UBS has been accused of “dishonest and unethical business activities” by Massachusetts Secretary of the Commonwealth William F. Galvin for giving hedge fund managers perks in order to get their lucrative trading business, according to The Boston Globe.
UBS Securities gave investment managers office space at discounted rents, a personal line of credit, tickets to sporting events and other perks, Galvin charged in an administrative complaint this week.
The complaint states that UBS created potential conflicts of interest and violated a number of securities regulations. UBS declined to comment and a spokesperson stated it is reviewing Galvin’s filing.
Galvin said that UBS provided office space to hedge funds at its expensive office locations at discounts as high as $40,000 a year. Managers who failed to produce for UBS ran the risk of being kicked out, according to the suit.
“Either we kick them out now or give them six to nine months and tell [them] we need to try to get more revenues,” wrote Michael Torrisi, executive director of UBS prime brokerage services, in an internal e-mail about a hedge fund tenant, according to the lawsuit.
The suit does not detail how much trading business the hedge funds directed to UBS in exchange for the perks.
Entertainment benefits also occurred. The suit said that Torrisi charged thousands of dollars to meals and sport tickets to his corporate credit card for hedge fund tenants. Galvin alleged that Torrisi charged more than $1,300 worth of food at Fenway Park to his corporate card during a Boston Red Sox versus New York Yankees game. Among the guests were employees of three hedge fund tenants who were listed on his expense report, the suit notes.
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