The Securities and Exchange Commission (SEC) has charged UBS Securities with violating securities laws while structuring and marketing a collateralized debt obligation (CDO). The SEC’s investigation found that UBS received $23.6 million in upfront payments in the process of acquiring collateral. This contradicted marketing materials which represented that the CDO had to acquire all collateral at either fair market value or the price it was acquired by UBS. The CDO did not receive the $23.6 million in upfront cash kept by UBS as an additional undisclosed fee, and the collateral was not acquired at fair market value.

UBS agreed to pay nearly $50 million to settle the SEC’s charges.