UBS confirmed today it has reached a settlement agreement with the New York Attorney General (NYAG) regarding InsightOne, its fee-based brokerage program.
UBS is disappointed with the NYAG's press statement announcing the settlement, which mischaracterizes the program and its operation.
UBS settled this case to avoid protracted litigation. InsightOne was developed to benefit clients, not as a scheme to disadvantage them. Despite what the NYAG's press statement alleges, UBS did not "inappropriately steer" customers into unsuitable accounts or "switch customers into accounts regardless of whether the accounts fit their needs" or abuse the trust of its clients.
Fee-based brokerage accounts like InsightOne provide clients with a choice of pricing methodologies (i.e., paying a quarterly fee based on assets in the account instead of paying commissions on a trade-by-trade basis). The vast majority of clients who chose InsightOne during the relevant period realized cost savings over the life of their accounts.
UBS agreed to pay $21.3 million to approximately 3000 current and former InsightOne clients who, after extensive review, would have been better served in a commission-based account. That number comprises less than 3% of the more than 100,000 accounts that were active in InsightOne during the relevant period. UBS believes this is appropriate and equitable under the circumstances.
UBS also agreed to pay a $2 million penalty.
Karina Byrne, 212-882-5692
Kris Kagel, 212-882-5691
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