U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21658 / September 21, 2010
Securities and Exchange Commission v. UBS Securities LLC and UBS Financial Services, Inc., Civil Action No. 08 CIV 10754 (S.D.N.Y.)
SEC Completes Review of Performance by UBS under Auction Rate Settlement
The Securities and Exchange Commission today announced that UBS Securities LLC and UBS Financial Services Inc., collectively, UBS, has satisfied its obligations under its auction rate securities (ARS) settlement with the SEC, which returned more than $18 billion to the firm's ARS customers.
Under the settlement, UBS was required to offer to purchase ARS at par from its individual, charitable, small business and institutional customers. In compliance with these settlement obligations, UBS purchased over $18 billion worth of ARS from over 32,000 customer accounts — or almost 100% of its customers' ARS positions that had not already been liquidated through issuer redemptions. Of the eight broker-dealer firms that entered into ARS settlements with the Commission, UBS and Wachovia were the only two that agreed to purchase ARS held not only by retail and small business customers, but by institutional customers as well.
UBS also met its other settlement obligations, including compensating investors who sold ARS below par, reimbursing investors for excess interest costs associated with loans taken out due to ARS illiquidity, and participating in special arbitration proceedings before the Financial Industry Regulatory Authority. UBS also submitted periodic reports to, and met quarterly with, SEC staff regarding its progress in meeting its settlement obligations.
The UBS settlement provided for a potential deferred penalty if the firm did not meet its settlement obligations. The SEC has determined that based on the firm's compliance with its settlement, as well as other factors, no penalties will be pursued.
The Commission's eight ARS settlements, including the UBS settlement, followed the Commission's investigation into the ARS market seizure of February 2008, an event that left tens of thousands of investors holding ARS they could not sell. To date, over $67 billion has been returned to ARS customers of the settling firms.
The Commission notes the assistance and cooperation from the Office of the New York Attorney General, the Financial Industry Regulatory Authority, the Texas State Securities Board, the Massachusetts Securities Division, and the North American Securities Administrators Association.
- Litigation Release No. 20824 (SEC v. UBS Securities LLC and UBS Financial Services, Inc.)