UBS agrees to pay $850,000 to settle allegations of failing to supervise a registered representative who channeled $7.2 million of clients’ money into unapproved private securities investments.
The settlement with Finra, the brokerage industry self-regulator, comes without UBS admitting or denying misconduct. UBS states it has since updated its system to better screen for unauthorized activity.
"UBS is pleased to resolve this matter dating back to 2021, which involved an automated surveillance system that has been updated for better precision and purpose," a spokesman says.
Finra does not name the advisor involved, but details in the settlement suggest it was Robert Turner, a longtime UBS advisor. Turner was later sued by the brokerage for allegedly orchestrating unauthorized transactions that cost clients over $7.2 million.
Turner allegedly misled clients into believing their money was being invested in fixed annuities with healthy returns. Instead, he directed their funds to an entity controlled by a college friend and executed private securities transactions on their behalf. Clients received bogus account statements reflecting purported balances in the annuities.
Turner couldn’t be reached for comment, and his lawyer did not respond to requests for comment.
UBS reimbursed Turner’s clients $17 million, covering both the principal lost and the earnings listed on the fraudulent statements. The firm now settles charges that it lacked a supervisory system to flag the dozens of transfers Turner allegedly initiated to a third party.
Finra alleges that Turner sold unauthorized products from 1997 through 2021, despite UBS’ policy prohibiting registered representatives from recommending or directing clients to purchase any product not approved or offered by UBS.
UBS discovered the alleged scheme in fall 2021 when one of Turner’s clients attempted to withdraw her entire account balance from the third party.
Finra states that Turner orchestrated the transfers by bundling multiple unrelated accounts to send money to his friend’s entity, a practice described as “many-to-one” transfers. UBS’ system failed to monitor such transactions, which are often linked to fraudulent activity.
"Given the hundreds of thousands of outgoing third-party wire transfers processed each year, UBS' failure to establish a system to surveil many-to-one transfers was unreasonable," Finra says.
