Ex-broker files whistle-blower suit against UBS
A former UBS broker who sold $30 million in auction-rate securities to Massachusetts municipalities has filed a whistle-blower lawsuit against the Wall Street firm, alleging it retaliated against him for cooperating with regulators and forced him to resign.
In a complaint to the US Department of Labor, Timothy P. Flynn alleged UBS Financial Services Inc. locked him out of his office and shut off his e-mail access shortly after he provided testimony for state Attorney General Martha Coakley’s investigation of the firm last spring.
UBS settled with Coakley’s office in May, agreeing to buy back $37 million in investments sold by Flynn and others at UBS to 17 towns and cities and the Massachusetts Turnpike Authority.
UBS spokesman Kris Kagel said: ‘‘The firm has taken no improper actions against Mr. Flynn. Mr. Flynn made the decision to resign of his own volition. UBS therefore denies the allegations in his claim and plans to defend itself vigorously.’’
According to Flynn’s complaint, he agreed to speak with the attorney general after receiving a request in March. At an April 16 meeting, he told investigators UBS had led its brokers to believe that auction-rate securities were cash alternatives, similar to money markets.
Auction-rate securities are bonds issued by municipalities and nonprofits, such as student lenders. The market for the bonds shut down in February, when there were more sellers than buyers, and UBS and other firms stopped using their funds to support trading. As a result, individuals, companies, and small-town treasurers were left with an estimated $220 billion stuck in securities they were told were as safe as cash.
In May, when the Globe first wrote about Flynn, the firm refused to say whether he was being disciplined.
(By Beth Healy, Globe staff)
