UBS E-Mails Show Conflicts With Auction-Rate Clients (Update2)
By Michael McDonald June 27 (Bloomberg)
UBS AG was attempting to liquidate an $11 billion ``albatross'' of auction-rate bonds by selling the debt to individual investors as the market for the securities started to collapse, according to company e-mails.
While executives at the Zurich-based bank identified the hazards of auction-rate securities in August, they simultaneously began to ``mobilize the troops,'' holding more than a dozen conference calls with salesmen and giving them new marketing materials to promote the bonds, according to e-mails from David Shulman, the head of UBS's municipal securities group. ``The pressure is on to move inventory,'' he said in an Aug. 30 note.
The e-mails between Shulman and UBS executives were disclosed in a lawsuit filed yesterday by Massachusetts Secretary of State William Galvin, who claimed the bank committed fraud by selling the bonds as the equivalent of money market securities without disclosing to investors that the $330 billion market was lurching toward a breakdown. Investors who own the bonds now can't get their money.
No comments:
Post a Comment