Skip to comments.More Fraud on Wall Street: UBS Emails Show Who Gets The Shaft
Posted on 06/28/2008 11:08:19 PM PDT by txzman
EVERY few years, the conflicts of interest so deeply embedded in the Wall Street business model emerge from the shadows for all to see. Coming to light last week, courtesy of Massachusetts regulators, was UBSs dual roles in the auction-rate securities market, which have had devastating effects on the people and institutions that invested in them.
Because every big brokerage firm that participated in this market faced the same conflicts as both underwriters of the securities and managers of the auctions that set their prices, similar ugliness will likely turn up elsewhere as regulators continue their digging.....
The problem UBS faces began in August, when the credit markets seized. Corporations which are big buyers of auction-rate securities because of their slightly-higher-than-money-market yields were beginning to sell. New buyers had to be found or UBS, as underwriter and auction manager, would be stuck with the securities. The firm was going into shell shock because of losses from subprime mortgages on its books, so it needed to find a way out of the auction-rate mess.
Throughout the autumn, increasingly frantic e-mail messages flew among UBS executives. As you can imagine during these stressful times, the pressure is on to move our inventory, wrote David Shulman, global head of fixed income distribution at UBS, on Aug. 30. I am aware that JPM and Citi are on all alert in the same fashion with their retail groups.
Joel P. Aresco, chief risk officer for the Americas, sent this message on Nov. 15: Why the continual increase in the inventory of auction-rate securities? What measures are being taken to reduce this exposure?
On Dec. 11, Mr. Shulman wrote: I am pushing every angle here to move product.
(Excerpt) Read more at nytimes.com ...
Man... when your cash accounts are no good, where does that leave a simple investor?
I worry about an ABN/AMRO “cash” account I have some of my 401K sitting in.
And in this case it isn't even clear that there was some indictable act... I don't see any mentioned in the story at any rate. It's just another senseless rail against those evil Wall Street guys.