1. From at least January 2010 through June 2015 (the "Relevant Period"), UBS disadvantaged certain retirement plan and charitable organization brokerage customers ("EligibleCustomers")1 by failing to ascertain that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain open-end registered investment companies ("mutual funds") when less expensive share classes were available. UBS did so without disclosing that it would receive greater compensation from the Eligible Customers' purchases of the more expensive share classes. Eligible Customers did not have sufficient information to understand that UBS had a conflict of interest resulting from compensation it received for selling the more expensive share classes. Specifically, UBS recommended and sold these Eligible Customers Class A shares with an up-front sales charge, or Class B or Class C shares with a back-end contingent deferred sales charge ("CDSC") (a deferred sales charge the purchaser pays if the purchaser sells the shares during a specified time period following the purchase) and higher ongoing fees and expenses, when these Eligible Customers were eligible to purchase load-waived Class A and/or no-load Class R shares. UBS omitted material information concerning its compensation when it recommended the more expensive share classes. UBS also did not disclose that the purchase of the more expensive share classes would negatively impact the overall return on the Eligible Customers' investments, in light of the different fee structures for the different fund share classes.2. In making those recommendations of more expensive share classes while omitting material facts, UBS violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. These provisions prohibit, respectively, in the offer or sale of securities, obtaining money or property by means of an omission to state a material fact necessary to make statements made not misleading, and engaging in a course of business which operates as a fraud or deceit on the purchaser.= = = = =Footnote 1 : The term "Eligible Customers" may include, among other things, customers that held the following type of retirement accounts: 401(k) plans, 403(b) plans, profit-sharing plans, defined benefit plans, and certain IRA accounts. Eligible Customers also include accounts held by tax exempt, non-profit organizations.
recruited individuals to open bank accounts (straw account owners) for the purpose of depositing money extorted from victims of tax impersonation calls, and to conceal their involvement in the fraud. The money was deposited by victims who were contacted by callers who falsely represented themselves as officials with the IRS, Canadian tax authorities, or as local law enforcement officers. The callers demanded payment for federal income taxes or other financial obligations and stated that if the victims failed to pay, they or their family members would face arrest, prosecution, or other legal consequences.With online access provided by the straw account owners, Owen and Corrigan monitored the straw bank accounts in order to verify victims' deposits and ensure timely withdrawals by the straw account owners. In order to make the withdrawals at the bank, Owen and Corrigan provided the straw account owners with the victims' names, locations, and amounts of the deposits. They then directed the straw account owners to withdraw the funds in cash, and turn it over to them, often less a payment for their role in the scheme.To facilitate the telemarketing fraud scheme, Owen recruited an individual to "operate" a business and open bank accounts in that business's name for the purpose of depositing the proceeds of a sweepstakes fraud. Owen's conspirators called elderly victims and falsely represented that they were with the Publisher's Clearinghouse lottery, informing the victim that they had won the lottery for millions of dollars. The callers then induced the victims to provide financial information and to send large cashier's checks to the Florida company, falsely claiming that advance taxes had to be paid in order to collect the full amount of the alleged lottery winnings. Owen, and others, then laundered the proceeds of this fraud scheme.