made] -as you say always want to err on the low 

side- thks for colour- may even swap ideas about 1m 2m and 3 mo with you too 

in curect climate - sure few weeks down the road then will only need to chat about 

v short dates ie <1mo- appreciate colour" 

U.S. Dollar Trader 1: "np at all ... we just dont want to give the market a wrong 

impression ... we not struggling to get cash ... so therefore dont want to be on 

the highs of libors" 

(Emphasis added.) 

A few days later, on August 14, 2007, U.S. Dollar Trader 1 confirmed again, "my 

indications are deliberately on the low side ... " and U.S. Dollar Trader-Submitter 1 agreed, "y[es] 

pls err on the side of caution as before- once teh mkt normalises ... then we can adj 

accordingly .... " 

On September 3, 2007, U.S. Dollar Trader 1 explained to an ALM Manager his 

understanding of why UBS wanted to "err on the low side," stating that UBS did not want "to be 

seen to pay higher or at libor in the market to avoid trouble." On September 5, 2007, U.S. Dollar 

Trader-Submitter 1 explained he was following the "err on the low side" direction to his 

supervisor, Senior Rates Manager C: 

"fyi libor has been fuctioning well for many years - current turbulance and 

american home owners exposure to libor may trigger further questions - since the 

mkt dislocation I am now keeping a record ofUBS libor fixings vs the implied 

rates - we are fixing on the low side of all other banks in the libor panel in the 

4- 12 mo period by several bps - and we are still fixing 12 - 15 over implied 

rates - I can justify my fixings each day if asked - I se longer dated libors even 

lower however the rest of he mkt continue to calllibors higher than UBS - we 

should be protected from moral hazard as a bank. Short rates coming grom 

Zurich now - again asa bank we are erring on the low side." 

(Emphasis added.)26 As noted above, this particular Trader-Submitter never had direct access to 

information about UBS's actual costs of borrowing unsecured funds in the relevant market for 

U.S. Dollar LIBOR. 

26 On the same day, after Derivatives Broker Al commented on how low UBS was on the Yen LIBOR 

fixes, stating, "you are conspicuous by how low you are on the fixes now .. 2bps below the lowest and 

about 5bps below the norm! ... I take it [Senior Yen Trader-Submitter] is the other way", the UBS Senior 

Yen Trader responded, "no is all senior mngment mate want to show the world we are the strongest 

44 
Thereafter, UBS managers monitored how UBS's LIBOR submissions sent signals to the 

markets and the press about UBS's ability to obtain funds. At this time, as part of their daily 

internal calls about liquidity and funding as the financial crisis intensified, UBS managers 

received internal analyses about UBS's LIBOR submissions relative to other panel banks. 

Specifically, UBS ALM Manager A circulated spreadsheets about the panel banks' submissions 

for U.S. Dollar, Euro, Sterling, Swiss Franc and Yen LIBOR, showing how UBS compared to 

the other banks. For example, in an email on September 4, 2007, ALM Manager A wrote, "For 

those interested, this new tool shows where each bank on the Libor fixing panel quoted their 

offer level in today's fixing. Should give some insights into the funding situation at our peers. 

Note Barclays are consistently amongst the highest contributors and UBS are often the lowest." 

On September 10, 2007, the same person commented, "we're still contribute the lowest rates in 

most cunencies." Notably, the spreadsheets and "tools" provided to the managers did not 

include information about UBS's actual transactions in the relevant unsecured interbank cash 

markets or any other information relating to costs of borrowing in those markets. 

The "err on the low side" direction generally applied to UBS's U.S. Dollar LIBOR 

submissions for the rest of2007, as reflected in communications between U.S. Dollar Trader 1 

and U.S. Dollar Trader-Submitter 1, such as the following: 

November 5, 2007: 

U.S. Dollar Trader 1: "I left 2s and 3s a tad on low side just not to stir any 

additional" 

U.S. Dollar Trader-Submitter 1: "great- do appreciate your input each day" 

U.S. Dollar Trader 1: "but I have been on lower end def" 

U.S. Dollar Trader-Submitter 1: "I know- I am same with 4mo -out-" 

U.S. Dollar Trader 1: "ok perfect" 

U.S. Dollar Trader-Submitter 1: "we are towards to lower end across the board" 

U.S. Dollar Trader 1: "yep we are"27 

bank with loads of liquidity we'd lend at 0 us! has been a lot of media focus on Barclays lib or fixes 

so they are paranoid ... " (Emphasis added.) 

27 The "err on the low side" direction did not deter certain Derivatives Traders trying to benefit their 

trading positions with higher submissions. On November 30, 2007, U.S. Dollar Trader 1, when providing 

the rates to be submitted under Group Treasmy's instruction, told U.S. Dollar Trader-Submitter 1, "go 

5.18 (will be low) if you have exposure, let me know, happy to go a bit higher." On December 11, 2007, 

the Yen Desk Manager, asked for relief from Group Treasmy' s instructions and questioned what was in 

the best interests ofUBS in making its LIBOR submissions- maximizing its profit or concern for its 

reputation: 

"Currently, we are in the bottom quartile. A move into the middle is worth 500k. There 

is some reluctance on their part to move it higher as they are concerned about the 

reputational risl{S of putting in a high fix. I'd agree with this if we were to set in the top 

quartile that may be the case, but I don't think anyone's really got their eye on UBS's 3m 

yen fix. If our position is bigger then [STIR], we should be doing what's best for the 

bank. ... " 

45 
November 23, 2007: 

U.S. Dollar Trader 1: "again ... we are probably low 1-3rnonth ... " 

U.S. Dollar Trader-Submitter 2: "y but 7 bp?" 

U.S. Dollar Trader 1: "well [U.S. Dollar Banlc A] is constantly lower than us i 

am happy to move ern up to 4.99 the 2s and 3s the 1s is ole its about 2 [bp].'' 

U.S. Dollar Trader-Submitter 2: "3 month is about rn5.045 so that is like 6.5 bp 

away" 

U.S. Dollar Trader 1: "04 ist the last I heard ... I mean agree ... 4.99 is probably 

low we can go to 5.00 ... but there are other people on the other side of the 

extrern in my opinion" 

U.S. Dollar Trader-Submitter 2: "i see where u are corning from ole will show 5" 

U.S. Dollar Trader 1: "ole cheers." 

UBS's submissions moved to the lowest quartile, of the panel submissions almost 

immediately after the issuance of the August 9, 2007 direction and, in some tenors, often 

remained in the lowest quartile for the rest of the year and through March 2008. In fact, UBS 

remained on the "low side" of the submissions, despite reporting two significant write-downs of 

assets in late 2007. On October 1, 2007, UBS reported it would record negative revenues of 

approximately $3.42 billion in its Fixed Income business and then on December 10, 2007, UBS 

reported a $10 billion write-down of assets. 

UBS's drop to the "low side" is evidenced by the marked increase in the percentage of 

instances after August 9 when UBS's submissions were excluded from the BBA's U.S. Dollar 

LIBOR fixing for each ofthe key one, three, six and twelve-month tenors because UBS's 

submissions were in the lowest quartile of all sixteen banlcs, as reflected in the following chart: 

Percentage ofUBS's Submissions in the Lowest Quartile 

January 1,2007 to August 10,2007 to 

_ ___ _ .. __ -~Ug!l_S_! 2,_2QQ7_ ---·--~---· .. __ J~!~!~J!. ~!!_~Q.Q8 

1 1-month tenor 3% · 39% 

3-month tenor 16% 4 7% ~ -----~---~----- _, ~ --- -~--- -~--- ---- ~--------~~---------" 

1 6-llioD.thteiior--· -_-- 42% 

12-month tenor 22% 

77% 

67% 

By the spring of2008, UBS's financial position began to worsen significantly, impacting 

its ability to borrow unsecured funds in the relevant interbanlc markets. On April1, 2008, UBS 

announced a net loss of approximately 12 billion Swiss Francs for the first quarter of2008, 

attributable to approximately $19 billion lost on U.S. real estate and related "structured credit 

positions." UBS also announced it was seeking shareholder approval of a 15 billion Swiss Franc 

increase in share capital underwritten by a syndicate ofbanlcs, including JP Morgan Chase Banlc 

("JP Morgan"). That same day, Moody's Investor Service ("Moody's") downgraded UBS's 

(Emphasis added.) He emphasized a few days later that UBS had the ability to impact the fixing in its 

favor: "(The yen fix is 16 banks, of which the top and bottom four are excluded. This leaves 8 banks that 

determine the fix. Our rate input can make a significant difference)." 

46 
credit rating from "Aaa" to "Aa1," noting that a further downgrade was possible. Other rating 

agencies also downgraded UBS. At the same time, UBS's costs ofborrowing funds were rising. 

Nevertheless, despite these events and conditions, the "err on the low side" direction remained in 

place into mid-April 2008. 

April-May 2008: The "Middle of the Pack" Direction 

As the financial crisis deepened, the press scrutiny of banks' LIBOR submissions 

increased. Around this time, on April 10, 2008, certain UBS managers, involved in the issuance 

and implementation of the directions commented on the impact that Group Treasury was having 

on LIBOR submissions. 

