Ex-UBS employee-turned-witness avoids prison in bid rigging case

Reuters News
Posted: Mar 27, 2014 1:32 PM

By Nate Raymond

NEW YORK (Reuters) - A former UBS AG trader who became a cooperating witness in the U.S. government's sweeping probe of bid-rigging in the $3.7 trillion municipal bond market was sentenced to time served on Thursday.

Mark Zaino, a former director on UBS' municipal bond and derivatives desk in New York, had pleaded guilty to conspiracy and wire fraud charges in 2010, becoming the fourth person to admit wrongdoing as part of the antitrust investigation.

The probe has resulted in numerous convictions and resulted in $743 million of settlements with UBS, Bank of America Corp, General Electric Co, JPMorgan Chase & Co and Wells Fargo & Co. UBS' payment was $160 million.

U.S. District Judge Kimba Wood in Manhattan said Zaino's eight years of cooperation with government investigators justified the sentence.

"It is true that an investigation like this could not be successful without someone like yourself," she said.

The Justice Department said that from October 2001 to March 2006, Zaino and his co-conspirators would decide in advance who would win auctions of guaranteed investment contracts, which public entities buy with the proceeds from municipal bond sales.

Zaino would then arrange for lowball bids to give the appearance of competitive bidding, and for kickbacks to be funneled to CDR Financial Products Inc, a Beverly Hills, California broker that prosecutors said steered investment agreements to financial firms.

CDR founder David Rubin was sentenced this month to two years probation after pleading guilty to wire fraud and conspiracy. He also cooperated with investigators.

"I live every day with regret and remorse," Zaino said.

Zaino, 39, testified against three former UBS executives -Peter Ghavami, Gary Heinz and Michael Welty - who were convicted in 2012 for participating in frauds related to municipal bond proceed contracts.

Zaino also testified at the trial of three former GE bankers - Steven Goldberg, Dominick Carollo and Peter Grimm. A federal appeals court vacated their 2012 convictions last year, saying the government waited too long to prosecute.

The case is U.S. v. Zaino, U.S. District Court, Southern District of New York, No. 10-cr-00434.

(Reporting by Nate Raymond; Editing by Andrea Ricci)