UBS hit with $8 Million for Unsuitable Sales of VXX Fund

Did you lose money investing in iPath S&P 500 VIX Short-Term Futures ETN (VXX)?

UBS hit with $8 Million for Unsuitable Sales of VXX Fund

According to the US Securities and Exchange Commission on July 19, the regulator has charged the brokerage arm of UBS Group AG (UBSG.S) with regulatory failures in connection with the sales of a volatility-linked, exchange-traded product, called the iPath S&P 500 VIX Short-Term Futures ETN.

UBS Financial Services reportedly agreed to pay $8.1 million in disgorgement, interest and a civil penalty after the SEC said that the firm’s advisors placed 1,882 accounts in the iPath S&P 500 VIX Short-Term Futures ETN for extended periods between January 2016 and January 2018, according to the order. It’s the sixth firm ordered to pay significant settlements under the SEC Division of Enforcement’s exchange-traded product sweep after several cases were brought in November 2020, according to the order.

The SEC said some financial advisors fail to understand the appropriate use of these products, purchasing and holding the product in client accounts for lengthy periods that resulted in “meaningful losses”.

UBS, which neither denied nor admitted to the SEC’s allegations, agreed to pay another $112,274 in interest. The civil penalty will be distributed to harmed investors, according to the SEC.

VXX is among the largest and most liquid volatility ETPs, and is one of a handful that offer short-term VIX futures exposure.

Investing in Exchange-traded Notes (ETNs)

The White Law Group continues to investigate the liability that brokerage firms may have for recommending complex and risky ETNs like VXX to investors.

An exchange-traded note (ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank. Similar to other debt securities, ETNs have a maturity date and are backed only by the credit of the issuer. ETNs are designed to provide investors access to the returns of various market benchmarks.

Many of these investments are packaged as a way for investors to avoid the volatility of the market or capture growth in a particular sector.  In reality, these structured investments are just ways for the industry to increase revenues generated from the creation, sale, and management of these products.

Financial professionals and brokerage firms have a duty to recommend only investments that are appropriate for the client based on the client’s age, investment experience, net worth, and investment objectives.

For more information on the firm’s investigation of VXX, please see:

iPath B S&P 500 VIX S/T Futs ETN (VXX) – Investment Losses

If your financial advisor has over-concentrated your assets in any sector or investment, particularly one as volatile as the iPath B S&P 500 VIX S/T Futs ETN (VXX) and you suffered substantial losses, you may have a claim to recover your losses through FINRA arbitration. For a free consultation, please call The White Law Group’s Chicago office at 888-637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.

For more information on The White Law Group, visit https://whitesecuritieslaw.com.