Rates Manager A: " ... here is a mind fuck for you if we are doing CP at 2.81% 

and that is 3m usd libor + 10 why arent we putting our 3m rate in at 2.81% for 

libors" 

ALM Manager B: "we should" 

Rates Manager A: "but then GT will rip our boys a new one for being the highest 

ban1c in the poll" 

ALM Manager B: "you can't win ... " 

That same day, a U.S. Dollar Trader involved in the LIB OR submission process 

commented to Rates Manager A that "libors have totally de-linked with real cash markets 

the libors have become a total joke ... and certainly no reflection of the cash market." Rates 

Manager A noted that a higher LIB OR would have ':GT chewing your head off," and the U.S. 

Dollar Trader responded: "we got clapped our fingers back in august when we put high libors in 

yep GT is the one." · 

On April16, 2008, the WSJ published an article entitled, "LIBOR Fog Bankers Cast 

Doubt on Key Rate Amid Crisis." The article stated the concern that "[s]ome banks don't want 

to report the high rates they are paying for short-term loans because they don't want to tip off the 

market that they're desperate for cash." That same day, ALM Manager Band Rates Manager A 

discussed the WSJ article, noting that UBS was funding at rates higher than the LIBOR fixing 

and that the article might increase the scrutiny ofban1cs' LIBOR submissions: 

Rates Manager A: " ... great article in the WSJ today about the libor problem" 

ALM Manager B: " ... we issue way above libor in usd ... " 

Rates Manager A: " ... rum our BBA denying the earlier story ... this turn of events 

is very interesting it forces transparency" 

ALM Manager B: "y, the central ban1cs and the regulators have us by our balls 

these days ... pull your pants down" 

Thereafter, Group Treasury and ALM issued a new direction for submissions to be 

higher, specifically in the "middle of the pack" of sixteen panel banks. On April17, the day 

following the WSJ article, UBS and most other panel ban1cs dramatically raised their LIB OR 

submissions. UBS's one-month tenor submission increased by eight basis points, the threemonth by nine and a half basis points, the six-month by fifteen basis points, and the twelve47 
month by eighteen basis points, placing UBS's submissions in the middle eight of the panel 

banks and thus included in the calculation ofthe LIBOR fixings. That day, U.S. Dollar Trader 1 

told U.S. Dollar Trader-Submitter 1: "the guidance I got from my management with regards to 

libors is that we should aim to be in the middle of the pack they also want to see the levels we 

are posting trough [sic] the hole [sic] curve. (they got GT on their back again as w·en)." 

(Emphasis added). On April 18, ALM Manager A informed other senior managers: "With 18 

April levels. As you can see another big increase in USD Libors (1M +7.4; 3M +9.0; 6M + 13.7; 

12M +15.6) and UBS again in the middle ofthe pack." (Emphasis added.) 

On April 22, 2008, a senior Group Treasury manager ("Group Treasury Senior 

Manager") in Stamford, Connecticut, determined that UBS's LIBOR submissions were "lagging 

the panel and peer banks" and therefore decided to adjust UBS's submissions upward towards its 

CP/CD issuance levels. The Group Treasury Senior Manager apparently believed, incorrectly, 

that LIBOR served as an "advertisement" of the rate that UBS would pay for funds, and not the 

rate at which UBS could borrow funds in the London interbank market. As a result, he was 

purportedly concerned that UBS's LIBOR submissions were not competitive and should more 

closely reflect the bank's issuance·rates for CP/CDs to attract potential clients. That same day, 

ALM Manager B informed other senior managers and the traders primarily responsible for the 

U.S. Dollar LIBOR submissions: 

"[Group Treasury Senior Manager] requested today that we fix our libors in$ a 

few bps higher going fwd, as we still fix below where we post issuance. I went 

through the other banks that issue and are on the libor panel, and only [U.S. 

Dollar Banlc B] fixes lower than where they post issuance (same as UBS). 

Suggest we hike our fixings 2-3 bps out to 6 month and 4-5 bps out to 1 year, and 

we will still not be the highest fixing. You ok with that?" 

After receiving this new direction, U.S. Dollar Trader 1 commented to U.S. Dollar 

Trader-Submitter 1: "that libor setting is getting a bit of a joke ... they seem to want us to fix 

higher again cause they issue higher." 

ALM Manager B made sure that the new revised direction was followed. For example, 

upon hearing that the U.S. Dollar Trader-Submitter 1 was resisting some of the directed 

submissions and had commented "since its my name on the libor fixings then I will fix them 

appropriately ... ," ALM Manager B stated" ... he'll go with our levels." This revised direction 

appears to have been in place and followed from approximately late April to June 1, 2008. 

On May 21, 2008, UBS received an inquiry from a WSJ reporter who was preparing an 

article concerning LIB OR. The repmter asked, " .. .it is now my understanding that UBS was 

willing to pay 2.85% to sell three-month commercial paper in mid-April. However, this was 

some 12 basis points above the Libor rate UBS quoted on April16 for the three-month dollar 

rate of2.73%. Can UBS explain yvhy it was paying 12 basis points for CP more than it was 

posting as a Libor quote?". This press inquiry was elevated to the highest levels ofUBS's Group 

Treasury, who remained concerned about the signals that UBS's LIBOR submissions sent to the 

market. During discussions about a potential response to the WSJ, ALM Manager B franldy 

stated that: "the answer would be 'because the whole street was doing the same and because 

48 
we did not want to be an outlier in the libor fixings, just like everybody else' .... "(Emphasis 

added.) 

The WSJ article, which ran on May 29, 2008, focused on UBS and other banks, and 

indicated that UBS's LIBOR submissions were significantly lower than where other market 

measures indicated that they should have been. Consistent with the inquiry to UJ3S on May 21, 

the WSJ reported that "[i]n mid-April, UBS, which has suffered some $38 billion in write-downs 

on investments gone bad, was offering to pay an annual rate of about 2.85% to borrow dollars for 

three months in the commercial-paper market, according to a person familiar with the matter. 

But when it reported for LIBOR on Apri116, UBS said it could borrow for three months from 

other banks at 2.73%--in line with all the other panel banks. A UBS spokesperson declined to 

comment." 

Early June 2008: Direction to More Closely Track CP/CD Rates, Rendering UBS an Outlier 

On May 30, Rates Manager A, UBS's representative on the BBA's Foreign Exchange 

and Money Markets ("FX/MM") Committee, reported his understanding that BBA supported 

panel banks using CP/CD rates to determine LIBOR submissions. As a result of these factors, 

UBS began to incrementally move its submissions closer to UBS's CP/CD rates, even if those 

rates were high, and even ifthe submissions placed UBS out of the middle ofthe pack. 

On June 2, 2008, UBS's U.S. Dollar Trader-Submitter 3 in Zurich confirmed to U.S. 

Dollar Trader-Submitter 1 that they were being told to track CP/CD issuance rates in their 

LIBOR submissions: "just had to run it through with alm desk. .. here is what they have come up 

with ... o/n 2.28, 1 w 2.36, 2wk 2.36, 1m 2.405, 2m 2.54, 3m 2.65, 4m 2.74, 5m 2.82, 6m 2.90, 9m 

3. 03, 1 y 3 .16 ( thats very diff from what we would hv set) as it is following more closely to 

where issuance is being done."28 (Emphasis added.) 

28 On June 2, 2008, the Rates and ALM managers again expressly recognized the issues surrounding the 

LIBOR submission process and the role of Group Treasury in UBS's LIBOR submissions, including 

whether Group Treasury would acknowledge its role: 

Rates Manager A: "this libor submissions thing is gaining speed the Fed and the BBA 

are doing a thorough investigation ... you know GT will wash their hands of any 

involvement" 

ALM Manager B: ')ust what we needed of course as always" 

Rates Manager A: "i will be vocal if anyone in FXMM or Rates gets pulled aside for that 

very vocal in fact" 

ALM Manager B: "a gun might be loud enough ... " 

On the same day, U.S. Dollar Trader-Submitter 1 made the following comments in a UBS group chat 

to the U.S. Dollar Trader-Su~mitter 3: 

U.S. Dollar Trader-Submitter 1: "will be interesting to see- all we can keep doing is 

keep being as fair and as honest as possible - have re read the BBA libor defintions and 

we continue to be in lne with their letter and spirit, however they do leave room for 

interpretation." 

49 
Over the next two weeks in June, UBS concluded that it was the only banlc apparently 

trying to base its LIBOR submissions on its CP/CD issuance rates after the FX/MM Committee 

meeting. As ALM Manager A wrote to Group Treasury, "it seems we're the only banlc trying to 

even move in that direction." 

When UBS adjusted its submissions closer to its CP/CD issuance levels, it became a 

somewhat high outlier on the U.S. Dollar LIBOR panel. During the two weeks up to June 16, 

2008, for the one, three, six and twelve-month tenors in U.S. Dollar LIBOR, UBS rose from 

being in the lowest quartile or the middle of the pack to being in the highest quartile of 

submitting banlcs, and was therefore excluded from the calculation of the U.S. Dollar LIBOR 

fixings. 

