SEC Whacks UBS|for $49.3 Million

     WASHINGTON (CN) – UBS Securities will pay $49.3 million to settle charges of defrauding investors in the sale of collateralized debt obligations, the SEC said Tuesday.
     UBS put together and sold the securities while “failing to disclose that it retained millions of dollars in upfront cash it received in the course of acquiring collateral for the CDO,” the SEC said in a statement announcing the settlement.
     UBS kept $23.6 million in upfront payments as collateral, and rather than transferring it to the CDO when the collateral was transferred, it kept it, in addition to its disclosed fee of $10.8 million, the SEC said.
     “Not only did UBS go on to market the deal using materials that omitted any reference to its retention of the upfront payments, but the materials inaccurately represented that the CDO had to acquire all collateral at either fair market value or the price it was acquired by UBS,” the SEC said in the statement. “This representation was inaccurate because the CDO did not receive the $23.6 million in upfront cash kept by UBS as an additional undisclosed fee, and the collateral was not acquired at fair market value.”
     UBS has 30 days to pay the judgment.

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