Brokerage Firm Review: UBS Financial Services

UBS Financial Services Inc. (“UBS Financial Services”) (CRD# 8174) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated UBS Financial Services, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.

If you believe you have a claim against UBS Financial Services, you should strongly consider hiring an investment fraud lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Can I Sue UBS Financial Services?

If you’ve lost money caused by UBS Financial Services and/or its employees’ misconduct then the answer is, YES, you can sue UBS Financial Services but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue UBS Financial Services in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against UBS Financial Services is to call Attorney Pearce at our office at 800-732-2889.

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

What is UBS Financial Services?

UBS Financial Services (CRD# 8174) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors.

As a registered broker-dealer, UBS Financial Services is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.

A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.

UBS Financial Services Has Many Different Regulatory Problems 

UBS Financial Services’ rapid growth has not been without consequences. There have been approximately 469 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against UBS Financial Services for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record. 

We have reported and written about these regulatory problems and customer complaints over many years. UBS Financial Services is a repeat offender: there are over 469 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.

A Brief Overview of Some of the Regulatory Problems UBS Financial Services Has Faced Over the Years*

UBS Financial Services has been repeatedly censured, warned, and fined multi-millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:

Massive Fines, Awards Against UBS Financial Services

Brief Overview: John Maccoll, a registered representative of UBS Financial Services, embezzled over $3.7 million from more than a dozen customers between April 2010 and March 2018. The Securities and Exchange Commission filed charges against Maccoll, highlighting his use of “high pressure sales tactics” to deceive elderly and retired customers into investing in a fraudulent private fund. Maccoll pleaded guilty to wire fraud and received a nine-year prison sentence. The case shed light on UBS Financial Services’ supervisory failures and its failure to safeguard customers’ investments.

$8 Million Penalty over ETN Trades

Brief Overview: In July 2021, UBS Financial Services was ordered to pay an $8 million penalty by the Securities and Exchange Commission for its failure to supervise sales of iPath S&P Short-Term Futures ETN (VXX). The SEC found that UBS advisors held VXX products in customer accounts for extended periods, including hundreds of accounts that held the product for over a year. UBS advisors’ flawed understanding of the appropriate use of volatility-linked ETPs resulted in significant losses for customers. The SEC emphasized the importance of advisory firms protecting clients from inappropriate investments in complex financial products.

$9 Million Award in Puerto Rico Bond Complaint

Brief Overview: UBS Financial Services extended a “non-purpose” loan of $8 million to a customer named Luis Romero Lopez, allowing him to invest in closed-end Puerto Rico bond funds. When the Puerto Rico bond market experienced a downturn, Lopez’s account balance plummeted, resulting in substantial losses. A FINRA panel found that UBS violated federal regulations and ordered the firm to pay Lopez $7.9 million in compensatory damages and $1 million in punitive damages.

$18.5 Million Penalty Over Puerto Rico Bonds

Brief Overview: In 2015, FINRA fined UBS Financial Services $18.5 million in fines and restitution over unsuitable Puerto Rico closed-end bond fund transactions. The firm failed to supervise bond transactions and neglected to monitor leverage and concentration levels in customers’ investments. UBS was aware of the unique circumstances surrounding Puerto Rico bond investments but did not take adequate steps to ensure suitability. The market downturn resulted in substantial losses for customers, particularly those who had opened lines of credit collateralized by highly concentrated accounts. UBS was ordered to pay $7.5 million in fines and $11 million in restitution.

$15 Million Penalty over Unsuitable Reverse Convertible Notes

Brief Overview: UBS faced charges from the SEC for its failure to train salespeople adequately in selling reverse convertible notes (RCNs) to retail investors. The firm made unsuitable recommendations of RCNs to thousands of customers, resulting in significant losses. UBS agreed to a settlement with the SEC, paying over $9 million in disgorgement and a $6 million penalty. The case highlighted the importance of firms ensuring their financial advisors comprehend the risks and rewards of complex financial products when recommending them to investors.

Why Does UBS Financial Services Have So Many Regulatory Problems And Customer Complaints?

Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.

The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers. 

Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.

These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.

Did UBS Financial Services Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. UBS Financial Services is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting UBS Financial Services without representation with an attorney about their complaints and have their complaints denied.

Related Read: Can You Sue Your Brokerage Firm?

Investment Losses? We Can Help

Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.

Get A Free Consultation

or, give us a ring at (800) 732-2889.

Consult With An Attorney Who Recovers Investment Losses Caused By UBS Financial Services Today!

The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with UBS Financial Services cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.

Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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