June 17, 2008 through 2009: UBS Returns to the "Middle ofthe Pack" Direction 

By June 17, 2008, in reaction to being a high outlier on the U.S. Dollar panel, UBS 

decided to return to the "middle of the pack." On that day, Senior STIR Manager C went to the 

trading floor in Zurich and directed that UBS's LIBOR submissions be lowered so that UBS 

would be in "the middle of the pack" ofthe submitting banlcs. 

That day, U.S. Dollar Trader-Submitter 3 discussed with ALM Manager B the need to 

implement the "middle of the pack" direction quickly and that the "middle of the pack" direction 

would be in place "until further notice:" 

U.S. Dollar Trader-Submitter 3: "just spoke to [U.S. Dollar Trader-Submitter 1 in 

London] ... we will start lowering over the next few days to get to more or less 

middle of the pack until further notice did you need me for anything else?" 

ALM Manager B: "nope that was it, thx we should bring it down fast so.we are 

in line by friday with the pack. .. " 

U.S. Dollar Trader-Submitter 3: "we will get there by friday" 

ALM Manager B: "and out to 6m you can be in line tomorrow" 

U.S. Dollar Trader-Submitter 3: "sure" 

(Emphasis added.) 

The next day, June 18, U.S. Dollar Trader-Submitter 3 explained the revised direction to 

U.S. Dollar Trader-Submitter 1, confirming that Senior STIR Manager C was the source of this 

direction and that the proposed LIBOR submissions were "instructions" from ALM. U.S. Dollar 

Trader-Submitter 1 expressed frustration with media scrutiny: 

U.S. Dollar Trader-Submitter 3: "i think its been good we bounce the levels off each 

other" 

U.S. Dollar Trader-Submitter 1: "so many interested parties and hidden agendas out 

there - fro mthe press to hedge funds to home owners - 100% agree about boucing 

thoughts and ideas of each other - so frustration when all we have tried to be is honest 

and transparent and you still get attached in the press - it is so much in our interest that 

libor is 'accurate"' 

50 
U.S. Dollar Trader-Submitter 3: "its with him [ALM Manager A] and [ALM 

Manager B] i get the instructions how we want to set" 

U.S. Dollar Trader-Submitter 1: "understand" 

U.S. Dollar Trader-Submitter 3: "didnt like that comment very much ... and of 

all the days today we fixed lower" 

U.S. Dollar Trader-Submitter 1: "it is wrong- however it is a conclusion which 

will be reached by others . . . we are still 1 0 bps over the competition ... in the 

12mo" 

U.S. Dollar Trader-Submitter 3: "yeah but they want us to get in line with 

competition by Friday" 

U.S. Dollar Trader-Submitter 1: "who is the they?" 

U.S. Dollar Trader-Submitter 3: "[Senior STIR Manager C] gave instructions 

to alm ... i will discuss with alm" 

U.S. Dollar Trader-Submitter 1: "we should be consistent" 

U.S. Dollar Trader-Submitter 3: "i sent [Senior STIR Manager C] and alm that 

comment ... will discuss with alm when there are some bodies abt" 

U.S. Dollar Trader-Submitter 1: "if you are too low you get written about for 

being too low if you are too high you get writen about for being too high" 

U.S. Dollar Trader-Submitter 3: "middle of the pack there is no issue" 

U.S. Dollar Trader-Submitter 1: "and if you are in line with the crowd you get 

wrtiine about because the crowd is too low" 

U.S. Dollar Trader-Submitter 3: "thats why for a long time we were in the middle 

of the pack and only after [Rates Manager A]'s meeting with bba did we start 

moving towards our issuance level" 

U.S. Dollar Trader-Submitter 1: "understand reasonnig behind the move" 

U.S. Dollar Trader-Submitter 3: "me too. just surprised others didnt interpret it 

like that" 

U.S. Dollar Trader-Submitter 1: "again there is no 'right' answer- which think is 

what the press does not like" 

(Emphasis added.) 

From June 17 through December 2008, UBS was in middle of the pack virtually every 

day, with very little deviation in its submissions.29 UBS remained in the middle of the pack even 

after October 16, when it received approximately $59 billion in funds from the Swiss 

government and the Swiss National Bank and borrowed over $77 billion from the various 

liquidity programs of the Federal Reserve Bank.30 UBS continued to submit in the middle of the 

29 U.S. Dollar Trader-Submitter 3 made sure in December 2008 that the back-up submitter adhered to 

the direction in her absence: "We want our fixings to be roughly in the middle of the pack." 

30 In October 2008, UBS's implementation ofthe "middle ofthe pack" direction in Yen LIBOR again 

conflicted with the Senior Yen Trader's efforts to use UBS's Yen LIBOR submissions to skew the BBA's 

Yen LIB OR fixings in favor of his derivatives trading positions. On October 8, 2008, the Yen Desk 

Manager asked Senior Rates Manager C for relief from the Group Treasury direction: 

51 
pack throughout at least the first half of2009, despite UBS's February 10, 2009 announcement 

of an 8.1 billion Swiss Franc loss for the fourth quarter of2008. 

UBS, through its managers, Derivatives Traders and Trader-Submitters, knew that 

concerns about reputation or perceived inaccurate negative market or press reports were not 

legitimate or permissible factors on which to base their daily LIBOR and other benchmark 

interest rate submissions. Yet, during the financial crisis, UBS at times made its U.S. Dollar 

LIBOR submissions and other benchmark interest rate submissions in accordance with Group 

Treasury and ALM managers' directions, and not in accordance with the relevant definitions and 

criteria for those rates. These submissions based in whole or in part on these considerations were 

knowingly false because such submissions did not reflect solely UBS's assessment of the costs 

of borrowing unsecured funds in the relevant interbank market at that time. Accordingly, UBS at 

times, through its submissions, knowingly delivered, or caused to be delivered, benchmark 

interest rate submissions that constituted false, misleading or knowingly inaccurate reports that 

affected or tended to affect LIBOR, Euribor or Euroyen TIBOR, all commodities in interstate 

commerce. 

IV. 

LEGAL DISCUSSION 

A. UBS Made False, Misleading or Knowingly Inaccurate Reports Concerning the 

Costs of Borrowing Unsecured Funds in Violation of Section 9(a)(2) of the Act 

Section 9(a)(2) of the Act makes it unlawful for any person "knowingly to deliver or 

cause to be delivered for transmission through the mails or interstate commerce by telegraph, 

telephone, wireless, or other means of communication false or misleading or knowingly 

inaccurate reports concerning crop or market information or conditions that affect or tend to 

affect the price of any commodity in interstate commerce .... " 7 U.S.C. § 13(a)(2) (2006); U.S. 

v. Brooks, No. 09-20871, 2012 WL 1768061, *691 (5th Cir. May 18, 2012); United States v. 

Valencia, 394 F.3d 352, 354-355 (5th Cir. 2004); see also CFTC v. Johnson, 408 F. Supp. 2d 

259, 267 (S.D. Tex. 2005) (same). 

On a daily basis, UBS, through the transmission of an electronic spreadsheet to the 

service provider of the BBA, EBF and JBAwho calculates their official fixings (e.g., Thomson 

Reuters), knowingly delivered or caused to be delivered its U.S. Dollar, Swiss Franc, Sterling, 

"We have a large tibor/libor position which loses iflibors move higher. 4mio/bp Group 

treasury has informed Stir to put all fixings in the middle of the pad:. This has 

resulted in UBS personally contributing to a 1/2bp higher fixing today. Last year when 

we wanted Libors higher, we were told our fixing had to be low to show UBS's 

compartive strength. Now there are 7 banks showing lower fixes than us in 3m yen. 

How do I get some focus on this?" 

(Emphasis added.) 

52 
Euro and Yen LIBOR, Euribor and Euroyen TIBOR submissions through the mails or interstate 

commerce. UBS's submissions were also caused to be delivered through the mails or interstate 

commerce through the daily dissemination and publication globally, including into the United 

States, of the panel banks' submissions as well as the daily official benchmark interest rates by at 

least Thomson Reuters on behalf of the BBA, EBF and JBA, and other third party vendors. The 

panel banks' submissions are used to determine the official published rates for LIBOR, Euribor 

and Euroyen TIBOR, which are calculated based on a trimmed average of the submissions. 

UBS's daily LIBOR, Euribor and Euroyen TIBOR submissions contained market information 

concerning the costs of borrowing unsecured funds in particular currencies and tenors, the 

liquidity conditions and stress in the money markets, and UBS' s ability to borrow funds in the 

particular markets. Such market information affects or tends to affect the prices of commodities 

in interstate commerce, including the daily rates at which U.S. Dollar, Swiss Franc, Sterling, 

Euro and Yen LIBOR, Euribor and Euroyen TIBOR are fixed. 

