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UBS fined for Supervision System Failures

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UBS was fined $500,000 for failing to have an adequate supervision that timely provided information about stockbrokers records, including the broker’s own tax lien or civil judgment. This is a significant failure because it is a basic part of UBS’s duty to supervise the brokers, and to report on their significant personal issues that could have a potential impact on their recommendations to customers. It is a longstanding responsibility of UBS, too, and rather surprising that its supervisory system failed to function on this basic requirement. (March, 2015 2013037118101).

UBS was fined a whopping $4,586,000 in a Global Settlement for failing to have stockbrokers actually registered in the state where the customer is located. These fines can be substantial, including $64,000 and $71,000 and $60,000, $66,000 $68,000, $114,000 (Florida) $126,000 (March, 2014 13-469). UBS’s failure, again, to comply with basic requirements–that the stockbroker have a simple registration in the state where the customer is located–is a real red flag of significant supervision issues. A state registration is fundamental to the state securities regulators knowing who is functioning as a stockbroker or financial advisor in their state.

A registration issue is, to us, a red flag itself of overly aggressive selling by a firm. It means that stockbrokers are pursuing sales leads literally anywhere and to any state, rather than first having a registration in that state. Where sales are sought too aggressively, it is likely that unsuitable recommendations will be made.

UBS was fined $12,000,000 for disobeying regulations regarding short sales of securities. As a result, UBS mis-marked millions of short sale orders, putting the orders into the market without reasonable grounds to believe that the securities could be borrowed and delivered. Securities regulations, including RG SHO, requires a broker like UBS to have reasonable grounds to believe that a security could be borrowed and available for delivery before accepting or effecting a short sale order. This is an important limit on the use of short sales which can effect the price of securities. (Finra 2011).

UBS was fined $14,500,000 by the Securities and Exchange Commission (SEC) that it violated federal securities laws in a private stock trading system called a “dark pool.” The trading system allowed traders to buy and sell stocks priced at increments smaller than a penny, and failed to disclose the system and another to all investors in its market. This is the largest penalty ever against an alternative, closed trading system.

These very large fines show that UBS has been overly aggressive in seeking out sales and business, and not restraining by the regulations that is supervisory system is required to follow. The types of activities that are overly pursued–selling shorts and exchanging in private markets–is aggressive trading that most of the people that we see always wanted to avoid. While UBS is a very large firm, the attention given to these very aggressive trades is something that likely detracts from the quality of the advice and performance given to the more ordinary investor, who seeks conservative growth, but is facing large, unanticipated losses.


When we take action against stockbroker misconduct, we help level the playing field for all brokers.

If you aware of stock broker misconduct that is not being addressed, contact us:

Fogel & Associates
15260 Ventura Blvd.
Suite 2250
Sherman Oaks, CA 91403-5338
By phone: Call us toll-free at 1 (888) 986-9010
By email: Please fill out the form to the right

Contact StockBrokerLawyer now for a free, confidential review of your losses, and if they can be recovered.  The passage of time is always used as a defense, don’t delay, contact us now by calling (888) 986-9010, or emailing on the form provided.  We will respond as soon as possible, and having an independent no-cost review will help answer your questions.  We never share your personal information with third parties.


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