UBS To Pay $19.5 Mln To Settle Charges Involving Notes

(RTTNews) - The Securities and Exchange Commission announced that UBS AG (UBS) has agreed to pay $19.5 million to settle charges involving structured notes linked to a proprietary foreign exchange trading strategy.

The SEC's order found that the Swiss financial services giant UBS acted negligently by misleading investors through material misstatements or omissions in the offering documents.

SEC Chair Mary Jo White, said, "This first-of-its-kind case involving misstatements and omissions by a structured notes issuer shows that the SEC continues its commitment to pursue wrongdoing across the securities industry in order to better protect investors,"

SEC noted that UBS did not disclose that it took unjustified markups on hedging trades, engaged in hedging trades with non-systemic spreads, and traded in advance of certain hedging transactions. As a result of the undisclosed markups and spreads on these hedging transactions, the V10 index was depressed by 5 percent, causing investor losses of approximately $5.5 million.

Without admitting or denying the SEC's findings, UBS has agreed to cease and desist from committing or causing any similar future violations, to pay disgorgement and prejudgment interest of $11.5 million, to distribute $5.5 million of the disgorgement funds to V10 investors to cover the total amount of investor losses, and to pay a civil monetary penalty of $8 million.