Breaking News
FONT-SIZE Plus   Neg
Share SHARE

UBS Fined GBP 9.45 Mln By FSA For Failures In AIG Fund Sale

RELATED NEWS
Trade UBS now with 

The Financial Services Authority or FSA in the UK on Tuesday said it has imposed a 9.45 million pounds fine for Swiss financial giant UBS AG (UBS: Quote) for failures in its sale of AIG Enhanced Variable Rate Fund of Insurer American International Group, Inc. (AIG: Quote).

According to FSA, the failures by UBS led to its customers being exposed to an unacceptable risk of an unsuitable sale of the fund. UBS agreed to settle at an early stage, entitling it to a 30 percent discount on its fine. Were it not for this discount, the FSA would have imposed a financial penalty of 13.5 million pounds on UBS.

The fund was launched in December 2003 and was supplied by American Life Insurance Co., a UK branch of a subsidiary of AIG. UBS sold the fund between December 1, 2003 and September 15, 2008 to 1,998 high net worth customers, with initial investments totaling about 3.5 billion pounds.

The fund was suspended after a large number of investors sought to withdraw their investment due to a sharp decline in AIG's share price following Lehman Brothers' Chapter 11 bankruptcy protection application during the financial crisis of 2007 and 2008.

According to FSA, UBS breached certain FSA principles as it failed to carry out adequate due diligence on the Fund before selling it to customers, and also failed to ensure its advisers were provided with appropriate training about the Fund.

UBS' failings also included that it indicated that the Fund was a cash fund that invested in money market instruments, while a significant proportion was invested in other assets.

Tracey McDermott, director of enforcement and financial crime, said, "UBS has paid the price for its failures and we will continue to take strong action against firms who fail to do the right thing for their customers."

UBS now has agreed to conduct a redress program for those customers who remained invested in the fund at the time of its suspension. It is estimated that compensation payable to customers will be around 10 million pounds.

"We are pleased that we can put this issue that dates back to 2008 behind us, so that we can continue to focus on serving our clients and executing our strategy," UBS said in an e-mailed statement.

In mid-December, UBS agreed to pay about 1.4 billion Swiss francs or about $1.53 billion in fines and disgorgement to settle LIBOR-related investigations on manipulation of key global benchmark interest rates. UBS agreed to pay 160 million pounds in fines to the FSA, the largest fine ever imposed by the FSA for significant failings regarding the London Interbank Offered Rate or LIBOR.

In Zurich, UBS shares are currently trading at 15.33 Swiss francs, up 0.12 francs or 0.79 percent, on a volume of 4.6 million shares.

Register
To receive FREE breaking news email alerts for UBS AG and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
A number of major retailers will be open on Thanksgiving for early Black Friday shopping events. Kohl's department stores will kick off Black Friday sales two hours earlier this year, at 6 p.m. Thanksgiving Day, while Macy's, Bon-Ton and Best Buy will open at the same time. J.C. Penney and Sears... Twitter Inc. has replaced its head of product Daniel Graf just six months after luring him over from Google, according to multiple reports. Graf, previously known for his work leading Google Maps, will retain his vice president of product title and work on Twitter's geolocation features, the Wall... LinkedIn Corp., the world's largest online professional network, said Thursday after the markets closed that its third quarter loss widened slightly from last year, as higher costs and expenses more than offset a 45% increase in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.