Euribor - FBI Informe UBS

8/14/2019 Euribor - FBI Informe UBS

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12 M G 3229Approved: .

f f f ~ : 4 - ' t J ; ~ ~ ~ / ~ ~ . A : ? 2Will iam S t e lmach, Chie f E l i z a b e t h P r e w i t t A s s t . Chie fDanie l Braun, Deputy Richard Powers , T r i a l A t t o r n e yLuke Marsh, T r i a l A t t o r n e y A n t i t r u s t D i v i s i o n New YorkC r i m i n a l D i v i s i o n (Fraud S e c t i o n

Before : HONORABLE FRANK MAASUni ted S t a t e s M a g i s t r a t e JudgeSouthe rn D i s t r i c t o f New York

- - - - - - - - - - -xTO BE FILED UNDER SEAL

UNITED STATES OF AMERICACOMPLAINT

- v -18 U.S .C . 1349, 1343

TOM ALEXANDER WILLIAM HAYES, and 2 ; 15 U.S.C. 1ROGER DARIN,

COUNTY OF OFFENSE:D e f e n d a n t s . New York and e l sewhere

- - - - - - - - - - - - - - - - - -x

SOUTHERN DISTRICT OF NEW YORK s S . :

MICHAEL J . MCGILLICUDDY, b e i n g d u l y sworn , deposes ands a y s t h a t he i s a S p e c i a l Agent w i t h t h e F e d e r a l Bureau o fI n v e s t i g a t i o n ( FBI ) and charges a s f o l l o w s : .

COUNT ONE(Consp i racy t o Commit Wire Fraud)

1 . From a t l e a s t i n o r abou t Sep tember 2006 t h roughi n o r abou t September 2009, i n t he Sou the rn D i s t r i c t o f New Yorkand e l s e w h e r e , TOM ALEXANDER WILLIAM HAYES and ROGER DARIN, t h ed e f e n d a n t s , and o t h e r s known and unknown, d i d knowing ly combine,c o n s p i r e c o n f e d e r a t e and a g r e e t o commit c e r t a i n o f f e n s e sa g a i n s t t h e U n i t e d S t a t e s t h a t i s : t o d e v i s e and i n t e n d t od e v i s e a scheme and a r t i f i c e t o def raud , and t o o b t a i n money andp r o p e r t y by means o f m a t e r i a l l y f a l s e and f r a u d u l e n t p r e t e n s e sr e p r e s e n t a t i o n s and p r o m i s e s , knowing t h a t t h e y were f a l s e andf r a u d u l e n t when made, and t r a n s m i t t i n g and c a u s i n g t o bet r a n s m i t t e d c e r t a i n w i r e communica t ions i n i n t e r s t a t e and f o r e i g ncommerce, f o r t h e purpose o f e x e c u t i n g t h e scheme, t o w i t t h ed e f e n d a n t s engaged i n a scheme t o d e f r a u d c o u n t e r p a r t i e s t oi n t e r e s t r a t e d e r i v a t i v e t r a d e s t a k e n on b e h a l f o f t h e i r employerby s e c r e t l y m a n i p u l a t i n g benchmark i n t e r e s t r a t e s t o which t h ep r o f i t a b i l i t y o f t h o s e t r a d e s was t i e d i n v i o l a t i o n o f T i t l e 18,


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p r o f i t a b i l i t y o f t h o s e t r a d e s was t i e d , i n v i o l a t i o n o f T i t l e 18,Uni t ed S t a t e s Code, S e c t i o n 1343.

O v e r t c t s

2 . In f u r t h e r a n c e o f t h e c o n s p i r a c y and t o e f f e c t t h ei l l e g a l o b j e c t t h e r e o f , t h e fo l lowing o v e r t a c t s , among o t h e r s ,were commit ted i n t h e Sou the rn D i s t r i c t o f New York ande l s e w h e r e :

a . On o r abou t September 12, 2007 and on o rabou t J u l y 15, 2008, HAYES e n t e r e d i n t ot r a d e s wi th a c o u n t e r p a r t y b a s e d i n Purchase ,New York;

b . At v a r i o u s t imes r e l e v a n t t o t h i s Compla in t ,i n c l u d i n g on o r abou t March 29, 2007 and ono r abou t A p r i l 28, 2008, DARIN engaged i ne l e c t r o n i c c h a t s w i t h HAYES; and

c . A t v a r i o u s t imes r e l e v a n t t o t h i s Compla in t ,HAYES and DARIN and o t h e r s known andunknown, caused t h e p u b l i c a t i o n o fmanipu la t ed i n t e r e s t r a t e i n f o r m a t i o n i n NewYork, New York.

T i t l e 18, u n i t e d S t a t e s Code, S e c t i o n 1349

OUNT TW

Wire Fraud)

3. At v a r i o u s t imes r e l e v a n t t o t h i s Compl a in t , i nt h e Sou the rn D i s t r i c t o f New York and e l s e w h e r e , TOM ALEXANDERWILLIAM HAYES t h e d e f e n d a n t , u n l a w f u l l y, w i l f u l l y , andknowingly, hav ing d e v i s e d and i n t e n d i n g t o d e v i s e a scheme anda r t i f i c e t o d e f r a u d , and f o r o b t a i n i n g money and p r o p e r t y bymeans o f f a l s e and f r a u d u l e n t p r e t e n s e s , r e p r e s e n t a t i o n s , andpromises , would and d i d t r a n s m i t and cause t o be t r a n s m i t t e d bymeans o f wire communica t ion i n i n t e r s t a t e and f o r e i g n commerce,w r i t i n g s , s i g n s , s i g n a l s , p i c t u r e s , and sounds f o r t h e purpose o fe x e c u t i n g such scheme and a r t i f i c e , t o w i t , HAYES causedc o n f i r m a t i o n s on o r a b o u t September 12, 2007 and on o r abou t

J u l y 15, 2 0 0 8 , t o be t r a n s m i t t e d f rom o u t s i d e t h e Uni t ed S t a t e st o a c o u n t e r p a r t y b a s e d i n Purchase , New York, f o r t r a n s a c t i o n si n v o l v i n g i n t e r e s t r a t e d e r i v a t i v e p r o d u c t s t i e d t o a benchmarki n t e r e s t r a t e which HAYES was s e c r e t l y m a n i p u l a t i n g .

T i t l e 18, Uni t ed S t a t e s Code, S e c t i o n s 1343 and 2

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OUNT THREE

A n t i t r u s t

4 . In o r abou t May 2009, i n t h e S o u t h e r n D i s t r i c t o fNew York and e l s e w h e r e , TOM LEX NDER WILLIAM HAYES t h ed e f e n d a n t , and h i s c o - c o n s p i r a t o r s , i n c l u d i n g an employee a t ama jo r f i n a n c i a l i n s t i t u t i o n , and o t h e r s known and unknown,engaged i n a combina t i on and c o n s p i r a c y i n u n r e a s o n a b l e r e s t r a i n to f i n t e r s t a t e and f o r e i g n t r a d e and commerce i n v i o l a t i o n o fS e c t i o n 1 o f t h e Sherman A c t . The a f o r e s a i d combina t i on andc o n s p i r a c y c o n s i s t e d o f an a g reemen t , u n d e r s t a n d i n g , and c o n c e r to f a c t i o n among H YES and h i s c o - c o n s p i r a t o r s , t h e s u b s t a n t i a lt e rms o f which were t o f i x Yen LIBOR a key p r i c e component o fYen LIBOR-based d e r i v a t i v e p r o d u c t s .

T i t l e 15, U n i t e d S t a t e s Code, S e c t i o n 1)

A f f e c t on a i n a n c i a ~I n s t i t u t i o n

5 . The scheme a l l e g e d i n t h i s Compla in t had an a f f e c ton one o r more f i n a n c i a l i n s t i t u t i o n s , w i t h i n t h e meaning o fT i t l e 18, Uni t ed S t a t e s Code, S e c t i o n s 20 and 3293 2 ) .

