UBS agrees to pay $850,000 to resolve allegations of failing to supervise a registered representative accused of channeling $7.2 million of clients’ money to unapproved private securities investments.
UBS settled the matter with Finra without admitting or denying misconduct and has since updated its system to screen for unauthorized activity.
“UBS is pleased to have resolved this matter dating back to 2021, which involved an automated surveillance system that has since been updated to be more precise and fit for purpose,” a spokesperson says.
Finra doesn’t name the advisor, but the settlement details suggest it was Robert Turner, a longtime UBS advisor later sued by the brokerage for allegedly orchestrating unauthorized transactions costing clients more than $7.2 million.
Turner allegedly told clients he would invest their money in fixed annuities with healthy returns but directed their funds to an entity controlled by a college friend and executed private securities transactions on their behalf. Clients allegedly received bogus account statements detailing their purported annuity balances.
Turner couldn’t be reached for comment, and his lawyer didn’t respond to a request for comment.
UBS reimbursed Turner’s clients $17 million to reflect the principal they lost and the earnings listed on the bogus statements.
The firm is now settling charges that it should have had a supervisory system in place to raise red flags about the dozens of transfers Turner allegedly initiated to a third party.
Finra alleged that Turner sold unauthorized products from 1997 through 2021, despite UBS’ policy prohibiting “registered representatives from recommending, referring, soliciting, or directing clients to purchase any product not approved or offered by UBS,” according to the settlement letter.
UBS discovered the alleged scheme in fall 2021 when one of Turner’s clients attempted to withdraw her entire account balance held with the third party.
Finra says Turner orchestrated the transfers by bundling multiple unrelated accounts to send money to his friend’s entity, described as “many-to-one” transfers.
Finra alleges UBS’ system wasn’t set up to monitor those transactions, even though they are often involved in fraudulent activity.
“Given the hundreds of thousands of outgoing third-party wire transfers that UBS processed each year, the firm’s failure to establish any system to surveil for many-to-one transfers was unreasonable,” Finra says.
