UBS AG (UBS)

[$King]

HOD 11.9

[$King]

6 MIL vol

[$King]

- 8.7%

[$King]

UBS @ 11.43

[mlkrborn]

UBS’s Ermotti Faces Task of Shrinking Bank
bloomberg

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Elisa Martinuzzi and Giles Broom, On Monday September 26, 2011, 3:27 am EDT

Sergio Ermotti, installed as UBS AG’s interim Chief Executive Officer after Oswald Gruebel’s exit, inherits the twin tasks of boosting client confidence and shrinking the investment bank after a $2.3 billion trading loss.

Ermotti, the bank’s European head and a former derivatives banker, succeeded Gruebel two days ago, after the Zurich-based firm’s risk controls missed “unauthorized trading” that will probably trigger a loss in the third quarter. Chairman Kaspar Villiger announced Gruebel’s departure after two-and-a-half- years following a board meeting in Singapore.

Ermotti will take over in “difficult times,” Villiger told reporters. The 51-year-old will have to rebuild investor confidence shaken by the failure of the bank’s risk controls. He will have to shrink an investment bank to conserve capital as well as bolster the bank’s wealth management operations, which generate about 41 percent of the bank’s revenue. There, he will have to prevent wealthy clients from pulling funds from the country’s largest wealth manager.

“They have to accept the reality that the business model is gone,” said Enrico Racioppi, an analyst at Hammer Partners in Lugano, Switzerland. “They have to reduce leverage and close proprietary trading.”

Ermotti, who worked at Merrill Lynch & Co. for 18 years, joined UBS from UniCredit SpA in April. A Swiss national, he remained based in Lugano when he worked at both Milan-based UniCredit and UBS.

‘Knows Investment Banking’

“His background in markets will be fundamental to his success in the role,” Alessandro Profumo, UniCredit’s former CEO, said in a telephone interview. “On the whole he knows investment banking very well.”

Reducing risk at the investment bank won’t necessarily hurt earnings, Ermotti told reporters, adding that it’s too early to evaluate whether the trading loss will have an impact on jobs or pay. The bank declined to make him available for an interview.

“They’ve got to change the aspirations of the investment bank and they’ve got to shrink it,” said Peter Thorne, a London-based analyst at Helvea SA.

UBS fell as 2.9 percent in Swiss trading today and was up 0.7 percent at 10.19 francs as of 9:24 a.m. The stock has dropped 8.4 percent since the trading loss was announced, and 35 percent this year. That compares with a 38 percent tumble in the Bloomberg Europe Banks and Financial Services Index, which tracks 46 companies.

Kweku Adoboli, 31, the UBS trader charged with fraud and false accounting that may have resulted in the loss, remains in custody after a hearing in London on Sept. 22. He has yet to enter a plea.

Booms and Busts

Ermotti inherits a legacy of booms and busts that have jarred the firm for more than a decade. UBS had hired Gruebel, 67, out of retirement to stabilize the lender, the flagship for Switzerland’s wealth-management industry, after bets on U.S. mortgage-backed securities backfired. The bank posted the biggest loss in Swiss corporate history and took a capital injection of 6 billion Swiss francs from the government in 2008.

Gruebel, during his 37-year career at Credit Suisse Group AG, had earned the moniker “Saint Ossie” for helping restore that bank’s profit. At UBS, he returned the bank to profit about six months after arriving, resolved a dispute with the U.S. over banking secrecy that threatened the firm’s existence and stemmed nine straight quarters of client defections at the private bank.

Kengeter Stays Put

He also began by cutting jobs and curbing risk-taking, missing the 2009 boom in fixed-income trading that allowed competitors such as New York-based Goldman Sachs Group Inc. and JPMorgan Chase & Co. to profit. Then in 2009, he set a target of reaching 15 billion francs in pretax profit by 2014. To get there, he expanded the fixed-income unit under Carsten Kengeter, added staff at the investment bank and took on more risk. By November 2010, Kengeter, 44, was in sole charge of the investment bank.

Kengeter did an “excellent job” in covering positions and there is “no doubt” about his future, Villiger, 70, said on the conference call yesterday.

The bank’s bigger bets haven’t translated into more profit. UBS increased so-called value at risk, a measure of how much the firm could lose in securities markets on a single day, to 75 million francs from 48 million francs in the year-earlier period. Meantime, pretax profit at UBS’s investment bank slumped to 376 million francs in the second quarter from 1.31 billion francs in the year-earlier period. The unit’s cost-to-income ratio, the highest among the nine biggest investment banks last year, rose to 86 percent in the quarter.

“This is a bank now in disarray,” said Chris Wheeler, an analyst at Mediobanca Securities SpA in London. “They’ve let the CEO walk away. They’ve left themselves in a vacuum.” Mediobanca today cut its rating on UBS to “underperform” from “outperform.”

‘Task Ahead’

Market turmoil and rising capital requirements had led UBS to begin reversing the buildup of the investment bank even before the trading loss. About 45 percent of 3,500 job cuts announced last month were slated for the division.

“I’m fully aware of the magnitude and the complexity of the task ahead,” Ermotti said on the call with reporters on Sept. 24. “I’m counting on my colleagues on the executive board to support me in this challenge.”

The bank will announce further changes to the unit in a presentation to investors scheduled for Nov. 17, Ermotti said.

“My impression is that they haven’t fully decided what they want to do,” said Matthew Czepliewicz, an analyst at Collins Stewart Hawkpoint Plc in London. “If they had decided, they wouldn’t need to wait until the investor day before saying whether they would scale back investment banking and how they would scale it back.”

UniCredit Retreat

For Ermotti, scaling back an investment bank isn’t entirely new. After joining UniCredit as investment banking chief in 2005, the former head of derivatives and equities at Merrill Lynch first attempted to expand the business to compete with the world’s top securities firms. It was the first quarter of 2007, mergers were soaring and UniCredit helped finance Kohlberg Kravis Roberts & Co.’s 10.1 billion-pound ($15.6 billion) bid for Alliance Boots Plc.

The collapse of the subprime market and the credit crunch that followed left Ermotti little choice but to retrench and refocus the investment banking business on the firm’s historic markets of Germany, Italy, Poland and Austria.

Under Ermotti’s leadership, UniCredit established its lead in corporate lending, while the firm struggled to turn the relationships into advising on mergers and dealmaking. UniCredit last year wasn’t among the top 20 merger advisers in its home markets, data compiled by Bloomberg show.

Power Struggle

Ermotti left Milan-based UniCredit after a power struggle that led to the ouster of Profumo, 54, and the promotion of Federico Ghizzoni, 55, to the CEO post. Roberto Nicastro, 46, was named general manager, the No. 2 position at the company, in the shakeup.

Ermotti sits on the board of Hotel Residence Principe Leopoldo SA, owner of a luxury hotel near Lugano, the Swiss companies register online shows.

