Dual-Registrant Fined $8 Million for Insufficient Compliance Policies Related to Volatility-Linked ETP
July 20, 2021
The SEC has fined a dual-registrant $8 million after finding it did not adopt and implement compliance policies and procedures reasonably designed to prevent the unsuitable use of a volatility-linked-exchange-traded product (ETP) in discretionary advisory accounts. The SEC imposed the civil penalty despite the fact that the firm had voluntarily reviewed its use of volatility-linked ETPs and, based on its review, had removed the ETP from the advisory platform before the SEC contacted the firm. The firm’s policy had limited holdings of volatility ETPs to three percent of account assets, but the system that monitored for that limit had not been updated after the ETP underwent a reverse split. The policy also did not prevent the purchase of volatility ETPs that might be unsuitable for client accounts. In addition to the civil penalty, the firm was ordered to pay disgorgement of $96,344 and prejudgment interest of $15,930. This is the sixth action arising from the SEC’s ETP Initiative, a fact noted by the SEC in a related press release.
See UBS Financial Services Inc. (July 19, 2021).
