FINRA Fines UBS Securities in Short Sale Cases

The experienced securities attorneys at Levin Papantonio are currently investigating claims on behalf of UBS investors who have suffered significant losses in their portfolios due to USB’s misconduct.

On October 25, 2011, the Financial Industry Regulatory Authority fined the Swiss banking giant $12 million for its continuous failure to properly supervise millions of short-sale orders.

According to FINRA, the bank’s UBS Securities LLC broker-dealer unit allowed short sale orders to be filled without checking to see if the underlying securities even existed.  UBS also mismarked millions of sale orders as “long” sales, when they were not.

What is a Short Sale?

The term short sales refers to the practice of investors trading and selling securities that they do not actually own.  The hope is that the cost of the securities drops, allowing the investors to buy them back for a lower price and pocket the leftover cash after paying back the lender.  Abuse of this practice could hasten a drop in share prices and interfere with the market.

UBS Violated Regulation SHO

FINRA claims that UBS’ abuse of short selling occurred from 2005 to 2010, processing “tens of millions” of short sale orders for equities and exchange-traded funds improperly.  UBS specifically violated Regulation SHO, an SEC rule meant to prevent abuse of short selling by requiring brokerages to make sure they actually possess the underlying securities before making a transaction.

What to do if Affected

If you or a loved one has been harmed by stockbroker misconduct, please fill out the evaluation form on this website, call our office, or email our experienced investment and stockbroker fraud lawyers today. We'll evaluate your claim for no cost and help you get the justice you deserve.