January 17, 2012 / 7:31 PM / 6 years ago

UBS unit pays $300,000 to settle SEC charges

WASHINGTON (Reuters) - An investment advisory arm of Swiss bank UBS will pay $300,000 to settle charges that it misled investors by incorrectly pricing certain securities in three of its mutual funds, U.S. securities regulators said on Tuesday.

The Securities and Exchange Commission’s administrative action against UBS Global Asset Management came on the heels of a referral from SEC examiners who were conducting a routine inspection of the firm.

UBS is settling the charges without admitting or denying the SEC’s findings. The SEC alleged that UBS failed to properly price securities in three of its mutual funds, resulting in a misstatement to investors of the net asset values of those funds.

The SEC also claimed that UBS did not follow the mutual funds’ fair valuation procedures in pricing certain fixed-income securities over a two-week period.

“UBS Global Asset Management failed to fulfill one of its core delegated responsibilities on behalf of mutual funds it advises - to price securities in the mutual funds accurately,” Merri Jo Gillette, who heads the SEC’s office in Chicago, said in a statement.

“”UBS Global Asset Management is pleased to have resolved this issue with the SEC,” a spokeswoman for the bank, Karina Byrne, said 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.”

In 2008, the UBS unit purchased around $22 million worth of fixed-income securities, most of which were risky mortgage-backed securities not guaranteed by Fannie Mae or Freddie Mac, according to the SEC’s order.

UBS then valued most of the securities “substantially” higher than what it paid - 100 percent higher in some cases, the government said.

The unit had relied on pricing data from third-parties rather than the purchase prices, a violation of the funds’ own valuation procedures, the SEC said.

UBS did not correct the mistake until more than two weeks later, which led the funds’ values to be off during part of that time period between one cent and 10 cents per share, according to the government.

Reporting By Sarah N. Lynch and Aruna Viswanatha; Editing by Bernard Orr

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