The Oxford University graduate, also faces the challenge of steering a fresh management team in a time of crisis. Tom Naratil, 49, replaced John Cryan, 50, as the chief financial officer in June and Maureen Miskovic, 54, took over as chief risk officer in January.

Ermotti, who became deputy CEO at UniCredit in July 2007, will be a candidate for the permanent top job at UBS, Helvea’s Thorne said. The position isn’t assured, as some investors say the board should look outside.

“UBS needs a leader with long experience, but also needs to signal a break with the past management,” said Angelo Drusiani, who manages about 3 billion euros ($4 billion) at Banca Albertini Syz & C. in Milan. “Ermotti could be the right person in the short term to move toward a new step and to an external candidate.”

To contact the reporters on this story: Giles Broom in Geneva at [e-mail]; Elisa Martinuzzi in Milan at [e-mail].

To contact the editor responsible for this story: Frank Connelly in Paris at [e-mail]

[DAD2]

More food for thought imo.


http://www.reuters.com/article/2011/09/20/us-offshorebanks-idUSTRE78J30E20110920?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+News%29

[Rothstein]

Potential for reporting third quarter loss still exists.

[mlkrborn]

UBS $11.40 Trade cost is half billion higher and Greece fear is back to market!

[Rothstein]

Exactly what I'm waiting to see.

[mlkrborn]

Why Rogue Traders Get Jail But Bad Execs Get A Pension
9/15/2011 @ 12:43PM |588 views



Daniel Fisher



UBS Investment Bank's Offices at 299 Park Avenue


Kweku Adoboli, a 31-year-old UBS trader arrested in London today for allegedly causing $2 billion in losses on ETFs , will likely face criminal prosecution — unlike his superiors, who three years earlier lost more than $25 billion betting on U.S. mortgage-backed securities.

The difference is subtle, but can equal jail time for traders who don’t understand it. Executives who make spectacularly bad decisions can only be subjected to criminal prosecution if they engage in fraud or deliberately close their eyes to it.

As long as they operate within company rules — and part of being an executive is having wide latitude to make decisions — they are immune. The head of AIG’s London office, Joseph Cassano, has not been prosecuted for his role in underwriting risky credit-default swaps that helped cause $11 billion in losses.

“The fact that an executive exercised appropriate business judgment and followed procedures is compelling evidence of absence of criminal intent,” said Jacob Frenkel, a white-collar defense attorney with Shulman Rogers in Potomac, Md.

“Merely because there’s been a loss, merely because there’s a bad decision, is not evidence of a crime,” added Ellen Podgor of Stetson College of Law and editor of the White Collar Crime Prof blog.
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Traders have it a little rougher. Most operate within a web of risk limits, documentation requirements and other rules that make it easy to turn a bad bet into a criminal matter. Those rules have only gotten stricter under Sarbanes-Oxley and its big brother, the Dodd-Frank reform act.

“Intentional disregard for any one of those is compelling evidence of criminal intent,” said Frenkel, a former Securities and Exchange Commission enforcement attorney. “It’s no different than intentional falsification of records.”

Rogue traders have tried to defend themselves by saying their colleagues were doing the same things, or their bosses secretly encouraged them to swing for the fences with the bank’s money. Societe General trader Jérôme Kerviel promised to expose a culture of crazy risk-taking at the French bank when he was prosecuted for losing $6 billion on an illicit $60 billion gamble on futures.

It didn’t work. Kerviel was sentenced to three years in prison last October, and ordered to repay the $6 billion.

“It’s an outrage,” said Kerviel’s lawyer, Oliveir Metzner, after the sentencing. “The people who created him and used him have been totally exonerated.”

That’s how it goes on the trading desk. Nicholas Leeson, who was sentenced to six-and-a-half years in prison for causing the collapse of the 233-year-old Barings Bank in 1995, told reporters last year that he was disgusted that executives like former RBS Chairman Sir Fred Goodwin didn’t get the same treatment.

Goodwin, who presided over the largest corporate loss in U.K. history, quit the bank with a $500,000-a-year pension. Now he’s embroiled in a scandal over his affair with a top RBC exeutive, which he allegedly failed to disclose to the board. The London Times has reported Britain’s Financial Services Authority is investigating whether the affair violated RBC’s code of conduct and if it may have contributed to the bank’s collapse.

“If it’s proven they’ve done something criminal then I think they need to be prosecuted,” Leeson said of his better-compensated superiors. “But I think that is unlikely. What will be more likely to be proven is that a) they were reckless and b) some of their decision-making was not short of being stupid.”

The web of rules is getting tighter around financial executives.

“Especially after the crash of 2008, regulators all around the world are expecting and requiring banks, broker-dealers and futures merchants to supervise their traders,” said Barry Temkin, a lawyer with Mound Cotton Wollan & Greengrass in New York and expert on securities regulation at Fordham Law School. Regulators are more concerned with systemic risk, or the risk that one bank’s collapse can take down the entire financial system, and so they are requiring stricter compliance rules and controls on trading desks, he said.

But in order to find themselves in the same criminal dock as a trader, executives must have either been involved in the crime or wilfully ignored it, Podgor said.

“If you have a higher-up who says, `Wait a minute I didn’t know this was going on,’ it becomes very difficult for the government because they must show executive made deliberate steps to avoid getting this knowledge,” she said.

The Supreme Court made it even harder last year with Global-Tech Appliances vs. SEB, oddly enough a patent case. In that decision the court said wilful blindness is more than mere negligence: it require knowing there’s a “high probability that a fact exists,” and “the defendant must take deliberate actions to avoid learning of that fact.”

Given that traders go rogue on a regular basis, maybe the fact executives are ignoring is their compensation systems. Frenkel noted that not only is a trader’s income, but his continued employment are dependent upon making risky bets that pay off.

“The interesting question is whether compensation is structured in a way that it creates a strong incentive to commit fraud,” Frenkel said.

Given the multibillion-dollar government bailouts of AIG, RBC, UBS in recent years, perhaps regulators should spend more time on that.

[lazyeye]

Watching closely...could be a good entry point if end of day shows life...

[mlkrborn]

UBS $11s on trading losses of $2 b. The guy face imprisonment for "wrong" trades! What a logic. Imagine same logic applies to small equity investors/traders' decisons in various message boards, everyone of us would go to prison..
UBS Announces Trading Loss
Date : 09/15/2011 @ 3:00AM
Source : Business Wire

UBS Announces Trading Loss
print

UBS has discovered a loss due to unauthorized trading by a trader in its Investment Bank. The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of USD 2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.

[mlkrborn]

UBS $12.81
ADR Report-European banks lead broad sell-off



NEW YORK, Sept 6 | Tue Sep 6, 2011 10:58am EDT

NEW YORK, Sept 6 (Reuters) - U.S.-listed shares of European lenders tumbled on Tuesday as renewed concern with the ability of governments to solve the debt crisis grips the region's banking system.

