UBS Exec Suspended Amid Auction-Rate Securities Probe
The Swiss banking giant UBS has suspended David Schulman, the head of its U.S. fixed income unit and global head of municipal securities, Reuters reports.
The revelation comes on the heels of a lawsuit filed last Thursday by New York State Attorney General Andrew Cuomo which alleges UBS committed multibillion-dollar fraud when it steered clients into the auction-rate securities market.
The lawsuit alleges that at least seven UBS executives dumped $21 million worth of auction-rate investments at the same time they urged clients to continue buying the instruments.
UBS did not comment on the personnel matter. However, as Reuters notes in “UBS suspends munis head amid auction-rate probe,” the Swiss banker shut down its U.S. municipal bond business last month.
Auction-rate securities are municipal or corporate debt securities or preferred stocks that pay interest at rates set through periodic auctions. The instruments typically have long-term maturity dates or no maturity date.
In mid-February, the auctions for the investment instruments failed. That meant investors were unable to sell their securities. To this day, auction-rate securities investors find themselves owning frozen assets.
On May 8, Carey & Danis filed a class action lawsuit in the U.S. District Court for the Southern District of New York on behalf of persons who purchased auction rate securities from UBS AG (NYSE: UBS), UBS Securities LLC and UBS Financial Services Inc. between May 8, 2003 and Feb. 13, 2008 and who continued to hold the securities as of Feb. 13, 2008.
Auction-rate securities investors who wish to discuss their rights against any broker-dealer may contact Carey & Danis toll-free at 800-721-2519 or fill out our online contact form
