Last Updated Aug 5, 2008 9:29 AM EDT
Cuomo's complaint against UBS, filed at state court in Manhattan, says Executive A e-mailed his personal financial adviser Dec. 14, saying 'I want to get out of ARCs,' the same day he was e-mailed a copy of a message from UBS's chief risk officer to the company's CEO about a series of problems with the auction-rate market. By Dec. 21, he had sold all $250,000 of his auction-rate securities.It apparently didn't take "Executive A" (believed to be Aufhauser) long to figure he'd done something wrong. As Bloomberg reports, "Executive A repurchased the same securities on Feb. 12, after he questioned the 'propriety' of another executive's trades in the debt, the complaint said. A day later, UBS stopped supporting its auctions."Normally, insider trading (which is not always illegal) involves buying or selling shares of a particular security by someone armed with knowledge of a particular company. Charging someone with fraud based on his insider knowledge of an entire market is pretty much unheard of. But there's a first time for everything.
UBS said it doesn't think anyone at the bank did anything illegal here. But the last thing that UBS needs is a lawyer who, instead of arguing precedents, is a precedent himself.