.*

The b a s e s f o r my knowledge and t h e f o r e g o i n g c h a rg e sa r e , i n p a r t , a s f o l l o w s :

6 . I am a S p e c i a l Agent w i t h t h e FBI o f t h e Uni t edS t a t e s Depar tment o f J u s t i c e . I am t ho rough ly f a m i l i a r w i t h t h ei n f o r m a t i o n c o n t a i n e d i n t h i s Compla in t , e i t h e r t h rough my ownd i r e c t i n vo lv em en t i n i n v e s t i g a t i v e work o r t h rough c o n v e r s a t i o n sw i t h law e n fo r c eme n t a g e n t s and o t h e r s , and my examina t ion o fdocuments , aud io r e c o r d i n g s , and o t h e r r e c o r d s f rom t h e v a r i o u se n t i t i e s i d e n t i f i e d below. Because t h i s Compla in t i s b e i n gs u b m i t t e d f o r a l i m i t e d purpose , I have no t s e t f o r t h each ande v e r y f a c t t h a t I know a b o u t t h e i n v e s t i g a t i o n . To t h e e x t e n tt h a t t h i s Compla in t c o n t a i n s a s s e r t i o n s conce rn ing d a t e s andnumbers , such a s s e r t i o n s a r e o f t e n a p p r o x i m a t i o n s b a s e d uponi n f o r m a t i o n and e v i d e n c e g a t h e r e d t o d a t e . Where t h e c o n t e n t s o fdocuments and t h e a c t i o n s , s t a t e m e n t s , and c o n v e r s a t i o n s o fo t h e r s a r e r e p o r t e d h e r e i n , t h e y a r e r e p o r t e d i n s u b s t a n c e and i np a r t , excep t where o t h e r w i s e i n d i c a t e d .II

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R e l e v a n t Background

A. The London I n t e r b a n k O ff e r e d Ra te

7 . The London I n t e r b a n k O f f e r e d Rate ( LIBOR ) i s t h e

p r i m a r y g l o b a l benchmark f o r s h o r t - t e r m i n t e r e s t r a t e s , and t i sc a l c u l a t e d by a v e r a g i n g t h e e s t i m a t e s f rom l e a d i n g b a nks a roundt h e world o f t h e r a t e s t h e y would be cha rged i f bo r rowi n g f romo t h e r banks . Many f i n a n c i a l i n s t i t u t i o n s , mortgage l e n d e r s , andc r e d i t c a r d a g e n c i e s s e t t h e i r own r a t e s r e l a t i v e t o LIBOR.Mortgages , c r e d i t c a r d s , s t u d e n t l o a n s , and o t h e r consumerl e n d i n g p r o d u c t s o f t e n use LIBOR as a r e f e r e n c e r a t e .

8 . LIBOR i s p u b l i s h e d unde r t h e a u s p i c e s o f t h eB r i t i s h Banke r s ' A s s o c i a t i o n ( BBA ), a t r a d e a s s o c i a t i o n basedi n London. LIBOR i s c a l c u l a t e d f o r t e n c u r r e n c i e s a t f i f t e e nbo r rowing p e r i o d s (o r m a t u r i t i e s ) , r a n g i n g f rom o v e r n i g h t t o one

y e a r .

9 . The LIBOR f o r a g iven c u r r e n c y a t a s p e c i f i cm a t u r i t y i s t h e r e s u l t o f a c a l c u l a t i o n based upon s u b m i s s i o n sf rom a p a n e l o f banks f o r t h a t c u r r e n c y s e l e c t e d by t h e BBA.Accord ing t o t h e BBA t h e b a s i s f o r a p a n e l b a n k ' s LIBORs u b m i s s i o n must be t h e r a t e a t which members o f t h e b a n k ' s s t a f fp r i m a r i l y r e s p o n s i b l e f o r management o f t h e b a n k ' s cash p e r c e i v et h a t t h e bank can bor row unsecu red funds f rom a n o t h e r bank i n t h ed e s i g n a t e d c u r r e n c y ove r t h e s p e c i f i e d m a t u r i t y.

10 . Each bank on t h e pane l f o r a p a r t i c u l a r c u r r e n c ysubmi t s i t s LIBORs e v e r y London b u s i n e s s day t h r o u g h e l e c t r o n i cmeans t o Thomson R e u t e r s , as an agen t f o r t h e BBA by 11 :10 a .m.London Time. Among o t h e r c u r r e n c i e s , Thomson Reu te r s p u b l i s h e sLIBORs f o r t h e Japanese Yen. A f t e r each Yen p a n e l bank hass u b m i t t e d i t s r a t e s , Thomson Reu te r s r anks t h e c o n t r i b u t e d r a t e sf rom h i g h e s t t o l o w e s t , t h e n e x c l u d e s t h e t o p fou r and b o t to mf o u r s u b m i s s i o n s , and f i n a l l y ave rages t h e r ema in ing midd l e e i g h ts u b m i s s i o n s t o d e t e r m i n e t h e o f f i c i a l LIBOR s e t t i n g (o r f i x )f o r t h a t p a r t i c u l a r c u r r e n c y a t each m a t u r i t y . Thomson Reu te r sthen p u b l i s h e s t h o s e f i x i n g s p u b l i c l y , i n c l u d i n g t o s e r v e r s andc o u n t e r p a r t i e s b a s e d i n New York, New York.

B. R e l e v a n t I n d i v i d u a l s and E n t i t i e s

11. As e x p l a i n e d above, e ach p a n e l bank made d a i l ys u b m i s s i o n s t o t h e BBA p u r p o r t i n g t o r e p o r t t h e r a t e s a t which tcou ld borrow sums o f a r e a s o n a b l e marke t s i z e from o t h e r banksf o r s p e c i f i e d m a t u r i t i e s .

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12 . The Yen LIBOR pane l i n c l u d e d , among o t h e r banks :

a . Bank A a g l o b a l f i n a n c i a l s e r v i c e s companyh e a d q u a r t e r e d i n New York, New York;

b . Bank B,a

g l o b a l f i n a n c i a l s e r v i c e s companyh e a d q u a r t e r e d i n F r a n k f u r t , Germany;

c . Bank C a g l o b a l f i n a n c i a l s e r v i c e s companyh e a d q u a r t e r e d i n Edinburgh , S c o t l a n d ;

d . Bank D a g l o b a l f i n a n c i a l s e r v i c e s companyh e a d q u a r t e r e d i n New York, New York; and

e . UBS AG a g l o b a l f i n a n c i a l s e r v i c e s companyh e a d q u a r t e r e d i n B a s e l and Z u r i c hS w i t z e r l a n d , wi th e l e v e n p r i n c i p a l o f f i c e saround t h e wor ld , i n c l u d i n g New York, NewYork. At c e r t a i n t imes r e l e v a n t t o t h i sCo m pl a in t , UBS AG o p e r a t e d , among o t h e rwhol ly-owned s u b s i d i a r i e s , UBS S e c u r i t i e sJapan L t d . , an i nves tmen t bank and f i n a n c i a ls e r v i c e s f i rm based i n Tokyo, J apan

c o l l e c t i v e l y, UBS ) . '

13 . Brokerage Fi rm A and Brokerage Fi rm Bc o l l e c t i v e l y, t h e Broke rage Firms ) were London-based , i n t e r

d e a l e r b r o k e r s t h a t , i n exchange f o r commiss ions o r o t h e r f e e s ,matched buye r s and s e l l e r s i n v a r i o u s f i n a n c i a l p r o d u c t s ,e n a b l i n g them t o engage i n t r a n s a c t i o n s . The Brokerage Firms

p r o v i d e d such s e r v i c e s t o numerous c l i e n t s , i n c lud ing Yen LIBORp a n e l banks , f o r Yen money market t r a n s a c t i o n s , among o t h e rt h i n g s .

14. At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t , p r i o rt o making Yen LIBOR s u b m i s s i o n s t o t h e BBA s u b m i t t e r s a t v a r i o u sYen LIBOR p a n e l banks c o n s u l t e d . r i t h i n t e r - d e a l e r b r o k e r semployed by t h e Brokerage Firms t o l e a r n a b o u t t r a n s a c t i o n s ,

At a l l t imes r e l e v a n t t o t h i s C ompla in t , UBS o p e r a t e dbranches o r a g e n c i e s w i t h i n t h e Uni t e d S t a t e s , which were

f i n a n c i a l i n s t i t u t i o n s , w i t h i n t he meaning o f T i t l e 18, Uni t edS t a t e s Code, S e c t i o n 20 . UBS a l s o engaged i n t r a n s a c t i o n s w i t hc o u n t e r p a r t i e s t h a t i n c l u d e d f i n a n c i a l i n s t i t u t i o n s . One o r moreo f t h e s e f i n a n c i a l i n s t i t u t i o n s was a f f e c t e d by t h e conductc h a rg e d i n t h i s Compla in t , w i t h i n t h e meaning o f T i t l e 18, U ni t edS t a t e s Code, S e c t i o n 3 2 9 3 ( 2 ) .

