UBS to Pay $25 Million to Settle SEC Fraud Costs Involving Complicated Choices Buying and selling Technique – SEC.gov

The Securities and Change Fee right now introduced that UBS Monetary Companies Inc. has agreed to pay roughly $25 million to settle fraud prices regarding a fancy funding technique known as YES, or Yield Enhancement Technique.

In keeping with the SEC’s order, UBS marketed and bought YES to roughly 600 buyers by means of its platform of home monetary advisors from February 2016 by means of February 2017. The order finds that, throughout this time, UBS didn’t present its monetary advisors with sufficient coaching and oversight within the technique, and though UBS acknowledged and documented the potential for vital threat in YES investments, it did not share this knowledge with advisors or shoppers. In consequence, the order finds, a few of UBS’s advisors didn’t perceive the dangers and had been unable to kind an inexpensive perception that the recommendation they supplied was in one of the best curiosity of their shoppers. When buyers suffered losses, a lot of them, together with their monetary advisors, expressed shock and closed their YES accounts.

“Advisory corporations are obligated to implement acceptable insurance policies and procedures to make sure all events concerned within the sale of complicated monetary merchandise and techniques have a transparent understanding of the dangers these merchandise current,” mentioned Osman Nawaz, Chief of the Division of Enforcement’s Complicated Monetary Devices Unit. “As fiduciaries, advisers additionally should make appropriate suggestions to their shoppers. Complicated merchandise can current distinctive dangers, and the SEC will stay vigilant and proceed to take motion to guard those that put money into these merchandise from misconduct.”

UBS consented to the entry of the SEC’s order discovering that it violated Sections 206(2) and 206(4) of the Funding Advisers Act of 1940 and Rule 206(4)-7. With out admitting or denying the SEC’s findings, UBS agreed to a cease-and-desist order, a censure, and to pay disgorgement of $5.8 million and prejudgment curiosity of $1.4 million, which is deemed glad by funds made to buyers in associated arbitration proceedings. UBS additionally agreed to pay a civil penalty of $17.4 million, which it is going to undertake to distribute to harmed buyers pursuant to the truthful fund provisions of the Sarbanes-Oxley Act of 2002.

The SEC’s investigation was performed by James F. Murtha, Jonathan C. Shapiro and Brent S. Mitchell, and was supervised by Reid A. Muoio of the Complicated Devices Unit with help from Timothy Okay. Halloran of the Trial Unit.

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