HSBC got fined about half that when they caught laundering money for the Mexican cartels a few years back. True story: HSBC had to design special teller windows because the standard ones were too small to fit the sacks of money that were being brought in and laundered. If you want to know why these guys don't go to jail, pull up a bottle of lithium and sit down with The Chickenshit Club.
Also: in the US, I've heard the "value of saving a life" for some decision calculations to be assumed at ten million dollars. That's $200k per year for 50 years. (In New Zealand, from talking to some civil engineers, it is a lot lower.)
At the American price, the fine is worth 420 human lives.
Instead, if the company risks fines like these, the environment of its employees may start to emphasise derisking more, to prevent them from being hit with new fines.
Of course, this is all just me looking into my crystal ball.
They were also fined 50000 to 300000 euros personally (they have to pay as private citizens, it's not part of the 3.7B euros fined to UBS).
Not completely full, but also not completely empty.
Jail time would be the only real punishment. They take very calculated and rewarding risks. If they don't get caught they walk away with many millions. If they get caught they walk away with many millions minus a few k.
Technically this is a "sure bet".
They were fined $1.9 billion.
Not "fined about half"
There are many ways to get money in a large Banking group like UBS, HSBC, and others. They have become Lernaea Hydras and for a good reason.
Of course, over the years, we can be pretty sure that UBS made more money out of these schemes than the fine and they are most likely having such a scheme running right now which may be discovered in 10 years if we are lucky.
Sure prison would be nice, but 4.8 billion dollar is very far from "a slap on the wrist", it it more than half of their yearly operating income worldwide.
Literally no one went to jail for the crimes of 2007-2008. No one went to jail for laundering money for the cartels, no one went to jail for Libor scandal, and no one went to jail here. Yet if you walk into McDonalds and rob it of the amount in the cash register, you could go to jail for many years
It does show a lack of controls in place, though.
Also if the article is right in that this was affected by the protests, then that is a big win for protesting.
There are many factors that could be influencing price, but if we attribute this 4% delta entirely to the announcement, the market is guessing the actual penalty will amount to $1.84B. This could be bc the market thinks UBS can appeal with a 50% success rate, or can negotiate the penalty down by 50% with high certainty.
Edit: I hadn't considered tax implications. If UBS is able to deduct these penalties pre-tax (which I'd assume they would), then it suggests that they are very likely going to have to pay the full penalty. Of course, this is all guess work. e.g. the market could be scared that this sets a precedent for future additional penalties which would decrease the signalling towards full payment on this penalty.
Secondly, and it depends on the jurisdiction, but penalties and fees associated with wrongdoing generally aren't tax deductible.
The US clarified this during the TCJA but most countries agree: https://www.clearyenforcementwatch.com/2018/02/1962/
First, there are two ways to value companies, depending on what kind of companies they are. The two extremes are on one side a consulting firm, where the value is worth only the present value of the future fees to be earned by the consultants. But the company itself has no asset, very little debt, and its balance sheet is pretty much irrelevant to its valuation. The other extreme is an investment fund, where the company is worth exactly the current market value of its assets, it has no other future revenues other than the expected incomes from these assets.
A bank is somewhere in the middle. It is kind of an investment fund in the sense that all its assets are financial assets that can be sold pretty much at their book value (unlike a factory where the book value may mean very little in term of how much the asset is really worth). But the book value may differ from the fair market value (that's often the case if there are bad loans). But part of the value will also be generated from profits that are unrelated to these assets: fees on payment processing, advisory fees, trading income, etc. So part of the value is also a PV of future revenues.
And these future revenues may be negative. If you look at the past 10 years, banks have experienced huge revenue volatility. From trading losses, fraud (Kerviel style), fines (like UBS here), bad loans (RBS and HBOS style), etc.
And then you can have all sort of weird technicalities. Like the book value may be increased for gains on own credit (if the company fair values part of its liabilities). That's a paper gain that the market is unlikely to give any credit for.