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The F r a u d u l e n t Scheme

19 . From a t l e a s t i n o r abo u t September 2006 t h roughi n o r abo u t June 2010, HAYES t o g e t h e r wi th o t h e r s known andunknown, o r c h e s t r a t e d a scheme t o manipu la t e Yen LIBOR t o

maximize p r o f i t s f o r h i s t r a d i n g p o s i t i o n s a t t h e e xpense o f h i sc o u n t e r p a r t i e s . Among o t h e r f r a u d u l e n t d e v i c e s t o manipu la t e YenLIBOR i n a d i r e c t i o n f a v o r a b l e t o h i s t r a d i n g p o s i t i o n s HAYESengaged i n t h e fo l lowing means and methods t o e x e c u t e h i sf r a u d u l e n t scheme:

a . HAYES c o n s p i r e d wi th DARIN and o t h e r s knownand unknown ' , i th in UBS t o cause t h e bank t omake f a l s e and m i s l e a d i n g Yen LIBORsubmis s ions t o t h e BBA;

b . HAYES caused t h e Brokerage Fi rms t od i s s e m i n a t e t o o t h e r Yen LIBOR p a n e l banksf a l s e and m i s l e a d i n g i n f o r m a t i o n abou t s h o r t -t e rm i n t e r e s t r a t e s f o r Yen which t h o s e banksc o u l d and d i d r e l y upon i n f o r m u l a t i n g t h e i rown Yen LIBOR submis s ions t o t h e BBA; and

c . HAYES made e f f o r t s t o c o o r d i n a t e w i t h Yenswaps t r a d e r s a t o t h e r Yen LIBOR p a n e l bankst o l i k e w i s e cause t h o s e banks t o make f a l s eand m i s l e a d i n g Yen LIBOR submiss ions t o t h e BBA.

20. In t h i s manner, HAYES t o g e t h e r wi th o t h e r s known

and unknown, d e v i s e d and c a r r i e d o u t a scheme t o d e f r a u d UBS'sand Bank D's c o u n t e r p a r t i e s and a l s o g l o b a l l y impac t edt r a n s a c t i o n s and f i n a n c i a l p r o d u c t s t i e d t o Yen LIBOR.C o u n t e r p a r t i e s e n t e r i n g i n t o Yen LIBOR-based d e r i v a t i v e t r a d e sw i t h HAYES and t h e r e f o r e UBS and Bank D d i d n o t know abou t t h i sm a n i p u l a t i o n and were dece ived r e g a r d i n g i t s o c c u r r e n c e .

A. The Consp i r acy t o F a l s i f y UBS's Yen LIBOR Submis s ions

21 . Unless o t h e r w i s e s p e c i f i c a l l y s t a t e d based on myrev iew o f b u s i n e s s r e c o r d s f rom UBS t h e Brokerage F i rms , ando t h e r Yen LIBOR p a n e l banks , my p a r t i c i p a t i o n i n i n t e r v i e w s

i n c l u d i n g t h o s e w i t h t h e UBS J u n i o r Trade r and UBS J u n i o r

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S u b m i t t e r 2,2 my r ev i ew o f memoranda o f i n t e r v i e w s conduc t ed byo t h e r a g e n t s , my r ev i ew o f summaries p r e p a r e d by o t h e r s ,i n c l u d i n g summaries o f UBS t r a d i n g r e c o r d s , and my rev iew o fp u b l i c l y a v a i l a b l e i n f o r m a t i o n , I have l e a r n e d t h e f o l l o w i n g :

a . From a t l e a s t i n o r abou t September 2006t h rough i n o r about August 2009, HAYESDARIN and o t h e r s known and unknown, causedUBS r e p e a t e d l y t o p r o v i d e f a l s e andm i s l e a d i n g i n f o r m a t i o n i n i t s d a i l y Yen LIBORsubmis s ions t o t he BBA r e g a r d i n g t h e i n t e r e s tr a t e s a t which UBS cou ld bor row r e a s o n a b l esums denomina ted i n Yen f rom o t h e r banks . Ase x p l a i n e d above , HAYES and DARIN p r o v i d e dt h i s f a l s e and m i s l e a d i n g i n f o r m a t i o n t ocause t h e f i n a l Yen LIBOR f i x i n g s p u b l i s h e dby Thomson Reu te r s t o move i n d i r e c t i o n sf a v o r a b l e t o UBS t r a d i n g p o s i t i o n s i n YenLIBOR-based d e r i v a t i v e p r o d u c t s .

b . For example , i n an e l e c t r o n i c c h a t on o ra b o u t November 20, 2006: 3

i . HAYES e x p l a i n e d t o UBS J u n i o r S u b m i t t e r1 t h a t HAYES and DARIN g e n e r a l l yc o o r d i n a t e and skew t h e l i b o r s a b i t .HAYES f u r t h e r s t a t e d : r e a l l y need h i g h

m f i x e s t i l l t h u r s d a y.

2 Both t h e UBS J u n i o r Tr a d e r and UBS J u n i o r S u b m i t t e r 2a r e c o o p e r a t i n g wi th t h i s i n v e s t i g a t i o n p u r s u a n t t o nonp r o s e c u t i o n ag re emen t s s t a t i n g t h a t , i t h e s e i n d i v i d u a l s ab ideby t h e t e rms o f t h e ag reemen t s , n e i t h e r t h e Cr imina l D i v i s i o n nort h e A n t i t r u s t D i v i s i o n o f t h e Uni t ed S t a t e s Depar tment o f J u s t i c ew i l l p r o s e c u t e them f o r t h e i r r o l e s i n t h e conduc t a l l e g e d i nt h i s Compla in t .

A r e d a c t e d copy o f t h i s UBS i n t e r n a l c h a t i s a t t a c h e dh e r e t o as E x h i b i t 1 . A l l e x h i b i t s t o t h i s Compla in t have beenr e d a c t e d t o p r o t e c t t h e i d e n t i t i e s and p r i v a c y i n t e r e s t s o fi n d i v i d u a l s and e n t i t i e s no t s p e c i f i c a l l y named i n t h i s

Compla in t . A l l s h o r t h a n d , m i s s p e l l i n g s , and grammat ica l o rt y p o g r a p h i c a l e r r o r s i n t h e o r i g i n a l S have been p r e s e r v e d i n t h ee x c e r p t s quo ted i n t h i s Compla in t . As r e f l e c t e d i n t h e a t t a c h e dE x h i b i t s , t h e e l l i p s e s i n c l u d e d i n t h e quo ted e x c e r p t s t h roughou twere e i t h e r i n t h e o r i g i n a l o r i n d i c a t e a l i n e b r e a k i n t h eo r i g i n a l .

