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UBS Financial Services Will Pay $15 million To Settle With SEC

UBSAccording to reports published on Reuters and elsewhere, UBS Financial Services has agreed to pay $15 million to settle charges by the Securities and Exchange Commission (SEC) involving sales practice violations. The securities and investment fraud law firm Fitapelli Kurta is interested in hearing from investors who have complaints regarding UBS Financial Services, especially if those complaints involve investments in reverse convertible notes (RCNs).

The Wall Street Journal reports that UBS Financial Services “sold roughly $548 million of the financial products, known as single-stock linked reverse convertible notes, to more than 8,700 relatively inexperienced individual investors from 2011 through 2014.” However, according to the SEC, “some of UBS’s sales representatives weren’t provided adequate education and training to understand the risks of the financial products, which contained embedded derivatives, and as a result they weren’t always able to determine whether they were a good match for certain customers.”

As a consequence of this alleged inadequate training, some UBS representatives recommended products that were unsuitable for clients “who had indicated primarily moderate or conservative investment objectives, along with modest reported incomes and net worths, including some that were retired,” according to the Wall Street Journal.

According to an SEC administrative proceeding dated September 28, 2016, these activities took place between 2011 and 2014. Allegedly, “UBS’s supervisory policies and procedures… were not reasonably designed and implemented to provide effective oversight of the training, education and recommendations of the registered representatives to prevent and detect violations of the Securities Act.”

For context, single-stock linked reverse convertible notes “a type of structured product issued by a financial institution as an unsecured debt obligation that is linked to the performance of an underlying single stock,” according to the SEC, which also noted that UBS’s offerings “involved certain complex structures, including: (1) Trigger Yield Optimization Notes; (2) Trigger Autocall Optimization Securities; (3) Trigger Phoenix Autocall Optimization Securities; (4) Airbag Yield Optimization Notes; and (5) Airbag Autocallable Yield Optimization Notes.”

As a result of these charges, UBS has been censured, and will “pay disgorgement of $8,227,566 and prejudgment interest of $798,316 to the Securities and Exchange Commission.” It will also pay a civil penalty of $6,000.

If you have complaints regarding UBS Financial Services and/or investments in reverse convertible notes, you may be entitled to recoup your losses. Call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. All cases are taken on a contingency basis, which means we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.