Aufhauser, Former UBS GC, Settles Insider-Trading Allegations

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David Aufhauser, then the Treasury Department GC, speaks with reporters at the Treasury Department, Oct. 14, 2003. (AP Photo/Evan Vucci)

David Aufhauser has a pretty sterling resume: general counsel of the Treasury Department official; former general counsel for UBS AG’s investment bank; partner at Williams & Connolly; graduate of elite schools (Wesleyan, Penn Law, Harvard MBA). Today, that resume picked up a bit of a smudge: a settlement with New York AG Andrew Cuomo over allegations of insider trading in the auction-rate securities market. Here’s the story from the WSJ.

Aufhauser, who stepped down from his post at UBS in August, was one of seven UBS executives Cuomo alleged in a complaint to have sold auction rate securities with inside and early knowledge of the problems in that market. He is the only top executive to settle with regulators over his actions. A representative from the attorney general’s office says it is still investigating the other executives.

Aufhauser has agreed to pay to the state of New York his entire 2008 incentive compensation package from UBS of $6 million plus a $500,000 penalty. He has also agreed to be barred from the securities industry for two years, barred from being an officer or director of a public company for two years, and barred from practicing law in New York for two years, according to the settlement agreement signed by Aufhauser, his attorney and an attorney in Mr. Cuomo’s office. He neither admits nor denies wrongdoing.

“We are pleased to have reached this amicable agreement and avoided a potentially lengthy litigation,” a spokesman said on behalf of Aufhauser in a statement.

Just in case you were wondering what he learned in law school, there’s this, from the Penn Law Web site: “Penn’s broadband view of a lawyer’s role in civil society gave a lot of us the courage - and commitment - to pursue careers that could lead a trial lawyer to be a counselor to a President, and then to help run enterprises of enormous dimension and impact. One of my great fortunes in life was to have attended the School.”