The SEC has doled out $15 million in penalties to UBS for failing to supervise its staff in selling complex products to inexperienced clients, the Financial Times writes.
The regulator says UBS advisors peddled $550 million worth of reverse convertible notes, which included embedded derivates tied to implied volatility, to 8,743 unsophisticated retail customers, according to the newspaper. The SEC charges that many of these clients lacked investing experience and had moderate or conservative risk profiles, reports the publication.
From 2011 to 2014, UBS’s structured solutions desk created about 2,500 RCNs, the FT writes. In all, UBS sold $10.7 billion worth of RCNs to 44,000 customer accounts, according to the Financial Times.
UBS has agreed to pay a $6 million penalty, as well as more than $8 million in disgorgement and close to $800,000 in interest, without admitting or denying fault, the publication writes.
The SEC has come after UBS over sales of complex products before.
Last October the regulator fined the firm $19.5 million over sales of structured notes tied to foreign-exchange trading, Financial Times writes.
The latest case was the result of a year-long investigation by the SEC, Finra, and other regulators, Reuters writes. SEC enforcement chief Andrew Ceresney says the training at UBS stressed selling the upside potential of its products but not their volatility, according to the newswire.
Ceresney also says the SEC used big data analytics to reveal the sales pattern rather than resorting to interviewing individual customers, Reuters writes. The regulator will use such techniques in the future, he says, according to the newswire.