European shares slumped, with banks hitting a 29-month low on worries about the political handling of the euro zone debt crisis. A regional index of European bank stocks .SX7P fell 2.9 percent and is down nearly 12 percent so far in September. For details see [.EU].

UBS (UBS.N) fell 11.9 percent to $12.61 and Barclays (BCS.N) slumped 9.5 percent to $9.59 in New York, while HSBC Holdings (HBC.N) dropped 4.7 percent to $40.40 and Spain's Banco Santander (STD.N) lost 7.9 percent to $7.90. RBS (RBS.N) lost 14 percent to $6.82 and Credit Suisse (CS.N) fell 13.8 percent to $23.59.

Investors worry that some of these banks have high exposure to sovereign debt from countries whose debt levels could be spiraling out of control. Concerns over whether Greece will receive its next aid tranche took center stage again.

The BNY Mellon index of leading American Depositary Receipts (ADRs) .BKADR was down 4.3 percent, while the U.S. benchmark S&P 500 index .SPX dropped 2.8 percent.

The BNY Mellon index of leading Asian ADRs .BKAS fell 3.2 percent, while the BNY Mellon index of leading European ADRs .BKEUR lost 5 percent.

The BNY Mellon index of leading Latin American ADRs .BKLA lost 4 percent. (Reporting by Rodrigo Campos; Editing by Theodore d'Afflisio

[JSBISHI]

Would a forecast surplus be predicted in 2011?

[MinnieM]

UBS Profit Beats Estimates on Investment Bank Rebound (Update1)

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aErpVMptJK48&pos=2

By Elena Logutenkova

July 27 (Bloomberg) -- UBS AG, Switzerland’s biggest bank, reported a third consecutive quarterly profit, beating analysts’ estimates on higher-than-expected trading revenue.
Net income was 2.01 billion Swiss francs ($1.91 billion), after a net loss of 1.4 billion francs a year earlier, the Zurich-based bank said in a statement today. That beat the 1.12 billion-franc median estimate of 11 analysts surveyed by Bloomberg News.

UBS’s investment bank reported a smaller decline in trading revenue than the average of its competitors from the first quarter as the European sovereign debt crisis made clients reluctant to trade. Chief Executive Officer Oswald Gruebel said he’s “confident” about the future after withdrawals from UBS’s wealth management units slowed.

“The regeneration of this business is crucial to UBS’s future,” Mediobanca Securities analysts led by Christopher Wheeler, who rate UBS as “outperform,” said in a note before the release. The bank “does appear to be finally making strides toward putting the horrors of the credit crisis behind it.”

Withdrawals from UBS’s wealth management units slowed to 8.1 billion francs in the second quarter from 15.4 billion francs in the first. Rich clients pulled a net 243.5 billion francs in the two years through March following UBS’s credit- crisis losses, pressure on Swiss banking secrecy and departing client advisers.

UBS has dropped 2.2 percent this year, compared with a 2.3 percent decline in the 54-company Bloomberg Europe Banks and Financial Services Index.

Trading Revenue

“Our portfolio of businesses is increasingly able to generate competitive returns in a variety of market conditions, and our risk management framework has proven robust,” Gruebel said in the statement. “I remain confident in our future and I firmly believe that we have the right strategy in place.”

The wealth management and Swiss bank division reported a 21 percent increase in pretax profit to 1.13 billion francs, beating analysts’ estimates for 1.08 billion francs, while wealth management Americas had a pretax loss of 67 million francs. Pretax profit at the investment bank rebounded to 1.31 billion francs after a 1.85 billion-franc loss a year ago, beating estimates for earnings of 759 million francs.

The unit generated 3.07 billion francs from trading stocks, currencies, bonds and commodities in the second quarter. The 10 percent decline from the first three months of the year compares with the average 34 percent drop reported by Zurich-based Credit Suisse Group AG, Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley of New York, as well as Charlotte, North Carolina-based Bank of America Corp.

Passing Stress Tests

UBS and its largest Swiss rival Credit Suisse passed stress tests that included a global recession, a slump in financial markets and “very sharp shocks” in some European states, the country’s financial regulator said July 23. The banks maintained tier 1 capital ratios in excess of 8 percent in the face of “particularly severe” scenarios, the regulator said.

Credit Suisse last week beat analysts’ expectations with a second-quarter profit of 1.59 billion francs thanks to a tax credit and gains on the company’s own debt. The bank attracted 13.8 billion francs in net new funds at its wealth management business, while the securities unit reported a 53 percent drop in pretax profit as Europe’s sovereign debt crisis deterred clients from trading.

The crisis is creating “more headwinds” for UBS on the way to reversing withdrawals this year as clients are uncertain about what to do with their money, Juerg Zeltner, head of wealth management, said in an interview this month.

Parliamentary Approval

The bank is “relieved” the U.S. cross-border case, in which UBS was accused of helping clients evade taxes, is drawing to a close, he said, adding that this will help the company hire more client advisers after 1,149 departures in 2009.
UBS aims to start making progress over the next six months toward its target of having a total of 4,700 advisers, he said. The number fell 1 percent to 4,112 during the second quarter.

The Swiss parliament last month approved the agreement with the U.S. to disclose information on as many as 4,450 accounts of UBS’s American clients suspected of evading taxes. The Swiss tax authorities have until Aug. 24 to issue decisions on all accounts.

The 18-month deferred prosecution agreement that UBS signed to avoid criminal charges in the U.S. also runs out in August, after which the U.S. government may seek dismissal of the case against the bank.

To contact the reporter on this story: Elena Logutenkova in Zurich at [e-mail]
Last Updated: July 27, 2010 01:54 EDT

[Molotov]

i am working in this bank and for me with a long term view you can be confident

[ID Supermoney]

Down down down like another MM starting with "N"!!


Love it!!

ID

[TeaMaker]

UBS stopped the transaction today because the whole swiss market went down at 1530PM (SwissTime).

Would you please stop seeing dead people all around you ?

[ID Supermoney]

Wonder why price falling maybe someone shorter this company!!

ID

[ID Supermoney]

I wonder why UBS did not trade SPNG at the end??

Some say they were banded!

Not sure why??

Not sure why price rose today?


IMHO

ID

[ID Supermoney]

UBS may be in trouble with SPNG!!!

They do not even trade this stock!!

Wonder why??

UBS may be under attack short ly!!


IMHO


ID

[Harri7]

i ask myself, how can you trust them in future. They made a deal, and sold out their clients. Doesn't matter whether the clients were clean or not. Who decides this? Where is the bar? When will it be lowered to include you, or me?

[Tam Lau]

I love this bank! my position has more than doubled since I bought. just great!

[goforthebet]

UBS Hires Matthias Frisch As CEO Of Invest Bank Switzerland

SEPTEMBER 18, 2009, 3:12 A.M. ET.

ZURICH (Dow Jones)--UBS AG (UBS) Friday said it is hiring Matthias Frisch as chief executive of its investment bank in Switzerland, effective Oct. 1.

