June 4 A UBS AG hedge fund agreed to
pay a fine of $5.3 million to settle a charge that one of its
units bought stocks in public offerings that an affiliated unit
was shorting, the U.S. securities regulator said on Monday.
The U.S. Securities and Exchange Commission (SEC) said UBS
AG's $6 billion hedge fund, UBS O'Connor LLC, violated a rule
governing short sales 16 times between January 2009 and March
The rule prevents an entity from buying stocks in a public
offering if it has shorted those same stocks.
"The settlement pertains to certain transactions for which
O'Connor believed that an exception to an SEC rule applied," UBS
spokeswoman Karina Byrne told Reuters.
Byrne said the firm determined that settling the matter
"without admitting or denying liability was the best and most
expedient way forward".
The settlement does not affect UBS O'Connor's funds or their
investors, she added.
The SEC said on its website that UBS O'Connor had the
"mistaken belief" that each of its units qualified for the
rule's "separate accounts" exception.
The exception allows a person or an entity to buy stocks
from a public offering in an account when a short sale has been
made in another account, provided that trading decisions for
each account are made separately.