UBS, BNP, RBS get subpoenas in U.S. Treasuries probe – Bloomberg

U.S. federal prosecutors subpoenaed several banks last month as part of a criminal investigation into possible manipulation of the U.S. Treasuries market, Bloomberg reported on Monday.

The banks include UBS Group AG (>> UBS Group AG), BNP Paribas SA (>> BNP Paribas) and Royal Bank of Scotland Plc (>> Royal Bank of Scotland Group plc), Bloomberg reported, citing people familiar with the matter.

A series of class action lawsuits have accused various banks and brokerages of conspiring to manipulate U.S. Treasury auctions.

The lawsuits have alleged that the banks colluded to manipulate Treasury Department auctions and the pricing of Treasury securities, as well as derivative products such as futures, whose value is pegged to the Treasury.

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UBS, Barclays Settle With Bondholders In Libor Suit

Law360, New York (October 26, 2016, 2:55 PM EDT) — Bondholders suing major banks for allegedly conspiring to manipulate the London Interbank Offered Rate told a Manhattan federal judge on Wednesday that they have settled with UBS AG and Barclays Bank PLC.

UBS has reached a settlement with bondholders over Libor-rigging claims. (Credit: AP) The bondholders, whose claims against the banks were resurrected by the Second Circuit in May, told U.S. District Judge Naomi Reice Buchwald that they have reached a settlement with UBS and are finalizing one with Barclays over claims that the banks engaged…

Source: Law360

BIG PLAYERS, LITTLE STOCKS, AND NAKED SHORTS

Part 2 by David Dayen

Part 2

A self-appointed stock sleuth finds financial giants trading extensively in little penny stocks like the one he owned that tanked. And he learns something amazing: Some brokers can sell shares that don’t actually exist.

CHRIS DIIORIO HAD lost a million dollars when the penny stock he was betting on shed 98 percent of its value in a matter of weeks. But when he looked deeper, he found this wasn’t a typical penny stock pump-and-dump scheme. He was determined to get to the bottom of it.

For one thing, there were two huge companies involved.

UBS, one of the world’s largest private banks, seemed to have no business trading in penny stocks. “This was a $50 billion-plus bank, it didn’t seem like penny stocks would move the needle,” DiIorio said. But just in December 2011, UBS’s trades in 32 penny stocks represented over half of the firm’s total share volume, according to his calculations.

In a one-line response to a series of detailed questions from The Intercept, UBS media relations director Peter Stack wrote in an email: “UBS applies strict due diligence and anti-money-laundering standards to all its business.”

After some research, DiIorio became even more disturbed by the presence of the other company, Knight Capital, which has traded an average of more than 2 billion shares of penny stocks daily for the past three years.

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UBS’ Liability in $2B Mortgage Suit Pruned

MANHATTAN (CN) — This past spring, UBS faced a trial over $2 billion in investor damages related to the 2008 housing crisis, but an order issued Tuesday clears a path for a smaller penalty.
Three trusts represented by U.S. Bancorp have spent for four years trying to hold the Zurich-based UBS liable for breaching warranties on over 12,000 of approximately 17,000 mortgage loans originally pooled.
On the road to trial, the trusts dropped their estimates to more than 9,800 loans that they claimed to be defective, and the case finally went to a bench trial before U.S. District Judge Kevin Castel from April 18 to May 13 this year.
Four UBS managers and traders took the stand along with one of the trust’s executives and experts from both parties. The banks and trustees also submitted two terabytes of data — including thousands of loan files — for the court’s review.
After digesting the enormous record over the summer, Castel issued a 239-page ruling clearing the bank of turning a blind eye toward the loans’ deficiencies.
“The trusts have not established that UBS was willfully blind to widespread breaches of warranties across the loans in the three trusts,” he wrote.
UBS manager Jonathan Lantz testified that the bank had “ceased its surveillance operations around the same time that it wound down its business of structuring and selling [residential mortgage-backed securities] pools,” according to the ruling.
But Castel also found that UBS would have to repurchase or pay damages for 13 out of 20 loans that he examined, described in the ruling as “exemplar loans.”
Thousands of other loans still need to be reviewed.

