NJ entitled to receive 5M in restitution by UBS

Government and nonprofit agencies in New Jersey harmed by UBS’s manipulation of the London Interbank Offered Rate, a benchmark interest rate with widespread impact on global markets, will receive $5 million in restitution.Government and nonprofit agencies in New Jersey harmed by UBS’s manipulation of the London Interbank Offered Rate, a benchmark interest rate with widespread impact on global markets, will receive $5 million in restitution.

Approximately $2 million will go to the New Jersey Economic Development Authority. This is part of a multi-state settlement totaling $68 million.

“This is an important settlement, not only for the restitution it will provide to government entities and nonprofit organizations in New Jersey harmed by UBS’s actions but also for the message it sends—that when financial institutions manipulate financial markets to advance their own self-interest we will take action and they will be held accountable,” said Attorney General Grewal in a prepared statement.

“This kind of manipulative, unethical conduct erodes public trust in our financial institutions and the integrity of our financial markets, and that loss of public confidence can result in damage to the entire economy,” he said.

An investigation by multiple Attorneys General concluded that UBS acted improperly in multiple ways. UBS employees made internal requests for U.S. dollar LIBOR submissions to “err on the low side” to avoid the perception that UBS had higher borrowing costs than its peers, according to the Office of the Attorney General.

Upon media scrutiny, according to the OAG, UBS then instructed its U.S. dollar LIBOR submitters to be “middle of the pack.”

As a result, government and nonprofit agencies in New Jersey and across the country were defrauded of millions of dollars when investing with UBS.

New Jersey organizations eligible for restitution due to harm from UBS’s conduct include the New Jersey Division of Investment on behalf of the State’s pension funds, New Jersey Turnpike Authority, Rutgers University, the EDA, the New Jersey Higher Education Student Assistance Authority, Holy Name Hospital, the Delaware River Port Authority and the Robert Wood Johnson Foundation.

“We are pleased to have resolved this legacy matter related to events that are almost a decade old. It was achieved with the best interests of our shareholders in mind,” said a representative for UBS in an e-mail to NJBIZ.