UPDATE 4-UBS healthcare bankers move en masse to Jefferies

Fri Jun 26, 2009 7:19pm EDT
 
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* 36 UBS employees resign, including Lorello, Kelly

* UBS gets injunction against bankers, Jefferies

* UBS to name new head of healthcare soon (Adds background)

By Paritosh Bansal

NEW YORK, June 26 (Reuters) - Jefferies Group Inc (JEF.N) has hired away three dozen UBS AG (UBSN.VX) employees, including nearly all its healthcare investment bankers, in what the Swiss bank called a "massive, premeditated raid."

The exodus deals another body blow to the Swiss bank, which said the move "has inflicted enormous reputational, economic and other harm." Healthcare was the only M&A sector globally to see year over year growth in the first half and is expected to continue to stay abuzz with deal activity. [ID:nLP502660]

These employees in the bank's healthcare group and equity capital markets left in a "mass resignation" between June 17 and June 21, UBS (UBS.N) said in an arbitration claim filed with the Financial Industry Regulatory Authority, dated June 22.

UBS accused two senior healthcare bankers -- group head Benjamin Lorello and Managing Director Sage Kelly -- of "surreptitiously planning" the move with Jefferies.

Lorello and Kelly could not be reached at their UBS offices. A Jefferies spokesman was not available for comment.

Lorello is also known for advising HealthSouth Corp (HLS.N) under its former boss Richard Scrushy. Scrushy was ordered to pay $2.9 billion last week in a civil case after a judge found him responsible for an accounting fraud that nearly brought down the hospital chain.

The mass exit is the latest in a series of departures of investment bankers from UBS, which has been hit hard by the financial crisis and had to cut bonuses, although the Swiss bank has also hired a few bankers over the past few months.

It is also the latest in a string of negative headlines in the past year for the world's largest wealth manager that have prompted big client withdrawals.

UBS was bailed out by the Swiss government, which is still invested in the bank, and it faces legal problems in the United States over a tax case. It expects to post a second-quarter loss and plans to raise $3.5 billion of new capital. [ID:nLQ421864]

Since 2005, the healthcare group closed more than $567 billion in transactions, bringing in over $1 billion in revenues. UBS is seeking damages and other relief.

Only three managing directors and four executive directors are left in UBS' healthcare group, it said.

DISILLUSIONED  Continued...

 

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