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UBS rogue trader: Nothing’s changed, and next phase of financial crisis could prove it

The London trader who years ago hobbled Swiss investment bank UBS by racking up some $2 billion in losses told the BBC in an interview posted on Monday that not much has changed since he was jailed in 2012, and that the kind of crime he committed could “absolutely” happen again.

“I think the young people I’ve spoken to, former colleagues I have spoken to, are still struggling with the same issues, the same conflicts, the same pressures to achieve no matter what,” he said. “And this goes back to the structure of the industry. People are required to take risk to generate profit, because yields in the industry are consistently compressed.”

A year after being released from prison, Kweku Adoboli also said there’s an increasing likelihood of another trader going rogue to such a degree as we enter “the next phase of the great financial crisis” over the next couple of years.

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UBS to face French court over billions of euros of tax fraud, report

Swiss bank UBS, along with several of its former executives, is to face legal action for encouraging tax fraud that could cost it five billion euros, if judges accept a public prosecutor’s …

France’s financial crimes prosecutors’ office has recommended that UBS AG, UBS France and a half dozen former company executives should face trial for “aggravated money-laundering for tax fraud” and/or “illicit banking procedures”, Le Mondenewspaper reported Friday.

If Judge Guillaume Daïeff accepts the recommendation, they could face fines of five billion euros, since the penalty can be up to half of the value of the money laundered and investigators estimate that to be at least 10 billion euros between 2004 and 2012, the paper says.

Solicited tax-dodgers’ custom

UBS has denied the allegations but in June one of the accused, the former number two at UBS France Patrick de Fayet, reportedly wrote to prosecutors accepting he was guilty of illicit banking procedures.

The prosecutors’ 126-page report says that UBS solicited the custom of tens of thousands of French taxpayers, most of them very wealthy, to help them dodge French tax.

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UBS : chief says Swiss government is leaving banks exposed

Switzerland’s politicians have done too little to protect the country’s banks from demands for data from foreign governments, UBS Chief Executive Sergio Ermotti said in an interview published by the SonntagsZeitung newspaper on Sunday.

Since the financial crisis, cash-strapped governments around the world have clamped down on tax evasion, with authorities investigating Swiss banks in Germany, France and the United States.

But Switzerland’s attempts to negotiate with other governments have not provided legal certainty or closed the book on issues of the past, Ermotti said.

“This is unacceptable and opens the door for a new offensive against Swiss banks,” he told the paper, adding that the government had been too ready to hand over customer data and that it is perhaps too late to get a better deal after years of negotiations.

“On some issues, the train has left the station,” he said.

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UBS Judge Strives For Best Way Forward As $2B Trial Wraps

Law360, New York (May 13, 2016, 8:00 PM ET) — A New York federal judge said Friday he is wrestling to come up with the best method for ruling on trustee U.S. Bank’s contract claims against UBS AG over $2 billion in bundled home loans as a three-week bench trial featuring 39,000 separate allegations of breach flowing from 8,000 allegedly defective mortgages wrapped.

U.S. Bank’s attorney pressed the judge to order UBS to pay for a swath of allegedly defective loans. (Credit: AP) U.S. District Judge P. Kevin Castel stressed again during a daylong closing session…

Source: Law360

UBS will pay $69.8 million to NCUA for credit union RMBS losses

The National Credit Union Administration announced this week that it reached a $69.8 million settlement with UBS, as the company becomes the latest to settle with the NCUA over losses related to several corporate credit unions’ purchases of faulty residential mortgage-backed securities in the run-up to the financial crisis.

According to the NCUA, it will receive $69.8 million from UBS in damages and interest for claims arising from losses to Members United Corporate Federal Credit Unionand Southwest Corporate Federal Credit Union.

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Former UBS Trader Challenges Bar Over Libor Misconduct

LONDON — A former UBS derivatives trader said on Thursday that he would fight an effort by the Financial Conduct Authority of Britain to bar him from the financial services industry for misconduct related to the setting of a global benchmark interest rate known as Libor.

The trader, Arif Hussein, says the regulator ignored crucial evidence in the case and relied on information provided by UBS’s lawyers, who conducted an internal investigation into potential manipulation of the London interbank offered rate, or Libor.

Mr. Hussein has challenged the Financial Conduct Authority’s decision before the Upper Tribunal, an administrative court in Britain. The tribunal will determine whether the Financial Conduct Authority can proceed with the ban or direct it to reconsider the decision.

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