In the Matter of UBS Global Asset Management (Americas) Inc.
Securities and Exchange Commission
Investment Company Act Release No. 29920 (2012)
UBS Global Asset Management (Americas) Inc. (UBSGAM) was the investment adviser to certain registered investment companies (the funds). In June 2008, UBSGAM purchased 54 fixed-income securities for the funds, most of which were mortgage-backed securities issued by private lenders and not guaranteed by U.S. agencies. None of the securities purchased were listed on an exchange or had an active trading market. The funds’ valuation procedures required the securities to be valued at the prices paid for them by UBSGAM (transaction prices) for up to five business days whenever there was a difference of 3 percent or more from the valuation of the securities provided by a third-party pricing source. In that situation, the procedures also required UBSGAM to ask the pricing source to justify the pricing source’s valuation. If the pricing discrepancy was not resolved by the end of the five-business-day period, the procedures called for a UBSGAM internal valuation committee (the valuation committee) to make a fair value determination. A majority of the 54 securities purchased by UBSGAM for the funds were valued by the pricing source at least 100 percent higher than the transaction price and, in some cases, more than 1,000 percent higher. Despite these discrepancies of far greater than 3 percent, UBSGAM used the pricing sources’ valuations, rather than the transaction prices, during and beyond the five-business-day period. In most cases, UBSGAM neglected to follow up with the pricing sources on the discrepancies, as required by the funds’ valuation procedures. The valuation committee eventually made a fair-value determination for each security, choosing the midpoint between the transaction price and the pricing-source valuation. UBSGAM’s failure to properly and timely value the securities caused the funds’ net asset values (NAVs) to be overstated for several days, which meant that the prices at which the funds sold and redeemed their shares on those days were not proper. The Securities and Exchange Commission (SEC) brought an administrative proceeding against UBSGAM for causing violations of Rules 22c-1 and 38a-1 under the Investment Company Act of 1940 (Company Act).
Rule of Law
Holding and Reasoning ()
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.