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i i i HAYES t hen responded , i n p a r t : o ko b v i o u s l ; y no i n t i n t h a t happeninge i t h e r n o t a s k i n g f o r i t be 7bp f romr e a l i t y anyway any h e l p a p p r e c i a t e d .

i v. Subsequent t o t h e c h a t , DBS's 3-monthYen LIBOR submis s ion was 0.67 p e r c e n ti n s t e a d o f t h e u n b i a s e d 0 .69 p e r c e n tt h a t DARIN sugges t ed o t h e r w i s e wouldhave b e e n s u b m i t t e d . A c c o r d i n g t o BBAr e c o r d s o f Yen LIBOR p a n e l banksubmis s ions f o r t h a t day, t h e r e s u l t i n g3-month Yen LIBOR f i x was 1 /8 o f a b a s i sp o i n t ' lower t h a n i t o t h e r w i s e wouldhave been had DBS's ' s ubmi s s ion remaineda t t h e u n b i a s e d 0 . 6 9 p e r c e n t .

e . Al t h ough t h e movements i n Yen LIBOR

submis s ions r e q u e s t e d by HAYES and t h e UBSJ u n i o r Trade r who a c t e d a t h i s d i r e c t i o nc o u l d be measured i n b a s i s p o i n t s , t h e y i e l d st o HAYES's t r a d i n g p o s i t i o n s werec o n s i d e r a b l e . In f a c t , a t c e r t a i n t imesr e l e v a n t t o t h i s Compla in t , HAYES i n d i c a t e di n h i s r e q u e s t s t o DARIN o r DBS J u n i o rS u b m i t t e r a p p r o x i m a t e l y how much h i st r a d i n g p o s i t i o n s would b e n e f i t f rom evenr e l a t i v e l y s l i g h t movements i n t he r e s u l t i n gYen LIBOR f i x . For example , i n a s e r i e s o fe l e c t r o n i c c h a t s f rom on o r abou t Wednesday,

March 12 , 2008 t h rough on o r abo u t Monday,March 17 , 2008: 6

i On o r ab o u t Wednesday, March 12 , 2008,HAYES a s k ed DBS J u n i o r Submi t t e r f o r a

h i g h 3-month Yen LIBOR s u bmis s ionbecause we have m usd f i x i n 3m onmonday p e r b p . DBS's t r a d i n g r e c o r d sc o n f i r m t h a t HAYES had a n e t t r a d i n gp o s i t i o n on o r a b o u t Monday, March 17 ,2008, t h a t would p r o f i t by app rox ima te ly

5 A b a s i s p o i n t (or bp l i s e q u a l t o 0 .01 p e r c e n t ; 100b a s i s p o i n t s t h e r e f o r e e q u a l s 1.00 p e r c e n t .

6 Redacted c o p i e s o f t h e s e DBS i n t e r n a l c h a t s a r ea t t a c h e d h e r e t o as E x h i b i t 3 .

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$ 2 . 1 m i l l i o n .based on a one b a s i s p o i n ti n c r e a s e i n t h e 3-month Yen LIBOR f i x ont h a t day.

i i UBS J u n i o r S u b m i t t e r 2 t h e n r e spondedt h a t UBS's 3-month Yen LIBOR submiss iono f 0 .99 p e r c e n t had been on t h e v e r yh igh s i d e t h e p r e v i o u s day and, a s ar e s u l t , UBS J u n i o r S u b m i t t e r 2 needed t ogo l ower and t h o u g h t abou t 0 . 9 7 . .H YES t hen i n q u i r e d whethe r 0 .98 p e r c e n twas p o s s i b l e , b u t no ted : anyway t h ea c t u a l f i x i s monady so t h a t s t h e keyday.

i i i Tha t same day, n o t w i t h s t a n d i n g UBSJ u n i o r S u b m i t t e r 2 ' s s u g g e s t i o n t h a t a0 .97 p e r c e n t submiss ion was more

a p p r o p r i a t e , UBS's 3-month Yen LIBORsubmiss ion was 0 .98 p e r c e n t , c o n s i s t e n tw i t h HAYES s r e q u e s t .

i v . The fo l lowing two d a y s - - o n o r abou tThursday, March 13, 2008, and on o rabou t F r iday, March 14, 2008--UBS J u n i o rS u b m i t t e r 2 i n c r e a s e d t h e b a n k ' s 3-monthYen LIBOR submiss ion t o 0 .99 p e r c e n t .

v . On o r about Monday, March 17, 2008, t h ekey day f o r h i s t r a d i n g p o s i t i o n ,

H YES no ted t h a t he had spoken w i t hDARIN r e g a r d i n g t h e 3-month Yen LIBORsubmiss ion and i n q u i r e d whethe r wec o u l d push i t a b i t more t h a n u s u a l .UBS J u n i o r S u b m i t t e r 2 t h e n r e p l i e d :

f r i d a y f i x e d 3mt a t 0 .99 s h a l l i gof r o 1%? H YES t h e n answered p l s , t owhich UBS J u n i o r S u b m i t t e r 2 r e p l i e d :

ok w l l do .

v i . On o r abou t Monday, March 17, 2008,UBS's 3-month Yen LIBOR submiss ion was1.00%. On t h a t day, a l o n e , t h er e s u l t i n g 3-month Yen LIBOR f i xg e n e r a t e d approx imate ly $793,000 i na d d i t i o n a l p r o f i t s f o r HAYES's t r a d i n gbook and, u l t i m a t e l y , f o r UBS comparedt o t h a t which i t would have e a r n e d had


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t h e ban


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i . In r e q u e s t i n g a h i g h 6-month Yen LIBORsubmiss ion f rom UBS J u n i o r S u b m i t t e r 2,HAYES i n q u i r e d : can we s t 6m l i b o r h i g hp I s ?

i i UBS J u n i o r S u b m i t t e r 2 t h e n respondedt h a t , based on a v a i l a b l e i n f o r m a t i o n ,UBS's 6-month Yen LIBOR submiss ionl i k e l y would be 0 .7150 p e r c e n t .

i i i HAYES t hen asked : can we go 74 o r75 we have 2m usd a bp f i x . '0

i v . UBS J u n i o r S u b m i t t e r 2 t h e n responded:yes s u r e w i l l . i go wi th .75 f o r you .

UBS's 6-month Yen LIBOR submiss ion wasi ndeed 0 .75 p e r c e n t t h a t . day, which was3 .5 b a s i s p o i n t s h i g h e r t h a n t h e r a t e

which UBS J u n i o r S u b m i t t e r 2 would havesubmi t t ed .

v . According t o BBA r e c o r d s o f Yen LIBORp a n e l bank submiss ions f o r t h a t day,UBS's 6-month Yen LIBOR submiss ion o f0 .75 p e r c e n t p l a c e d i t i n t h e upperq u a r t i l e , which meant t h a t a n o t h e rb a n k ' s submiss ion which would have beeno t h e r w i s e d i s c a r d e d was moved down i n t othe midd le e i g h t and averaged t ode te rmine t h e f i n a l LIBOR f i x . As a

r e s u l t o f t h a t change, the 6-month YenLIBOR f i x t h a t day was i n c r e a s e d by 1 /16o f a b a s i s p o i n t .

h . On a t l e a s t approx imate ly 335 o f t h e 738t r a d i n g days f rom i n o r abou t November 2006t h rough i n o r abou t August 2009, HAYES o r t h eUBS J u n i o r Tr a d e r, a t HAYES s d i r e c t i o n ,r e q u e s t e d t h a t DARIN, UBS J u n i o r S u b m i t t e r 1,o r UBS J u n i o r S u b m i t t e r 2 accommodate HAYES sr e q u e s t s when s e t t i n g UBS's Yen LIBOR

1 In t h i s c o n t e x t , I b e l i e v e t h a t 2m usd a bp f i x meansHAYES had a t r a d i n g p o s i t i o n which would g a i n o r l o s e $2 m i l l i o nf o r each s i n g l e b a s i s p o i n t movement i n t h e r e s u l t i n g 6-month YenLIBOR f i x .

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sUbmis s ions . l l At c e r t a i n t imes i n t h i sp e r i o d , H YES r e q u e s t e d accommodat ions f o rc o n t i n u o u s days .

i . H YES engaged i n t h i s conduc t b o t h b e f o r e and

a f t e r e n t e r i n g i n t o t r a d e s w i t h v a r i o u sc o u n t e r p a r t i e s .

j . At c e r t a i n t i m es r e l e v a n t t o t h i s Compla in t ,c o u n t e r p a r t i e s t o HAYES s t r a d i n g p o s i t i o n si n c l u d e d e n t i t i e s l o c a t e d i n New York, NewYork which were f i n a n c i a l i n s t i t u t i o n s ,w i t h i n t h e meaning o f T i t l e 18, u n i t e d S t a t e sCode, S e c t i o n 20.

