UBS Financial Services will pay $15 million to settle charges that it failed to adequately educate and train its sales force about critical aspects of certain complex financial products it sold to retail investors.

UBS was represented by Peter Macdonald of Wilmer Hale in New York.

The SEC’s order finds that UBS failed to develop and implement policies and procedures reasonably designed to educate and train UBS registered representatives in connection with the sale of reverse convertible notes (RCNs) so that they could form a reasonable basis to make suitable recommendations.

RCNs are complex securities that feature embedded derivatives whose performance is driven by the concept of implied volatility.

Without adequate education and training, certain registered representatives made unsuitable recommendations in the sale of RCNs to certain retail customers in light of their investment profiles.

UBS sold approximately $548 million in RCNs to more than 8,700 relatively inexperienced retail customers.

”We can now analyze literally hundreds of millions of trading records using sophisticated coding techniques that allow us to build platform wide cases rather than cases built investor by investor.  We found that UBS dropped the ball by allowing the sales of complex financial products to retail investors without adequately training its sales force,” said SEC enforcement chief Andrew Ceresney.