UBS Charged With Supervisory Failures by the SEC

UBS Financial Services has agreed to pay over $15 million, following an investigation by the United Sates Securities and Exchange Commission (SEC), in order to settle charges of failing to properly train or educate their sales force on key parts of some of the complex financial products sold to retail investors. The Director of the SEC Enforcement Division, Andrew Ceresney, said:

“We can now analyze literally hundreds of millions of trading records using sophisticated coding techniques that allow us to build platform wide cases rather than cases built investor by investor. We found that UBS dropped the ball by allowing the sales of complex financial products to retail investors without adequately training its sales force.”

The SEC made their announcement on Wednesday, September 28 after finding that UBS neglected to create or utilize procedures and policies intended to train and educate their registered representatives about reverse convertible notes (RCNs). Without this training, multiple representatives of the company were accused of making unsuitable recommendations to their clients despite the fact that the RCNs should not have been recommended based on their investment profiles. The SEC reported that UBS representatives sold around $548 million worth of RCNs to over 8,700 retail customers. The Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit followed up on Ceresney’s statements, saying that:

“When it comes to complex financial products, investors are especially dependent upon firms making sure their financial advisors comprehend the potential risks and rewards of the investments they are recommending. The SEC takes a dim view of firms that fall short in their obligations.”

Without admitting or denying the SEC’s findings, UBC agreed to pay a $6 million penalty, $8,227,566 in disgorgement, and an additional $798,316 in interest.

If you suspect that your UBS broker recommended unsuitable investments to you, you may be able to file a claim to recover your losses. Contact the investment fraud attorneys at Meyer Wilson today by completing our online form. We handle every case on a contingency fee basis, so we won’t charge you for our services until we help you recover your losses.


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