UBS Category Archives — Page 4 of 20 — Investor Lawyers Blog Published By Investment Fraud Attorneys

Deutsche Bank, UBS, and HSBC Securities Settle Respective Spoofing Cases with the CFTC for $46.6M

Published on: January 29, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Deutsche Bank Securities Inc. and Deutsche Bank AG (DB) will pay a $30M civil penalty to resolve charges brought by the Commodity Futures Trading Commission accusing them of spoofing. According to the regulator, from at least 2/2008 through 9/2014, DB AG, with the help of a number of precious metal traders, sought to rig the price of precious metals futures contracts that were traded on the Commodity Exchange, Inc.

The CFTC’s order said that the traders worked alone and with each other to buy or sell these contracts while planning all along to cancel them before they were executed after a smaller offer was made on the opposite side of the market. The spoof orders were purportedly made to give the impression of market depth in order to generate trading interest.

The regulator found that through the traders’ actions, Deutsche Bank AG sought to not only rig the price of precious metals futures contracts but also to profit from these manipulations. The CFTC said the firm worked with one trader in Singapore who made orders and trades to “trigger customer stop-loss orders.”

UBS Did Not Fully Disclose the Risks Involved in Puerto Rico Bond Funds to Investors and Brokers, Reports CNBC

Published on: December 22, 2017 | by Shepherd Smith Edwards & Kantas, LLP

According to a recent CNBC investigation, not only did UBS Puerto Rico (UBS-PR) fail to disclose to investors the risks involved in the bond funds UBS pushed on the island’s residents, but also the brokerage firm neglected to fully apprise its own brokers of the incredible risks. While these findings are not new, the CNBC probe digs deeper into the matter.

The majority of these investors were island locals, who have now also been further devastated as a result of Hurricane Maria. Already, UBS has come under fire and paid hundreds of millions of dollars in securities settlements and awards from FINRA arbitration panels over losses investors sustained when these investments failed dramatically more than four years ago. UBS also has settled with regulators, including the U.S. Securities and Exchange Commission and FINRA, and paid over $60 million for its wrongful conduct and abuse of investors. The firm did not, however, deny or admit to wrongdoing.

UBS Executives Purportedly Knew Puerto Rico Bonds Would Fail
CNBC’s investigative team obtained approximately “2,000 pages of confidential documents” that display conversations and the “inner workings” between UBS executives in Puerto Rico and the U.S. mainland prior to the funds’ collapse. According to the documents, as far back as a year before the Puerto Rico funds failed, UBS management already knew that problems were brewing and they discussed what could happen if the firm did not deal with these issues immediately.

UBS Group Ordered to Pay Former CMBS Strategist Turned Whistleblower $903K

Published on: December 21, 2017 | by Shepherd Smith Edwards & Kantas, LLP

A jury in Manhattan federal court found that UBS Group (UBS) owes ex-commercial mortgage-backed securities strategist Trevor Murray $903K after he turned whistleblower on the Swiss lender. Murray contends that he was fired after reporting that CMBS traders had tried to affect his research reports, which were supposed to be independent.

Murray claims that UBS CMBS bond trading head and managing director David MacNamara insisted on screening drafts of the strategist’s reports in advance, which violates firm policy. The former UBS strategist accused Kenneth Cohen, his former boss, of being the one to instigate the pre-clearance process and calling his reports “off message.”

Testifying about one instance, Murray spoke about how Cohen instructed him not to put down anything negative regarding the hotel sector since UBS was engaged in financing for a Miami Beach hotel. The ex-UBS strategist said that he disregarded Cohen’s alleged instructions and notified clients about his worries.

Securities News: Whistleblower is Awarded $4.1M, FINRA Bars Former UBS Broker Who Managed High Net Worth Investor, and Microcap Company Is Accused of Fraud

Published on: December 6, 2017 | by Shepherd Smith Edwards & Kantas, LLP

SEC Awards Whistleblower $4.1M
A company insider who notified the US Securities Exchange Commission about a “widespread, multi-year securities law violation” involving the employer, is getting a $4.1M whistleblower award. The individual, who is a foreign national employed abroad, also provided information and help during the regulator’s probe. Further details about the case have been kept confidential so as to protect the confidentiality and anonymity of the whistleblower.