During the periods relevant to the conduct described herein, UBS's submissions for 

LIB OR for Swiss Franc, Sterling, Euro, Yen and U.S. Dollar, Euribor and Euroyen TIBOR were 

false, misleading or knowingly inaccurate because they were based in whole or in part on 

impermissible and illegitimate factors, specifically: (1) the derivatives positions oftraders, which 

occurred routinely, and at least for certain currencies and periods, daily; and/or (2) at times 

during the financial crisis commencing in early August 2007, UBS's Group Treasury and ALM 

managers' directions that UBS's submissions be either on the low side or in the middle ofthe 

pack of the panel banlc submissions to manage market and media perceptions of UBS and protect 

its reputation. By using these impermissible and illegitimate factors in making its LIB OR, 

Euribor and Euroyen TIBOR submissions, UBS conveyed false, misleading or knowingly 

inaccurate information that the rates it submitted were based on and related solely to the costs of 

borrowing unsecured funds in the relevant markets and were truthful and reliable. Certain of 

UBS's managers, traders and submitters knew that certain UBS's LIBOR, Euribor and Euroyen 

TIBOR submissions contained false, misleading and knowingly inaccurate information 

concerning the submitted rates. By such conduct, Respondents violated Secti9n 9(a)(2) of the 

Act, 7 U.S.C. § 13(a)(2) (2006). 

B. UBS Manipulated Yen LIBOR at Times for Certain Tenors 

Together, Sections 6(c), 6(d), and 9(a)(2) of the Act prohibit acts of manipulation or 

attempted manipulation. Section 9(a)(2) of the Act makes it unlawful for "[a]ny person to 

manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for 

future deiivery on or subject to the rules of any registered entity .... " 7 U.S.C. § 13(a)(2) 

(2006). Section 6( c) of the Act authorizes the Commission to serve a complaint and provide for 

the imposition of, among other things, civil monetary penalties and cease and desist orders if the 

Commission "has reason to believe that any person ... is manipulating or attempting to 

manipulate or has manipulated or attempted to manipulate the market price of any commodity, in 

interstate commerce, or for future delivery on or subject to the rules of any registered entity, ... or 

otherwise is violating or has violated any of the provisions of [the] Act .... " 7 U.S.C. § 9 

(2006). Section 6(d) of the Act is substantially identical to Section 6(c). See 7 U.S.C. § 13b 

(2006). 

53 
Manipulation under the Act is the "intentional exaction of a price determined by forces 

other than supply or demand." Frey v. CFTC, 931 F.2d 1171, 1175 (7th Cir. 1991). The 

following four elements must be met, by a preponderance of the evidence, to show a successful 

manipulation has occurred: 

(1) the [respondent] had the ability to influence market prices; 

(2) the [respondent] specifically intended to do so; 

(3) artificial prices existed; and 

(4) the [respondent] caused an artificial price. 

In re Cox, [1986-1987 Transfer Bhider] Comm. Put. L. Rep. (CCH) ~ 23,786 at 34,061 

(CFTC July 15, 1987). The test for manipulation, however, is a practical one: 

We think the test of manipulation must largely be a practical one if the purposes 

of the Commodity Exchange Act are to be accomplished. The methods and 

techniques of manipulation are limited only the ingenuity of man. The aim must 

be therefore to discover whether conduct has been intentionally engaged in which 

has resulted in a price which does not reflect basic forces of supply and demand. 

Cargill v. Hardin, 452 F.2d 1154, 1163 (8th Cir. 1971). 

"[I]ntent is the essence of manipulation." Indiana Farm Bureau Cooperative Ass'n, Inc., 

[1982-1984 Transfer Binder] Comm. Fut. L. Rep (CCH) ~ 21,796, at 27,282 (CFTC Dec. 17, 

1982). The manipulator's intent separates "lawful business conduct from unlawful manipulative 

activity." Id. at 27,283. To prove the intent element of manipulation, it must be shown that UBS 

"acted (or failed to act) with the purpose or conscious object of causing or effecting a price or 

price trend in the market that did not reflect the legitimate forces of supply and demand." !d. 

The Commission has observed that "intent must of necessity be inferred from the 

objective facts and may, of course, be inferred by a person's actions and the totality of the 

circumstances." In re Hohenberg Bros., [1975-1977 Transfer Binder] Comm. Fut. L. Rep. 

(CCH) ~ 20,271 at 21,477 (CFTC Feb. 18, 1977). "[O]nce it is demonstrated that the alleged 

manipulator sought, by act or omission, to move the market away from the equilibrium or 

efficient price -the price which reflects market forces of supply and demand -the mental 

element of manipulation may be inferred." Indiana Farm Bureau, (CCH) ~ 21,796 at 27,283. 

"It is enough to present evidence from which it may reasonably be inferred that the accused 

'consciously desire[ d] that result, whatever the likelihood of that result happening from his 

conduct."' !d. (quoting U.S. v. United States Gypsum Co., 438 U.S. 442, 445 (1978)). A profit 

motive may also be evidence of intent, although profit motive is not a necessary element of an 

attempted manipulation. See In re DiPlacido [2007-2009 Transfer Binder] Comm. Put. L. Rep. 

(CCH) ~ 30,970, at 62,484 (CFTC Nov. 5, 2008) (citing In re Hohenberg Bros. Co., (CCH) 

~20,271, at 21,478)), aff'd, 364 Fed. Appx. 657, No. 08-5559-ag, 2009 WL 3326624 (2d Cir. 

2009). 

An artificial price (also termed a "distorted" price) is one "that does not reflect market or 

economic forces of supply and demand." Cox,~ 23,786 at 34,064; Indiana Farm Bureau,~ 

54 
21,796 at 27,288 n. 2. As the Commission noted with approval in DiPlacido, ~ 30,970, at 62,484 

(quoting Indiana Farm Bureau,~ 21,796 at 27,300 (Commissioner Stone concurring)), a 

Commissioner has commented: "[t]his is more an axiom than a test." In determining whether an 

artificial price has occurred: 

[O]ne must look at the aggregate forces of supply and demand and search for 

those factors which are extraneous to the pricing system, are not a legitimate part 

of the economic pricing of the commodity, or are extrinsic to that commodity 

market. When the aggregate forces of supply and demand bearing down on a 

particular market are all legitimate, it follows that the price will not be artificial. 

On the other hand when a price is effected by a factor which is not legitimate, the 

resulting price is necessarily artificial. Thus, the focus should not be as much on 

the ultimate price as on the nature of the factors causing it. 

Indiana Farm Bureau,~ 21,796 at 27,288 n. 2. See also DiPlacido, ~ 30,970 at 62,484 (finding 

that the placement of uneconomic bids or offers results in artificial prices because those prices 

are not determined by the free forces of supply and demand on the exchange"). 

Causation of artificial prices is established when it is demonstrated that artificial market 

prices resulted from the conduct of a trader, or group of traders acting in concert, rather than 

legitimate forces of supply and demand. See Cargill, Inc. v. Hardin, 452 F.2d 1154, 1171-72 

(8th Cir. 1971) (price squeeze "intentionally brought about and exploited by Cargill"); Cox,~ 

23,786 at 34,067 (proof of causation requires the Division to show that "the respondents' 

conduct 'resulted in' artificial prices"). 

There can be multiple causes of an artificial price. DiPlacido, ~ 30,970, at 62,485. The 

manipulator's actions need not be the sole cause of the artificial price. "It is enough for purposes 

of a finding of manipulation in violation of Sections 6(b) and 9 of the Act that respondents' 

action contributed to the price [movement]." In re Kosuga, 19 A.D. 603, 624 (1960). See also 

Cox~ 23,786 at 34,066 (recognizing there can be multiple causes of an artificial price and 

holding that a charge of manipulation can be sustained where respondents' acts are a proximate 

cause of the artificial price). 

Here, as a member of the BBA' s Yen LIB OR panel, UBS made daily submissions that 

purported to reflect its assessments of the costs of borrowing unsecured funds in the London 

interbank market for Yen LIBOR across tenors. The official LIBOR fixings are calculated using 

a trimmed average methodology applied to the rates submitted by the panel banks. By virtue of 

this methodology, UBS had the ability to influence or affect the rate that would become the 

official Yen LIBOR for any tenor. 

As evidenced by the extensive communications and other facts set forth above, in making 

the false Yen LIB OR submissions, several UBS Trader-Submitters and Derivatives Traders, in 

particular the Senior Yen Trader, specifically intended to affect the daily Yen LIB OR for certain 

tenors, including one-month, three-month, six-month, and twelve-month. Their intent is also 

made clear by the evidence that Derivatives Traders' and Trader-Submitters' motives were to 

55 
benefit UBS's derivatives trading position, or, at times, the derivatives trading positions of other 

panel banks with whom some UBS Derivatives Traders colluded. 

On certain occasions, UBS's false, misleading or knowingly inaccurate Yen LIBOR 

submissions were illegitimate factors in the pricing ofthe daily Yen LIBOR fixings and affected 

the official Yen LIB OR for certain tenors, resulting in artificial Yen LIB OR fixings. Thus, 

UBS' s actions were a proximate cause of the artificial Yen LIB OR fixings. 

