UBS, a Swiss investment bank, has reached a $68 million settlement with 40 states to resolve allegations of fraudulently manipulating benchmark interest rates.
New Jersey nonprofits and government entities will receive $5 million in restitution while Pennsylvania groups will get $2.7 million, authorities said.
The attorneys general accused UBS of manipulating the London Interbank Offered Rate (LIBOR), a benchmark interest rate at which banks offer to lend money to each other. LIBOR is widely used for student loans, adjustable mortgages, credit cards, and other loans. Government units and nonprofits were cheated out of millions of dollars as a result of the rate rigging, authorities said.
The investigation found that UBS employees improperly asked for its U.S. Dollar LIBOR submissions to “err on the low side” to avoid the perception that UBS had higher borrowing costs, according to the New Jersey attorney general’s office.
“We are pleased to have resolved this legacy matter related to events that are almost a decade old," UBS said in a statement. “It was achieved with the best interests of our shareholders in mind.”
UBS is the fourth U.S. Dollar LIBOR-setting panel bank to resolve claims after investigations by state attorneys general, who have recovered $488 million from the banks. The previous three were Citibank, Deutsche Bank, and Barclays Bank.