Case shows that policies need monitoring and enforcement to be effective (IGNITES/Financial Times)

A breakdown of policies management and oversight led to a recent SEC action against a firm for its failure to follow its own policies on the length of time to hold a certain security in customer accounts. Fined $8.1 million to settle the case, UBS and its financial advisors purchased a volatility-linked exchange-traded product (ETP) for numerous clients, yet held it for too long in their accounts resulting in significant losses that should have been avoided. FrontLine’s Founder and President Amy Lynch sees a situation for compliance where individualized investment strategies employed by firms require extra attention on what the policies require, including monitoring investor risk. Ms. Lynch comments that when advisors are provided discretion to manage individual accounts, compliance regimes must thoroughly train these advisors on firm requirements for specific products, and the training must be consistent as new products are added. See IGNITES (subscription required), “UBS to Pay $8.1M Over Volatility-Linked ETP” and Financial Times, “US regulator fines UBS $8m over volatility ETP”