SEC has previously brought similar charges of municipal bond offering “flipping” and retail order period abuses in August 2018, December 2018, September 2019 and in April 2020.
UBS did not admit nor deny the findings but agreed to a cease-and-desist order. The order also imposes a $1.75 million penalty, $6.74 million in disgorgement of ill-gotten gains and more than $1.5 million in prejudgment interest and a censure.
SEC also set in motion proceedings against UBS registered representatives William S. Costas and John J. Marvin. The US watchdog found that Costas and Marvin submitted retail orders for municipal bonds on behalf of their flipper customers. The SEC also found that Costas helped UBS bond traders improperly obtain bonds for UBS’s own inventory through his flipper customer. Costas and Marvin agreed to pay prejudgment interest in the amount of $16,585 and a civil penalty of $25,000. Marvin also agreed to pay disgorgement and prejudgment interest of $27,966 and a civil penalty of $25,000. Both of them agreed to a 12-month limitation on trading negotiated new issue municipal securities.
Prior to that, the SEC settled charges against former UBS Executive Director, Jerry E. Orellana, for submitting retail orders to the underwriting syndicate from certain UBS customers who were flippers.
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