UBS Fined $850,000 for Supervisory Failures Leading to Investor Losses
From the desk of Jim Eccleston at Eccleston Law
FINRA has fined UBS Wealth Management USA $850,000 for failing to supervise an advisor who recommended unauthorized outside investments for over a decade. This lapse allowed the advisor to steer $7.2 million from 30 customers into an unapproved third-party investment, resulting in significant losses for the investors and $17 million in restitution costs for UBS.
According to AdvisorHub, the allegations relate to Robert E. Turner, a Waco, Texas-based advisor barred by FINRA in 2023. Turner allegedly offered “fixed annuities” that were part of a fraudulent scheme.
According to the Acceptance, Wavier, and Consent (“AWC”), the advisor's scheme involved 64 wire transfers from at least 10 clients, totaling approximately $1.8 million, to a company started by his college friend. UBS' compliance system failed to flag these transfers because it lacked an alert for “many-to-one transfers”, where multiple clients wire money to the same outside account.
FINRA criticized UBS’s compliance system as unreasonable given the high volume of third-party wire transfers the firm processed annually. Despite 17 transfers marking the reason as “investment,” UBS’s system did not trigger an alert. A UBS supervisor also failed to respond to red flags, such as a 2016 email from Turner’s sales assistant requesting a fee waiver for a wire transfer to the sham annuity business.
AdvisorHub reports that, from September 2010 to July 2021, UBS did not adequately investigate instances where multiple customers wired money to the same third party within a short period. In March 2021, two unrelated customers sent a total of $47,000 to a third party within eight days, yet UBS failed to investigate why.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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