UBS: U B Screwed

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UBS, AG should have a new slogan - You Be Screwed. UBS often times will place its interests before that of its customers. UBS’s employees will often place their personal interests before that of UBS’s customers. This is not unusual. This is how American bankers now do business.

Here is a real world example. David Shulman, the former Global Head of the UBS AG Municipal Securities Group and Head of the UBS Securites LLC Fixed Income for the Americas, was convicted of illegal insider trading by Andrew Cuomo, the New York Attorney General. Mr. Shulman sold his personal holdings of auction rate securities before notifying his customers. He saved himself to the detriment of the customers of UBS. Deal with UBS and U B Screwed.

Mr. Shulman must pay New York State $2.75 million and cannot be employed or associated with a broker-dealer for thirty months. Realize that the payment to NY State is not a penalty. It is just the illegal gains Mr. Shulman made from his illegal auction rate securities sales. Mr. Shulman will be coming to a consulting company near you. How would you like having a felon providing consulting services to you? This is how business is now done in America.

What does this mean to you? Realize that American bankers often place their company’s and their personal interests before their customers.

Realize that illegal insider trading is still fun, profitable, and difficult to prosecute. Mr. Shulman could have set up a blind trust and then fed information to the investment manager of that trust. Mr. Shulman is a felon and an idiot.

UBS’s internal controls were non-existent. UBS should have caught the trade by Mr. Shulman. Maybe they did and did nothing about it. Where was the inquiry into UBS’s internal controls?

UBS still has not provided the names of 4,450 Americans with secret accounts in Switzerland (WSJ February 25, 2010). This is a huge story. How many politicians, tax cheats, and organized crime syndicates are included in that group of 4,450 Americans? Here is an idea. Either UBS provides the U.S. authorities with the names of those 4,450 Americans or their charter is pulled.

Source: Website of the NY Attorney General. Reported on February 18, 2010.