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Written by 3:41 pm FINRA SEC Sanctions, Securities Fraud Articles

UBS Financial Services Regulatory History Overview

UBS Financial Services Regulatory History Overview featured by Top Securities Fraud Attorneys, The White Law Group

The White Law Group reviews the regulatory history of UBS Financial Services.  

 UBS Financial Services (CRD#: 8174/SEC#: 801-7163,8-16267) has been a FINRA member since 1936. The firm, headquartered in Weehawken, New Jersey, has over 11,000 registered representatives at over 800 branch locations. UBS is dual registered brokerage firm and registered investment advisory. 

As a registered broker-dealer, UBS Financial Services falls under the regulatory purview of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This means adherence to regulations and standards aimed at safeguarding the interests of clients. 

UBS has a long history of regulatory issues, including penalties related to unfair sales practices and excessive markups in the past. To view UBS Financial Services full CRD, you can visit FINRA BrokerCheck. 

Failure to Supervise Private Securities Trades 

July 8, 2024: The Financial Industry Regulatory Authority (FINRA) has reportedly fined UBS $850,000 and issued a censure due to inadequate supervision of a registered representative’s private securities trades.  

Between September 2010 and July 2021, UBS reportedly failed to monitor the transfer of customer funds to third parties and address red flags related to these transactions. This alleged oversight allowed a representative to direct clients to invest $7.2 million in fixed annuities from a company founded by his college friend. These annuities were not approved or offered by UBS.  

The issue was only discovered in fall 2021 when a client attempted to withdraw her investment. UBS eventually repaid customers over $17 million in principal and appreciation. Without admitting or denying the allegations, UBS consented to the censure and fine earlier this month. 

Regulatory Actions and Arbitrations 

The firm reportedly has 915 disclosure events including 470 regulatory actions and 439 arbitrations and 6 civil events on its broker report or CRD. FINRA, the self-regulator that oversees brokers and brokerage firms and the SEC (Securities and Exchange Commission) may impose sanctions such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.   

Arbitration awards are also reported on a firm’s CRD, often related to customer disputes. These awards typically indicate the outcome of arbitration proceedings, which could result in financial compensation for unhappy customers. The presence of multiple arbitration awards against a broker or firm can indicate a history of unresolved customer complaints or poor conduct.  The following is a brief review of publicly available information regarding UBS Financial Services and its securities sales practices and FINRA regulatory history.   

The White Law Group files a Claim against UBS Financial 

March 23, 2022: The White Law Group filed a FINRA arbitration claim against Credit Suisse Securities, LLC and UBS Financial Services, Inc. on behalf of a Texas family. The claim alleged common law fraud, breach of fiduciary duty, negligence, and negligent supervision, focusing on unsuitable investments in high-risk royalty trust stocks: Hugoton Royalty Trust and Permian Basin Royalty Trust.  

The claim was seeking damages between $1 million and $3 million, asserting that both firms failed to conduct necessary due diligence and did not adequately disclose the investment risks to their clients. 

SEC Charges UBS with Fraud Related to YES Investment Strategy 

July 12, 2022: UBS Financial Services Inc. to pay $25 million to settle SEC fraud charges related to its Yield Enhancement Strategy (YES), a complex options trading strategy. Between February 2016 and February 2017, UBS marketed and sold YES to about 600 investors without providing adequate training and oversight to its financial advisors.  

Despite recognizing significant risks in YES investments, UBS failed to inform advisors and clients. This led to advisors not fully understanding the risks, resulting in unsuitable investment recommendations and subsequent client losses. UBS consented to a cease-and-desist order, censure, and to pay $5.8 million in disgorgement, $1.4 million in prejudgment interest, and a $17.4 million civil penalty to be distributed to harmed investors.  

Review of Broker Misconduct and Customer Complaints   

There have been many cases of registered representatives employed by UBS Financial Services allegedly involved in broker misconduct and fraudulent activities.  Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim.  

March 2022: Paul Koch, a former UBS Financial advisor from Wayzata, MN, was reportedly barred by FINRA after allegedly recommending unsuitable outside investments to a former NFL player, Charles Johnson. The allegations claim Koch recommended risky investments in businesses partially owned by his wife, such as janitorial services and clothing stores, and diverted funds for personal gain.  

A 2019 customer dispute resulted in a $3.75 million settlement. Johnson also filed a separate suit in South Carolina alleging financial improprieties by Koch and his wife. Koch, who denied wrongdoing, was with UBS from 2009 to 2018 before moving to RBC. FINRA barred him from working in the securities industry in March 2022. 

More Regulatory Failures UBS Financial Services 

FINRA and the SEC may impose regulatory actions against financial advisors and broker-dealers such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.  UBS Financial Services currently has 40 regulatory events indicated by its CRD (broker report). The following is a brief review of a few of UBS Financial Services’ regulatory failures.  

August 14, 2023: UBS AG and its affiliates agreed to pay $1.435 billion in penalties to settle a civil action filed in November 2018, addressing allegations of fraud related to the underwriting and issuance of residential mortgage-backed securities (RMBS) in 2006 and 2007.  

This case is part of the last wave of actions by a Justice Department group investigating the roles of banks in the 2008 financial crisis. RMBS, which pooled individual residential mortgages into a single security sold to investors, were significantly impacted during the crisis due to the inclusion of subprime mortgages and inflated property values.  

The government’s complaint alleged that UBS misled investors about the quality and compliance of the underlying mortgage loans, leading to substantial losses. The Justice Department has collected over $36 billion in penalties from various entities involved in RMBS-related misconduct leading up to the crisis. 

Failure to Supervise   

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.   

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.   

If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced attorney who is knowledgeable about securities law can greatly increase your chances of success.         

Class Action vs. Individual FINRA Arbitration Lawsuit 

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually. 

How to Recover Investment Losses     

If you have suffered losses investing with UBS Financial Services or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help you by filing a FINRA claim.  To contact the firm, please call 888-637-5510          

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.                

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.  With offices in Seattle, Washington and Chicago, Illinois, The White Law Group reviews securities fraud cases throughout the country.  





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