22. Based on p r e v i o u s l y i d e n t i f i e d s o u r c e s , I havel e a r n e d t h a t :

a . At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t ,H YES engaged i n Yen LIBOR-based d e r i v a t i v et r a n s a c t i o n s wi th a c o u n t e r p a r t y ( t he

Coun te rpa r ty ) based i n P u r c h a s e , New York.

b . For example , on o r abou t September 12, 2007,H YES e n t e r e d i n t o two t r a d e s w i t h t h eC o u n t e r p a r t y f o r d e r i v a t i v e p r o d u c t s t i e d t o6-month Yen LIBOR. The c o n f i r m a t i o n s f o rt h e s e t r a d e s were e l e c t r o n i c a l l y r o u t e d f rom

l Based on t h e s o u r c e s p r e v i o u s l y i d e n t i f i e d , I l e a r n e dt h a t beg inn ing i n o r a b o u t 2007 , managers a t UBS i s s u e di n s t r u c t i o n s t o s u b m i t t e r s f o r v a r i o u s LIBOR c u r r e n c i e s ,i n c l u d i n g t h e Yen and U.S. d o l l a r , t o e r r on t h e low s i d e i nt h e i r submis s ions o r t o make submiss ions t h a t would be i n t h e

midd le o f t he pack o f o t h e r p a n e l bank s u b m i s s i o n s . Thesei n s t r u c t i o n s , a t l e a s t p a r t , were prompted by conce rns t h a t iUBS s u b m i t t e d h i g h e r LIBORs r e l a t i v e t o o t h e r b a n k s , UBS cou lda t t r a c t n e g a t i v e a t t e n t i o n i n t h e media by p o t e n t i a l l y c r e a t i n gt h e impres s ion i t was p a y i n g h i g h e r r a t e s o f i n t e r e s t due t od i f f i c u l t i e s i n o b t a i n i n g funds : h i g h e r LIBORs migh t s u g g e s t UBShad a c r e d i t problem. Accord ing t o UBS J u n i o r S u b m i t t e r 2, t h e s e

i n s t r u c t i o n s f rom h i g h e r l e v e l s w i t h i n UBS, a t c e r t a i n t imes ,p r e v e n t e d H YES f rom m a n i p u l a t i n g Yen LIBOR t o b e n e f i t h i st r a d i n g p o s i t i o n s , l e a d i n g t o m u l t i p l e compla in t s by H YES and a tl e a s t two a t t e m p t s by h i s s u p e r v i s o r t o o b t a i n an e x c e p t i o n f o rHAYES. I n t e r n a l e l e c t r o n i c communicat ions r e c o v e r e d d u r i n g t h i si n v e s t i g a t i o n c o r r o b o r a t e t h i s i n f o r m a t i o n .

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DBS s o f f i c e s o v e r s e a s t o t h e C o u n t e r p a r t y spr imary s e r v e r s , l o c a t e d i n Rye Brook, NewYork.

c . On t h e v a l u a t i o n d a t e s p r i o r t o t h e

s e t t l e m e n t o f t h o s e t r a d e s , HAYES r e q u e s t e dt h a t UBS J u n i o r S u b m i t t e r 2 move UBS s6-month Yen LIBOR submis s ions i n t h ed i r e c t i o n t h a t maximized HAYES s p r o f i t s ont h o s e t r a d e s . Accor d ing t o BBA r e c o r d s ,compared t o t h e p r e v i o u s day, t h e change i nDBS s 6-month Yen LIBOR submis s ion wasc o n s i s t e n t w ~ t t h e d i r e c t i o n o f HAYES sr e q u e s t on one o f t h o s e d a t e s .

d . On o r abou t J u l y 15, 2008, HAYES a g a i ne n t e r e d i n t o a Yen LIBOR-based d e r i v a t i v e

t r a n s a c t i o n wi th t h e C o u n t e r p a r t y, and t h ec o n f i r m a t i o n was a g a i n e l e c t r o n i c a l l y r o u t e dt h rough t h e C o u n t e r p a r t y s s e r v e r s i n t h i sD i s t r i c t f rom o v e r s e a s .

e . In an i n t e r v i e w w i t h a n o t h e r a g e n t , t h ep r i n c i p a l i n cha rge o f f i x e d income r a t et r a d i n g f o r North America and Asia a t t h eC o u n t e r p a r t y s t a t e d t h a t he neve r s p e c u l a t e do r obse rved t h a t a Yen LIBOR p a n e l bank hads u b m i t t e d r a t e s t o t h e BBA t h a t b e n e f i t t . e di t s t r a d i n g p o s i t i o n s . I n s t e a d , t h eC o u n t e r p a r t y s p r i n c i p a l assumed t h a t t h e r ewas a s e g r e g a t i o n o f d u t i e s and t h a t t h e Yenswaps t r a d e r a t t h e p a n e l bank on t h e o t h e rs i d e o f t he C o u n t e r p a r t y s t r a d i n g p o s i t i o n swas n o t invo lved i n t h e b a n k s Yen LIBORsubmis s ions because o t h e r w i s e t h e swapst r a d e r cou ld i n f l u e n c e t h o s e submis s ions a tt h e C o u n t e r p a r t y s expense .

B. D i s s e m i n a t i o n o f F a l s e and M i s l e a d i n gI n t e r e s t Rate I n f o r m a t i o n Through t h e Broke rage Firms

23. Unles s o t h e r w i s e s p e c i f i c a l l y s t a t e d , based on

p r e v i o u s l y i d e n t i f i e d s o u r c e s , I ha.ve l e a r n e d t h e f o l l o w i n g :

a . From a t l e a s t i n o r abou t September 2006t h rough i n o r about September 2009, HAYESand o t h e r s known and unknown, a l s o e n l i s t e d

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b r o k e r s employed a t t h e B r o k e r a g e Fi rms f o rt he purpose o f d i s s e m i n a t i n g f a l s e andm i s l e a d i n g i n t e r e s t r a t e i n f o r m a t i o n i n t o t h em a r k e t p l a c e . As e x p l a i n e d above , suchb r o k e r s have many c o n t a c t s a t Yen LIBOR p a n e l

banks , i n c l u d i n g Yen swaps t r a d e r s and YenLIBOR s u b m i t t e r s . Some b r o k e r s employed a tt h e Brokerage Fi rms , be cause t h e y a r r a n g el a r g e money mar ke t t r a n s a c t i o n s be tween majo rf i n a n c i a l i n s t i t u t i o n s a r e i n a p o s i t i o n t oo b t a i n knowledge o f i n t e r b a n k l e n d i n ga c t i v i t y and money marke t s g e n e r a l l y . YenLIBOR s u b m i t t e r s a t v a r i o u s p a n e l ban k s , a tt imes , i n c o r p o r a t e i n f o r m a t i o n f u r n i s h e d byt h e Brokerage Fi rms i n de te rmin ing t h e i r YenLIBOR s u b m i s s i o n s . By d i s s e m i n a t i n g f a l s eand m i s l e a d i n g i n f o r m a t i o n t h r o u g h t h eBrokerage Fi rms , HAYES, and o t h e r s known andunknown, f u r t h e r e d t h e scheme t o manipu la t eYen LIBOR t o move i n d i r e c t i o n s f a v o r a b l e t oHAYES s t r a d i n g p o s i t i o n s .

b . I n exchange f o r t h i s a s s i s t a n c e f rom t h eb r o k e r s HAYES a r r a n g e d f o r t h e BrokerageFi rms t o be compensa ted i n t h e form o fi n c r e a s e d f e e s o r t r a d i n g commiss ions .

