The Securities and Exchange Commission (SEC) has issued an order authorizing UBS Financial Services Inc. to transfer the remaining funds of $20,487.50, which are infeasible to return to investors, to the U.S. Treasury. The SEC also terminated the Fair Fund established in connection with a previous order against UBS Financial Services Inc.

In July 2021, the SEC issued an Order Instituting Administrative and Cease-and-Desist Proceedings against UBS Financial Services Inc., finding that the company violated federal securities laws by failing to adopt and implement written policies and procedures to prevent unsuitable investments in volatility-linked exchange-traded products (ETPs) between January 2016 and January 2018. As a result, financial advisers in UBS’s discretionary Portfolio Management Program purchased and held one such ETP for their advisory clients for durations inconsistent with the product’s purpose.

The Order required UBS to pay disgorgement of $96,344, prejudgment interest of $15,930, and a civil monetary penalty of $8,000,000, for a total of $8,112,274. The Order also established the Fair Fund to distribute the penalty, disgorgement, and prejudgment interest to harmed investors.

UBS was responsible for administering the Fair Fund and compensated 53.9% of the harm sustained by advisory clients for their losses. Efforts were made to reach investors who did not cash checks, and $8,091,786.50 was successfully disbursed to recipients. The remaining $20,487.50 in the Fair Fund has been returned to the Commission, including uncashed checks, returned funds, and other residual amounts.

The SEC approved UBS’s final accounting, and all remaining amounts in the Fair Fund that are infeasible to return to investors, as well as any future returned funds that are infeasible to return, will be sent to the U.S. Treasury. The Fair Fund has been terminated.