SAN FRANCISCO (CN) – A broker in UBS Financial Services’ Walnut Creek office defrauded customers of millions of dollars and spent it on “luxury cars, prostitutes and large gambling debts,” the SEC says. Then “to conceal the fraud,” Steven Kobayashi “liquidated his customers’ personal securities holdings” and sucked up “millions more by using a line of credit he had purportedly obtained on his investors’ behalf,” according to the federal complaint.
The SEC sued Kobayashi, 39, of Livermore – but not UBS – for the shenanigans he allegedly pulled off from 2004 though 2009.
Kobayashi was a UBS financial adviser and holds Series 7, 63, and 65 licenses, the SEC says.
According to the complaint, Kobayashi swiped at least $3.3 million from his customers, and “unrelated to any securities transaction, between 2006 and 2009 Kobayashi stole approximately $4 million in additional funds from LSP and from his UBS customers, including funds from the $3 million line of credit.”
(LSP is Life Settlement Partners LLP, which Kobayashi set up in 2004, without informing UBS, though four of his UBS customers ended up investing a total of $1.4 million in LSP, according to the SEC complaint.)
The SEC seeks disgorgement and penalties and it wants a judge to tell Kobayashi never to do such a thing again.