UBS Pays Up in New York Private Client Case But Rejects Allegations

Paul Adams

17 July 2007

UBS has confirmed it has reached a settlement agreement with the New York Attorney General regarding InsightOne, its fee-based brokerage programme. UBS has agreed to pay $21.3 million to approximately 3,000 current and former InsightOne clients who, after extensive review, would have been better served in a commission-based account. According to UBS, that number comprises less than 3 per cent of the more than 100,000 accounts that were active in InsightOne during the period under review. The Zurich-based bank has also agreed to pay a $2 million penalty. In a statement UBS says that it is disappointed with the NY Attorney General’s press statement announcing the settlement, which the bank believes "mischaracterises the programme and its operation". UBS maintains that it did not "inappropriately steer” customers into unsuitable accounts nor did it "switch customers into accounts regardless of whether the accounts fit their needs” or abuse the trust of clients. UBS says it has settled this case to avoid protracted litigation. According to UBS fee-based brokerage accounts like InsightOne provide clients with a choice of pricing methodologies . The vast majority of clients who chose InsightOne during the relevant period realised cost savings over the life of their accounts, says UBS.