Two former UBS traders have been charged by United States prosecutors in connection with efforts to manipulate Libor interest rates.
The US criminal charges are the first to be brought in the worldwide scandal. It comes after the Swiss bank was fined £940 million by regulators for "extensive and widespread" attempts to rig interbank lending rates.
Former traders Tom Hayes and Roger Darin have been charged with conspiracy to manipulate the interbank lending rate. Mr Hayes has also been charged with wire fraud and an antitrust violation.
UBS has agreed to pay £940 million to regulators in the biggest penalty yet from the industry's Libor-rigging scandal
The charges against Hayes, a former trader who has worked in London and Tokyo, and Darin, from Switzerland, were revealed in a district court in New York.
US attorney general Eric Holder said: "By causing UBS and other financial institutions to spread false and misleading information about Libor, the alleged conspirators we've charged - along with others at UBS - manipulated the benchmark interest rate upon which many transactions and consumer financial products are based.
"They defrauded the company's counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves."
Libor is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars of contracts from mortgages to the cost of corporate lending.
UBS agreed a record £160 million penalty from the UK's Financial Services Authority (FSA) earlier today after admitting to fraud and corrupt payments to brokers.
As well as the FSA fine, UBS said it had also agreed to pay 1.2 billion US dollars (£737 million) in combined fines to the US Department of Justice and the Commodities Futures Trading Commission, and 59 million Swiss francs (£40 million) to UBS's main Swiss supervisor, the Swiss Financial Market Supervisory Authority.
The bank also admitted committing wire fraud through its office in Japan relating to rate manipulation.
UBS said the fines were likely to see it report a loss of around 2 billion to 2.5 billion Swiss francs (£1.3 billion to £1.7 billion) for the fourth quarter.
The Zurich-based bank, which has around 6,500 staff in London, has endured a turbulent year after the jailing of rogue trader Kweku Adoboli.
In its report, the FSA said the misconduct was rife throughout the bank between 2005 and the end of 2010 as UBS traders routinely made requests to colleagues responsible for determining Libor and Euribor submissions to benefit their own trading positions.
It said that at least 45 individuals, including traders, managers and senior managers, were involved in, or aware of, the practice. The regulator recorded at least 2,000 requests for inappropriate submissions and said many more would have been made verbally.
Misconduct at the bank was so routine during the five-year period that every Libor and Euribor submission was at risk of having been manipulated, according to the FSA.
The FSA said misconduct at UBS was "all the more serious" as it had attempted to manipulate Libor submissions at other banks, making corrupt payments to reward brokers for their efforts.
The bank set up unnecessary trades, known as "wash trades", to bribe brokers for their help, which saw one broker firm make £170,000 in illicit fees.
UBS also made corrupt payments of £15,000 a quarter to another broker firm over at least 18 months, according to the FSA.
The report from the FSA revealed incriminating conversations between UBS traders and brokers, saying they would "play the rules" and "return the favour".
One trader said: "I need you to keep it (the six-month Japanese Libor rate) as low as possible... if you do that... I'll pay you, you know, 50,000 dollars, 100,000 dollars... whatever you want... I'm a man of my word."
Bankers referred to each other in congratulatory terms, such as "the three muscateers" (sic), "Superman", and "Captain caos" (sic), the FSA added.
Swiss regulator Finma discovered that a lot of the rate-fixing originated in UBS's Tokyo office.
According to details released by Finma, one trader asked another trader: "Could you do me favour would you mind moving you(r) 6 month l(i)bor up a bit today."
Sergio Ermotti, chief executive of UBS, said the group had "taken decisive and appropriate actions" following the investigation.
Between 30 and 40 people are understood to have left UBS or been asked to leave as a result of the investigation.
Mr Ermotti said: "We deeply regret this inappropriate and unethical behaviour.
"No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity."
The rate-rigging investigation, which has embroiled about 20 financial institutions, has accelerated, with the first arrests by the Serious Fraud Office taking place last week.
Taxpayer-backed Royal Bank of Scotland has previously said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.
The FSA remained tight-lipped on which other firms are being investigated, saying only that it "continues to pursue a number of other significant cross-border investigations in relation to Libor and Euribor".
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