UBS Financial Services will pay $54 million to settle market-timing charges from the New York Stock Exchange, the New Jersey Bureau of Securities and the Connecticut Attorney General. Under the agreement, UBS will split $49.5 million between NYSE and New Jersey and pay $5.5 million to Connecticut. New Jersey's $25 million share is the largest fine any state has collected in a securities matter.
The penalties relate to various trades made between 2000 and 2002 in at least seven UBS branch offices, according to NYSE Regulation, in which brokers sold shares in mutual funds just before or after the close of trade in a practice known as market-timing. Fund prices are recalculated only once daily. If a security is likely to fall in value, a window of opportunity exists between the close of trade and the time of recalculation in which the security can be sold and losses prevented.