UBS AG will pay almost $50 million to settle U.S. Securities and Exchange Commission claims that a brokerage unit violated securities laws in the structuring and marketing of a collateralized debt obligation.
The bank’s UBS Securities unit failed to disclose that it retained millions of dollars in upfront cash it received while acquiring collateral for the CDO in 2007, the SEC said today in a statement.
“UBS kept $23.6 million that under the terms of the deal should have gone to the CDO for the benefit of its investors,” George S. Canellos, co-director of the SEC enforcement unit, said in the statement. “In doing so, UBS misrepresented the nature of the CDO’s collateral and rendered false the disclosures about how that collateral was acquired.”
In the settlement, UBS agreed to pay disgorgement of the $23.6 million in upfront payments as well as the disclosed fee of approximately $10.8 million plus prejudgment interest of approximately $9.7 million and a penalty of $5.7 million, the SEC said. The company agreed to settle without admitting or denying wrongdoing.
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