Frisch, who was previously chief executive of private wealth management at Horizon21, replaces Andy Haeberli, who left the bank in August.

Company Web site: www.ubs.com

-By Katharina Bart, Dow Jones Newswires; [phone]; [e-mail]

[goforthebet]

UBS Tax Net Snares Clients of Credit Suisse, Julius Baer, LGT

By Carlyn Kolker and David Voreacos

Sept. 18 (Bloomberg) -- UBS AG’s $780 million settlement with U.S. authorities to avoid prosecution for helping Americans cheat on their taxes has opened a Pandora’s box for banks worldwide.

A U.S. tax program encouraging UBS clients to avoid criminal inquiries by declaring offshore accounts before Sept. 23 is prompting a flood of disclosures by customers of Zurich-based Credit Suisse Group AG and Julius Baer Holding AG, LGT Group in Liechtenstein, London-based HSBC Holding Plc, and Bank Leumi Le-Israel Ltd., tax attorneys said.

That may give the Internal Revenue Service ammunition to target other overseas wealth managers as it seeks to crack down on tax evasion. UBS, the largest Swiss bank, avoided prosecution on Feb. 18 when it admitted helping Americans dodge taxes, paid a $780 million penalty, and disclosed secret data on 250 clients. In August, UBS agreed to reveal another 4,450 clients to settle a U.S. lawsuit seeking more data.

“It is very possible that the IRS will be able to get strangleholds over the other banks because they’ll have specific information which will permit them to bring specific allegations of wrongdoing before the U.S. courts,” said Robert Fink, an attorney at Kostelanetz & Fink in New York. “This thing may spread like wildfire.”

The disclosure program and the U.S. lawsuit settled by UBS are helping the U.S. crack down on offshore tax evasion by pursuing financial institutions and intermediaries including law firms, IRS Commissioner Doug Shulman said Aug. 19. The U.S. loses $100 billion a year through offshore tax evasion, estimated U.S. Senator Carl Levin, a Michigan Democrat.

Bahamas, Granada

Fink, whose firm handled more than 250 disclosures, said his clients told the IRS about accounts at a dozen Swiss banks, as well as banks in Germany, England, Italy, Belgium, Singapore and Hong Kong. Lawrence Horn, an attorney at Sills Cummis & Gross in Newark, New Jersey, said his clients declared accounts at Bank Hapoalim Ltd. in Israel, as well as banks in the Bahamas, Granada and the Cayman Islands.

After UBS customers, account holders at Zurich-based Credit Suisse are the largest group of people coming forward to the IRS, said Fink and Scott Michel, a lawyer at Caplin & Drysdale in Washington.

“We strongly believe we have the right compliance standards in place and adhere to all applicable laws,” David Walker, a Credit Suisse spokesman, said in an e-mail.

Karina Byrne, a UBS spokeswoman, didn’t immediately return a call seeking comment.

Representatives of LGT Group, Bank Hapoalim and Julius Baer couldn’t immediately be reached for comment after regular business hours yesterday.

Juanita Gutierrez, a spokeswoman for HSBC, and Chaim Fromowitz, a spokesman for Bank Leumi USA, declined to comment.

Prosecution Risk

Thousands of Americans must decide by Sept. 23 whether to disclose accounts to the IRS and possibly face back taxes, fines and penalties, or keep their assets undeclared and risk criminal prosecution. The Justice Department so far has prosecuted two UBS bankers, five of its U.S. clients, a Liechtenstein adviser, a Swiss lawyer, and a manager at Zurich-based Neue Zuercher Bank.

“The question is whether the U.S. government is going to make the same effort to get the names of account holders at Credit Suisse, Julius Baer and LGT that it did at UBS, and if not, why not?” Horn said.

Taxpayers making voluntary disclosures and third parties are “providing us with useful information” every day, said Frank Keith, an IRS spokesman, in a written statement.

Offshore Accounts

“This includes how undisclosed offshore accounts came to be set up and the identities of those who assisted in these efforts to circumvent U.S. tax laws,” Keith said.

Taxpayers must reveal names of bankers, financial advisers and others who helped hide assets from the IRS, Michel said. He said he expects the IRS to create a database to find patterns.

Coming forward voluntarily usually allows a taxpayer to avoid criminal charges, although all applications for leniency will be screened by criminal investigators, the IRS said in March.

“I have a pretty clear idea that they’ll set their sights on the next level of Swiss banks,” said attorney Robert McKenzie of Arnstein & Lehr in Chicago, which represents 65 clients making disclosures.

Switzerland, which manages an estimated 27 percent of the world’s privately held offshore wealth, agreed in March to cooperate with foreign authorities on tax-evasion probes to avoid being blacklisted as a tax haven by the Organization for Economic Cooperation and Development.

Disclosure Rush

The IRS deadline has set off a rush of disclosures, with tax attorneys estimating that more than 3,000 U.S. taxpayers have filed paperwork with the IRS since the program was announced in March. The IRS hasn’t said how many people have applied to file voluntary disclosures.

“I feel like I work in a bakery where I ask people to take numbers,” Fink said. “I have never seen such a deluge. I was thinking of getting folding chairs in our reception area.”

Some potential clients have been skittish about revealing their identities to him, with one wearing “massive sunglasses and a red wig which was so artificial that it must have been bought in a five-and-dime store,” Fink said.

Fink said most of his clients have offshore assets of $1 million to $5 million, with four exceeding $100 million.

McKenzie said some of his clients inherited accounts set up by parents or grandparents in other countries. They include political refugees who fled Vietnam and Iran as well as descendants of Holocaust survivors, he said.

Cash Hoard

“There was a mentality among direct descendants of Holocaust survivors that you should have a cash hoard somewhere else in case the United States becomes the next fascist enterprise,” he said.

While lawyers suggest the IRS should extend the Sept. 23 deadline, they urge clients with undeclared accounts to come forward.

“You’ve got to be crazy not to come forward,” said lawyer Charles Falk, who practices in Mendham, New Jersey. “If you are found out, they’re going to prosecute you and take all your money and make your life miserable. For your own sanity, you’d be well advised to come forward.”

To contact the reporters on this story: Carlyn Kolker in New York at [e-mail]; David Voreacos in Newark, New Jersey, at [e-mail].

Last Updated: September 18, 2009 00:01 EDT

[JustCallMeSassy]

Secret Swiss Bank Accounts Are A Good Thing
Published: Thursday, 20 Aug 2009 | 11:28 AM ET Text Size
This week's agreement between UBS and the Internal Revenue Service to reveal the names of Americans holding secret Swiss bank accounts ... is a terrible thing. There are going to be major unintended consequences.

You may think this is about rich tax cheats—but no matter what your income is—your taxes are lower because of tax havens. And they help prevent tyranny by corrupt governments.




Michelle Caruso-Cabrera
Anchor
Follow me here.

Do you know which country in the world is the biggest tax haven? The United States.

