"Just be careful Dude," a manager at Swiss bank UBS cautioned a trader.
Not careful enough, it turned out.
Financial regulators in the U.S., Britain and Switzerland sifted through the emails, chat messages and phone calls between traders, managers and outside brokers as they built a case against UBS for alleged manipulation of a key market index, the London Interbank Offered Rate. Banks submit data daily to compile the index, which is used to price trillions of dollars in contracts around the world, including mortgages and credit cards.
UBS agreed to pay $1.5 billion to settle charges that it manipulated that market.
The quotes of traders and bankers, collected and published Wednesday by Britain's Financial Services Authority, leave no doubt they knew they were skirting on the wrong side of the law.
CALL ME SUPERMAN
Some individuals liked to adopt colorful nicknames: "the three muscateers," ''captain caos" or "Superman." One urged his contact: "Be a hero today."
I'LL BE SO GRATEFUL
In a phone call, one UBS trader begged a broker to put pressure on a contact to modify the LIBOR. In return, the trader promised to make financial transactions that would net the broker commissions:
"If you keep (the six-month Japanese yen LIBOR rate) unchanged today ... I will (expletive) do one humongous deal with you ... Like 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."
The UBS trader and the broker made nine trades that netted more than $280,000 in illicit fees for the broker.
SCRATCH MY BACK
Upon request of a UBS trader, a broker asked a LIBOR rate submitter at another bank to manipulate the market.
The submitter agreed, adding: "Alright, well make sure he (the UBS trader) knows."
Broker: "Yeah, he will know mate. Definitely, definitely, definitely."
Submitter: "You know, scratch my back yeah an all."
Broker: "Yeah oh definitely, yeah, play the rules."
WILL CHEAT, WITHIN LIMITS
A manager at UBS told a trader in a chat message there was only so far he could go in manipulating the market: "I dun mind helping on your fixings, but I'm not setting LIBOR 7 (basis points) away from the truth I'll get UBS banned if I do that, no interest in that."
- London Interbank Offered Rate