You & Us and Frank the Tank

It's no secret that times are tough for UBS. In its self-admitted "blind rush for revenues" the staid, sober, and prudent company walked in to the mortgage equivalent of the Mitch-a-Palooza frat party in "Old School" dressed in a pin-striped, three piece grey suit. Starting with sips of single family home mortgage brew and finishing with beer bongs of trailer park mortgages, UBS left as Will Ferrell's character Frank the Tank, running naked down the street trying to figure out whether KFC was still open. This complete change in character, and resulting losses, have led to an out-flow of funds with an estimated $20 billion going out the door in this year's second quarter alone.
Other changes are also apparent as evidenced by a story that came out last week from Prescott, Az. The story was about the arrest of a UBS financial advisor, named Steven Democker, for the bludgeoning murder of his ex-wife which took place in early July, 2008. Recently divorced after 25 years of marriage, Mr. Democker would have fit the bill as a "person of interest", a fact not lost on the management at UBS. So you've got the murder of an ex-wife, no other suspects, and your guy is a person of interest. For a company as image conscious as UBS the appropriate question is probably "What would Donald Stern do?". In Stern's universe, it's very unlikely that Mr. Democker would be seen shooting jump shots for the Suns. In the UBS universe, Mr. Democker was put right back to work in his two person office in Prescott Az., 100 miles from his nearest supervisor.
It's a common practice for brokers that are leaving the business to accelerate trading in their books to make as much as they can for as long as they can. In houses of lesser repute, management quite often looks the other way as they usually share in at least 50% of the broker's commissions. Was Mr. Democker, sensing the ultimate outcome of the police investigation, allowed to do the same? At this point we don't know but we're working on it. Stay tuned and if you have anything to add please email us at: financialshenanigans@gmail.com