In September 2016, the SEC
imposed an approximately $15 million penalty and disgorgement (in
total) against UBS Financial Services Inc. (UBS) as part of a
settled action alleging that UBS failed to adequately train its
registered representatives. The representatives had sold complex
financial products to UBS's retail investors, many of whom had
minimal investment experience and reported modest income and net
worth.
The complex financial
products at issue were risky, single stock-linked reverse
convertible notes (RCNs), which contained embedded derivatives
based on underlying stocks. To build its case, the SEC, along with
its Enforcement Division's Complex Financial Instruments Unit,
used, for the first time, "big data" analysis tools to
identify "platform-wide" sales patterns rather than
engage in the more customary investor-by-investor review.
