UBS Global Asset Management agreed to pay $300,000 to settle SEC charges over improper pricing of securities in three mutual funds managed by the firm.
“UBS Global Asset Management failed to fulfill one of its core delegated responsibilities on behalf of mutual funds it advises — to price securities in the mutual funds accurately,” Merri Jo Gillette, director of the Securities and Exchange Commission's Chicago regional office, said in a news release. Ms. Gillette's office handled the investigation into pricing irregularities occurring in 2008. “Fortunately this misconduct was brought to light quickly, so the duration was short and the harm to investors minimal.”
SEC examiners conducting a routine exam of UBS Global discovered that during a two-week period in June 2008, the manager failed to follow its own procedures when it purchased 54 complex fixed-income securities totaling $22 million. According to the SEC order, all but six of the securities were then valued substantially above the transaction prices by as much as 100% or more.
Prices were based on other sources, and were not properly valued until the firm's global valuation committee met to review pricing discrepancies more than two weeks later, according to the SEC complaint. The mispricing also caused the mutual funds to deviate from their own valuation procedures. The names of the mutual funds were not disclosed.
SEC officials said UBS Global cooperated in the investigation and settled without admitting or denying the SEC's findings.
John Tharp, defense counsel for UBS Global from the law firm Mayer Brown, referred calls to the UBS corporate office, which in a statement said the firm “is pleased to have resolved this issue with the SEC. During the two-week period concerned in June 2008, the firm relied on pricing data from independent third parties. … The impact on those funds was minimal.” The statement added that UBS Global regularly reviews its procedures “to ensure its valuations and pricing are as accurate as possible.”