SEC Charges UBS with Fraudulent Bidding Practices Involving Investment of Municipal Bond Proceeds

They must of made billions in profit to pay $160 million in fines…

Just another slap on the wrist without admitting or denying the allegations in the SEC’s complaint…

Just the cost of doing business, right???

Blah, blah, blah…


UBS to Pay $160 Million to Settle Charges

Washington, D.C., May 4, 2011 — The Securities and Exchange Commission today charged UBS Financial Services Inc. (UBS) with fraudulently rigging at least 100 municipal bond reinvestment transactions in 36 states and generating millions of dollars in ill-gotten gains.

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To settle the SEC’s charges, UBS has agreed to pay $47.2 million that will be returned to the affected municipalities. UBS and its affiliates also agreed to pay $113 million to settle parallel cases brought by other federal and state authorities.

When investors purchase municipal securities, the municipalities generally temporarily invest the proceeds of the sales in reinvestment products before the money is used for the intended purposes. Under relevant IRS regulations, the proceeds of tax-exempt municipal securities must generally be invested at fair market value. The most common way of establishing fair market value is through a competitive bidding process in which bidding agents search for the appropriate investment vehicle for a municipality.

The SEC alleges that during the 2000 to 2004 time period, UBS’s fraudulent practices and misrepresentations undermined the competitive bidding process and affected the prices that municipalities paid for the reinvestment products being bid on by the provider of the products. Its fraudulent conduct at the time also jeopardized the tax-exempt status of billions of dollars in municipal securities because the supposed competitive bidding process that establishes the fair market value of the investment was corrupted. The business unit involved in the misconduct closed in 2008 and its employees are no longer with the company.

According to the SEC’s complaint filed in U.S. District Court for the District of New Jersey, UBS played various roles in these tainted transactions. UBS illicitly won bids as a provider of reinvestment products, and also rigged bids for the benefit of other providers while acting as a bidding agent on behalf of municipalities. UBS at times additionally facilitated the payment of improper undisclosed amounts to other bidding agents. In each instance, UBS made fraudulent misrepresentations or omissions, thereby deceiving municipalities and their agents.

“Our complaint against UBS reads like a ‘how-to’ primer for bid-rigging and securities fraud,” said Elaine C. Greenberg, Chief of the SEC’s Municipal Securities and Public Pensions Unit. “They used secret arrangements and multiple roles to win business and defraud municipalities through the repeated use of illegal courtesy bids, last looks for favored bidders, and money to bidding agents disguised as swap payments.”

According to the SEC’s complaint, UBS as a bidding agent steered business through a variety of mechanisms to favored bidders acting as providers of reinvestment products. In some cases, UBS gave a favored provider information on competing bids in a practice known as “last looks.” In other instances, UBS deliberately obtained off-market ”courtesy” bids or arranged “set-ups” by obtaining purposefully non-competitive bids from others so that the favored provider would win the business. UBS also transmitted improper, undisclosed payments to favored bidding agents through interest rate swaps. In addition, UBS was favored to win bids with last looks and set-ups as a provider of reinvestment products.

In a related enforcement action, the SEC barred former UBS officer Mark Zaino from associating with any broker, dealer or investment adviser, based upon his guilty plea last year in a criminal case charging him with two counts of conspiracy and one count of wire fraud for engaging in misconduct in the competitive bidding process involving the investment of proceeds of tax-exempt municipal bonds. The Commission recognizes Zaino’s cooperation in the SEC’s investigation as well as investigations conducted by other law enforcement agencies.

Without admitting or denying the allegations in the SEC’s complaint, UBS has consented to the entry of a final judgment enjoining it from future violations of Section 15(c) of the Securities Exchange Act of 1934. UBS has agreed to pay a penalty of $32.5 million and disgorgement of $9,606,543 with prejudgment interest of $5,100,637. The settlement is subject to court approval.

This is the SEC’s second settlement with a major bank in an ongoing investigation into corruption in the municipal reinvestment industry. In December 2010, the SEC charged Banc of America Securities LLC (BAS) with securities fraud for similar conduct. In that matter, BAS agreed to pay more than $36 million in disgorgement and interest to settle the SEC’s charges, and paid an additional $101 million to other federal and state authorities for its misconduct.

The SEC’s investigation was conducted by Deputy Chief Mark R. Zehner and Assistant Municipal Securities Counsel Denise D. Colliers, who are members of the Municipal Securities and Public Pensions Unit in the Philadelphia Regional Office.

