4 Executives At UBS Quit After Internal Fund Probe
The chairman of UBS AG stepped down today after an internal investigation by the Swiss banking giant revealed "shortcomings in risk management" in the company's dealings with Long-Term Capital Management L.P., the massive speculative fund that nearly collapsed last week.</br></br>Mathis Cabiallavetta and three top executives were the first casualties in the upper echelons of the bevy of blue-chip financial firms that lent hundreds of millions of dollars to Long-Term Capital -- and then wound up rescuing the fund. But many on Wall Street are bracing for similar shake-ups, particularly amid public scoldings about a lack of lending controls at many institutions by Federal Reserve Chairman Alan Greenspan and Treasury Secretary Robert E. Rubin.</br></br>"There have got to be sacrificial lambs," said a senior Wall Street executive. "We're all waiting to see who is going to take the blame."</br></br>Executives of some firms speculated that lower-level managers may take the fall, particularly in cases where their own chiefs were unaware of the extent of the risk their companies were taking.</br></br>Indeed, Bank of Italy Governor Antonio Fazio today said he was unaware until this week of the involvement of Italy's Foreign Exchange Office UIC in Long-Term Capital -- even though he chairs UIC, which manages Italy's foreign-exchange reserves on the central bank's behalf.