24 . At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t , ab r o k e r employed a t Brokerage Fi rm A ( Broker A1 ) a s s i s t e d HAYESi n b r o k e r i n g i n t e r e s t r a t e d e r i v a t i v e t r a d e s .and a n o t h e r b r o k e r

employed a t Brokerage Fi rm A ( Broker A2 ) d i s t r i b u t e d s u g g e s t e dLIBORs v i a a d a i l y ema i l t o Yen LIBOR p a n e l bank s u b m i t t e r s ando t h e r s p u r p o r t i n g t o d i s c l o s e where B roke r A2, b a s e d on h i si n f o r m a t i o n and e x p e r i e n c e b e l i e v e d t h a t Yen LIBOR would o rs h o u l d be s e t f o r t h a t day a t each s p e c i f i e d m a t u r i t y . HAYESs o l i c i t e d Broker A t o i n t e r c e d e wi th Broke r A2 t o a d j u s t Broke rA2 ' s s u g g e s t e d LIBORs t o b e n e f i t HAYES's t r a d i n g p o s i t i o n s .

a . As t h e f i n a n c i a l c r i s i s u n f o l d e d i n o r a b o u tAugus t 2007, i n t e r b a n k l e n d i n g d e c l i n e d .Based on my p a r t i c i p a t i o n i n i n t e r v i e w s w i t hLIBOR s u b m i t t e r s employed a t v a r i o u s p a n e l

banks , I l e a r n e d t h a t t h i s t r e n d i n c r e a s e dt h e e x t e n t t o which LIBOR s u b m i t t e r s r e l i e don i n f o r m a t i o n f rom t he Brokerage Fi rms i nde te rmin ing t h e i r submis s ions because t h ei n d i v i d u a l pane l banks were engaged i n l e s si n t e r b a n k l end ing t hemse lves and c o n s e q u e n t l y

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r e l i e d more on o t h e r d a t a . For example, i nan e l e c t r o n i c c h a t w i t h B roke r Al on o r abou tAugus t 15, 2007: 2

i . HAYES no ted t h a t he needed t o keep 6m

upt i l l

t u e s t h e n l e ti t

c o l l a p s e .

i i B r oke r Al t h e n r e sponded : do ing a goodj ob so f a r as l ong a s t h e l i q u i d i t yremains poor we have a b e t t e r chance o fb u l l y i n g t h e f i x .

i i i L a t e r t h a t day, Broke r A2 ' s f o r e c a s t f o rt h e 6-month Yen LIBOR i n c l u d e d i n Broke rA2 ' s sugges t ed LIBORs was i n c r e a s e d byh a l f o f a b a s i s p o i n t compared t o t h ep r e v i o u s day.

b . The nex t day, i n an e l e c t r o n i c c h a t w i t hBroke r Al on o r abou t August 16, 2007: ' 3

i . HAYES r e i t e r a t e d h i s nee d f o r a h igh 6 -month Yen LIBOR f i x and s t a t e d : r e a l l yr e a l l y r e a l l y n eed h igh 6m.

i i . Broker Al t h e n r e sponded : ye p t h i n k ir e a l i s e t h a t and y e s mate , w i l l makemyse l f u s e f u l .

i i i L a t e r t h a t day, Broke r A2 ' s f o r e c a s t f o r

t h e 6-month Yen LIBOR i n c l u d e d i n Broke rA2 ' s sugges t ed LIBORs was i n c r e a s e d by6 .5 b a s i s p o i n t s compared t o t hep r e v i o u s day.

c . At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t ,m u l t i p l e Yen LIBOR p a n e l banks madesubmis s ions t h a t m i r r o r e d e x a c t l y Broke r A2 ' ss u g g e s t e d LIBORs f o r ex tended p e r i o d s o ft ime . For example, i n t h e p e r i o d betweenJanua ry 1, 2008 and December 31, 2009, t h e r e

2r e d a c t e d copy o f t h i s Bloomberg c h a t i s a t t a c h e d

h e r e t o a s E x h i b i t 6 .

3r e d a c t e d copy o f t h i s Bloomberg c h a t i s a t t a c h e d

h e r e t o as E x h i b i t 7 .

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were approx ima te ly 523 t r a d i n g days , and ona p p r o x i m a t e l y 308 o f t h o s e t r a d i n g days , BankD made submis s ions i n a l l e i g h t m a t u r i t i e st h a t were i d e n t i c a l t o t h e f o r e c a s t s f romBroke r A2, a t t imes down t o t h e f i f t h dec ima l

p o i n t .

d . A t c e r t a i n t imes r e l e v a n t t o t h i s Compla in t ,HAYES e x p r e s s e d a p p r e c i a t i o n t o Broke r A f o rBroke r A2 ' s i n f l u e n c e . For example , i n ane l e c t r o n i c c h a t on o r abou tAugus t 22, 2008: 14

i . Broke r A s t a t e d : t h i n k [B rok e r A2J i syo u r b e s t b r o k e r i n t e rms o f va lue added

- ) .

i i HAYES t hen r e p l i e d : yeah r e c kon iowe [Broker A2] a l o t m o r e .

i i i Broker A t h e n r e sponded : [Broke r A2's ]ok w i t h an annua l champagne sh ipment , afew p i s s ups w i t h [Broker A2 ' ss u p e r v i s o r ] and a s m a l l bonus eve ry nowand t h e n .

25. At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t , HAYESengaged i n s i m i l a r c o n t a c t s w i t h a b r o k e r employed a t Brok e rageFirm B ( B rok e r B )

a . For example , i n an e l e c t r o n i c c h a t wi thBroke r B on o r abou t Feb rua ry 25, 2009: '5

i . HAYES i n s t r u c t e d Broker B: low m and3m we must keep 3m down. He t h e ns t a t e d : t r y f o r low on a l l o f em.

i i Broker B t h e n r e sponded : ok i l l do myb e s t f o r t h o s e t d a y.

i i i To compensate Broker B f o r t h a t

14 A r e d a c t e d copy o f t h i s Bloomberg c h a t i s a t t a c h e dh e r e t o a s E x h i b i t 8 .

5 A r e d a c t e d copy o f t h i s Bloomberg c h a t i s a t t a c h e dh e r e t o a s E x h i b i t 9.

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a . HAYES asked : b i t cheeky b u t i f you know whos e t s your l i b o r s and you a r e n ' t t h e o t h e r wayI have some a b s o l u t e l y mass ive m f i x e s t h enex t few days and would r e a l l y a p p r e c i a t e a

h igh m f i x . HAYES t hen no ted : Anyt ime ican r e t u r n t he f avour l e t me know as t h e guyshe re a r e p r e t t y accommodat ing t o me.

b . Trade r A t h e n r e p l i e d : I w i l l t r y my b e s t .

28. In a n o t h e r e l e c t r o n i c c h a t w i t h HAYES on o r aboutJanua ry 29, 2007: 17

a . Trade r A r e q u e s t e d : Anyth ing you need onl i b o r s t oday? High 6m would h e l p me.

b . HAYES t h e n r e sponded : h i g h m i l l s o r t our6m r a t e f o r you t h a n k s .

c . Fol lowing t h i s c h a t , HAYES c o n t a c t e d UBSJ u n i o r S u b m i t t e r 1 and r e q u e s t e d a h igh 6-month Yen LIBOR submis s ion .

29. HAYES s u b s e q u e n t l y r e f e r e n c e d e f f o r t s t oc o o r d i n a t e w i t h Tr a d e r A t o a Yen swaps t r a d e r employed a t Bank C( Trade r C ) t o e x p l a i n why t h e 3-month Yen LIBOR was h i g h . For

example, i n an e l e c t r o n i c c h a t on o r abou t Feb rua ry 2, 2007: 18

a . HAYES e x p l a i n e d : 3m l i b o r i s t oo h igh cause

i have kep t i t a r t i f i c i a l l y h i g h .

b . A f t e r Tr a d e r C i n q u i r e d how HAYES had donet h a t , HAYES responded : b e i n g mates w i t h t h ecash desks , [Bank AJ and i a lways h e l p eacho t h e r o u t . . . t o o .

2 . E f f o r t s t o n f ~ u e n c eank E s Yen LI OR S u b m i s s i o n s

30. At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t , HAYESc o n t a c t e d a Yen swaps t r a d e r employed a t Bank B ( Trade r B ) i n a

17 A r e d a c t e d copy o f t h i s c h a t i s a t t a c h e d h e r e t o asE x h i b i t 11.

18 A r e d a c t e d copy o f t h i s Bloomberg cha t i s a t t a c h e dh e r e t o as E x h i b i t 12.

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s i m i l a r e f f o r t t o i n f l u e n c e Bank B ' s Yen L1BOR submiss ions . Forexample, i n a s e r i e s o f e l e c t r o n i c c h a t s from on o r abou tMay 21, 2009 t h rough on o r about May 22, 2009: 19

a . On o r abou t May 21, 2009, HAYES asked Trader

B: c l d you do me a f avour would you mindmoving you 6n l i b o r up a b i t t oday, i have ag i g a n t i c f i x . UBS's t r a d i n g r e c o r d s conf i rmt h a t HAYES had a n e t t r a d i n g p o s i t i o n t h a tday t h a t would p r o f i t by approx imate ly$459,000 based on a one b a s i s p o i n t i n c r e a s ei n t h e 6-month Yen L1BOR f i x on t h a t day.

b . Tr a d e r B t hen responded: I can do t a h t .Bank B ' s 6-month Yen L1BOR submiss ion theni n c r e a s e d by s i x b a s i s p o i n t s compared t o i t ssubmiss ion the p r e v i o u s day.

c . Accord ing t o BBA r e c o r d s o f Yen L1BOR p a n e lbank submiss ions f o r t h a t day, t h e r e S U l t i n g6-month Yen L BOR f i x was 3 /8 o f a b a s i sp o i n t h i g h e r t h a n t o t h e r w i s e would havebeen had Trader B l e f t Bank B ' s submiss ion a tt h e same r a t e t h a t t had been f o r t h ep r e v i o u s 26 t r a d i n g days . Accord ing ly, j u s tfrom t h e change i n Tr a d e r B ' s 6-month YenL1BOR submiss ion , HAYES g e n e r a t e dapprox imate ly $172,000 i n a d d i t i o n a l p r o f i t sf o r h i s t r a d i n g book and, u l t i m a t e l y , f o rUBS

d . The fo l lowing day, on o r abou t May 22, 2009,Trader B asked HAYES: u happy w i t h mey e s t e r d a y ? HAYES t h e n r e p l i e d : t h x .

