UBS Li-Bros Were Amazing at Rigging Interest Rates, Horrible at Spelling

Men at a Party
Artist’s rendering of the UBS fixed-income desk. Photo: Radius Images/Corbis

Last summer, we introduced you to the Li-Bros, a VIP fraternity of Wall Street n’er-do-wells whose favorite activities included chest-bumping and exchanging bottles of Bollinger while conspiring to rig Libor, the world’s most important interest rate.

Back then, we could barely believe the audacity of the Li-Bros. They were bold. They were unabashedly corrupt, urging their Libor submitters to bump the next day’s rate up or down a few basis points to improve their trading positions. They e-mailed each other like teenage girls, with such bons mots as “I love you” and “when I retire and write a book about this business your name will be written in golden letters.” They had horrible, remedial-level spelling. And we were in awe.

Little did we know that the Barclays Li-Bros were just the warm-up act for the real thing.

UBS, the giant Swiss bank, settled its Libor case late last night, agreeing to pay $1.5 billion in penalties and have its Japanese unit plead guilty to criminal charges for “its role in a multiyear scheme to manipulate interest rates.” It’s more than triple the size of the $450 million settlement Barclays struck over its role in the Libor scandal, which forced the resignation of CEO Bob Diamond and sparked a global wave of outrage.

When the possible size of UBS’s settlement leaked last week, we surmised that the only way UBS would agree to such a steep penalty is if the communication trail investigators had found was “really, really damning.” We should have added ten or twelve more reallys, because, as the FSA’s notice (PDF) reveals, the UBS rate-rigging evidence is both incredibly brazen and filled to the brim with shockingly terrible spelling.

What did we learn about the UBS Li-Bros? Well, unlike their cowardly counterparts at Barclays, they’re not afraid to bribe inter-dealer brokers outright:

For example, in a telephone conversation on 18 September 2008, Trader A explained to Broker A of Broker Firm A: “if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today… I will fucking do one humongous deal with youLike a 50, 000 buck deal, whatever. I need you to keep it 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”.

They know that flattery will get you everywhere:

Between 1 and 31 July 2009, Trader A made 39 requests of Broker F of Broker Firm C . For example, in an electronic chat on 14 July 2009, Trader A requested a “HIGH 6M SUPERMANBE A HERO TODAY.” Broker F said: “ill try mate … as always.

They have nicknames:

In an electronic chat on 15 July 2009, Trader A instructed Broker F that the submission should remain high and then he would need it a lot lower. (At that time, Trader A’s plan was to maintain high six month LIBOR rates until the end of the month). Trader A also requested: “3m and 1m unch [i.e. unchanged]”. Trader A also inserted an extract of another electronic chat with Broker A of Broker Firm A in which Broker A said: “putting the captain caos [sic] outfit on as we speak”.


On 29 July 2009, Trader A and Broker E discussed recent small reductions in UBS’s JPY LIBOR submissions. In the course of that electronic chat, Broker E referred to External Trader E at Panel Bank 4. External Trader E was building positions in the expectation that the six month rate would increase. Broker E said that External Trader E: “ … could be in for a shock going into august … the three muscateers [sic] could do him a fair bit of damage”. The reference to the three “muscateers [sic]” was to Trader A, External Trader A at Panel Bank 2 and Panel Bank 5.

They understand that Libor-rigging is a quid pro quo endeavor:

Panel Bank 1 submitter: “Alright, well make sure he [Trader A] knows”

Broker B: “Yeah, he will know mate. Definitely, definitely, definitely”;

Panel Bank 1 submitter: “You know, scratch my back yeah an all

Broker B: “Yeah oh definitely, yeah, play the rules.”

They are capable of misspelling even second-person pronouns:

On 31 March 2008, in the course of an electronic chat between Trader A, Manager E and Broker A of Broker Firm A, Manager E complained to Broker A about the level of six month JPY LIBOR. Broker A said “we have to be careful on putting too much pressure on mate I ask all the time for yu [sic] guys as you know”. Manager E replied “yeah I know you do it is much appreciated”.

And they travel in packs. Huge packs:

The U.K. Financial Services Authority said it had identified more than 2,000 such [Libor-rigging] attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives.

And all this over official, subpoena-able work e-mails and phone calls. Truly, our hands are sore from clapping. Welcome to the club, gentlemen.

Li-Bros at UBS