Gibson Dunn advises UBS on Libor settlements

US firm Gibson Dunn & Crutcher has advised UBS on settlements with UK, US and Swiss regulators totalling SFr1.4bn (£940m) concerning allegations that figures at the bank manipulated the key Libor interest rate.

City disputes head Philip Rocher led the firm’s team on the UK side, advising the Swiss bank on matters including discussions with the FSA.

In the US, the Gibson Dunn team was headed by San Francisco partner and firmwide antitrust and trade regulation chief Gary Spratling, who worked with antitrust partner Jarrett Arp and white-collar partner David Burns, both in Washington DC, Los Angeles litigation partner Steven Sletten and New York litigation partner Lawrence Zweifach.

The settlements, announced today (19 December), see the bank’s board of directors agree fines with the US Department of Justice (DoJ) and America’s Commodity Futures Trading Commission (CFTC), the FSA and Finma, the Swiss financial regulator.

These comprise fines worth $1.2bn (£740m) to the DoJ and CFTC, Sfr59m (£40m) to Finma and £160m to the FSA. The FSA said this was the largest fine it had ever imposed.

In a statement, the FSA claimed that UBS traders had routinely requested that colleagues at the bank adjust their Libor and Euribor submissions to benefit their trading positions. The regulator also alleged collusion with interdealer brokers in an attempt to influence Japanese Yen Libor submissions made by other banks, and that payments were made to reward brokers who tried to manipulate the key interest rate.

FSA director of enforcement and financial crime Tracey McDermott said in a statement: “The findings we’ve set out in our notice today don’t make for pretty reading. The integrity of benchmarks such as Libor and Euribor are of fundamental importance to both UK and international financial markets. UBS traders and managers ignored this. They manipulated UBS’s submissions in order to benefit their own positions and to protect UBS’s reputation, showing a total disregard for the millions of market participants around the world who were also affected by Libor and Euribor.”

UBS CEO Sergio Ermotti added: “During the course of these investigations, we discovered behavior of certain employees that is unacceptable. Their misconduct does not reflect the values of UBS nor the high ethical standards to which we hold every employee. We’ve co-operated fully with the authorities and taken decisive and appropriate actions to correct the issues and to strengthen our control processes and procedures. We deeply regret this inappropriate and unethical behavior. No amount of profit is more important than the reputation of this firm, and we’re committed to doing business with integrity.”

The news marks the second fine for a major bank over its manipulation of Libor after Barclays in June reached a settlement of more than $450m with UK and US regulators. Barclays was advised on the investigation by Clifford Chance (10 July 2012).

For more on law firms’ roles on Libor investigations, see City column