Swiss Banking Giant UBS Settles $135 Million with US Law Firm Hausfeld in FX Fixing Litigation

UBS has reportedly settled in the on-going currency fixing manipulation. Hausfeld, an international claimants’ law firm announced details of the case. The firm stated that it had reached a settlement with the Swiss bank for $135 million and for assistance in future investigations.

The case is part of the foreign Exchange antitrust litigation which alleges that a number of tier-1 financial institutions were involved in the manipulation of currency rates.

UBS reiterated details referencing the amount of the fine in its 2014 Annual Report, stating that these are “on behalf of putative classes of persons who engaged in foreign currency transactions with any of the defendant banks.”

The $135 million settlement comes after US institute, JP Morgan, also settled with a US law firm. UBS’ settlement which is subject to court approval has yet to be paid according to the bank.

The settlement is believed to be with Hausfeld, an international firm that has offices in Europe and the USA. The firm’s Chairman, Michael D. Hausfeld, commented about the case: "The settlement agreement with UBS provides a significant monetary recovery as well as substantial cooperation that will further our efforts to recover damages from financial institutions that we allege consciously manipulated the FX market to the detriment of their customer-clients."

The FX fixing cases, along with the Libor manipulation, shocked the global financial markets which have seen numerous fines issued against banking and financial institutions. UBS faced a $371 million fine in November during one of the largest penalties against five banks.

The post-fixing environment has lead to numerous discussions and consultations among government officials, regulators and policy makers. The audit and reporting of rates on single platform were some of the many proposals put forward. In the precious metals market, ICE became the administrator for the daily LBMA Gold price fixing.

FX Litigation

In its annual filing, UBS added: “In January 2015, UBS was added to an on-going putative class action against other banks in federal court in New York on behalf of a putative class of persons that transacted in physical silver or a silver financial instrument priced, benchmarked, and/or settled to the London silver fix at any time from January 1, 1999 to an unspecified date. The complaint asserts claims under the antitrust laws and the Commodity Exchange Act and for unjust enrichment.

In February 2015, a putative class action was filed in federal Note 22 Provisions and contingent liabilities (continued)466 Financial information Notes to the UBS Group AG consolidated financial statements court in New York against UBS and other banks on behalf of a putative class of persons who entered into any standardized FX futures contracts and options on FX futures contracts on an exchange since January 1, 2008. The complaint asserts claims under the Commodity Exchange Act and the antitrust laws.”

Full Year Earnings

UBS came out strong in 2014 according to data issued in its annual report, the bank reported a net profit of $3.48 billion, 9% up YoY, with diluted earnings per share at $0.91. The positive figures came despite 2014 being a year full of doom and gloom for banks with sentiment low among traders.

The bank's share price increased 1.27% at close, ending the day at 19.97.

Weathering the SNB Storm

On another note, the leading Swiss banking institute managed to weather the recent storm that hit the international currency markets on the 15th of January. In the midst of the action, a number of Swiss listed firms saw their share price plummet, coupled with leading sell-side providers such as FXCM and Alpari reporting heavy losses as a result of the harsh market move.

However, UBS reported that it was not impacted by the issues. Although it did see some fluctuation in its share price, UBS' shares which fell 11% since the central bank’s policy change, fellow Swiss bank, Credit Suisse, also had no material impact but saw its share price move 15% in the red zone.

In a company statement UBS said: “In aggregate, UBS did not experience negative revenues in its trading businesses in connection with the announcement."

The bank believes 2014 has been a successful year in so far as the bank meeting certain strategic objectives. Axel A. Weber, Chairman of the Board of Directors & Sergio P. Ermotti the bank’s Group Chief Executive Officer, outlined in the annual report, stating: “In 2014, we achieved the key strategic targets we set out in 2011 and 2012.

Now that we have completed our strategic transformation, we will concentrate all our efforts on executing our strategy to unlock our firm’s full potential. Our strategy centres on our leading wealth management businesses and our premier universal bank in Switzerland, enhanced by our strong asset manager and investment bank.”

Dr Ahsan Jamil, Dean at Dhofar University in Oman, has been analysing the FX fixing cases, he explained to Forex Magnates in a telephone interview: "The size of the fines and settlements show that the matter is being taken seriously by the bank and regulators, there's surely more to come."