Beleaguered UBS offers clients buy-back scheme

16 July 2008

Swiss bank UBS is to offer its clients the opportunity to buy up around $3.5 billion of auction-rate shares, it was announced today.

The move follows a successful legal action from Massachusetts secretary of state William Galvin, who alleged that investors had been fraudulently sold "low-risk" securities that later lost value.

These clients will now be paid back in full, costing UBS around $70 million.

New York-based investor Harry Newton, speaking to news agency Bloomberg, welcomed the news.

"It's fabulous," he said. "[UBS] were the worst of all the brokerage companies that sold this stuff."

News of the buy-back scheme adds to the many financial setbacks currently faced by the Zurich-based firm.

As well as writing off around $40 billion of assets due to the ongoing credit crunch, UBS has also replaced its chief executive earlier this year.

The US trial of a former UBS banker, Bradley Birkenfeld, has also proved severely embarrassing - with allegations that staff helped wealthy American clients hide around $20 billion from authorities so that they could avoid income tax.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development