UBS Settles With SEC for $20M Over Structured Note Disclosures

UBS Settles With SEC for $20M Over Structured Note Disclosures

UBS has agreed to pay the Securities and Exchange Commission nearly $20 million over claims that the company made false and misleading statements, and omitted information when offering structured notes to retail investors. FINRA’s investigation and settlement involved UBS’s proprietary V10 Currency Index. According to the SEC, between December 2009 and November 2010 approximately 1,900 U.S. investors bought approximately $190 million of structured notes linked to UBS’s V10 index.

The SEC has praised the settlement as being the first of its kind, involving misstatements by an issuer of structured notes. The bank will pay $8 million as a fine, plus an additional $11.5 million in disgorgement and prejudgment interest.

According to the SEC, UBS was not transparent in their trading strategies – instead of using market prices to value the index of 10 major global currencies, the bank engaged in activity that shaved as much as 5 percent of the value from the index. The SEC also claimed that UBS took “unjustified markups” and traded in advance of certain hedging transactions, which ended up causing UBS to suffer approximately $5.5 million in losses for investors.

This case should serve as a warning for other banks to ensure their disclosures are both fair and accurate.

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The attorneys at Dimond Kaplan & Rothstein, P.A. have helped recover more than $100 million from some of the largest banks and brokerage firms in the world. If you invested in notes linked the V10 Currency Index with UBS, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.

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