The U.S. government generally does not tax interest and capital gains received by foreigners who invest in America, according to Dan Mitchell from the Cato Institute. And guess what, if a foreign government came to us to get that information, we would have no information to give them because the IRS doesn't collect it.

But now every foreign country can come to us and say: "Hand over information about our citizens—you made the Swiss do it."

Think about that. Hugo Chavez of Venezuela, who is stealing his citizens' property in seizures every day, can come to us and say: "These people are evading my taxes." Should we hand that information over to him? By this action, we give him the moral platform to do so.



If you still don't think tax havens are about preventing tyranny, remember why Swiss banking privacy laws were strengthened in the first place: To help Jewish people hide their assets from Hitler's Gestapo.

I am not, and do not advocate people cheating on their taxes. But tax havens help keep your taxes lower by providing tax competition.

It's no surprise that countries like France, Italy and Germany are the biggest complainers—they have high taxes and they want the rest of the world to have high taxes as well. And the U.S. is getting there too.

Some say this UBS [UBS 16.72 1.28 (+8.29%) ] agreement was a win for America, while others, myself included, say this was a big loss.


© 2009 CNBC.com

[MONEYMADE]

,,,,,,,Short this mother tomorrow

[goforthebet]

UBS AG (UBS:US): Switzerland’s biggest bank may disclose data on 4,000 to 5,000 U.S. clients as part of a settlement agreement initialed last week by Switzerland and the U.S., Sonntag reported, citing two unidentified people familiar with the matter. While the bank isn’t facing a fine, its clients may have to pay about 4 billion francs ($3.7 billion) in taxes and penalties, the newspaper estimated.

[goforthebet]

UBS’s Gruebel Says Client Withdrawals May Persist

By Elena Logutenkova

Aug. 4 (Bloomberg) -- UBS AG, Switzerland’s largest bank by assets, will see further withdrawals by wealthy clients after reporting a third consecutive quarterly loss, Chief Executive Officer Oswald Gruebel said.

UBS fell as much as 6.6 percent in Zurichtrading as Gruebel said a halt in redemptions at the wealth management unit will probably lag behind a financial turnaround at the bank. Customers withdrew a net 22.3 billion Swiss francs ($21 billion) in the second quarter, a fifth straight period of redemptions.

“In international net new money we’re unlikely to see a quick reversal of the trend,” Gruebel said at a press conference today in Zurich. Outflows may persist after UBS lost client advisers and as regulatory pressures reduce growth prospects for wealth management, he said. The market as a whole “will see less growth in European offshore private banking for the foreseeable future.”

Gruebel, who cut 7,500 jobs and sold a Brazilian unit since joining in February, said that while markets have improved, a sustainable economic recovery “is not yet visible.” The bank reported a net loss of 1.4 billion Swiss francs in the second quarter, wider than the 395 million-franc deficit a year earlier, on costs for job cuts and charges tied to an improvement in its own debt.

UBS declined 96 centimes, or 6 percent, to 15.04 francs by 12:58 p.m. in Zurich, giving up the gains made since the U.S. and Switzerland said last week they were near a settlement of a U.S. lawsuit seeking data on 52,000 UBS clients.

‘Huge Burden’

U.S. Justice Department attorney Stuart Gibson said in a telephone conference call with District Judge Alan Gold on July 31 that the U.S. and Switzerland “have reached an agreement in principle on the major issues” related to the lawsuit. Remaining points may be settled before Aug. 7, he said.

A settlement “is a huge burden off the share price,” said Andy Lynch, who helps manage about $170 billion at Schroder Investment Management Ltd. in London. Investors next want to see stabilization in net new money flows, Lynch said. “The story is a long way from being finished.”

The U.S. sued UBS on Feb. 19, seeking names of 52,000 clients, a day after the bank agreed to pay $780 million to defer prosecution for helping wealthy Americans evade taxes. UBS agreed then to give the U.S. data on more than 250 accounts.

The IRS is seeking the additional names because it suspects American account holders of evading taxes. Switzerland called the case a threat to its sovereignty and said it would force UBS to violate criminal laws protecting bank secrecy. The parties declined to provide any additional information on the agreement.

Client Trust

“We look forward to a definitive resolution of the U.S. cross-border matter,” Gruebel, 65, and Chairman Kaspar Villiger, 68, said in a letter to shareholders. “This is a positive development in a matter that has adversely affected our efforts to regain the trust of our clients and restore momentum to our businesses.”

The bank didn’t make any additional provisions for litigation costs related to the U.S. lawsuit in the second quarter, Chief Financial Officer John Cryan told journalists on a conference call.

UBS said the second-quarter earnings included a 1.2 billion-franc charge related to the company’s own debt, 582 million francs in reorganization costs and a goodwill impairment of 492 million francs from the sale of Brazil’s UBS Pactual unit.

Third Quarter

The bank’s securities unit reported a pretax loss of 1.85 billion francs, compared with a loss of 5.24 billion francs a year ago. Earnings at the wealth management and Swiss bank halved to 932 million francs, while wealth management Americas had a pretax loss of 221 million francs, compared with a 748 million-franc deficit a year ago. Asset management profit dropped 77 percent to 82 million francs.

Excluding charges, operating earnings in the quarter showed “very encouraging signs,” Cryan said. “The general environment, which obviously in the second quarter of this year was more positive than for some quarters, seems to have continued into the third quarter.”

Before the second quarter, UBS had amassed $53.1 billion in writedowns and losses from the financial crisis and had to raise more than $38 billion to replenish capital from investors including the Swiss government, data compiled by Bloomberg show. The bank said in June it expected a loss for the second quarter.

Zurich-based Credit Suisse Group AG, which declined government aid, posted on July 23 its second consecutive quarterly profit, beating analysts’ estimates as revenue from trading doubled. BNP Paribas, France’s largest bank, reported today a 6.6 percent increase in second-quarter profit.

Wealth Management

UBS’s wealth-management units suffered 156.3 billion francs of net client withdrawals since the second quarter of last year. The number of advisers at the wealth management and Swiss bank unit, which oversees 961 billion francs in customer assets, fell by 855 over that period to 3,593. Client advisers at the Americas division, which manages 695 billion francs, declined by 752 to 7,939.

Asset outflows increased “slightly” at the European business in the quarter, while in Switzerland they stabilized and the Asia-Pacific region recorded net inflows, Gruebel said. “But this does not yet constitute the reversal of the trend,” he added.

Wealth management in the U.S., where net new money outflows are expected to continue, is concentrating on clients with more assets, from $1 million, to differentiate itself from competitors, Gruebel said. “I strongly believe that it can be run very profitably and that’s what we’re trying to achieve.”

He declined to comment on reports that UBS is looking for a new head for the U.S. business, calling them “rumors.”