This is the third whistleblower award issued this month by the SEC. The regulator awarded two other people $8M each for their help in another successful enforcement action.

To date, the SEC whistleblower program has awarded 50 whistleblowers over $179M.

UBS to Pay $3.5M Penalty To Settle Allegations that It Disadvantaged Retirement and Charity Accounts During Mutual Fund Transactions

Published on: November 6, 2017 | by Shepherd Smith Edwards & Kantas, LLP

UBS Financial Services Inc. (UBS) has agreed to settle US Securities and Exchange Commission charges accusing the brokerage firm of not ensuring that certain charitable brokerage accounts and retail retirement accounts received the sales charge waivers or reduced fee share classes to which they were entitled when they purchased certain mutual funds. However, despite settling, including agreeing to pay a $3.5M penalty, the firm did not admit to or deny the SEC’s findings.

The regulator’s order states that from at least 1/2010 through 6/2015, UBS did not confirm certain customers’ eligibility to purchase from a less costly mutual fund share class and instead recommended that they buy more expensive ones. The customers that were affected purportedly did not have enough information at their disposal to understand that UBS had a conflict of interest when recommending the costlier share classes, such as Class A shares that came with an upfront sales fee and Class B/C shares that charged contingent deferred sales fees at the back-end plus came with costlier ongoing expenses and fees. All of the customers affected had been eligible to buy either no-load Class R shares or load-waved Class A shares.

As a result, claims the Commission, 15,250 customer accounts paid more than $18.5M in excess fees and expenses, upfront sales fees, and “contingent deferred sales charges.” Also, by selling investors the more expensive share classes, UBS earned higher compensations. The brokerage firm is accused of not disclosing to these customers that buying the costlier share classes would hurt their investments’ returns.

FINRA Cases: Ameritas to Pay $180K Fine Over Variable Annuity Sales, UBS Ordered to Pay Former Broker $3M for Defamation, and 13 Investors Awarded $5M After Losses Allegedly Caused by Ex-LPL Financial/Edward Jones Broker

Published on: November 4, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ameritas Investment Corp. Must Pay $180K for Inadequate Supervision Involving VA Sales
The Financial Industry Regulatory Authority is ordering Ameritas to pay $180K for an inadequate supervisory system that oversaw its multi-share class variable annuity sales. The self-regulatory organization claims that between 9/2013 and 7/2015, the brokerage firm failed in its supervision of the VA sales and did not have adequate written supervisory procedures in place.

It was during this period that the firm sold almost 4,100 variable annuity contracts, making more than $58M in the process. 697 of the sales were L-share contracts, rendering approximately $11M. These types of contracts usually come with a shorter surrender period than the more common B-share contracts. FINRA believes that the broker-dealer failed to provide its registered representatives proper guidance on the different share classes that were for sale or on how to discern which ones would be best for each customer.

Fired Broker Will be Paid $3M by UBS
A FINRA arbitration panel is ordering UBS Financial Services (UBS) to pay $3M in compensatory damages to a broker that it fired. The Claimant, James L. Springer, had made numerous claims, including wrongful termination, emotional distress, negligence, unfair competition, breach of fiduciary duty, unpaid wages, and others.

Former UBS Precious Metals Trader is Accused of Market Rigging

Published on: September 20, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In the US, federal prosecutors have filed a complaint against ex-UBS (UBS) trader Andre Flotron, charging him with commodities fraud, wire fraud, conspiracy, and spoofing. The latter is what they claim that he engaged in to rig the precious metal futures market. Spoofing involves issuing bids or offers that are deceptive to manipulate a market.

According to the criminal complaint, Flotron and co-conspirators engaged in the alleged spoofing scam from at least 7/2008 through at least 11/2013. He would submit a small sell order or buy order for a certain futures contract, which would be close in price to the current market price. Flotron would then put in an order at least 10 times bigger on the market’s opposite side before cancelling the bigger order seconds after at least part of the order he made originally was put through.

Flotron also is accused of teaching a young trader how to spoof. The trader, who spoofed on numerous occasions, struck a nonprosecution deal in which he agreed to share information about the alleged spoofing.

