FINRA Orders UBS to Pay $10.75M for Notes Sales
April 18, 2011
FINRA has fined UBS Financial Services $2.5 million and ordered to pay $8.25 million in restitution for conduct related to the sale of Lehman Brothers Holdings principal protection notes.
The fine and restitution is tied to alleged misleading of investors that took place in the sale of the principal protection notes, or PPNs, prior to Lehman Brothers' September 2008 bankruptcy filing. The PPNs promised a minimum return equal to an investor's investment, according to FINRA, and were structured as fixed-income security structured products including bonds and options.
UBS' advertisements and its financial advisers did not adequately disclose all the information related to the notes from March to June 2008, FINRA said. UBS' violations, according to FINRA, included not disclosing that the principal protection relied on issuer credit risk; not making UBS advisers aware of the effect of credit default swap spreads on the firm; not supervising the sale of the PPNs or provide training or written policies related to their sale; not taking into account the suitability of the notes for certain customers; and misleading investors with certain advertising materials.
Citi Offers Centralized Derivatives Processing
Citigroup has launched a single platform that will provide a full range of middle- and back-office services to buyers and sellers of over-the-counter derivative securities.
The Global Transaction Services unit of Citigroup has rolled out OTC Derivatives Service, which consolidates and streamlines the confirmation, settlement, valuation, collateral management, and margin management involved after a trade is executed. The service also provides access to Citi's global clearing network.
The system can be used to navigate a rapidly changing regulatory and operational environment, the company said.
The Hartford Emphasizes 401(k) Tax Advantages
The Hartford found in a recent survey that 37% of Americans age 45 and older with incomes below $50,000 worry more about rising taxes than those with higher incomes, but are less likely to participate in a 401(k) or other retirement plan that could reduce their taxes. By comparison, 28.5% of those earning $50,000 to $100,000 have such worries, and 32% of those earning more than $100,00 are worried about taxes. Thus, The Hartford has developed educational materials outlining the tax advantages of saving in a qualified or other retirement savings plan.
The materials note the 2011 Savers Credit that provides up to $1,000 for individuals with adjusted gross income of $28,500 or less and up to $2,000 for married couples with adjusted gross income of $56,500 or less, or the head of a household whose adjusted gross income does not exceed $56,500.
The Hartford also tells investors about the advantages of Roth 401(k)s: while contributions are made after taxes, earnings accumulate tax-deferred and withdrawals are tax-free at retirement.
Further, contributions to a traditional 401(k) lower a participant's overall taxable income since contributions are made before taxes are paid. In addition, The Hartford encourages investors to contribute either to a Roth IRA or traditional IRA. MME
Quote of the Week
"There certainly are some downside risks to economic growth, but we continue to believe that US GDP growth will accelerate and come in at roughly 3.0% to 3.5% for all of 2011."
- Bob Doll
Chief Equity Strategist