Accordingly, on certain occasions, UBS manipulated Yen LIBOR for certain tenors, a 

commodity in interstate commerce, in violation of Sections 6(c), 6(d), and 9(a)(2) of the Act. 

C. UBS Attempted to Manipulate LIBOR, Euribor and Euroyen TIBOR 

To prove attempted manipulation, two elements are required: (1) an intent to affect the 

market price; and (2) an overt act in furtherance of that intent. See In re Hohenberg Bros. Co. 

[1975-77 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 20,271 at 21,477 (CFTC Feb. 18, 1977); 

CFTC v. Bradley, 408 F. Supp. 2d 1214, 1220 (N.D. Okla. 2005). The intent standard is the 

same as that for manipulation. See Indiana Farm Bureau and Hohenberg Bros., supra. 

As with Yen LIBOR and as evidenced by the extensive communications, several UBS's 

Derivatives Traders and Trader-Submitters each specifically intended to affect the rate at which 

the daily LIBOR for Yen, Sterling, Swiss Franc and Euro, Euribor and Euroyen TIBOR would 

be fixed to benefit UBS 's derivatives trading positions or to benefit the derivatives trading 

positions of colluding traders at other banks. The UBS Derivatives Traders' requests for certain 

rates to be submitted that would benefit their derivatives trading positions or the derivatives 

trading positions of traders at other banks, and the Trader-Submitters making submissions for 

LIBOR for Yen, Sterling, Swiss Franc and Euro, Euribor, and Euroyen TIBOR reflecting rates 

beneficial to UBS's derivatives trading positions, rather than reflecting, as required, UBS's 

assessments of the costs ofborrowing unsecured funds, constitute overt acts in furtherance of 

their intent to affect the fixings of LIB OR for those currencies, Euribor and Euroyen TIBOR. By 

doing so, UBS engaged in repeated acts of attempted manipulation in violation of Sections 6( c), 

6(d), and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2) (2006). 

D. Respondents Aided and Abetted the Attempts of Other Traders at Other Banks to 

Manipulate Yen LIBOR and Euroyen TIBOR 

Pursuant to Section 13(a) of the Act, UBS aided and abetted the attempts of traders at 

other banks to manipulate Yen LIB OR and Euroyen TIBOR in violation of the Act. 

7 U.S.C. 13c(a) (2006). Liability as an aider and abettor requires proof that: (1) the Act was 

violated; (2) the aider and abettor had knowledge of the wrongdoing underlying the violation; 

and (3) the aider and abettor intentionally assisted the primary wrongdoer. See In re Nikkhah, 

[1999-2000 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 28,129 at 49,888 n.28 (CFTC May 

12, 2000). Although actuallmowledge of the primary wrongdoer's conduct is required, 

lmowledge of the unlawfulness of such conduct need not be demonstrated. See In re 

Lincolnwood Commodities, Inc., [1982-1984 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 

56 
21,986, at 28,255 (CFTC Jan. 31, 1984). Knowing assistance can be inferred from the 

surrounding facts and circumstances. Id. 

As evidenced by the extensive communications, certain UBS Yen Derivatives Traders, 

primarily the Senior Yen Trader, and traders at other panel banks coordinated about Yen LIBOR 

and Euroyen TIBOR rates that would benefit their banks' respective derivatives trading 

positions. At times, the traders at the other panel banks asked the UBS Yen Derivatives Traders 

to have the UBS Yen Trader-Submitters submit a certain rate, or submit a rate in a direction 

higher or lower, that would benefit the derivatives' positions of the traders at the other panel 

banks. The UBS Yen Derivatives Traders agreed and made the requests of the UBS Yen TraderSubmitters, who in turn made their Yen LIBOR submissions based on the UBS Yen Derivatives 

Traders' requests. Accordingly, by seeking to affect the rate at which LIBOR and Euroyen 

TIBOR were fixed, traders at other banks attempted to manipulate LIBOR and Euroyen TIBOR 

in violation of Sections 6(c), 6(d), and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2) 

(2006). Certain UBS Yen Derivatives Traders had knowledge of and intentionally assisted the 

attempts of the traders at the other banks to manipulate the rate at which LIBOR and Euroyen 

TIBOR were fixed. By such acts of those UBS Yen Derivatives Traders, UBS aided and abetted 

the attempts of traders at other banks to manipulate LIBOR and Euroyen TIBOR in violation of 

Sections 6(c), 6(d), and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2) (2006). 

E. UBS AG and UBS Securities Japan Co., Ltd. Are Liable for the Acts of their Agents 

Section 2(a)(1)(B) ofthe Act, 7 U.S.C. § 2(a)(l)(B), and Regulation 1.2, 17 C.P.R.§ 1.2 

(2012) provide that the act, omission, or failure of any official, agent or other person acting for 

any individual, association, partnership, corporation or trust within the scope of his employment 

or office shall be deemed the act, omission or failure of such individual, association, partnership, 

corporation or trust. Pursuant to Section 2(a)(1)(B) of the CEA and Commission Regulation 1.2, 

strict liability is imposed on principals for the actions of their agents. See, e.g., Rosenthal & Co. 

v. CFTC, 802 F.2d 963, 966 (7th Cir. 1986); Dohmen-Ramirez & Wellington Advisory, Inc. v. 

CFTC, 837 F.2d 847, 857-58 (9th Cir. 1988). 

UBS AG and UBS Securities Japan Co., Ltd. are liable for the acts, omissions and 

failures of the traders, managers and submitters who acted as their employees and/or agents in 

the conduct described above. UBS AG, which wholly owns UBS Securities Japan Co., Ltd., is 

liable for the acts, omissions and failures ofUBS AG and UBS Securities Japan Co., Ltd. with 

respect to the conduct described above. Accordingly, UBS AG and UBS Securities Japan Co., 

Ltd. violated Sections 6(c), 6(d), and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2) (2006), 

as set forth above. 

v. 

FINDINGS OF VIOLATIONS 

·Based on the foregoing, the Commission finds that Respondents violated Sections 6( c), 

6(d) and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). 

VI. 

57 
. OFFER OF SETTLEMENT 

Respondents, without admitting or denying the findings or conclusions herein, except to 

the extent Respondents admit those findings in any related action against UBS by, or any 

agreement with, the Department of Justice or any other governmental agency or office, have 

submitted the Offer in which they: 

A. Acknowledge receipt of service ofthis Order; 

B. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

C. Waive: 

1. the filing and service of a complaint and notice of hearing; 

2. a hearing; 

3. all post-hearing procedures; 

4. judicial review by any court; 

5. any and all objections to the participation by any member ofthe Commission's 

staff in the Commission's consideration of the Offer; 

6. any and all claims that they may possess under the Equal Access to Justice Act, 5 

· U.S.C. § 504 (2006) and 28 U.S.C. § 2412 (2006), and/or the rules promulgated by 

the Commission in conformity therewith, Part 148 of the Commission's 

Regulations, 17 C.F.R. §§ 148.1-30 (2012), relating to, or arising from, this 

proceeding; 

7. any and all claims that they may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, §§ 201-253, 110 Stat. 

847, 857-868 (1996), as amended by Pub. L. No. 110-28, § 8302, 121 Stat. 112, 

204-205 (2007), relating to, or arising from, this proceeding; and 

8. any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief; 

D. Stipulate that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondents have consented in the Offer; and 

E. Consent, solely on the basis of the Offer, to the Commission's entry of this Order that: 

58 
1. makes findings by the Commission that Respondents violated Section 6( c), 6( d) 

and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006); 

2. orders Respondents to cease and desist from violating Sections 6( c), 6( d) and 

9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006 & Supp. V 2012); 

3. orders Respondents, jointly and severally, to pay a civil monetary penalty in the 

amount of $700,000,000, plus post-judgment interest; and 

4. orders Respondents and their successors and assigns to comply with the 

conditions and undertakings consented to in the Offer and as set fmih in Part VII 

ofthis Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VII. 

ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. Respondents shall cease and desist from violating Sections 6(c), 6(d) and 9(a)(2) of the 

Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006 & Supp. V 2012). 

B. Respondents, jointly and severally, shall pay a civil monetary penalty of 700 Million 

U.S. Dollars ($700,000,000), within ten (10) days of the date of entry of this Order (the 

"CMP Obligation"). If the CMP Obligation is not paid in full within ten (10) days of the 

date of entry of this Order, then post judgment interest shall accrue on the CMP 

Obligation beginning on the date of entry of this Order and shall be determined by using 

the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 28 U.S. C. 

§ 1961 (2006). Respondents shall pay the CMP Obligation by electronic funds transfer, 

U.S. postal money order, certified check, banlc cashier's check, or bank money order. If 

payment is to be made other than by electronic funds transfer, then the payment shall be 

made payable to the Commodity Futures Trading Commission and sent to the address 

below: 

Commodity Futures Trading Commission 

Division of Enforcement 

ATTN: Accounts Receivables--- AMZ 340 

E-mail Box: 9-AMC-AMZ-AR-CFTC 

DOT/FAA/MMAC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

Telephone: ( 405) 954-5644 

59 
If payment is to be made by electronic funds transfer, Respondents shall contact Linda 

Zurhorst or her successor at the above address to receive payment instructions and shall 

fully comply with those instructions. Respondents shall accompany payment of the CMP 

Obligation with a cover letter that identifies the paying Respondent and the name and 

docket number of this proceeding. The paying Respondent shall simultaneously transmit 

copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581. 

