UBS Financial Services, charged with with the fraudulent rigging of municipal bond transactions, settled with the U.S. government and 25 states this week. The SEC said the transactions generated “millions of dollars in ill-gotten gains.” There were at least 100 of the transactions, said the SEC, and they occurred in 36 states.
The SEC said that a business unit of the company that was closed in 2008 had manipulated the bidding process that is supposed to ensure fair market value of the investments. Instead, employees no longer with the company both rigged and won bids, as well as acting as a bidding agent on behalf of the municipalities involved. At times it also improperly facilitated payments to other bidding agents.
Elaine C. Greenberg, chief of the SEC’s municipal securities and public pensions unit, said in a statement, “Our 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 the repeated use of illegal courtesy bids, last looks for favored bidders, and money to bidding agents disguised as swap payments.”
In a statement, the Justice Department said, "As part of its agreement with the department, UBS admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees."