Another Black Eye for UBS
The Securities and Exchange Commission (SEC) has announced that it has reached an agreement with UBS for $160 million to settle charges that UBS defrauded government bond issuers for five years in a bid rigging scheme. According to the article in Investment News, the scheme increased the prices municipal bond issuers paid generating millions of dollars in illicit profits for the Swiss bank and causing 18 individuals to face criminal charges.
According to the SEC’s Municipal Securities and Public Pensions Unit, UBS rigged over 100 bond auctions in 36 states during the time period of 2000 and 2004. The transactions involved a business that no longer exists at UBS and the employees involved are no longer with the firm. This settlement is the latest in a long standing investigation involving some 25 state attorneys general into the bid rigging of the municipal bond market. Elaine C. Greenberg, chief of the SEC’s investigative unit, said that their complaint against UBS “reads like a “how to “primer for bid rigging and securities fraud.” “They used secret arrangements and multiple roles to win business and defraud municipalities through repeated use of illegal courtesy bids, last looks for favored bidders and money to bidding agents disguised as swap payments.”
In another municipal bond fraud case, Bank of America agreed to a $137 million settlement in December 2010.