UBS Financial Services/UBS Global Asset Management
UBS Ordered to Pay Customer $500,000
A FINRA arbitration panel ordered UBS to pay an investor $395,000 to compensate him for damages that he suffered as a result of UBS’s misconduct. Claimant asserted causes action for breach of fiduciary duty, breach of customer agreement, negligence, gross negligence, negligent supervision, and failure to supervise.
UBS Fined $4.6 Mil for Mutual Fund Overcharges
The Securities and Exchange Commission and NASD announced disciplinary and enforcement actions against UBS for causing its clients to pay higher-than-necessary commissions on mutual funds. UBS was fined $4.6 Million and told to amend its procedures. Many mutual funds charge sales commissions, which are paid to firms which sell the mutual funds. A-share mutual funds charge these fees when the funds are purchased. These funds almost always offer discounts, known as breakpoints, when higher amounts are invested into a fund. Mutual funds extend the breakpoints to include purchases made within a “family of funds,” so that diversification can be accomplished without missing available breakpoints. Because breakpoints lower the commissions earned by salespersons, there is room for abuse. The SEC and NASD each brought cases against UBS for allowing brokers to violate the “break-point” rules. The regulators determined that, during the time period investigated, in more than 30% of fund purchases at UBS, breakpoint discounts were available but not provided to the investors, costing these investors a total of $2.5 million. These overpayments were ordered to be refunded.