BofA Bids Were Made to Rig Muni Prices With UBS, Witness Says

A prosecution witness who claims he conspired to rig bids on municipal bonds with three former UBS AG (UBSN) employees denied bids he made were legitimate as a defense attorney sought to characterize them as simply hurried.

Doug Campbell, who worked in Bank of America’s municipal reinvestment and municipal interest-rate hedging group from 1998 until 2002, was asked yesterday by Gregory L. Poe, a lawyer for Michael Welty, one of the UBS defendants, whether the low bids he submitted were intentional or a result of being distracted.

“You put in bids but didn’t have time to model them properly, right?” Poe asked Campbell on his second day of testimony in federal court in Manhattan, focusing on one trade for Anchorage, Alaska. “You in fact wanted to win the transaction but didn’t have time, isn’t that right?”

“That is not true,” Campbell said.

On a recorded phone call Poe played, Campbell said that “in hindsight,” the Anchorage deal came “quickly” and he had been very busy.

Campbell is testifying against Michael Welty and Gary Heinz, former UBS vice presidents, and Peter Ghavami, the former head of UBS’s municipal derivatives group. The three men face charges that they conspired to defraud municipal-bond issuers and U.S. tax authorities.

Later in the afternoon, Jonathan Halpern, a lawyer for Heinz, asked Campbell about his connection to a previous witness, Mark Zaino. Zaino worked on the bond desk at UBS and testified against Ghavami, Heinz and Welty last week.

Working Relationships

Halpern showed the jury a series of e-mails between Campbell and Zaino, suggesting Zaino was the member of the UBS staff helping Campbell rig bids. Campbell said he had working relationships with the defendants in this case.

Earlier in the day, Campbell had said he “had a relationship with all the members of the UBS/PaineWebber desk.”

Campbell pleaded guilty in September 2010 to restraint of trade, conspiracy to defraud municipal issuers and wire fraud. He faces as much as 35 years in prison and several million dollars in financial penalties, he told jurors yesterday. He’s testifying as part of a cooperation agreement with the government. Zaino also testified as part of a plea agreement with the government.

The case is U.S. v. Ghavami, 10-cr-1217, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Emily Grannis in New York at

To contact the editor responsible for this story: Andrew Dunn at

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