Friday, July 06, 2007

After Losses, UBS Ousts Its Chief

From the NYTimes. A lot more information then what you get from the Swiss Media.

Meanwhile, in May, UBS shut down its hedge fund group, Dillon Read, which had started in 2005 amid much fanfare. To quickly build up a presence in the hedge fund industry, UBS transferred many top traders from the investment bank to the hedge fund unit and seeded it with hundreds of millions of dollars of UBS capital. But this year, bad bets in subprime mortgage investments led to losses of $124 million.

UBS was the first Wall Street firm to announce heavy losses in the subprime sector, although it was not the only brokerage firm to do so. Last month, Bear Stearns said that it would provide up to $1.6 billion in secured financing to bail out one of two hedge funds run by its asset management division that had sustained substantial losses in complex loans and securities backed by subprime mortgages.

In the case of UBS, however, what shocked some analysts and investors was the $300 million it cost to close Dillon Read. Of that amount, $200 million went to severance payments and other costs for the hedge fund manager and his team.

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