C. Respondents and their successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. PRINCIPLES31 

i. UBS agrees to undertake the following: (1) to ensure the integrity and 

reliability of its Benchmark Interest Rate Submission(s), presently and in 

the future; and (2) to identify, construct and promote effective 

methodologies and processes of setting Benchmark Interest Rates, in 

coordination with efforts by Benchmark Publishers, in order to ensure the 

integrity and reliability of Benchmark Interest Rates in the future. 

n. UBS represents and undertakes that each Benchmark Interest Rate 

Submission by UBS shall be based upon a rigorous and honest assessment 

of information, and shall not be influenced by internal or external conflicts 

of interest, or other factors or information extraneous to any rules 

applicable to the setting of a Benchmark Interest Rate. 

31 The following terms are defined as follows: 

Benchmark Interest Rate: An interest rate for a currency and maturity/tenor that is calculated 

based on data received from market participants and published to the market on a regular, 

periodic basis, such as LIBOR and Euribor; 

Benchmark Publisher: A banking association or other entity that is responsible for or oversees 

the calculation and publication of a Benchmark Interest Rate; 

Submission(s): The interest rate(s) submitted for each currency and maturity/tenor to a 

Benchmark Publisher. For example, ifUBS submits a rate for one month and three month U.S. 

Dollar LIBOR, that would constitute two Submissions; 

Submitter(s): The person(s) responsible for determining and/or transmitting the Submission(s); 

and 

Supervisor(s): The person(s) immediately and directly responsible for supervising any portion of 

the process ofSubmission(s) and/or any ofthe Submitter(s). 

60 
2. INTEGRITY AND RELIABILITY OF BENCHMARK INTEREST RATE 

SUBMISSIONS 

1. DETERMINATION OF SUBMISSIONS: UBS shall determine its 

Submission(s) based on the following Factors, Adjustments and 

Considerations, unless otherwise prohibited by or contrary to an 

affirmative obligation imposed by any law or regulation, or the rules or 

definitions issued by a Benchmark Publisher. UBS's transactions shall be 

given the greatest weight in determining its Submissions, subject to 

applying appropriate Adjustments and Considerations in order to reflect 

the market measured by the Benchmark Interest Rate. 32 

UBS shall determine its Submissions as described in these Undertakings 

within fourteen (14) days ofthe entry ofthis Order. 

111 Factor 1-UBS's Borrowing or Lending Transactions Observed 

by UBS's Submitters: 

a. UBS's transactions in the market as defined by the 

Benchmark Publisher for the particular Benchmark Interest 

Rate; 

b. UBS's transactions in other markets for unsecured funds, 

including, but not limited to, certificates of deposit and 

issuances of commercial paper; and 

c. UBS's transactions in various related markets, including, 

but not limited to, Overnight Index Swaps, foreign currency 

forwards, repurchase agreements, futures and Fed Funds. 

111 Factor 2- Third Party Transactions Observed by UBS's 

Submitters: 

a. Transactions in the market as defined by the Benchmark 

Interest Rate relevant to each of the Submission(s); 

b. Transactions in other markets for unsecured funds, 

including, but not limited to, certificates of deposit and 

issuances of commercial paper; and 

c. Transactions in various related markets, including, but not 

limited to, Overnight Index Swaps, foreign currency 

forwards, repurchase agreements, futures, and Fed Funds. 

32 The rules used by Benchmark Publishers to determine Benchmark Interest Rates vary, may not be 

consistent with each other, and provide different levels of guidance as to how to make Submissions. 

61 
111 Factor 3-Third Party Offers Observed by UBS's Submitters: 

a. Third party offers to UBS in the market as defined by the 

Benchmark Publisher relevant to each of the 

Submission(s); 

b. Third party offers in other markets for unsecured funds, 

including, but not limited to, certificates of deposit and 

issuances of commercial paper, provided to UBS by 

interdealer brokers (e.g., brokers); and 

c. Third party offers provided to UBS in various related 

markets, including, but not limited to, Overnight Index 

Swaps, foreign currency forwards, repurchase agreements, 

and Fed Funds. 

111 Adjustments and Considerations: All of the following 

Adjustments and Considerations may be applied with respect to · 

each of the Factors above: 

a. Time: With respect to the Factors considered above, 

proximity in time to the Submission(s) increases the 

relevance of that Factor; 

b. Market Events: UBS may adjust its Submission(s) based 

upon market events, including price variations in related 

markets, that occur prior to the time at which the 

Submission(s) must be made to the Benchmark Publisher. 

That adjustment shall reflect measurable effects on 

transacted rates, offers or bids; 

c. Term Structure: As UBS applies the above Factors, ifUBS 

has data for any maturity/tenor described by a Factor, then 

UBS may interpolate or extrapolate the remaining 

maturities/tenors from the available data; 

d. Credit Standards: As UBS applies the above Factors, 

adjustments may be made to reflect UBS' s credit standing 

and/or the credit spread between the market as defined by 

the Benchmark Publisher and transactions or offers in the 

related markets used in the Factors above. Additionally, 

UBS may take into account counterparties' credit 

standings, access to funds, and borrowing or lending 

requirements, and third party offers considered in 

connection with the above Factors; and 

62 
e. Non-representative Transactions: To the extent a 

transaction included among the Factors above significantly 

diverges in an objective manner from other transactions, 

and that divergence is not due to market events as 

addressed above, UBS may exclude such transactions from 

its determination of its Submission(s). 

11. SUPERVISOR(S) REVIEW: Effective within fourteen (14) days of the 

entry of this Order, each daily Submission shall be reviewed by a 

Supervisor on a daily basis after the Submission(s) are made to the 

Benchmark Publisher. 

111. QUALIFICATIONS OF SUBMITTER(S) AND SUPERVISOR(S): All 

Submitter(s) shall have significant experience in the markets for the 

Benchmark Interest Rate to which they are submitting or a comparable 

market, but may designate less experienced parties, who routinely work 

under their supervision, to make Submission(s) during limited periods of 

absence. All Supervisors shall have significant experience in the markets 

for the relevant Benchmark Interest Rate or a comparable market. 

Submitters, Supervisors and any parties designated to make Submission( s) 

when the Submitter(s) are absent shall not be assigned to any derivatives 

trading desk, unit or division within UBS, or participate in derivatives 

trading other than that associated with UBS 's liquidity and liability 

management. The compensation of Submitter(s) and Supervisor(s) also 

shall not be directly based upon derivatives trading, other than that 

associated with UBS's liquidity and liability management. 

1v. FIREWALLS: INTERNAL CONTROLS REGARDING IMPROPER 

COMMUNICATIONS AND SUBMISSIONS: UBS shall implement 

internal controls and procedures to prevent improper communications with 

Submitter(s) and Supervisor(s) regarding Submission(s) or prospective 

Submission(s) to ensure the integrity and reliability of its Submission(s). 

Such internal controls and procedures shall include, but not be limited to: 

11 The "firewalls" contemplated herein will be implemented through 

written policies and procedures that delineate proper and improper 

communications with Submitter(s) and Supervisor(s), whether 

internal or external to UBS. For these purposes, improper 

communications shall be any attempt to influence UBS's 

Submission(s) for the benefit of any derivatives trading position 

(whether ofUBS or any third party) or any attempt to cause UBS's 

Submitter(s) to violate any applicable Benchmark Publisher's rules 

or definitions, or Section 2 of these Undertakings; and 

11 A requirement that the Submitter(s) shall not be located in close 

proximity to traders who primarily .deal in derivatives products that 

63 
reference a Benchmark Interest Rate to which UBS contributes any 

Submission(s). The two groups should be separated such that 

neither can hear the other. 

v. DOCUMENTATION: UBS shall provide the documents set forth below 

promptly and directly to the Commission upon request, without subpoena 

or other process, regardless of whether the records are held outside of the 

United States, to the extent permitted by law. 

111 For each Submission, UBS shall contemporaneously memorialize, 

and retain in an easily accessible format for a period of five (5) 

years after the date of each Submission, the following information: 

a. The Factors, Adjustments and Considerations described in 

Section 2(i) above that UBS used to determine its 

Submission(s), including, but not limited to, identifying any 

non-representative transactions excluded from the 

determination of the Submission(s) and the basis for such 

exclusions, as well as identifying all transactions given the 

greatest weight or considered to be the most relevant, and 

the basis for such conclusion; 

b. All models or other methods used in determining UBS's 

Submission(s), such as models for credit standards and/or 

term structure, and any adjustments made to the 

Submission(s) based on such models or other methods; 

c. Relevant data and information received from interdealer 

brokers used in connection with determining UBS's 

Submission(s) including, but not limited to, the following: 

• Identification of the specific offers and bids relied 

upon by UBS when determining each Submission; 

and 

• The name of each company and person from whom 

the information or data is obtained; 

d. UB S' s assessment of "reasonable market size" for its 

Submission(s) (or any other such criteria for the relevancy 

of transactions to a Benchmark Interest Rate), to the extent 

that the rules for a Benchmark Interest Rate require that 

pertinent transactions considered in connection with 

Submission(s) be of"reasonable market size" (or any other 

such criteria); 

64 
e. Information regarding market events considered by UBS in 

connection with determining its Submission(s), including, 

without limitation, the following: 

• The specific market announcement(s) or event(s); 

and 

• Any effect of such market event( s) on transacted 

rates, offers or bids in the relevant markets; and 

f. The identity of the Submitter(s) who made, and the 

Supervisor(s) who reviewed, the Submission(s). 