UBS Fights Insurers’ $20 Million Lawsuit Over Puerto Rico Bond Claims

Published on: August 31, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In an effort to fight a $20 million coverage lawsuit brought by insurance carriers over Puerto Rico bond fraud cases, UBS Financial Services, Inc. (UBS) argued in court that the exclusions at issue cannot be applied to these investors’ claims. The plaintiffs in the case include XL Specialty Insurance Co., Hartford Fire, and Axis.

According to Law360, a Securities and Exchange Commission filing notes that as of last year UBS is contending with $1.9 billion in claims – including civil, arbitration, and regulatory cases – over its Puerto Rico closed-end bond funds, and to date has already paid $740 million to resolve some of those claims. The bank has come under fire for the way it handled $10 billion of these closed-end bond funds, including claims that they pushed the securities onto investors who could not handle the risks involved and, in some cases, encouraged them to borrow funds to buy even more.

The bank wants coverage under new subsidiary policies that the insurers agreed to even though it includes a specific exclusion for claims that involve the closed-end fund debacle in any way. In its opposite brief, submitted to Puerto Rico federal court, UBS argued that the plaintiffs have not made much of an effort to argue how the exclusion could preclude every related claim, of which there are more than 1600. UBS noted in its brief that insurance law in the U.S. territory mandates that an insurance company defend the whole action even if just one claim is potentially covered.
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FDIC’s Libor Rigging Lawsuit Against Deutsche Bank, UBS, Royal Bank of Scotland, and Others in the UK Accuses Defendant Banks of Lowballing Benchmark Interest Rate Figures

Published on: August 31, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In the UK, the US government is suing several banks over Libor rigging allegations in High Court. The defendants in the London Interbank Offered Rate (Libor) manipulation lawsuit include Deutsche Bank (DB), Barclays (BARC), Royal Bank of Scotland (RBS), Lloyds Banking Group, UBS (UBS), Rabobank (RABO), and several other banks, in addition to the British Bankers Association.

According to the Federal Deposit Insurance Corporation’s claim, the banks would engage in lowballing by turning in estimates that were artificially low when participating in the daily process to set the Libor rate. The US agency said that it is suing for 39 US banks, which were once collectively valued at over $400M, that failed after they depended on the US dollar denominated-Libor variant for derivative and other transactions. FDIC contends that the inaccurate figures submitted by the European banks caused the US banks to sustain massive losses.

It believes that if the Libor rate had been set honestly, the benchmark’s rate would would have been higher and these banks would have achieved higher prices and larger returns on different mortgages, loans, options, swaps, and other Libor-tied agreements. Instead, the plaintiffs allegedly colluded together to keep borrowing rates down to make it appear as if the banks were in more robust financial health than what was actual. The FDIC argued that the joint efforts of the banks and the British Bankers Association resulted in the “sustained and material suppression of Libor” from August 2007 through at least 2009.

Securities Cases: Bank of America and Deutsche Bank Settle Agency Bond Rigging Litigation for $65.5M & Pension Funds Sue Citigroup, JP Morgan, and Other Big Banks Over Stock Lending Market Rigging Allegations

Published on: August 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In the U.S. District Court in Manhattan, preliminary settlements have been submitted in which Deutsche Bank (DB) will pay $48.5M and Bank of America (BAC) will pay $17M to resolve investor lawsuits accusing them of manipulating the agency bond market for years. A judge must still approve the settlements.

Despite settling, both banks maintain they did not engage in any wrongdoing. The lead plaintiff investors include the Sheet Metal Workers Pension Plan of Northern California and the Iron Workers Pension Plan of Western Pennsylvania, and KBC Asset Management NV.

According to court papers and as reported by Reuters, Bank of America and Deutsche Bank are two of the 10 banks accused of rigging the $9 trillion agency bond market for supranational, sub-sovereign and agency bonds, also known as SSA bonds. The plaintiffs contend that from 2005 to 2015 the banks shared price information with one another, worked as a “super-desk” together, and allowed traders to coordinate strategies in the name of profit. Meantime, customers had to accept bond prices that were unfair to them.