By Chad M. Kohler
If you're a customer of a full-service brokerage firm or wirehouse, chances are much of the day-to-day work relating to your investment account is handled by your broker's sales assistant.
A sales assistant might invite you to a firm-sponsored event; email paperwork for you to sign; send you a research report; or provide a stock quote over the phone.
In appropriate circumstances, a sales assistant may also accept your order to buy or sell securities in your investment account. To accept your order, however, the sales assistant must be properly licensed with your state securities regulator.
According to a recent Consent Order, UBS Financial Services, Inc. ("UBS") settled claims brought by the Ohio Division of Securities relating to "systemic issues" of UBS sales assistants, or Client Service Associates ("CSAs"), who were not properly licensed with the State of Ohio but who nevertheless accepted and entered securities orders on behalf of UBS's Ohio customers.
Ohio's investigation uncovered significant flaws with UBS's state licensing and order entry process. Among other things, UBS had no systems in place to verify the licensing status of employees accepting client orders when the employee accepting the order was not the assigned broker on the account. Moreover, UBS's records did not contain accurate information identifying the employees who accepted trades in customers' accounts.
The Consent Order concludes that "UBS's failure to establish an adequate system to monitor the licensure status of persons accepting client orders constitutes a failure to reasonably supervise persons associated with the dealer or to establish reasonable procedures designed to avoid violations" of Ohio's securities laws.
Under the terms of the Consent Order, UBS agreed to take various remedial measures to improve its policies and procedures relating to state licensing and the acceptance of customer orders. UBS also agreed to a fine of $87,723.66 to be paid to the Ohio Division of Securities Investor Education and Enforcement Expense Fund.
Ohio's claims were part of a larger investigation by securities regulators in all 50 states in coordination with the North American Securities Administrators Association ("NASAA"). Altogether, UBS agreed to fines totaling nearly $4.7 million to be paid to state securities regulators throughout the country relating to improper securities sales by unlicensed sales assistants.
NASAA is a voluntary association of securities regulators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.
About Meyer Wilson
The team of investment fraud attorneys at Meyer Wilson has successfully represented nearly 1,000 individual investors from across the country who have suffered financial harm at the hands of stockbrokers, brokerage firms and insurance companies. We have won verdicts, arbitration awards and settlements of hundreds of millions of dollars for our clients. If you believe you have a case involving investment misconduct our firm can help. Meyer Wilson represents clients nationwide from offices in Ohio and California.