The US Securities and Change Fee (SEC) has filed an $8 million settled motion towards UBS for compliance failures.
The SEC cited points associated to the sale of exchange-traded merchandise. Designed to trace short-term volatility expectations, the issuer warned UBS the product shouldn’t be held for prolonged intervals.
The SEC discovered UBS prohibited brokerage representatives from soliciting gross sales of the product, however didn’t place related restrictions on sure monetary advisers’ use of the product in discretionary managed consumer accounts.
In line with the watchdog, sure monetary advisors on the financial institution had a “flawed understanding of the suitable use of the volatility-linked ETP”.
It provides they “didn’t take enough steps” to know dangers related to holding the product for prolonged intervals. This resulted in “significant losses” for shoppers.
“Advisory companies should shield shoppers from inappropriate investments in complicated monetary merchandise,” stated Daniel Michael, complicated monetary devices chief on the SEC.
“We’ll proceed to scrutinise companies’ insurance policies and procedures associated to those dangerous merchandise, and we are going to take motion when they’re insufficient.”
UBS didn’t admit or deny the SEC’s findings, however agreed to stop and desist from rule violations and pay the $8 million penalty.