No, the market’s guess is $1.84B higher today than it was yesterday. The latter likely isn’t zero, as https://en.wikipedia.org/wiki/UBS_tax_evasion_controversies#... states ”In July 2014, the bank was required to post a bond of 1.1 billion euros, which UBS complied with while making multiple appeals in the French court system, finally losing its appeal at the Cour de Cassation, France's highest court”
That was 10 years ago, and and it's still being argued in court. I can very well see this being another delayed settlement that will drag on for another decade or more.
That would be more costly than paying whatever is due after exhausting legal appeals.
EDIT: Actually fine is €3.7 + €800m in damages.
There's a spectrum for this sort of thing, and I think UBS was clearly on the 'knowingly profiting from crime' side of it.
They were cold calling the customers accross the border, not closing their eyes on the paperwork associated with the money.
Just like bits have no color for you dollars had no color for bankers for a long time. Stopping money laundering in your organization is just as much pain as stopping copyright infringement on your system.
Well, it's been established empirically that such is not the case, and that the supposed statistics by the copyright lobbyists on the damage of piracy are outright lies.
Moreover, there is a very strong argument to be made that strong enforcement of copyright goes against several rights that individuals have whose values are above copyright. Privacy, fair use, distribution, preservation of knowledge and culture all have higher priority in many jurisdictions and the fight in this matter for the past two decades has shown that the argument in favor of strong copyright enforcement is not for the benefit of all.
But money laundering? Tax evasion? There are few if any arguments that support what is essentially billions and billions of dollars of theft from the commons where there is real, easily quantified damage to the entirety of society.
Arguments such as yours are fundamentally weak in that you expect that mere substitution of terms equates to... anything really. I don't know what world you live in where that's a strong proposition.
Now it is my personal and completely biased opinion that money laundering and tax evasion are very big problems affecting society negatively, while copyright infringement on-line is mostly a non-issue due to IP laws being abusive; still, while relatively different in importance, the problems are still similar in the way GP describes them.
(And in both cases you learn that color is very important to the law.)
I imagine most of us here have never felt like our money had "DRM" on it.
Our money is, in fact, a different color from the terrorists'.
> Our money is, in fact, a different color from the terrorists'.
Yes. The point is, the color isn't a feature of money - or of bits - but the legal systems around use of those.
If 2008 taught us anything it is the fact that big banks don't "go under" because they are considered "too big to fail" and as such will not be allowed to fail.
The German term for this is "systemrelevant", (systemically important) which imho fits way better than "too big to fail" because it's way blunter.
> The judges’ move followed a failed plea bargain between national financial prosecutors and UBS representatives, the first time such an out-of-court settlement was tested in France. French magistrates reportedly offered UBS to settle the case for 1.1 billion euros ($1.2 billion), after considering an initial deal of 2.2 billion euros ($2.4 billion). - 2017
However the basis was
> The assets illegally concealed by French clients in Switzerland between 2004 and 2012 allegedly amounted some 10 billion euros ($10.75 billion).
Another quote puts it at $600billion
I'd love to know the definition of "illegally concealed" in these circumstances
The chances of it being reasonable I'd consider very slim; France is not a reasonable country nor is it run by reasonable people. France is a failing protection racket running out of people to shake down, by and large. When the people who run the socialist party government budget are offshoring their wealth - perhaps your country is fundamentally broken.
Edit: Downvotes without comment. Not exactly productive conversation.
America has some problems, but there's a reason why they have a GDP 40x larger than France with only 5x the population.
In fact, the GDP per capita is 100$ less than that of the UK, and more than that of, for example, Japan or South Korea.
Also of note may be that France, unlike the US, does not dispose of oil resources, which makes comparisons not quite as simple.
And I'm not sure to understand why you prefer one mesure over the other. Pure GDP does not take into account systemic issues, such as the cost of health care or education. And the point of the discussion was the relevant merit of various economical systems.
But I did not post in order to correct some semantic point. But rather to explain the non-commented down votes.
In your original post you made an extraordinary claim, that was off by an order of magnitude. I pointed this out, and instead of checking facts, you downgraded your claim, even though a simple Google lookup would have been enough to know that even that was wrong by 100%.
In my mind this is an example of why it is difficult to have meaningful debate in our society. There is no point in debating if one or both parties are not willing to challenge their understanding of the facts.
You cannot round numbers at 1 significant digit and use them for further computations, that's butchering math.