FINRA censured UBS Financial Services and fined the firm $850,000 for failing to supervise a registered representative's private securities transactions, which totaled approximately $7.2 million, and resulted in significant losses totaling most of their investments.
According to the report, UBS failed to supervise a rep's selling away of fixed annuity products offered by an outside company, which turned out to be an entity former by a college friend of the representative, in violation of UBS policy prohibiting recommendation, referral, solicitation, or directing clients to purchase products not approved or offered by UBS.
Investigators found that the firm failed to detect $7.2 million of violative investments, including $1.8 million in wire transfers directly from UBS customer accounts to the outside and unapproved company's bank accounts.
In sum, FINRA determined that UBS failed to reasonably respond to red flags, in part, because of deficiently designed supervisory systems.
While UBS did flag at least 17 wire transfers to the outside business for additional review and approval, UBS purportedly failed to follow through with an investigation into why firm customers were wiring money to the unapproved company to begin with.
In its report, FINRA wrote that UBS failed to detect this misconduct for over 20 years—from 1997 to 2021—before discovering it only as a result of a former UBS customer's request to withdraw her entire investment from the outside business.
If you invested with UBS Financial Services or with any broker, investment adviser, or firm engaged in unapproved investment activity, such as selling away or unauthorized transfers or private securities transactions, and have suffered losses or other damages as a result of this misconduct, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.