More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Libor manipulation is rearing its ugly head again. In the latest infraction, UBS will pay $1 billion to settle allegations that it manipulated Libor, according to various reports.
The Financial Times and other publications reported Thursday that the news about UBS’ settlement will likely be made public on Monday.
As it stands now, “up to 10 authorities around the world are investigating potential manipulation of the rate in a probe that has embroiled around 20 banks and interdealer brokers,” the Financial Times reported. “The first arrests in the investigation were made this week by the U.K. authorities. One of the arrested men, Tom Hayes, used to work for UBS.”
UBS’ settlement is expected to involve four regulators, the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, the U.K. Financial Services Authority and the Swiss regulator FINMA, which is UBS’ primary supervisor, according to the Financial Times.
All four are expected to receive some sort of monetary settlement–although FINMA cannot extract fines, it can demand that companies give up ill-gotten gains, the Times reported.
A fine in excess of $1 billion would be more than double the record penalty paid by Barclays, which settled the authorities’ Libor investigation in June by paying $450 million, the Times said.
The Financial Times reported that UBS “also won partial immunity from regulators by coming with information. The Swiss bank was one of the first to launch an internal investigation into the matter after authorities requested information in 2009.”
The UBS settlement will shed a light on the “alleged manipulation of the yen-denominated Libor interest rate in particular,” people close to the situation told the Times.
A $1 billion fine would cap a year that has seen UBS’ compliance issues put under public scrutiny, including a rogue-trading incident that lost the bank $2.3 billion, the Financial Times reported. “The bank was fined nearly £30m last month by the FSA over the incident, while the trader at the heart of the scandal, Kweku Adoboli, was sentenced to seven years in prison for perpetrating the biggest bank fraud in British history.”