The investors charged that UBS traders used knowledge of Wood River's undisclosed outsize Endwave stake to bet against the stock with short sales of 3.5 million Endwave shares...Instead of ensuring disclosure of the Endwave stake by Wood River, the lawsuit said, UBS “designed a scheme to co-opt that fraud [by making] improper use of its position and nonpublic information to manipulate the market for Endwave stock...
In another dramatic and unpredictable development:
“UBS intends to defend itself vigorously against these allegations,” a spokeswoman for UBS said in a prepared statement.
It’s not clear whether that’s the same UBS Chatty Kathy, then characterized as “people familiar with the situation,” who, when the story first broke in Oct. 2005, said that UBS hadn’t suffered losses from its Wood River relationship. Or, for that matter, the same spokeswoman for UBS who several weeks (and some polite reminders) ago promised to get back to NakedShorts on the moderately fascinating question of what happened with all those futures brokerage accounts it bought from ABN-Amro last year.
And, thanks to a source who prefers to remain anonymous, the Wood River investors’ suit:
1. Street lore has it that UBS’s initials actually stand for U’ve Been Scr*wed.
2. Coming next week: A recounting of some recent aggressive marketing adventures of Wood River investors’ counsel Reed Smith, in which will be named at least some hedge funds that might have profitably been more profligate in their due diligence.
Lawsuit Against UBS Spotlights Prime Brokers [$$]
By Randall Smith
The Wall Street Journal May 23 2007