Capital

Gruebel has shaken up top management since taking over from Marcel Rohner, 44, in February. UBS appointed Chi-Won Yoon, 50, as chairman and CEO for Asia-Pacific in June, replacing Rory Tapner, 49. Gruebel in April hired former Credit Suisse colleague Ulrich Koerner, 46, as chief operating officer and named Alexander Wilmot-Sitwell, 48, and Carsten Kengeter, 42, co-heads of the investment bank, replacing Jerker Johansson, 53.

A recovery at UBS “will take time,” said Guy de Blonay, who helps manage about $70 billion at Henderson Global Investors Ltd. in London. “Gruebel has a good track record, and he is going to do everything that he can to position the company to match rival performance.”

UBS said its tier 1 capital ratio improved to 13.2 percent from 10.5 percent at the end of March after the bank cut more than 260 billion francs of assets on the balance sheet. Gruebel said he “cannot imagine why we would need additional capital.”

To contact the reporters on this story: Elena Logutenkova in Zurich at [e-mail]

Last Updated: August 4, 2009 07:39 EDT

[goforthebet]

US and UBS request court delay

ByJoanna Chung in New York and Haig Simonian in Zurich

Published: July 12 2009 16:58 | Last updated: July 12 2009 16:58

The US government and UBS on Sunday stepped back from the brink of a damaging court battle – scheduled to start on Monday – over the Swiss bank’s refusal to reveal the names of thousands of its offshore customers to the US Internal Revenue Service.

Prospects for a settlement between the sides improved after the US Department of Justice, UBS and the Swiss government asked for a three-week delay to the hearing to allow time for an “alternative” resolution to US demands for the names of 52,000 US taxpayers holding offshore accounts

[goforthebet]

UBS Raises $3.5 Billion in Share Sale, Expects Loss

By Elena Logutenkova and Christine Harper

June 26 (Bloomberg) -- UBS AG, the European bank with the biggest losses from the credit crisis, raised about 3.8 billion Swiss francs ($3.5 billion) by selling shares and said it expects a second-quarter loss.

The bank sold 293.3 million shares for 13 francs apiece to a “small number of institutional investors,” the Zurich-based company said in a statement late yesterday. UBS declined as much as 3 percent in Swiss trading.

UBS decided to raise the funds to bolster confidence in the bank following record losses, client defections and a U.S. probe into possible tax evasion by wealthy Americans. The company had further withdrawals from all of its money-management divisions in the second quarter. The Swiss central bank said last week that UBS needs to further increase reserves and cut assets.

“When the regulator tells you to raise capital, you do it,” said Andy Lynch, who helps manage about $170 billion at Schroder Investment Management Ltd. in London and holds UBS shares. “The view was probably that markets are in a good shape for the time being, we don’t know how it’s going to look in September, so let’s take some insurance.”

UBS declined 12 cents, or 0.9 percent, to 13.85 francs by 11:09 a.m. in Swiss trading. The stock fell 6.6 percent so far this year, compared with a 71 percent gain at Zurich-based Credit Suisse Group AG.

Banks Raise Cash

Oswald Gruebel, 65, joined UBS is February as chief executive officer to reorganize the bank and return it to profitability. The former CEO of Credit Suisse announced in April plans to cut 7,500 jobs and to save as much as 4 billion francs by the end of next year.

UBS said the second-quarter loss is mostly tied to reorganization costs and charges on the company’s own debt, while operating earnings improved from the first quarter on better market conditions. The bank is scheduled to publish second-quarter earnings on Aug. 4.

The bank, the biggest manager of money for the wealthy, has been seeing outflows of client funds since the beginning of 2008, with customers withdrawing 240.9 billion francs through the end of March.

‘More Evidence’

“Investors need to see more evidence of a successful turnaround” before buying shares, Derek De Vries, a London- based analyst at Merrill Lynch & Co. who has a “neutral” rating on the stock, said in a note to clients. “We can’t be certain this will be the last capital increase at UBS.”

In the U.S., lenders including Bank of America Corp. and Wells Fargo & Co. have raised more than $75 billion by selling shares or converting preferred stock into common shares since early May, when regulators demanded some of the banks bolster their capital.

The Swiss National Bank said last week that UBS and Credit Suisse need to increase the amount of capital they hold in relation to assets to withstand any further losses. The banks should aim for a so-called leverage ratio of at least 5 percent once the crisis is over, the SNB said. UBS’s ratio was 2.56 percent at the end of March.

The capital increase “is in accord with our expectations and increases the financial robustness of the bank,” Nicolas Haymoz, a spokesman for the SNB, said today.

Capital Ratio Rises

UBS has amassed more than $53 billion in writedowns and losses since the credit crisis began and had to raise about $34 billion before this capital increase from investors including the Swiss government to replenish reserves.

UBS’s Tier 1 capital ratio, a gauge of its ability to absorb losses, will rise to more than 11.9 percent at the end of this month from 10.5 percent at the end of March because of the share sale and a reduction in risk-weighted assets, the bank said. An increase of about 0.5 percentage point through the sale of Brazil’s Pactual unit will probably come in the third quarter, it added.

UBS also said the Swiss government, which holds 6 billion francs in notes it can convert into UBS shares, agreed not to sell any stock without the bank’s consent before Aug. 4. The finance ministry said in a statement it welcomed UBS’s measures to strengthen capital and that this lock-up was aimed to help the share placement.

The government can still exchange its holdings for shares or sell the mandatory convertible notes before Aug. 4. The ministry will continue to evaluate market conditions as it considers how to exit its investment in UBS, it said.

To contact the reporters on this story: Elena Logutenkova in Zurich at [e-mail]; Christine Harper in New York at [e-mail].

Last Updated: June 26, 2009 05:29 EDT

[mlkrborn]

18 b loss.. "overly cautious"

[MONEYMADE]

,,,,,,,Yes I'm here. We go up next week --MONEYMADE

[bullcents]

anybody here?

[bcblbrbm]

All - Sam here from Samanalysis
We are initiating coverage on UBS with a sell rating. Recent hedge fund failure portends future financial woes. sam

[Matt55]

NYBob I wouldn't be surprised if Unico UCOI:OTC BB by now is held let's say 20 times over by long shareholders. Even if only 10 times, how is/are the nss going to cover the illegal short position?

Watch Out, They Bite!
HOW HEDGE FUNDS TIED TO EMBATTLED BROKER REFCO USED "NAKED SHORT SELLING" TO PLUNDER SMALL COMPANIES
http://www.time.com/time/insidebiz/article/0,9171,1126706,00.html

[NYBob]

UBS & NITE banksters - nss - mmm - basher -



UBS & NITE banksters - nss - mmm - basher? -

[NYBob]

Swiss bank-banksters - still MM on penny-stocks in the US -
to me - UBSS - they looks like they are a nss -
short selling down the penny stocks in the US -
destroying the backbones of America Liberty -
a big bad bankster in my opinon -
terrorizing the risk takers in the US -
should never be allowed to operate -
with bad terror tactic in the US -
to many fines -
all should go to jail -
not be out and allowed -
to make terror to small companies in the US -
to me u are a 666 demon - evil - banksters -
are u part of the 9/11 terror team too? -
it would be of no surprise to me -



God Bless
http://www.888c.com/

[NYBob]

May 10 | UBS | $100 million
In agreement with the U.S. Federal Reserve, UBS -
(nyse: UBS - news - people )

consented to a $100 million civil money penalty
"in connection with U.S. dollar banknote transactions
with counterparties in jurisdictions subject to sanctions
under U.S. law, specifically Cuba, Libya,
Iran and Yugoslavia," according
to the Federal Reserve.

