UBS unit settles SEC and FINRA charges

The SEC has announced charging UBS Financial Services Inc. of Puerto Rico (UBSPR) and a former branch manager for failing to supervise a former broker who had customers invest in UBSPR affiliated mutual funds using money borrowed from a UBSPR affiliated bank. UBSPR and the bank prohibited using such loans to purchase securities and the practice exposed investors to losses while producing profits for the former UBSPR broker. UBSPR agreed to settle the SEC’s charges by paying $15 million in disgorgement, interest, and penalties, which will be placed into a fund for harmed investors. In addition, the Financial Industry Regulatory Authority (FINRA) announced an action against UBSPR for the firm’s violation of its rules on supervision and principles of trade. UBSPR agreed to settle FINRA’s charges by paying a $7.5 million fine and interest on up to $11 million in restitution to more than 150 investors in the closed-end funds. See our Penalty entry for more information.