US Supreme Court rejects former UBS executives’ appeals

  • Banking
  • Monday, 11 Jan 2016

The logo of Swiss bank UBS is seen at its headquarters Zurich in this July 27, 2015 file photo. To match story SWISS-BANKS/ASIAPAC-WEALTH REUTERS/Arnd Wiegmann/Files

WASHINGTON: The US Supreme Court on Monday declined to hear an appeal filed by three former executives of Swiss global investment bank UBS AG convicted of conspiring to deceive US cities and towns by rigging bids to invest municipal bond proceeds.

The court left in place a June 2015 ruling by the 2nd US Court of Appeals that upheld the 2012 convictions of Gary Heinz, Peter Ghavami and Michael Welty. They had argued that prosecutors waited too long to bring wire fraud and conspiracy charges.

The case stems from a bid-rigging investigation involving the US$3.7 trillion (RM16.2 trillion) US municipal bond market that resulted in 17 convictions and US$743mil (RM3.25bil) in settlements with five banks, including US$160mil (RM700.8mil) from UBS.

The defendants contended that prosecutors improperly relied on a 1989 law arising from the US savings-and-loan crisis to extend the statute of limitations to 10 years from five.

In June, the 2nd US Circuit Court of Appeals said in its ruling upholding the convictions that the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) covered any wire fraud that “affects a financial institution,” even when the banks themselves are also accused of wrongdoing.

Ghavami was UBS’s global head of commodities, while Heinz and Welty worked on its municipal bond reinvestment and derivatives desk.

US authorities accused them of steering financial contracts to others in exchange for kickbacks and favors between 2001 and 2006.

After a jury found them guilty in 2012, Heinz, Ghavami and Welty received prison sentences of 27, 18 and 16 months, respectively.

The case is Heinz v. United States, US Supreme Court, No. 15-432. - Reuters
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