In a press release, UBS said it "recognizes that very serious mistakes were made, accepts the sanctions and expresses its regret." According to UBS, the bank entered an agreement with the New York Fed to participate in its "Extended Custodial Inventory Program" for U.S. dollar banknotes, which blocks participation from countries under U.S. trade sanctions.

http://www.forbes.com/2002/10/24/cx_aw_1024fine.html

Btw. The Law should be equal for all -
666 - banksters responsible managements -
for any illegal criminal charges should -
go to jail as any other person !!! -
or the country is like a -
gypsy clown circus

[NYBob]

UBS Securities to Pay $2.1 Million in Penalties and Fines
for Failure to Preserve Email -

-- UBS is to pay $700,000 in civil penalties to the US Treasury
and fines of $700,000 to the New York Stock Exchange, Inc.
and $700,000 to NASD, Inc.
It also undertakes to review its preservation systems and
establish systems and procedures designed to achieve
compliance with applicable laws, regulations, and rules.

Full text of the Commission's Order can be found here -

http://www.ediscoverylaw.com/news-updates-ubs-securities-to-pay-21-million-in-penalties-and-fines-fo...

[Bad cuda]

thanx bob ,lots of good info in that post.

Cuda

[NYBob]

To 'Bad cuda' on 'UBS AG (UBS:NYSE) ' -

well, its a bit more nss info on the below link -

http://www.investorshub.com/boards/read_msg.asp?message_id=12901975

[NYBob]

CHECK THIS!!! UBS to hand over the information in ten days.

Louisiana State Attorney General Charles Foti is trying
to force UBS, the Wall Street investment bank, to turn over vast quantities of information on its trading, stock lending and other activities related to shares of software firm
Sedona -

The Louisiana Department of Justice filed documents in a state court Tuesday to compel UBS to hand over the information in ten days.

The state is probing naked short-selling, which is the practice of selling shares short without borrowing them. It is an issue that has already been raised in reference to Sedona Sedona. in an ongoing civil lawsuit against a number of brokers and hedge funds and in a Securities and Exchange Commission federal court case filed in April in New York against one brokerage and several individuals.

Several other states, including Illinois and Connecticut, are said to be looking into the issue. Possible abuses in stock trading and in the stock-lending business, which brings in $10 billion in annual profit for Wall Street firms, has started to attract the attention of federal regulators as well.

Foti's exhaustive list of demands for documents include all of UBS' electronic and paper communications files relating to Sedona stock, its trading records, monthly stock inventories, stock loan documentation, information regarding commission payments, customer account records and research done in house related to Sedona.

He also wants information related to the bank's market-making activities and its clearing and settlement procedures.

Louisiana is home to approximately 100 shareholders in Sedona, a Pennsylvania software company whose stock has been pummeled in the last six years, it contends because of manipulative short-selling by hedge funds and collusive brokers. Shares started out January 2000 at $10.25 and are now trading on the pink sheets at 20 cents.

Among these Louisiana-based shareholders is David Vey, a wealthy real estate developer who provided rescue financing to Sedona in 2003, joined its board and now owns about 44% of its outstanding shares.

Wes Christian, a Houston lawyer representing Sedona in a four-year-old civil suit against brokerage firms and hedge funds, says, "We are gaining momentum, finally."

It would be Louisiana's second demand for information from UBS. In September 2003, the state issued a subpoena seeking information on failed deliveries of Sedona shares in trades handled by UBS.

A spokesman for UBS had no immediate comment.

Lawyers who have defended Wall Street firms against naked short-selling allegations say the problem is overblown and that companies that complain about manipulation are generally weak and looking to blame financial problems on outsiders.

Still, that hasn't stopped many states and even Canada from investigating the allegations. Utah's state legislature went so far as to pass a law that would impose stiff penalties on brokers that didn't promptly report trade settlement failures to the state's securities division. After an intense behind-the-scenes Wall Street industry lobbying effort this summer, however, the governor relented and agreed not to enforce the law until next June.

"It seems like every jurisdiction wants to get in on naked short-selling," says Perrie Weiner, an attorney who has represented Wall Street against the naked short-selling crusaders.

In April, the Securities and Exchange Commission filed a civil lawsuit against broker Pond Securities and several individuals. The SEC suit, filed in New York federal court, says the brokers aided or failed to prevent a short-selling scheme carried out for Rhino Advisors, a now-defunct New York money management firm. Rhino is accused of setting up the scheme with one of its hedge fund clients, Amro International, to profit from a 2001 private placement in Sedona.

It is one of the so-called private investment in public equity, or PIPE, transactions regulators have been examining for illegal trading activity.

Three years ago, the then-president of Rhino Advisors, Thomas Badian, settled SEC charges of using offshore accounts to short shares of Sedona. He and the firm paid $1 million.

The SEC contends in its most recent case that Thomas Badian's brother, Andreas Badian, an official at Rhino, directed three brokers who were affiliated with Refco Securities, (two of them were also affiliated with another brokerage that was named in the case) to sell short massive amounts of Sedona shares with "unbridled levels of aggression," intending to "clobber" Sedona's stock price until it collapsed.

During March 2001, Badian's scheme to organize short-selling in Sedona represented 40% of the stock's trading volume for the month, the SEC contends, and the stock dropped from $1.43 to 75 cents. The shares were being sold short for Amro without borrowing them.

Sedona was founded in 1987 as a maker of image scanners. But nine years later it acquired database management software from Lockheed Martin and started selling the technology under license to small banks, to help them manage their customer accounts.

Rhino Investors, representing Amro and others, pumped $2.5 million into Sedona in November 2000 by way of a convertible debt offering, which is a bond that converts to shares at a designated point. Before the Internet bubble burst, such deals were a common way for small tech companies to raise capital without issuing a lot of potentially dilutive shares. They have since been criticized as desperate maneuvers by desperate companies--what is known as a "death spiral convertible."

The Amro agreement was arranged so that it would get more shares of Sedona on the conversion date if Sedona shares dropped in the period leading up to it. Sedona made the investors agree not to sell short the shares.

The company began to notice a pattern of heavy selling volume in its shares coinciding with positive news of new software sales, including two alliances with IBM announced in late 2000 and early 2001.

Its shares continued to fall and the company faced a cash crisis in late 2002 that prevented it from making payroll for nine weeks.

