Three former UBS bankers convicted last August of conspiring to defraud United States municipal bond issuers were fined and sentenced to jail on Wednesday by a district judge in New York. The sentences were significantly below those sought by prosecutors.
The bankers were accused of steering financial contracts to their friends in exchange for kickbacks and other favours between 2001 and 2006, while falsely certifying that the processes were competitive.
The first person, a former bank vice president who was caught on recordings discussing the scheme, received a prison sentence of 27 months and a $400,000 (CHF374,600) fine. The prosecution had asked for a 19.5-year sentence.
The second person, who was a global head of commodities until 2007, received an 18-month prison sentence and a $1 million fine. His lawyer said he was “very pleased” at the outcome as “justice was done”.
The third person, a former vice president, received a 16-month sentence and a $300,000 fine. Prosecutors had sought a sentence of more than 11 years.
US District Judge Kimba Wood greatly reduced the lengths of all three sentences, saying that the bankers’ criminal behaviour deviated from their otherwise law-abiding lives and that the victims had been "compensated highly" by a UBS settlement.
UBS agreed in 2011 to pay $160 million in restitution, penalties and disgorgement for the scheme.
However, a lawyer at the Department of Justice's antitrust division said Wood's reduction in sentencing ranges "greatly under-estimates the seriousness of the offense."
The US authorities charged the three men in 2010 as part of their broad investigation of the $3.7 trillion US municipal bond market, in which at least 19 people have been convicted or pleaded guilty.
A senior official at the antitrust division's criminal enforcement programme said in a statement after the sentencing that the division “will continue to prosecute those who subvert and corrupt competitive markets for personal profit."