The SEC thanks the Antitrust Division of the Department of Justice and the Federal Bureau of Investigation for their cooperation and assistance in this matter. The SEC is bringing this enforcement action in coordination with the Department of Justice, Internal Revenue Service and 25 State Attorneys General.

The SEC’s investigation is continuing.

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12 Responses to “SEC Charges UBS with Fraudulent Bidding Practices Involving Investment of Municipal Bond Proceeds”
  1. Yes it is the cost of doing FRAUD business, where can I open a business were I can make Billions in Fraud Money (maybe Trillions) and then pay only a few millions to keep doing it? mmmm… oh wait i know where, in America!
    What a good deal !

  2. maggie may says:

    I do it in my own way:)))) they raided 9 of their timeshare scam call centers yesterday didnt they? i could go on and on:) But you didnt know that did you??LOL

  3. Joe Loomer says:

    Seven years? SEVEN? Do any of the current laws (not in effect between 2000-2004) apply to this scenario as well? Or must they be taken to task under the existing regulations of the time of the offense?

    Augusta GA Homes

  4. Susan M. DeSimone says:

    Keep fighting! File your Complaint/Lawsuit against them (all of them) that have caused you harm; before they get to foreclose. File for the Origination Fraud, MERS, Fraudulent Appraisals and all the illegal Mortgage Documents. I have two (2) lawsuits going, doing it pro-se. Federal Judge in Indianpolis, Indiana ruled in my FAVOR to not allow the APPRAISER AND COMPANY to be dismissed. He found that there was FRAUD in the APPRAISAL. Now, they will have to SETTLE with me or we go to trial. I will prevail in TRIAL. I will not accept DEFEAT. I was DUPED and I am angry. So start fighting America. Just do it. We can’t let them win. Crowd the COURT ROOMS, with everyone’s COMPLAINT/LAWSUIT. It is nearly IMPOSSIBLe TO FIND an attorney to represent. I looked and here I am, doing it myself. Excited that I have a BIG WIN. We all were DUPED at CLOSING as NOONE explained how the GHOST of MERS would DESTROY AMERICA”S PROPERTY LAWS, that we would NEVER actually ever OWN the property. . They committed this FRAUD against us. FIGHT!

    • l vent says:

      Great idea, Susan!!! Death to MERS!!!! Death to the Foreign Multlinational Fascist Tyranny!! That Foreign Tyranny that wears and American face, FANNIE/FREDDIE, CHASE and BofA, are not American Institutions. They are aiding the hidden Foreign Multlinational interest and trying to take America over and ignore our rights under the U.S. CONSTITUTION and strict property laws that date back hundreds of years that protect the American people against such a tyranny,.Congratulations on your BIG WIN!!! The American people have to wake up and stand up, indivisible for their rights or they will lose them. President Obama spoke of this before saying something to the effect of We Are One Nation Under God and we have to be INDIVISIBLE in order to get the job done that needs to get done. I don’t think it is possible for President Obama or anyone to do it alone. You are correct about the getting angry part. It started for me when they denied me a loan mod after I clearly qualified for it. Really, they did me a favor. I found out my house is paid for free and clear because of their MORTGAGE FRAUD PONZI SCHEME. Let’s all fight!!!

      • maggie may says:

        DID ME A FAVOR TOO! Let themtry come after emenow i got a humdinger glad i save everything elizabeth olayala gunna find an arrow in her ass! and carteret ocwen etc:)))))))))))))))))))))))) I keep my cards close to the best now:)
        and ill bring it to court in FBI BOX:) Magda Simi:)

      • l vent says:

        Go get those bastards maggie may!!!!

    • maggie may says:

      Very few at top have money like farkas example the rest r deadbeats used f to make few big boys money buy a few trikles theyll go down like DESIREE BROWN KISSICK ETC!!!

  5. maggie may says:

    Yes thats true nothing to homeowners SAD

  6. Enough says:

    again nothing for home owners our homes were fraudulently over appraised we need compansation how more families in the united states need to be kicked of there houses because of these theives???? Some one please help us wells fargo ect are lieing to tke our houses they want there insurance money credit default swaps help us we are being forced out of our homes

  7. maggie may says:

    A wittle here a wittle there will add up to ruins for these sobs!

    • l vent says:

      They are all a bunch of way too greedy pigs. They need to be put in ruins. They ruined millions of lives with their Ponzi Scheme Mortgage Fraud. They want all of us to start over? Death to the Tyranny!!!

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