Its employees remained loyal, however, and CEO Marco Emrich reached out to investors for help. A Louisiana businessman named David Vey stepped in with an initial $1.4 million in convertible debt financing. He pumped more money into the company in 2003 and 2004, also in the form of convertible debt.

Vey now owns 43.7% of Sedona shares and is its biggest shareholder, according to the company's proxy. He is chairman of the board, along with his sister, Victoria Looney, a Louisiana businesswoman who owns less than 1% of the company's shares.

A spokeswoman for Sedona was not available.
--

Note: UBS Securities LLC (UBSS) is the second largest trader of Unico shares after NITE KNIGHT EQUITY MARKETS, L.P.

UBSS UBS Securities LLC (UBSS)

July Volume 301,458,595
Rank 1
% 42

June Volume 451,525,569
Rank 1
% 37

Year to Date Volume 6,556,431,726
Rank 2
% 26

NITE KNIGHT EQUITY MARKETS, L.P.

July Volume 273,390,498
Rank 2
% 38

June Volume 339,174,714
Rank 2
% 28

Year to Date Volume 10,925,843,565
Rank 1
% 44

short squeeze coming up soon ?

http://www.investorshub.com/boards/board.asp?board_id=6582

Posted by: Matt55 -

http://www.investorshub.com/boards/read_msg.asp?message_id=13038505

[Bad cuda]

i hope they get whats coming to them,european short sellers

Cuda

[NYBob]

UBS - NEWS - RE: illegal naked short-selling -

Louisiana State Attorney General Charles Foti is trying
to force UBS, the Wall Street investment bank, to turn over
vast quantities of information on its trading, stock lending
and other activities related to shares of software firm
Sedona -

The Louisiana Department of Justice filed documents in a state court Tuesday to compel UBS to hand over the information in ten days.

The state is probing naked short-selling, which is the practice of selling shares short without borrowing them. It is an issue that has already been raised in reference to Sedona Sedona (otcbb: SDNA - news - people ). in an ongoing civil lawsuit against a number of brokers and hedge funds and in a Securities and Exchange Commission federal court case filed in April in New York against one brokerage and several individuals.

Several other states, including Illinois and Connecticut, are said to be looking into the issue. Possible abuses in stock trading and in the stock-lending business, which brings in $10 billion in annual profit for Wall Street firms, has started to attract the attention of federal regulators as well.

Foti's exhaustive list of demands for documents include all of UBS' electronic and paper communications files relating to Sedona stock, its trading records, monthly stock inventories, stock loan documentation, information regarding commission payments, customer account records and research done in house related to Sedona.

He also wants information related to the bank's market-making activities and its clearing and settlement procedures.

Louisiana is home to approximately 100 shareholders in Sedona, a Pennsylvania software company whose stock has been pummeled in the last six years, it contends because of manipulative short-selling by hedge funds and collusive brokers. Shares started out January 2000 at $10.25 and are now trading on the pink sheets at 20 cents.

Among these Louisiana-based shareholders is David Vey, a wealthy real estate developer who provided rescue financing to Sedona in 2003, joined its board and now owns about 44% of its outstanding shares.

Wes Christian, a Houston lawyer representing Sedona in a four-year-old civil suit against brokerage firms and hedge funds, says, "We are gaining momentum, finally."

It would be Louisiana's second demand for information from UBS. In September 2003, the state issued a subpoena seeking information on failed deliveries of Sedona shares in trades handled by UBS.

A spokesman for UBS had no immediate comment.

Lawyers who have defended Wall Street firms against naked short-selling allegations say the problem is overblown and that companies that complain about manipulation are generally weak and looking to blame financial problems on outsiders.

Still, that hasn't stopped many states and even Canada from investigating the allegations. Utah's state legislature went so far as to pass a law that would impose stiff penalties on brokers that didn't promptly report trade settlement failures to the state's securities division. After an intense behind-the-scenes Wall Street industry lobbying effort this summer, however, the governor relented and agreed not to enforce the law until next June.

"It seems like every jurisdiction wants to get in on naked short-selling," says Perrie Weiner, an attorney who has represented Wall Street against the naked short-selling crusaders.

In April, the Securities and Exchange Commission filed a civil lawsuit against broker Pond Securities and several individuals. The SEC suit, filed in New York federal court, says the brokers aided or failed to prevent a short-selling scheme carried out for Rhino Advisors, a now-defunct New York money management firm. Rhino is accused of setting up the scheme with one of its hedge fund clients, Amro International, to profit from a 2001 private placement in Sedona.

It is one of the so-called private investment in public equity, or PIPE, transactions regulators have been examining for illegal trading activity.

Three years ago, the then-president of Rhino Advisors, Thomas Badian, settled SEC charges of using offshore accounts to short shares of Sedona. He and the firm paid $1 million.

The SEC contends in its most recent case that Thomas Badian's brother, Andreas Badian, an official at Rhino, directed three brokers who were affiliated with Refco Securities, (two of them were also affiliated with another brokerage that was named in the case) to sell short massive amounts of Sedona shares with "unbridled levels of aggression," intending to "clobber" Sedona's stock price until it collapsed.

During March 2001, Badian's scheme to organize short-selling in Sedona represented 40% of the stock's trading volume for the month, the SEC contends, and the stock dropped from $1.43 to 75 cents. The shares were being sold short for Amro without borrowing them.

Sedona was founded in 1987 as a maker of image scanners. But nine years later it acquired database management software from Lockheed Martin (nyse: LMT - news - people ) and started selling the technology under license to small banks, to help them manage their customer accounts.

Rhino Investors, representing Amro and others, pumped $2.5 million into Sedona in November 2000 by way of a convertible debt offering, which is a bond that converts to shares at a designated point. Before the Internet bubble burst, such deals were a common way for small tech companies to raise capital without issuing a lot of potentially dilutive shares. They have since been criticized as desperate maneuvers by desperate companies--what is known as a "death spiral convertible."

The Amro agreement was arranged so that it would get more shares of Sedona on the conversion date if Sedona shares dropped in the period leading up to it. Sedona made the investors agree not to sell short the shares.

The company began to notice a pattern of heavy selling volume in its shares coinciding with positive news of new software sales, including two alliances with IBM (nyse: IBM - news - people ) announced in late 2000 and early 2001.

Its shares continued to fall and the company faced a cash crisis in late 2002 that prevented it from making payroll for nine weeks.

Its employees remained loyal, however, and CEO Marco Emrich reached out to investors for help. A Louisiana businessman named David Vey stepped in with an initial $1.4 million in convertible debt financing. He pumped more money into the company in 2003 and 2004, also in the form of convertible debt.

Vey now owns 43.7% of Sedona shares and is its biggest shareholder, according to the company's proxy. He is chairman of the board, along with his sister, Victoria Looney, a Louisiana businesswoman who owns less than 1% of the company's shares.

A spokeswoman for Sedona was not available

Posted by: GOLDENBOLLOX

http://www.investorshub.com/boards/read_msg.asp?message_id=13038179