UBS settles SEC case over structured notes for $19.5 million

Tue Oct 13, 2015 2:28pm EDT
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By Sarah N. Lynch

WASHINGTON (Reuters) - UBS AG UBSG.VX will pay $19.5 million to settle civil charges alleging it made false statements to U.S. retail investors in its offering documents for complex structured notes tied to a proprietary foreign currency index, U.S. regulators said on Tuesday.

The case by the Securities and Exchange Commission marks the first ever to focus on misstatements involving structured notes, a complex product that consists of debt securities and derivatives pegged to the performance of other instruments.

Investors in structured notes get their return based on the performance of the derivative over the life of the note.

A UBS spokeswoman said the company is pleased to resolve the case.

"UBS is firmly focused on the future with an unwavering commitment to upholding a culture of doing the right thing," she said.

The bank neither admitted nor denied the charges under the terms of the settlement, and the SEC said it substantially cooperated with regulators during the investigation.

The SEC's case against UBS focused on structured notes tied to the V10 Currency Index with Volatility Cap.

The regulator said UBS told investors that the notes relied on a "transparent" and "systematic" currency trading strategy that used market prices.   Continued...

The logo of Swiss bank UBS is seen at its headquarters Zurich in this July 27, 2015 file photo.  REUTERS/Arnd Wiegmann/Files