111 For each Submission, UBS shall retain for a period of five (5) 

years after the date of each Submission, the following transactional 

data used by UBS to determine its Submission(s); the data shall be 

easily accessible and convertible into the Microsoft Excel file 

format; the data shall include, without limitation, the following to 

the extent known to UBS at the time ofthe Submission(s): 

a. Instrument; 

b. Maturity/tenor; 

c. Trade type (i.e., loan/deposit, placing/taking); 

d. Buy/sell indicator; 

e. Transaction date (in rnrnddyyyy format); 

f. Maturity date (in rnrnddyyyy format); 

g. Value date (in mmddyyyy format); 

h. Loan effective date; 

1. Customer number; 

j. Currency; 

k. Ticket ID; 

1. Timestamp; 

m. Counterparty A (buyer/bidder); 

n. Counterparty B (seller/offeror); 

o. Nominal/notional size of the transaction; 

p. Interest basis (360/365 day year); 

q. The fixed interest rate; and 

r. Any special or additional terms (e.g., a repurchase 

agreement or some form of"non-vanilla agreement"). 

111 Transaction Records: UBS shall retain for a period of five (5) 

years trade transaction records and daily position and risk reports, 

including (without limitation) monthly and quarterly position and 

risk reports, related to the trading activities of Submitter(s) and 

traders who primarily deal in derivatives products that reference a 

65 
Benchmark Interest Rate; the records and reports shall be easily 

accessible and convertible into the Microsoft Excel file format. 

111 Requirement To Record Communications: UBS shall record and 

retain to the greatest extent practicable all of the following 

communications: 

a. All communications concerning the determination and 

review ofthe Submission(s); and 

b. All communications of traders who primarily deal in 

derivatives products that reference a Benchmark Interest 

Rate concerning trades, transactions, prices, or trading 

strategies pe1iaining to any derivative that references any 

Benchmark Interest Rate (or the supervision thereof). 

The above communications shall not be conducted in a manner to 

prevent UBS from recording such communications; 

Audio communications of Submitters and Supervisors shall be 

retained for a period of one (1) year. Audio communications of 

traders who primarily deal in derivatives products that reference a 

Benchmark Interest Rate, and who are located at least in the 

London, Zurich, Tokyo, and Stamford, Connecticut office ofUBS, 

shall be retained for a period of six (6) months. Subject to a 

reasonable time to implement, UBS 's audio retention requirements 

pursuant to these Undertakings shall commence within a 

reasonable period after the entry of this Order and shall continue 

for a period of five (5) years thereafter; 

All communications except audio communications shall be 

retained for a period of five (5) years; and 

Nothing in these Undertakings shall limit, restrict or narrow any 

obligations pursuant to the Act or the Commission's Regulations 

promulgated thereunder, including but not limited to Regulations 

1.31 and 1.35,17 C.P.R.§§ 1.31 and 1.35 (2012), in effect now or 

in the future. 

v1. MONITORING AND AUDITING: 

111 Monitoring: UBS shall maintain or develop monitoring systems or 

electronic exception reporting systems that identify possible 

improper or unsubstantiated Submissions. Such reports will be 

reviewed on at least a weekly basis and, if there is any significant 

deviation or issues, the underlying documentation for the 

Submission shall be reviewed to determine whether the 

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II 

Ill 

Submission is adequately substantiated. If it is not substantiated, 

UBS shall notify its chief compliance officer(s) and the 

Benchmark Publisher; 

Periodic Audits: Starting six (6) months from the date of the entry 

of this Order and continuing every six (6) months thereafter, unless 

an annual audit is scheduled at the same time, UBS shall conduct 

internal audits of reasonable and random samples of its 

Submission(s), the factors and all other evidence documenting the 

basis for such Submission(s), and communications of the 

Submitter(s) in order to verify the integrity and reliability of the 

process for determining Submission(s); and 

Annual Audits By Third Party Auditors: Starting one (1) year 

from the date of the entry ofthis Order and continuing annually for 

four ( 4) additional years thereafter, UBS shall retain an 

independent, third-party auditor to conduct an audit of its 

Submission(s) and the process for determining Submission(s), 

which shall include, without limitation, the following: 

a. Reviewing communications of Submitter(s) and 

Supervisor( s); 

b. Interviewing the Submitter(s) and Supervisor(s), to the 

extent they are still employed by UBS; 

c. Obtaining written verification from the Submitter(s) and 

Supervisor(s), to the extent they are still employed by UBS, 

that the Submission(s) were consistent with this Order, the 

policies and procedures in place for making UBS' s 

Submission(s), and the definitions applicable to the 

Benchmark Interest Rate for which UBS made 

Submission(s); and 

d. A written audit report to be provided to UBS and the 

Commission (with copies addressed to the Commission's 

Division of Enforcement (the "Division")). 

vn. POLICIES, PROCEDURES AND CONTROLS: Within sixty (60) days 

of the entry of this Order, UBS shall develop policies, procedures and 

controls to comply with each of the specific Undertakings set forth above 

with the goal of ensuring the integrity and reliability of its Submission(s). 

In addition, UBS shall develop policies, procedures and controls to ensure 

the following: · 

11 The supervision of the Submission process; 

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11 That any violations ofthe Undertakings or any questionable, 

unusual or unlawful activity concerning UBS's Submissions are 

reported to and investigated by UBS's compliance or legal 

personnel and reported, as necessary, to authorities and the 

Benchmark Publishers; 

m The periodic but routine review of electronic communications and 

audio recordings of or relating to the Submission Process; 

11 The periodic physical presence of compliance personnel on the 

trading floors of the Submitter(s) and/or traders who primarily deal 

in derivatives products that reference a Benchmark Interest Rate to 

observe and ensure compliance with these Policies, Procedures and 

Controls, which shall be conducted not less than monthly; 

m The handling of complaints concerning the accuracy or integrity of 

UBS's Submission(s) including: 

a. Memorializing all such complaints; 

b. Review and follow-up by the chief compliance officer(s) or 

his designee of such complaints; and 

m The reporting of material complaints to the Chief Executive 

Officer and Board of Directors, relevant self-regulatory 

organizations, the relevant Benchmark Publisher, the Commission, 

and/or other appropriate regulators. 

vm. TRAINING: UBS shall develop training programs for all employees who 

are involved in its Submission(s), including, without limitation, Submitters 

and Supervisors, and all traders who primarily deal in derivatives products 

that reference a Benchmark Interest Rate. Submitters and Supervisors 

shall be provided with preliminary training regarding the policies, 

procedures and controls developed pursuant to Section 2(vii) of these 

Undertakings. By no later than September 20, 2013, all Submitters, 

Supervisors and traders who primarily deal in derivatives products that 

reference a Benchmark Interest Rate shall be fully trained in the 

application of these Undertakings to them, as set forth herein. Thereafter, 

such training will be provided promptly to employees newly assigned to 

any of the above listed responsibilities, and again to all Submitters, 

Supervisors and traders who primarily deal in derivatives products that 

reference a Benchmark Interest Rate as part of UBS 's regular training 

programs. The training shall be based upon the individual's position and 

responsibilities, and as appropriate, address the following topics: 

m The Undertakings set forth herein; 

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m The process of making Submission(s); 

m The impropriety of attempting to influence the determination of 

UBS's Submission(s); 

m The requirement to conduct all business related to UBS's 

Submission(s) on UBS's recorded telephone and electronic 

communications systems, and not on personal telephones or other 

electronic devices, as set forth in Section 2(v) of these 

Undertakings; 

m The requirement to conduct certain business related to derivatives 

products that reference a Benchmark Interest Rate on UBS's 

recorded telephone and electronic communications systems, and 

not on personal devices or systems, as set forth in Section 2(v) of 

these Undertakings; 

m The policies and procedures developed and instituted pursuant to 

these Undertakings; and 

m The employment and other potential consequences if employees 

act unlawfully or improperly in connection with UBS's 

Submission(s) or process for determining Submission(s). 