3 . E f f o r t s t o I n f l u e n c e Bank e ' s Yen LIBOR Submdssions

31. At c e r t a i n t imes r e l e v a n t t o t h i s Compla in t , HAYESc o n t a c t e d Tr a d e r C i n a s i m i l a r e f f o r t t o i n f l u e n c e Bank C ' s YenL BOR s u b m i s s i o n s . On occas ion , HAYES a l s o a g r e e d t o r e c i p r o c a t eand i n f l u e n c e UBS's submiss ions t o accommodate r e q u e s t s fromTrader C. For example , i n a s e r i e s o f e l e c t r o n i c c h a t s on o r

9 Redacted c o p i e s o f t h e s e Bloomberg c h a t s a r e a t t a c h e dh e r e t o a s E x h i b i t 13.

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abou t March 6, 2007 : 2 0

a . Tr a d e r C r e q u e s t e d t h a t HAYES t a k e s t e p s t oe n s u r e low UBS Yen LIBOR submis s ions f o r a l lm a t u r i t i e s : can u go f r low e v e r y t h i n gplse?fI

b . HAYES t h e n r e p l i e d t h a t he would make t h a tr e q u e s t , b u t he p e r s o n a l l y needed a h igh 3 -month Yen LIBOR f i x i n g .

c . HAYES t h e n made a r e q u e s t t o UBS J u n i o rS u b m i t t e r c o n s i s t e n t w i t h Tr a d e r C ' sr e q u e s t f o r low 1-month and 6-month Yen LIBORsubmis s ions , whi le o m i t t i n g t h e 3-monthm a t u r i t y which HAYES needed t o r ema in h igh .S p e c i f i c a l l y , HAYES s t a t e d : h i p i s d o n ' tf o r g e t low 1m and 6m : )

d. That day, compared t o t h e p r e v i o u s day, UBS's1-month and 6-month Yen LIBOR submis s ionsdropped by 2 .0 and 2 . 5 b a s i s p o i n t s ,r e s p e c t i v e l y , c o n s i s t e n t w i t h Tr a d e r C'sr e q u e s t t o HAYES.

32. HAYES a l s o made s i m i l a r r e q u e s t s o f Tr a d e r Cr e g a r d i n g Bank C ' s Yen LIBOR submis s ions . For example , i n as e r i e s o f e l e c t r o n i c c h a t s between on o r abou t A p r i l 19, 2007t h rough on o r abou t A p r i l 24, 2007: 2

a . On o r abou t Thursday, A p r i l 19, 2007, HAYESr e q u e s t e d a s s i s t a n c e i n l ower ing 3-month YenLIBOR and s t a t e d : have some huge hugef i x e s . He then asked : c a n you do me af avour and ask your cash guys f o r a low 3m?( In numerous c h a t s , HAYES r e f e r r e d t o Yen

LIBOR s u b m i t t e r s as c a s h g u y s , c a s h b o y s ,o r t h e c a s h d e s k . ) Tr a d e r C t h e nr e sponded : w i l l do my b e s t i am p r e t t y f l a ta t t e h moment so d o n ' t r e a l l y c a r e . Thatsame day, Bank C ' s 3-month Yen LIBOR

20 Re d ac t ed c o p i e s o f t h e s e c h a t s a r e a t t a c h e d h e r e t o asE x h i b i t 14.

21 Re d ac t ed c o p i e s o f t h e s e Bloomberg c h a t s a r e a t t a c h e dh e r e t o a s E x h i b i t 15.

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submis s ion was 0 .65 p e r c e n t , down f rom 0 .67p e r c e n t t h e p r e v i o u s day.

b . On o r abou t Fr iday, A p r i l 20, 2007, HAYESs t a t e d : " h i mate t hanks f o r keep ing 3m low

y /day wd r e a l l y a p p r e c i a t ei t i f u

c l d t r yf o r t h e same ove r t h e n e x t few d a y s . " L a t e rt h a t day, HAYES a g a i n r e q u e s t e d : " i know io n l y t a l k t o you when i n eed some t h ing b u t i fyou cou ld a sk your guys t o keep 3m low wd bemass ive h e l p as long a s i t d o e s n ' t i n t e r f e r ew i t h y o u r s t u f f . . . t x i n a d a v a n c e . "Approximate ly 30 minu te s l a t e r , HAYES f u r t h e ri n q u i r e d : "mate d i d you manage t o spk t o yourc a s h boys?" Trade r C t h e n r e sponded : "yes uowe me t h e y a r e go ing 65 and 7 1 . " HAYES t h e nr e p l i e d : " t h x mate y es i do . . . i n f a c t i oweyou b i g t i m e . " Approximate ly 45 minu te sl a t e r , HAYES l e a r n e d t h a t Bank C h ad made a3-month Yen LIBOR submis s ion o f 0 .64 p e r c e n tt h a t day, below even t h e number Tr a d e r C h a dprev i ewed t o him. Accord ing ly, HAYESe x p r e s s e d h i s g r a t i t u d e and s t a t e d : " t h e y s e t64 . . . t h a t s beyond t h e c a l l o f d u t y "

c . On o r abou t Tuesday, A p r i l 24, 2007, HAYESs t a t e d : " h e l l o mate t hanks f o r t h e h e l p onl i b o r s , i f you c l d ask f o r a low 3m f o r onel a s t day wd be a b i g h e l p , am mee t ing [abank] t o n i g h t so i l l drop your name i n t o t h ec o n v e r s a t i o n H

d . A f t e r t h r e e c o n s e c u t i v e t r a d i n g d a ys a t 0 .64p e r c e n t , Bank C's 3-month Yen LIBORsubmis s ion i n c r e a s e d t o 0 .65 p e r c e n t t h efo l lowing day, on o r abou t Wednesday, A p r i l25, 2007.

The Agreement t o F i x t h eP r i c e o f Yen LIBOR-Based D e r i v a t i v e P r o d u c t s

33. In f u r t h e r a n c e o f t h e p r i c e f i x i n g agreement

a l l e g e d i n Parag raph 4, HAYES t o g e t h e r wi th Trade rB

and o t h e r sknown and unknown, communica ted and a g r e e d w i t h each o t h e r , ass e t f o r t h i n Parag raph 30, t o f i x t he p r i c e o f i n t e r e s t r a t ed e r i v a t i v e p r o d u c t s whose p r i c e "las based on Yen LIBOR As ar e s u l t o f t h i s p r i c e f i x i n g a g reemen t , e n t i t i e s . l o c a t e d i n t h eUni t ed S t a t e s and h e a d q u a r t e r e d i n New York, New York t h a t were

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c o u n t e r p a r t i e s t o t h e s e a f f e c t e d d e r i v a t i v e c o n t r a c t s i n c u r r e dl o s s e s .

