Bloomberg reports that Alexander Wright took the witness stand in the criminal trial of Peter Ghavami, the former head of UBS’s municipal derivatives group, and told jurors about a dinner where bankers from the two firms agreed to 'forestall head-to-head competition'. He said the meeting took place at Veritas, possibly in early 2001.
They discussed 'ways the competition could be dulled' and how to 'keep other competitors away'. Wright told jurors today in Manhattan federal court.
Wright, 45, pleaded guilty last month to conspiracy to rig bids on a bond deal and is testifying for prosecutors as part of a plea deal for leniency. Two other men are also on trial: Garry Heinz and Michael Welty, who were both vice presidents and municipal reinvestment marketers. The three are charged with conspiracy to defraud municipal-bond issuers and U.S. tax authorities by fixing prices on investing agreements.
The dinner meeting aimed to ease the tension between the municipal derivatives desks of New York-based JPMorgan and Zurich-based UBS following UBS’s acquisition in 2000 of Paine Webber, Wright said. Before then, JPMorgan had done deals with Paine Webber, he said. That changed after UBS bought the smaller firm.
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