Former UBS Investment Head To Launch Broker/Dealer

John Costas, the former head of UBS’s investment bank, is setting up a full-service boutique in New York for institutional clients, according to news reports.

Costas and former colleagues Michael Hutchins and Matthew Johnson will launch the firm in the second quarter with about 40 to 50 employees, working as a broker/dealer and securities trader for institutional clients, according to a report in the Financial Times. The firm might also be a bank holding company, offer advisory services such as restructuring and distressed debt, and make bets with their own capital, the report said.

Costas stepped down from UBS when it closed the hedge fund he ran, Dillon Read Capital Management in May 2007, due to subprime mortgage investments. He spent the last two years overseeing his own private equity venture.

The news report said the new company will be similar to the smaller broker/dealers that existed alongside the dominant half dozen players until the late 1990s when they were outpaced in the competition for capital. Such companies are springing up as larger financial institutions struggle, the report commented.