HAYES s P o s t - U S S C o n d u c t

34 . Unl e s s o t h e r w i s e s p e c i f i c a l l y s t a t e d , b a s e d onp r e v i o u s l y i d e n t i f i e d s o u r c e s , I h a v e l e a r n e d t h e f o l l o w i n g :

a . I n o r abou t September 2009, H YES l e f t h i semployment a t UBS and began working as as e n i o r Yen swaps t r a d e r a t Bank 0 f rom i n o ra bou t Oecember 2009 t h rough i n o r abou tSeptember 2010 .

b . I n o r abou t June 2010, H YES a t t e m p t e d t ocause a Yen LIBOR s u b m i t t e r a t Bank 0 ( t h e

Bank 0 S u b m i t t e r ) t o p r o v i d e f a l s e andm i s l e a d i n g i n f o r m a t i o n i n i t s d a i l y Yen LIBORs u b m i s s i o n s t o t h e BBA

c . For example , i n an exchange o f e m a i l s on o rabou t June 1, 2010:

i . H YES a ske d a j u n i o r Yen swaps t r a d e r a tBank 0 ( Tr ade r 0 ) t o r e q u e s t t h a t t h eBank 0 S u b m i t t e r make Yen LIBORs u b m i s s i o n s f a v o r a b l e t o HAYES's t r a d i n gp o s i t i o n s and s t a t e d : I t r e a l l y s u i t sour book can we a s k i f we can j u s t l e a v ei t t h e r e f o r a c o u p l e o f w e e k s ?

i i . Tr a d e r 0 t h e n r e spo n ded : I w i l l m e n t i o ni t tomorrow morning so [ t h e Bank 0Submi t t e r ] ha s i t i n [ t he Bank 0S u b m i t t e r ' s ] mind . But t o be h o n e s tt h e y a r e r e a l l y n e rvous a b o u t i t s o Id o n ' t t h i n k we can be t oo p u s h y.

d . At c e r t a i n t imes d u r i n g h i s t e n u r e a t Bank 0,H YES remained i n c o n t a c t wi th , among o t h e r s ,B r o k e r AI, ~ a d e rB, and t h e UBS J u n i o rTr a d e r i n a c o n t i n u e d e f f o r t t o s o l i c i t YenLIBOR submis s ions t h a t were f a v o r a b l e t oHAYES's t r a d i n g p o s i t i o n s .

A r e d a c t e d copy o f t h i s ema i l exchange i s a t t a c h e dh e r e t o a s E x h i b i t 16 .

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e . In an e l e c t r o n i c c h a t w i t h t h e UBS J u n i o rTr a d e r on o r abou t May 12 , 2010: 23

i HAYES s t a t e d : u l i b o r s a r e g o i n g down

t o n i g h t .

i i The UBS J u n i o r Tr a d e r t h e n a s k e d : Uwhyyou th i '1k so?

i i i HAYES t hen e x p l a i n e d : u b e c a u s e i amgo ing t o p u t some p r e s s u r e on p e o p l e .

f . While employed a t Bank D HAYES a l s o madee f f o r t s t o i ' 1 f luence Bank C ' s Yen LIBORsubmis s ions t h rough a n o t h e r b r o k e r working a tB roke r a ge Fi rm A (UBroker A3 ) . For example ,i n a s e r i e s o f e l e c t r o n i c c h a t s o n o r abou tMarch 3 , 2010 t h rough on o r abou tMarch 4, 2010, HAYES and Bro k e r A3 d i s c u s s e dwhe the r t h e y cou ld c a u s e Bank C ' s Yen LIBORs u b m i t t e r ( t he uBank C S u b m i t t e r ) t o lowerBank C ' s 3-month Yen LIBOR submis s ion : 2

i On o r a b o u t March 3 , 2010, HAYES t o l dBroke r A3: u i r e a l l y n e e d a low 3m j pyl i b o r i n t o t h e imm 25 any f a v o u r s youcan g e t w i t h [Bank C Submi t t e r ] would bemuch a p p r e c i a t e d eve n i f [ t h e Bank CSubmi t t e r ] o n ; l y move 3m down 1 b p .

Broke r A3 t h e n a g r e e d t o c o n t a c t Bank CS u b m i t t e r on b e h a l f o f HAYES.

i i Fo l l o wing HAYES's r e q u e s t , Broke r A3asked t h e Bank C S u b m i t t e r : Uu see 3mj p y l i b o r go i n g anywhere btween now andimm? B r o k e r A3 c o n t i n u e d : Uwe hve a

23 A r ed a c t ed copy o f t h i s Bloomberg c h a t i s a t t a c h e dh e r e t o a s E x h i b i t 17 .

4

R edac t ed c o p i e s o f t h e s e Bloomberg c h a t s a r e a t t a c h e dh e r e t o a s E x h i b i t 18 .

25 In t h i s c o n t e x t , I b e l i e v e uimm r e f e r s t o t h eI n t e r n a t i o n a l Monetary Marke t d a t e , which o c c u r s q u a r t e r l y on t h et h i r d Wednesday o f March, J une , September, and December.

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mutua l f r i e n d who 'd l ove t o s e e i t godown, no chance a t a l l ? The Bank CS u b m i t t e r t h e n s p e c u l a t e d t h a t t h er e q u e s t came f rom HAYES and r e p l i e d :"haha TH by c h a n c e . " Broke r A t h e n

r e sponded : s h h h .

i i i Th a t n e x t day, on o r abou t March 4,2010, Bank C ' s 3-month Yen LIBORsubmis s ion d e c r e a s e d b y one b a s i s p o i n tcompared t o t h e p r e v i o u s day, c o n s i s t e n tw i t h HAYES's r e q u e s t t o B roke r A3.A f t e r t h e r e s u l t i n g Yen LIBOR f i x i n g swere p o s t e d , Bank C S u b m i t t e r t o l dBr o ke r A3: " L i b o r l ower ; . N Broker At h e n r e sponde d : "good work "

35 . Based on my p a r t i c i p a t i o n i n i n t e r v i e w s w i t ht h e UBS J u n i o r Tr a d e r, a long wi th my rev i ew o f aud io r e c o r d i n g s ,I a l s o l e a r n e d t h e f o l l o w i n g :

a . On o r abou t March 29, 2011, t h e UBS J u n i o rTr a d e r i n fo r m ed HAYES t h a t t h e U n i t e d S t a t e sDepar tment o f J u s t i c e had c o n t a c t e d UBS i no r d e r t o schedu le an i n t e r v i e w w i t h t h e UBSJ u n i o r Tr a d e r.

b . I n r e s p o n s e , HAYES t h e n a d v i s e d t h e UBSJ u n i o r Tr a d e r t o remove any b e l o n g i n g s f romJ a p a n and t o r e t u r n t o t h e f o r e i g n c o u n t r ywhere HAYES b e l i e v e d t h e a S J u n i o r Tr a d e r t ob e l o c a t e d . HAYES f u r t h e r c a u t i o n e d t h a t :

The U.s . Depar tment o f J u s t i c e ,m a te , you know, t h e y ' r e l i k e[ u n i n t e l l i g i b l e ] , t h e dudes who,you know, you know, a b s o l u t e l yl i k e , you know, you know[ u n i n t e l l i g i b l e ] p u t peop le i nj a i l . Why t h e h e l l would you wantt o ' t a l k t o them?

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WHEREFORE d epone n t prays t h t r r e s t w a r r a n t s bei s s u e d f o r t h e above-named d e f e n d a n t s and t h t t hey be impr i sonedo r b i l e d as t h e case may be .

Sworn t o b e f o r e me t h i s12th day o f cember 2012

JUDGEYORK

FEDERAL BUREAU OF INVESTIGATION

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Given t h e c o n f i d e n t i a l n a t u r e o f t h i s i n v e s t i g a t i o nt h e Government r e s p e c t f u l l y r e q u e s t s t h a t t h e Cou r t o r d e r t h a tt h i s Compla in t be f i l e d under s e a l .

R e s p e c t f u l l y s u b m i t t e dDENIS J MCINERNEY DEIRDRE A MCEVOY

C h i e f C h i e fFraud S e c t i o n New York F i e l d O f f i c eCr imina l D i v i s i o n A n t i t r u s t D i v i s i o n

SO ORDERED

B Y ~ / 1 ~Dan ie l BraunDeputy C h i e f A s s i s t a n t C h i e fFraud S e c t i o n New York F i e l d O f f i c eCr imina l D iv i s ion A n t i t r u s t D i v i s i o n

UN ED T TES MAGISTRATE JUDGESO THERN DISTRICT OF NEW YORK

28

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