UBS faces $850k fine over years-long wire transfer supervision failure

investmentnews.com:

Finra has imposed an $850,000 fine on UBS after an investigation revealed the firm failed to establish and maintain an adequate supervisory system, leading to millions in losses for at least 30 customers.

This supervisory lapse, which persisted from at least September 2010 to July 2021, allowed a registered representative to sell unapproved securities to UBS Financial Services clients without detection, according to the regulator.

According to the AWC published Monday, a UBS representative went outside the scope of his employment by selling securities offered by a third party, leading at least 30 UBS customers to invest approximately $1.8 million through direct wire transfers from their accounts.

In one instance, a sales assistant’s email to a supervisor requesting the waiver of a wire transfer fee described the recipient as an entity for customer investments.

“Although the sales assistant’s email referred to Company A as an entity to which the representative’s customers sent money ‘for investing,’ the supervisor failed to reasonably investigate Company A or the representative’s involvement in it,” Finra said.

Company A, according to Finra, was an entity set up by the representative’s college friend and business acquaintance. The money sent to the company, totaling $7.2 million over the course of the relevant period, was invested in fixed annuities that the firm did not approve.

During the period in question, Finra said the firm did not have an effective system to review third-party fund transmittals, despite regulatory reminders.

In November 2009, Finra issued Regulatory Notice 09-64, highlighting the necessity for firms to enforce policies and procedures governing the withdrawal or transmittal of customer assets. These