UBS Fined by SEC Over Complex Products Sales Practices

  • Bank agrees to $15 million penalty for not educating advisers
  • Wall Street’s top cop has been focusing on the retail products

UBS Group AG agreed to pay more than $15 million to settle allegations from the U.S. Securities and Exchange Commission that the bank failed to properly instruct advisers on risks tied to structured products.

The case involved so-called reverse-convertible notes, derivatives typically tied to company stocks, the SEC said Wednesday in a statement. The bank, which didn’t admit or deny the SEC’s findings, sold approximately $548 million in RCNs to more than 8,700 relatively inexperienced retail customers, according to the statement.

“UBS dropped the ball by allowing the sales of complex financial products to retail investors without adequately training its sales force,” Andrew Ceresney, director of the SEC Enforcement Division, said in the statement.

Wall Street’s top cop has been focusing on the products, which have been criticized for their high fees and lack of transparency. The SEC fined Bank of America Corp.’s Merrill Lynch unit in June for misleading investors and also sued UBS in October 2015 over statements tied to a currency-linked structured note.

The regulator said it used data analytics to find that UBS sold the securities from 2011 to 2014 to individuals including some retirees, even though many had limited investing experience, modest income and conservative investment objectives.

“We are pleased to have resolved the matter,” Gregg Rosenberg, a UBS spokesman, said in a statement.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE