SEC, State Probes will be helped by the UBS emails showing the Bank trying to off load problems onto investors.
The U.S. Securities and Exchange Commission and at least nine state regulators are investigating how banks sold the bonds. Individual investors have also filed lawsuits and complaints with state and federal regulators.
``Here you've got these e-mails, and that could give prosecutors a more favorable forum, said John Coffee, a Columbia University professor who specializes in corporate law.
Karina Byrne, a spokeswoman for UBS in New York, said in a statement yesterday the bank was ``disappointed with Galvin's complaint and ``will defend the specific allegations.
Zurich-based UBS is cutting 5,500 jobs, shutting businesses at the investment-banking unit and trying to stem client defections after posting the highest net losses in the subprime crisis of any bank in the world. The U.S. Justice Department is also investigating whether it may have helped clients evade American taxes.
Increasing Risks
The bank sold $42 billion of auction-rate securities for municipalities and student loan corporations between 2002 and 2007, second to New York-based Citigroup Inc., according to data compiled by Thomson Reuters. The bank earned fees from underwriting and managing the auctions.
Galvin is seeking to force UBS to liquidate all the auction-rate bonds it sold to investors in Massachusetts, which he estimated totals $190 million. He is also probing Merrill Lynch & Co. and Bank of America Corp.
