HONG KONG — Hong Kong’s main banking regulator on Friday released the results of an investigation that found that traders at the Swiss bank UBS tried to rig a local benchmark interest rate over a four-year period.
The Hong Kong Monetary Authority said that after an investigation of nine banks that were part of the local consortium making daily submissions to determine the Hong Kong Interbank Offered Rate — which is used as a benchmark to price corporate loans, household mortgages and other types of debt — only UBS was found to have tried to manipulate the rate.
The authority said it discovered that from September 2006 to June 2009, about 100 internal chat messages trying to rig the interest rate had been sent by UBS traders to the employee who was responsible for making submissions on the bank’s behalf.
However, only about a third of these rate-rigging requests affected the submissions that UBS actually made, the regulator found. Moreover, because UBS acted alone and was not conspiring with other banks to rig rates — a situation that proved to be the case in other financial markets, like London — the monetary authority found that UBS’s actions had no impact on how the Hong Kong rate was set each day.
As a result, the monetary authority did not issue a fine against UBS as an institution or impose other punitive measures on the bank. Instead, the authority said it would require that UBS implement a plan in the next six months to correct weaknesses in its governance and internal controls.
In addition, the authority said it had required UBS to discipline the individual staff members found to have been responsible for misconduct. Six traders who tried to rig rates have since left the bank, as has the employee who was responsible for submitting rates, the authority said.
“The bank has cooperated with the H.K.M.A.’s investigation and agreed to comply with the requirements by taking appropriate follow-up actions promptly,” the regulator said Friday in a statement. “The case is a clear reminder to all banks of their duty to uphold robust internal controls and governance and to take adequate measures to prevent and detect internal improprieties.”
In 2012, UBS was fined $1.5 billion by American and British regulators over rate-rigging. In addition, the Swiss bank pleaded guilty to criminal charges in the United States over rate-rigging carried out by its Japanese unit.