U.S. reaches a $90.8 million settlement with UBS for anticompetitive and fraudulent scheme

[News_Editor]

U.S. reaches a $90.8 million settlement with UBS for anticompetitive and fraudulent scheme

2011-05-05 04:50:03 GMT+7 (ICT)

TALLAHASSEE, FLORIDA (BNO NEWS) -- Florida's Attorney General Pam Bondi on Wednesday announced a $90.8 million multistate settlement with Union Bank of Switzerland AG (UBS) for his role in an anticompetitive and fraudulent scheme.

UBS was accused of engaging in a nationwide scheme to rig bids and engage in other anticompetitive and fraudulent conduct relating to municipal bond derivatives that defrauded state agencies, local governmental entities and not-for-profit entities.

"Bid rigging and other fraudulent conduct are illegal, and we will hold banks and brokers responsible for their actions," said Bondi. "I am pleased that we were able to reach a resolution that will repay those entities harmed by the fraudulent activity."

This multistate settlement is part of a settlement UBS entered simultaneously with the U.S. Department of Justice's Antitrust Division (DOJ), the Securities and Exchange Commission (SEC), and the Internal Revenue Service (IRS).

According to the settlement agreement, UBS agreed to pay $63.3 million in restitution nationwide to state agencies, local governmental entities, and non-profit organization that entered into contracts or transactions with UBS between 2001 and 2004.

Furthermore, the Swiss financial institution agreed to pay a $2.5 million civil penalty and $5 million in fees and costs stemming from the investigation carried out in the settling states. In addition, UBS will pay $20 million in restitution directly to certain other government and not-for-profit entities involved in a separate settlement entered with the SEC.

The ongoing multistate investigation revealed allegedly collusive and deceptive conduct by individuals at several financial institutions such as bid rigging, agreements to refrain from bidding, and fraud. Ultimately the conduct resulted in lower yields, lower rates of return, or less favorable terms for government and not-for-profit organizations.

The settlements were the result of an ongoing criminal and civil investigation involving 25 state Attorneys General and federal authorities and focusing on individuals at UBS, other major financial institutions, and certain brokers.

The other states involved in the USB settlement were Alabama, California, Colorado, Connecticut, District of Columbia, Idaho, Illinois, Kansas, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Tennessee and Wisconsin.

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