UBS disclosed to regulators that employees colluded to rig the London interbank offered rate – and the decision to make the confession is seen as an attempt to seek leniency from investigators.
“It’s a sound tactic and well-trodden path,” said Steven Francis, a regulatory lawyer at Reynolds Porter Chamberlain in London. “With competition law, there is a very well-recognised system of giving first-mover advantage to any cartel member who blows the whistle on the others.”
Francis added that UBS’ move to make the first disclosure has now made it difficult for the bank’s competitors, such as JP Morgan Chase & Co. and Citigroup Inc, to attempt to claim the same protection.
UBS is already facing scrutiny of its internal controls following a posting of $2.3bn in losses from unauthorized trading, and though UBS’ whistle blowing may lessen the punishment inflicted on the bank and shorten the range of the probe, its confession of wrongdoing may have left itself open to the possibilities of lawsuits from clients.
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