UBS nixes shareholder calls for investigation
The call comes amid a government probe as to whether UBS recorded inflated prices for mortgage bonds.
Federal criminal prosecutors in New York are investigating whether UBS AG misled investors by recording inflated prices for mortgage bonds that it held, despite knowing that the valuations had fallen, sources told The Wall Street Journal.
The investigation, which is being carried out by the U.S. attorney in New York’s Eastern District in Brooklyn, is in its preliminary stages.
Prosecutors have not yet issued subpoenas, the report stated.
In an effort to bolster investigations into whether Wall Street firms improperly priced mortgage securities, the Securities and Exchange Commission recently upgraded probes of UBS and Merrill Lynch & Co. Inc. into formal investigations.
Also today, Reuters reported that UBS has urged shareholders to throw out a dissenters’ plan for an external probe into the bank’s troubles with assets backed by subprime mortgages, and to approve a speedy cash injection to replenish its capital.
The bank, which recently posted $18.4 billion in write-downs related to subprime mortgages, also rejected calls from shareholders to take part in its capital increase through a rights offering.
UBS, Europe’s hardest-hit bank from the credit crisis, plans to add $12.03 billion in capital after posting large subprime-related write-downs.
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