More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
UBS Financial Services, charged with with the fraudulent rigging of municipal bond transactions, settled with the U.S. government and 25 states this week. The SEC said the transactions generated “millions of dollars in ill-gotten gains.” There were at least 100 of the transactions, said the SEC, and they occurred in 36 states.
The SEC said that a business unit of the company that was closed in 2008 had manipulated the bidding process that is supposed to ensure fair market value of the investments. Instead, employees no longer with the company both rigged and won bids, as well as acting as a bidding agent on behalf of the municipalities involved. At times it also improperly facilitated payments to other bidding agents.
Elaine C. Greenberg, chief of the SEC’s municipal securities and public pensions unit, said in a statement, “Our complaint against UBS reads like a ‘how-to’ primer for bid-rigging and securities fraud. They used secret arrangements and multiple roles to win business and defraud municipalities through the repeated use of illegal courtesy bids, last looks for favored bidders, and money to bidding agents disguised as swap payments.”
In a statement, the Justice Department said, "As part of its agreement with the department, UBS admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees."
UBS settled with the SEC, the Justice Department, the IRS, and 25 state attorneys general. It also agreed to pay $160 million to federal and state agencies, and, according to the SEC, "[w]ithout admitting or denying the allegations in the SEC’s complaint ... has consented to the entry of a final judgment enjoining it from future violations of Section 15(c) of the Securities Exchange Act of 1934."
UBS said in a statement, "UBS is pleased to have resolved this matter with its regulators. The underlying transactions were entered into in a business that no longer exists at UBS and involved employees who are no longer with the firm."
However, Christine Varney, head of the Justice Department's antitrust division, said, "This illegal conduct corrupted the competitive process that municipalities were entitled to. Our investigation into this industry is active and ongoing." And the SEC said in a statement, "This is the SEC’s second settlement with a major bank in an ongoing investigation into corruption in the municipal reinvestment industry."