UBS to Fine Reps for Flipping

UBS PaineWebber is now charging brokers two times gross commissions when clients sell a new issue within 40 trading days, providing the stock hasn’t moved up or down by 10%. The firm announced the policy last Friday. A firm spokesperson says it was implemented last week. Most firms charge back commissions for violating flipping policies, but the new Paine Webber policy is punitive. The reason for

UBS PaineWebber is now charging brokers two times gross commissions when clients sell a new issue within 40 trading days, providing the stock hasn’t moved up or down by 10%.

The firm announced the policy last Friday. A firm spokesperson says it was implemented last week.

Most firms charge back commissions for violating flipping policies, but the new Paine Webber policy is punitive.

The reason for the policy is twofold, the spokesperson tells RR: 1) to capture more investment banking business, and 2) “to discourage flipping and to ensure that FAs put clients in stocks they hold for the long term.”

“What’s long term?” counters one PaineWebber rep. “We all know what happens to long-term investors when they’re up 20%.” He questions the firm second-guessing his judgment on how to place an issue and complains that the policy is not clear. The broker says the firm has yet to put anything in writing; he learned of it after seeing a story last week on Bloomberg.

For more details on PaineWebber’s flipping policy, see the upcoming September issue of Registered Representative.

Editor's note: For any comments regarding this article, or to suggest a story idea for RR Online or Registered Representative magazine, contact Editor in Chief Dan Jamieson at [email protected], Online Editor Rick Weinberg at [email protected], Online Managing Editor Cheryl Cooper at [email protected] or Senior Editor Michael Hayes at [email protected]

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