The U.S. Securities and Exchange Commission announced Wednesday that UBS Financial Services has agreed to pay more than US$15 million to settle charges that it failed to adequately train its sales force to sell complex financial products it sold to retail investors.

“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, the SEC says in a news release.

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 US$548 million in RCNs to more than 8,700 relatively inexperienced retail customers,” the SEC adds.

UBS consented to the SEC’s order without admitting or denying the findings.

The order requires the firm to pay US$8.23 million in disgorgement, a US$6 million penalty, and almost US$800,000 in interest.

“When it comes to complex financial products, investors are especially dependent upon firms making sure their financial advisors comprehend the potential risks and rewards of the investments they are recommending. The SEC takes a dim view of firms that fall short in their obligations,” says Michael Osnato, chief of the SEC enforcement division’s complex financial instruments unit, in a statement.

The case was built on new data analysis techniques, the SEC notes.

“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,” adds Andrew Ceresney, director of enforcement at the SEC.