UBS Loss of GM IPO May Cost the Firm $50 Million

Getting booted off the General Motors initial public offering will cost UBS tens of millions of dollars, according to a person familiar with the matter.

UBS headquarters in Zurich, Switzerland.
Steffen Schmidt
UBS headquarters in Zurich, Switzerland.

The Swiss bank had been named as one of the underwriters in the offering. But after a high yield research analyst at UBS sent out an unauthorized email to around 150 potential investors—violating the SEC's rules on marketing—the bank was kicked out of this role.

The loss of the GM deal will cost far more than just the estimated $10 million UBS would have received in fees for participating in the IPO.

Other parts of UBS's business stood to profit from side deals being arranged around the IPO, as well. Some of those involved transactions with UBS wealth management clients who were shifting asset allocations to participate in the deal.

One person at the bank, who spoke on the condition of anonymity, estimated that UBS stood to make around $50 million from its role as an underwriter.

"This guy really hurt us," the person said, referring to the analyst who sent the email.

The analyst initially attempt to blame an assistant, according to the person.

"He said an assistant sent out his research without permission. Everyone knows that's bull****," the person said.

We're told by another source that the analyst has now been fired.


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