EX-UBS EMPLOYEE KOBAYASHI CHARGED BY THE SEC

by Christopher J. Gray on July 27, 2011

in SEC,UBS

Steven T. Kobayashi, a former financial adviser for UBS, was charged by the SEC on March 3, 2011. He was charged with misappropriating investors’ funds totaling $3.3 million.

Ex-UBS Employee Kobayashi Charged by the SEC

Allegedly, Kobayashi established a pooled life insurance policy investment fund, Life Settlement Partners LLC, and then solicited funds from many of his UBS customers. The problem, however, arose when he began using the funds as his own personal financing for gambling debts, expensive cars and prostitutes. Starting in 2006, Kobayashi spent at least $1.4 million on these personal and frivolous expenditures.

In an effort to cover his tracks, Kobayashi then defrauded more of his UBS customers, asking them to liquidate securities and transfer the money to more of his accounts in the fall of 2008. This second theft, which amounted to $1.9 million, was committed in an effort to repay Life Settlement Partners LLC before his initial theft was discovered. Kobayashi’s wrongdoings came to light when he could not pay the life settlement policy premiums on LSP and later when clients demanded their investment returns. A complaint was issued to UBS in September 2009 in which a customer accused Kobayashi of stealing hundreds of thousands of dollars from multiple accounts, including her own. The customer’s complaint went on to claim that he had forged documents and lied directly to investors about his intentions for their money. Kobayashi has not worked for UBS since the morning after the complaint was filed, when he tendered his resignation.

Kobayashi has not admitted or denied the allegations against him, but he has agreed to settle the SEC’s charges. The amount of money he will be ordered to pay will be settled in court. However, according to the SEC, “He agreed to a permanent injunction enjoining him from further violations of Sections 10(b) and 15(a) of the Securities Exchange Act and Rule 10b-5 thereunder, and consented to the institution of public administrative proceedings against him in which he will be permanently barred from associating with entities in the securities industry.” There is no mention of whether any of Kobayashi’s clients have secured an investment attorney.

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