UBS pays $8m to settle SEC compliance charges
The US Securities and Exchange Commission (SEC) has filed an $8 million settled action against UBS for compliance failures.
The SEC cited issues related to the sale of exchange-traded products. Designed to track short-term volatility expectations, the issuer warned UBS the product should not be held for extended periods.
The SEC found UBS prohibited brokerage representatives from soliciting sales of the product, but did not place similar restrictions on certain financial advisers’ use of the product in discretionary managed client accounts.
According to the watchdog, certain financial advisors at the bank had a “flawed understanding of the appropriate use of the volatility-linked ETP”.
It adds they “failed to take sufficient steps” to understand risks associated with holding the product for extended periods. This resulted in “meaningful losses” for clients.
“Advisory firms must protect clients from inappropriate investments in complex financial products,” said Daniel Michael, complex financial instruments chief at the SEC.
“We will continue to scrutinise firms’ policies and procedures related to these risky products, and we will take action when they are inadequate.”
UBS did not admit or deny the SEC’s findings, but agreed to cease and desist from rule violations and pay the $8 million penalty.