UBS adviser arm to pay $300K for alleged misstated fund values

UBS AG's' investment advisory unit has agreed to pay $300,000 for incorrectly pricing complicated fixed-income securities held in three of its mutual funds during a two-week period in June 2008, regulators said. During that time, UBS Global Asset Management misstated to investors the net asset values of those funds, according to the Securities and Exchange Commission. The firm used values provided by outside sources that didn't take into consideration the $22 million that the funds had actually paid for the securities, most of which were non-agency mortgage-backed securities issued by private institutions, the SEC said. In all but six of the 54 transactions, the valued prices were “substantially higher” than the prices the funds paid, and a majority of the prices were 100% higher than the transaction prices, the SEC's order said. The pricing issues were discovered during an SEC adviser examination. “Fortunately, this misconduct was brought to light quickly, so the duration was short and the harm to investors minimal,” said Merri Jo Gillette, regional director of the SEC's Chicago office. The firm's adviser unit was headquartered in Chicago in 2008, though now it is based in New York. The funds, which didn't follow the firm's own pricing procedures, were misstated by 1 cent to 10 cents a share for several days, according to the SEC. UBS, which neither admitted nor denied the allegations in settling the case, is pleased to have the issue resolved, said spokeswoman Karina Byrne. “The impact on those funds was minimal,” she wrote in a statement. “As a matter of course, the firm regularly reviews its procedures in an effort to ensure its valuations and pricing are as accurate as possible.”