1x. REPORTS TO THE COMMISSION: 

11 Compliance with Undertakings: Every four ( 4) months, starting 

120 days from the entry of this Order, UBS shall make interim 

reports to the Commission, through the Division, explaining its 

progress towards compliance with the Undertakings set forth 

herein. Within 365 days of the entry of this Order, UBS shall 

submit a report to the Commission, through the Division, 

explaining how it has complied with the Undertakings set fmih 

herein. The report shall attach copies of and describe the internal 

controls, policies and procedures that have been designed and 

implemented to satisfy the Undertakings. The report shall contain 

a certification from a representative ofUBS's Executive 

Management, after consultation with UBS's chief compliance 

officer(s), that UBS has complied with the Undertakings set forth 

above, and that it has established policies, procedures and controls 

to satisfy the Undertakings set forth in the Order; 

11 Submitter(s), Supervisor(s), and Heads of Appropriate Trading 

Desks: Within fourteen (14) days of the entry of this Order, or as 

soon as practicable thereafter, UBS shall provide, meet with and 

explain these Undertakings to all Submitters, Supervisors and the 

head of each trading desk that primarily deals in derivatives that 

69 
reference a Benchmark Interest Rate. Within that same time 

frame, UBS shall provide to the Commission, through the 

Division, written or electronic affirmations signed by each 

Submitter, Supervisor, and head of each trading desk that primarily 

deals in derivatives that reference a Benchmark Interest Rate, 

stating that he or she has received and read the Order and 

Undertakings herein, and that he or she understands these 

Undertakings to be effective immediately; and 

111 Disciplinary and Other Actions: UBS shall promptly report to the 

Commission, through the Division, all improper conduct related to 

any Submission(s) or the attempted manipulation or manipulation 

of a Benchmark Interest Rate, as well as any disciplinary action, or 

other law enforcement or regulatory action related thereto, unless 

de minimis or otherwise prohibited by applicable laws or 

regulations. 

3. DEVELOPMENT OF RIGOROUS STANDARDS FOR BENCHMARK 

INTEREST RATES 

To the extent UBS is or remains a contributor to any Benchmark Interest Rate, 

UBS agrees to make its best efforts to participate in efforts by current and future 

Benchmark Publishers, other price reporting entities and/or regulators to ensure 

the reliability of Benchmark Interest Rates, and through its participation to 

encourage the following: 

1. METHODOLOGY: Creating rigorous methodologies for the contributing 

panel members to formulate their Submissions. The aim of such 

methodologies should be to result in a Benchmark Interest Rate that 

accurately reflects the rates at which transactions are occurring in the 

market being measured by that Benchmark Interest Rate; 

n. VERIFICATION: Enforcing the use of those methodologies through an 

effective regime of documentation, monitoring, supervision and auditing, 

required by and performed by the Benchmark Publishers, and by the 

contributing panel members internally; 

iii. INVESTIGATION: Facilitating the reporting of complaints and concerns 

regarding the accuracy or integrity of Submissions to Benchmark Interest 

Rates or the published Benchmark Interest Rate, and investigating those 

complaints and concerns thoroughly; 

iv. DISCIPLINE: Taking appropriate action if, following a thorough 

confidential investigation, the Benchmark Publisher determines that a 

complaint or concern regarding the accuracy or integrity of a Submission 

or the published Benchmark Interest Rate has been substantiated; 

70 
v. TRANSPARENCY: Making regular reports to the public and the markets 

of facts relevant to the integrity and reliability of each Benchmark Interest 

Rate. Such reports should include, but not be limited to, the following: 

111 At the time each Benchmark Interest Rate is published, the 

Benchmark Publisher should display prominently whether each 

rate is based entirely on transactions in the market the rate is 

supposed to reflect, or whether it instead is based, in whole or in 

part, on other data or information; 

111 The Benchmark Publisher also should make periodic reports 

regarding the number and nature of complaints and concerns 

received regarding the accuracy or integrity of Submissions or the 

published Benchmark Interest Rate while maintaining the 

anonymity of all those who have reported or are the subject of 

complaints and concerns; 

111 The Benchmark Publisher should additionally make periodic 

reports regarding the results of all investigations into such 

complaints and concerns while maintaining the anonymity of all 

those involved in investigations that have not yet been completed; 

and 

v1. FORMULATION: Periodically examining whether each Benchmark 

Interest Rate accurately reflects the rate at which transactions are 

occurring in the market being measured (using the statistical method 

prescribed by that Benchmark Interest Rate), and evaluating whether the 

definition and instructions should be revised, or the composition of the 

panel changed; 

Such examinations should include a rigorous mathematical comparison of 

transactions in the relevant market with the published Benchmark Interest 

Rate on the same day over a specified period, and a determination of 

whether any differences are statistically or commercially significant. 

UBS shall report periodically, on at least a quarterly basis, to the Commission, 

through the Division, either orally or in writing, on its participation in such 

efforts, to the extent that such reporting is not otherwise prohibited by law or 

regulations, by the rules issued by Benchmark Publishers, or by nondisclosure 

agreements by and between UBS and Benchmark Publishers. 

4. COOPERATION WITH THE COMMISSION 

1. Respondents shall cooperate fully and expeditiously with the Commission, 

including the Division, and any other governmental agency in this action, 

and in any investigation, civil litigation, or administrative matter related to 

the subject matter of this action or any current or future Commission 

71 
investigation related thereto. As part of such cooperation, Respondents 

agree to the following for a period of five (5) years from the date ofthe 

entry of this Order, or until all related investigations and litigation are 

concluded, including through the appellate review process, whichever 

period is longer: 

Ill Preserve all records relating to the subject matter of this 

proceeding, including, but not limited to, audio files, electronic 

mail, other documented communications, and trading records; 

Ill Comply fully, promptly, completely, and truthfully with all 

inquiries and requests for information or documents; 

Ill Provide authentication of documents and other evidentiary 

material; 

Ill Provide copies of documents within UBS' s possession, custody or 

control; 

Ill Subject to applicable laws and regulations, UBS will make its best 

efforts to produce any current (as of the time of the request) 

officer, director, employee, or agent ofUBS, regardless of the 

individual's location, and at such location that minimizes 

Commission travel expenditures, to provide assistance at any trial, 

proceeding, or Commission investigation related to the subject 

matter of this proceeding, including, but not limited to, requests for 

testimony, depositions, and/or interviews, and to encourage them 

to testify completely and truthfully in any such proceeding, trial, or 

investigation; and 

Ill Subject to applicable laws and regulations, UBS will make its best 

efforts to assist in locating and contacting any prior (as of the time 

of the request) officer, director, employee or agent ofUBS; 

ii. UBS also agrees that it will not undertake any act that would limit its 

ability to cooperate fully with the Commission. UBS will designate an 

agent located in the United States of America to receive all requests for 

information pursuant to these Undertakings, and shall provide notice· 

regarding the identity of such agent to the Division upon entry of this 

Order. Should UBS seek to change the designated agent to receive such 

requests, notice of such intention shall be given to the Division fourteen 

(14) days before it occurs. Any person designated to receive such request 

shall be located in the United States of America; and 

m. UBS and the Commission agree that nothing in these Undertakings shall 

be construed so as to compel UBS to continue to contribute Submission(s) 

72 
related to any Benchmark Interest Rate. Without prior consultation with 

the Commission, UBS remains free to withdraw from the panel of 

contributors to any Benchmark Interest Rate. 

5. PROHIBITED OR CONFLICTING UNDERTAKINGS 

Should the Undertakings herein be prohibited by, or be contrary to the provisions 

of any obligations imposed on UBS by any presently existing, or hereinafter 

enacted or promulgated laws, regulations, regulatory mandates, or the rules or 

definitions issued by a Benchmark Publisher, then UBS shall promptly transmit 

notice to the Commission (through the Division) of such prohibition or conflict, 

and shall meet and confer in good faith with the Commission (through the 

Division) to reach an agreement regarding possible modifications to the 

Undertakings herein sufficient to resolve such inconsistent obligations. In the 

interim, UBS will abide by the obligations imposed by the law, regulations, 

regulatory mandates and Benchmark Publishers' rules and definitions. Nothing in 

these Undertakings shall limit, restrict or narrow any obligations pursuant to the 

Act or the Commission's Regulations promulgated thereunder, including, but not 

limited to, Regulations 1.31 and 1.35, 17 C.F.R. §§ 1.31 and 1.35 (2012), in effect 

now or in the future. 

6. PUBLIC STATEMENTS 

Respondents agree that neither they nor any of their successors and assigns, 

agents or employees under their authority or control shall take any action or make 

any public statement denying, directly or indirectly, any findings or conclusions 

in this Order or creating, or tending to create, the impression that this Order is 

without a factual basis; provided, however, that nothing in this provision shall 

affect Respondents' (i) testimonial obligations, or (ii) right to take positions in 

other proceedings to which the Commission is not a party. Respondents and their 

successors and assigns shall undertake all steps necessary to ensure that all of 

their agents and/or employees under their authority or control understand and 

comply with this agreement. 

D. Partial Satisfaction: Respondents understand and agree that any acceptance by the 

Commission of partial payment of Respondents' CMP Obligation shall not be deemed a 

waiver of their obligation to make further payments pursuant to this Order, or a waiver of 

the Commission's right to seek to compel payment of any remaining balance. 

73 
The provisions of this Order shall be effective as of this date. 

By the Commission. 

Dated: December 2012 

74