UBS Financial Services, Fined $10 Million for SEC Violations
UBS Financial Services Inc. has agreed to pay $10 million in fines after the Securities and Exchange Commission (SEC) accused the brokerage firm of circumventing the priority given to retail investors in specific municipal bond offerings.
According to the SEC, between 2012 and 2016, the firm knowingly allocated bonds intended for retail customers to “flippers,” who would immediately resell the bonds to other broker-dealers for profit. Furthermore, UBS Financial Services facilitated more than 2,000 trades, which allowed the brokerage firm to secure bonds for its inventory.
UBS Agreed to Cease-and-Desist Order
As a result, the firm has agreed to a cease-and-desist order without admitting or denying the findings. The fine includes a $1.75 million penalty, $6.74 million in disgorgement of ill-gotten gains, and over $1.5 million in prejudgment interest.
Authorities also announced separate fines for UBS brokers William Costas and John Marvin, who improperly submitted retail orders for municipal bonds on behalf of their flipper customers.
Mr. Costas agreed to pay disgorgement and prejudgment interest totaling $16,585 and a civil penalty of $25,000. On the other hand, Mr. Marvin settled to pay disgorgement and prejudgment interest totaling $27,966 and a civil penalty of $25,000. Both brokers consented to a one-year limitation on trading specific securities.
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Dimond Kaplan & Rothstein, P.A. has vast experience with cases related to broker or brokerage misconduct. The firm has successfully represented investors with losses as a result of UBS alleged negligence and we will aggressively pursue claims to recover your losses.
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