UBS Financial Services, Inc. (“UBS”) has agreed to settle a multi-state securities investigation lead by the North American Securities Administrators Association (“NASAA”) and the New Jersey Bureau of Securities (“New Jersey”). The NASAA is a voluntary association whose members consist of state securities regulators.
According to an Administrative Consent Order dated August 23, 2013 (“Consent Order”), the investigation focused on UBS’s supervision and registration of its client service associates (“CSAs”) during the period 2004 to 2010. UBS reported that it employed approximately 2,277 CSAs annually during this period. CSAs typically provide administrative and sales support to financial advisors/stockbrokers.
During the investigation, it was alleged that some of UBS’s CSAs accepted client orders without having the required state registrations. It was also alleged that UBS did not maintain a system to verify that the CSA accepting a client order was registered in the state where the client resided. In addition, New Jersey claimed that it found instances where a CSA was registered in one or more states, but he or she was not registered in New Jersey, while taking unsolicited trade orders from New Jersey residents. Subsequent to the initial inquiry by NASAA, UBS stated that it had implemented procedures to verify the registrations of its employees during the order entry process.
The Consent Order reflects that UBS will pay a total of $4.69 million to resolve the allegations: $98,184 to New Jersey; $10,000 to NASAA; and $4.586 million to be split among the remaining 49 states, the District of Columbia, Puerto Rico and the Virgin Islands.