UBS Shielded From Charges in U.S. Precious-Metals Probe

3:01 AM CST May 21, 2015

UBS Group AG won immunity from criminal fraud charges in a Justice Department investigation into misconduct in the trading of precious metals.

The Swiss bank’s main UBS AG unit won’t be charged by the department’s criminal division for information the firm disclosed to prosecutors about precious-metals transactions, according to the company’s plea agreement released on Wednesday to resolve a probe into interest-rate manipulation.

Prosecutors have been investigating whether at least 10 banks, including Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG, manipulated prices of precious metals such as silver and gold, Bloomberg reported in February. The scrutiny follows international probes into the rigging of financial benchmarks for rates and currencies, which have yielded billions of dollars in fines.

The Justice Department on Wednesday announced that JPMorgan, Barclays and units of Citigroup Inc. and Royal Bank of Scotland Group Plc agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros. In its deal, UBS promised to help investigators examine whether there was “manipulation of, or fraud in” precious metals markets. The four other banks’ agreements filed in federal court in Connecticut don’t detail cooperation by them in the metals case.

UBS spokeswoman Karina Byrne declined to comment beyond a statement the company issued Wednesday that noted the Zurich-based firm won’t be charged in the metals probe. UBS also won immunity from prosecution in the currency case.

“This immunity reflects UBS’s role as the firm that first reported potential misconduct to the DOJ, and the full cooperation provided to the DOJ and other authorities throughout the world,” the lender said.

HSBC Holdings Plc disclosed in February that the Justice Department and U.S. commodities regulators have sought documents on precious-metals dealings. The London-based bank, which is under a five-year deferred-prosecution agreement with the Justice Department from a money-laundering case, said it’s cooperating in the probes.

Wednesday’s plea agreement also said that UBS wouldn’t face criminal fraud charges for information it has given to prosecutors investigating the bank’s V10 Currency Indexes.

The Justice Department is investigating the UBS V10 Enhanced FX Carry Strategy, a product sold to institutional investors such as hedge funds and pension funds, to determine whether the bank misrepresented to clients the profits it was earning on the foreign-currency basket, a personal familiar with the matter told Bloomberg in February.