UBS Settles FINRA Claims Over Supervision of Short-Term Preferred Stock Trades

Posted on January 31st, 2025 at 2:21 PM
UBS Settles FINRA Claims Over Supervision of Short-Term Preferred Stock Trades

From the desk of Jim Eccleston at Eccleston Law

According to AdvisorHub, UBS Wealth Management USA’s broker-dealer has agreed to pay $3.5 million in sanctions over allegations of supervisory failures related to short-term trading of syndicate preferred stock. According to the settlement, known as an Acceptance, Waiver and Consent (“AWC”), the sanctions include a $500,000 fine, disgorgement of $2.65 million in commissions, and restitution of nearly $344,000 to customers affected by premature sales. UBS agreed to the terms without admitting or denying FINRA’s findings.

From 2017 to 2018, at least 22 UBS advisors or teams recommended nearly 2,000 unsuitable short-term trades in syndicate preferred stock, which the AWC states is a violation of FINRA Rule 2111 related to supervisory systems. AdvisorHub reports that UBS lacked written procedures or guidance on preferred stock holding periods, and its electronic supervisory systems only flagged sales made within 90 days by brokers conducting the highest volume of preferred stock business.

Preferred stocks are typically purchased for income generation and held long-term. However, FINRA found that UBS advisors advised customers to sell the securities within 180 days at a loss, primarily to capture commissions and fees.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next

I learned two important things working with Eccleston Law. First, I made a friend and ally with Jim and Steph for life. Secondly, and this is a crucial life lesson - if you need counsel, then seek out the very best. Jim was referred to me by a most trusted source. I've never had to hire an attorney for anything. Now, I know the value of hiring an important partner. Meticulous, thorough and detailed in preparation is the best way to describe Jim. Brilliant too, I might add. Bottom line, I would highly highly recommend Jim and Stephany for your legal needs. One of the best life decisions I've ever made.

Howard S.

LATEST NEWS AND ARTICLES

July 16, 2025
Former CFA Institute Executive Charged in $5 Million Embezzlement Scheme

Michael J. Collins, the former chief marketing officer of the CFA Institute, has been accused of embezzling nearly $5 million from the financial education organization through a long-running fraud scheme designed to fund a lavish personal lifestyle.

July 15, 2025
Former Advisor Sues Prime Capital Again Over Unpaid Equity Redemption

A former San Diego-based advisor has filed a second lawsuit against Prime Capital Financial, alleging breach of contract after the firm failed to honor agreed-upon terms related to his equity buyout.

July 14, 2025
Wisconsin Man Charged in $15.8 Million Ponzi Scheme Disguised as Investment Advisory Business

Federal authorities have charged a Wisconsin man with orchestrating a multimillion-dollar Ponzi scheme that defrauded more than 120 investors over six years.