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UBS fined $160 million for US bond-fixing scheme

The Swiss bank UBS was fined $160.2 million for a bid-rigging scheme involving the issue of US municipal bonds and reinvestment of their proceeds, the Justice Department announced Wednesday.

The bank admitted responsibility for the 2001-2006 scheme by a group of former employees to defraud the bond issuers, the department said in a statement.

“UBS and its former executives engaged in illegal conduct that corrupted the competitive process and harmed municipalities, and ultimately taxpayers, nationwide,” assistant attorney general Christine Varney said.

The executives took part in fixing bids and prices in “at least” 100 municipal bond transactions in 36 states, “generating millions in ill-gotten gains,” the Securities and Exchange Commission (SEC) said in a separate statement on the case.

The transactions involved both selling the bonds, and investing and hedging the proceeds from the bond sales, for the city issuers.

The scheme both “undermined the competitive bidding process and affected the prices that municipalities paid for the reinvestment products,” the SEC said.

The $160.2 million covers the disgorgement of gains, penalties and $47.2 million in restitution to the cities victimized by the scam.

Last December Bank of America was fined $137.3 million for similar activities.

Eighteen former executives of several financial institutions have been charged in the bid-rigging, and nine have pleaded guilty.

Four of those charged worked for UBS, and one of them, Mark Zaino, has pleaded guilty.