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UBS Unit Thrived as Strategist Was Fired, Ex-Group Head Says

(Bloomberg) -- UBS Group AG’s commercial mortgage-backed securities business was thriving in 2012, a former executive said, challenging the Swiss bank’s claim that financial woes led it to dismiss a senior strategist.

Kenneth Cohen, UBS’s ex-head of commercial real estate finance who left the bank in 2013, testified Wednesday at the trial brought by former strategist Trevor Murray, who contends he was fired for blowing the whistle on alleged attempts by UBS’s traders to influence his independent reports.

Cohen agreed under questioning by Murray’s lawyer, Robert Herbst, that UBS’s CMBS business was "solidly profitable" in the months before Murray was fired in February 2012 and that the "overall business has paid for itself."

"Yes, I suppose, yes," said Cohen, a well-known figure in the CMBS market who now leads commercial real estate at Bank of America Corp. "It was profitable in 2011."

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But Cohen, who said he met several times with UBS lawyers to prepare for his testimony, also bolstered the defense by repeatedly denying that he sought to influence Murray’s reports to benefit the bank’s own positions.

"You told him his views were too bearish, didn’t you?" Herbst asked.

"No," Cohen said.

Pressed on whether he confronted Murray about his research reports being "off message" Cohen said, "I absolutely did not say that."

Cohen, who ran the CMBS business at Lehman Brothers Holdings Inc. until its 2008 bankruptcy, testified he quit UBS in part because he believed the $2 million bonus he received in 2013 on top of a $500,000 base salary was too low compared with how profitable the unit had been.

UBS’s lawyers haven’t begun their cross-examination of Cohen, which may elicit favorable testimony about CMBS staffing issues at the time.

UBS has said Murray’s firing was part of a broader reduction in staff across the bank’s fixed income division as a result of several financial setbacks, including a $2 billion loss by a rogue trader at its London office in September 2011. The employment of a senior strategist for CMBS was a luxury the bank couldn’t afford, and the role hasn’t been refilled, the bank has said.

Peter Stack, a spokesman for UBS, declined to comment on the case.


Murray accuses UBS of violating the whistle-blower protections enacted as part of the 2002 Sarbanes-Oxley law. In his suit, he describes multiple attempts by managers and colleagues to get him to write bullish assessments of CMBS and recast his opinions based on UBS’s own holdings.

The Zurich-based bank says the conduct Murray alleges never took place and that he isn’t a whistle-blower. Instead, UBS says, Murray was one of about 100 people terminated from the same division at that time and part of a broader reduction in staffing caused by the bank’s poor financial performance at the time.

In seeking to undercut that claim, Herbst on Wednesday showed jurors internal UBS documents in which CMBS was included as part of a core business area that the bank intended to focus on, as well as a description of UBS’s planned CMBS deals for 2012 as a "major achievement."

The case is Murray v. UBS Securities, 14-cv-00927, U.S. District Court, Southern District of New York (Manhattan).

(Updates with detail about UBS staff reductions.)

To contact the reporter on this story: Erik Larson in New York at

To contact the editors responsible for this story: David Glovin at, Paul Cox

©2017 Bloomberg L.P.

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