Times have changed since 1989. That year, bond king Mike Milken was indicted on 98 counts of racketeering and securities fraud. He served two years in prison after he pled guilty to six securities violations. Milken paid $1.1 billion in fines and disgorgement to investors. His firm, Drexel Burnham Lambert, settled civil and criminal charges, but it went bankrupt the following year.
Now, because of the fragility of the financial system, UBS, the latest firm to be involved in systemic financial crimes after it was found to be manipulating Libor, will only face a criminal charge against its Japanese subsidiary. It is the equivalent of a legal slap on the wrist. The bank should instead be banned from conducting business in the U.S. The WSJ reports:
Regulators described the alleged illegality as ‘epic in scale,’ with dozens of traders and managers in a UBS-led ring of banks and brokers conspiring to skew interest rates to make money on trades. The six-year effort ‘seriously compromised’ the integrity of financial markets, said the U.S. Commodity Futures Trading Commission[…]
[…]UBS isn’t facing criminal charges. Justice Department officials said they decided not to charge the Zurich-based company, fearing such a move could endanger its stability.
But this wasn’t the first bid-rigging conviction for UBS this year. UBS employees were also convicted of multiple bid-rigging, writes Reuters: