Administration January 11, 2005

UBS Cans Two Brokers for Market Timing

November 25, 2003 (PLANSPONSOR.com) - Market timed mutual fund trades have cost two UBS AG financial advisers their jobs and led to disciplinary action to be taken against nine others.
Reported by

An internal probe conducted by the firm turned up the market timing activity that breached “firm policy regarding market timing,” UBS spokeswomen Christine Walton told Reuters.   Even though the probe is “largely complete,” UBS said it would continue to monitor for market timing activity.

Market timing is the rapid trading of mutual fund shares to profit from pricing lags. Although the practice is not illegal, most mutual fund companies generally frown it upon, while many fund prospectuses forbid the practice.   UBS, which has 8,200 financial advisers across the US, has had a policy disallowing market timing since December 2001.

The Swiss banking company is the latest brokerage house to terminate staff for improper mutual fund share trading.   Prior to UBS, similar step were taken at Bear Stearns Cos., Merrill Lynch & Co. and Putnam Investments (See  Putnam Excuses Two More Fund Managers ).

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