January 11, 2016 / 2:58 PM / 3 years ago

U.S. Supreme Court rejects former UBS executives' appeals

Former UBS AG banker Peter Ghavami (C) leaves the Manhattan Federal Court in New York July 24, 2013. REUTERS/Eduardo Munoz

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday declined to hear an appeal filed by three former executives of Swiss global investment bank UBS AG convicted of conspiring to deceive U.S. cities and towns by rigging bids to invest municipal bond proceeds.

The court left in place a June 2015 ruling by the 2nd U.S. Court of Appeals that upheld the 2012 convictions of Gary Heinz, Peter Ghavami and Michael Welty. They had argued that prosecutors waited too long to bring wire fraud and conspiracy charges.

The case stems from a bid-rigging investigation involving the $3.7 trillion U.S. municipal bond market that resulted in 17 convictions and $743 million in settlements with five banks, including $160 million from UBS.

The defendants contended that prosecutors improperly relied on a 1989 law arising from the U.S. savings-and-loan crisis to extend the statute of limitations to 10 years from five.

In June, the 2nd U.S. Circuit Court of Appeals said in its ruling upholding the convictions that the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) covered any wire fraud that “affects a financial institution,” even when the banks themselves are also accused of wrongdoing.

Ghavami was UBS’s global head of commodities, while Heinz and Welty worked on its municipal bond reinvestment and derivatives desk.

U.S. authorities accused them of steering financial contracts to others in exchange for kickbacks and favors between 2001 and 2006.

After a jury found them guilty in 2012, Heinz, Ghavami and Welty received prison sentences of 27, 18 and 16 months, respectively.

The case is Heinz v. United States, U.S. Supreme Court, No. 15-432.

Reporting by Lawrence Hurley; Additional reporting by Joseph Ax; Editing by Will Dunham

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