UBS to Pay $15,000,000
UBS Financial Services paid more than $15 million to settle Securities and Exchange Commission charges that it improperly sold risky, complex products to investors, the agency announced on Wednesday.
The SEC used a coding technique that allows it analyze data across an entire trading platform to identify potential unsuitable transactions to particular investors.
The case centers on the sales of approximately $548 million in reverse convertible notes to 8,743 UBS retail customer between 2011 and 2014. The investments are debt obligations linked to underlying stocks that pay a higher-than-normal interest rate because they use embedded derivatives linked to the volatility of the base stock.
The SEC charged that the investors who bought the products did not understand the volatility and risk associated with them and neither did the UBS registered representatives who sold them.
UBS will pay $8.2 million in disgorgement, a $6 million penalty and $798,316 in interest.
The SEC analyzed trading data to find UBS sales targeted to an entire class of clients who should not have had the complex, risky structured notes in their portfolios. The SEC used big data, rather than trying to put together individual examples to build the case.
According to Investment News, it’s the first time the SEC has used this particular kind of data analytics to identify a broker’s improper sales to an entire class of investors and its deficiencies in educating and training reps in those sales.
Brokerage firms are required to supervise their advisors to ensure that they are complying with FINRA rules. If it can be determined that a financial advisor violated FINRA rules and the employers failed to adequately supervise him, these firms can be held responsible for any resulting losses in a FINRA arbitration claim.
Before recommending an investment, a broker-dealer has a fiduciary duty to adequately disclose the risks involved in the investment and to perform the necessary due diligence to determine whether the investment is suitable for the investor.
Recovery of Investment Losses
FINRA Dispute Resolution is an arbitration venue for investors with claims against their brokerage firm or financial professional. It provides investors with an opportunity to attempt to recoup their investment losses and is an alternative to filing such claims in court. If you suffered losses investing with UBS, please call The White Law Group at 1-888-637-5510 for a free consultation.
The foregoing information is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm and it’s representation of investors, visit https://www.whitesecuritieslaw.com.