Criminal Justice
Lehman Brothers and a UBS Executive Investigated in Auction-Rate Probes
Posted Oct 2, 2008, 05:27 am CST
By Debra Cassens Weiss
Investigators probing criminal wrongdoing in the auction-rate securities market are looking at Lehman Brothers and a former executive at UBS AG, the Wall Street Journal reports.
Federal prosecutors in Brooklyn are investigating whether Lehman dumped auction rate securities into customer accounts despite knowledge that the market could fail, the story says. Federal prosecutors in Washington, D.C., are also looking at the activities of David Shulman, who oversaw auction-rate securities at UBS, according to the account. He reportedly sold his own auction-rate holdings before the market tanked.
The story relied on anonymous sources. It describes auction-rate securities as providing a way to borrow for the long-term at lower, short-term interest rates that reset in periodic auctions.