UBS apparently offers some investment accounts for which the fees can constitute an effective $8,800 per trade. They’ve been sued by the New York Attorney General and will now pay $21.3 million to settle those charges.
I can’t help but wonder, taking all the fees charged in the 3,000 affected accounts, and subtracting the $21.3 million fine, if the investment company still comes out ahead. One customer in the example was charged $35,000 in fees. If we assume that’s high and go with an average $20,000 for all of the 3,000 accounts, that’s a total of of $60 million.
I could be way off on the average fees, but $21.3 million no longer seems like a stiff penalty. It’s more like paying extra tax on the income.
Meanwhile, I’ve paid no outright fees in my investment accounts over the past few years. I hope that when I’m 91 years old, I’ll still have the mental faculty to avoid being suckered into bad deals. More importantly, I just hope I live that long and maintain any sort of mental faculty at all.
UBS Settles Fee-Based Charges for $23.3 Million [Marketwatch]
Updated May 26, 2009 and originally published July 16, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
Rank: Platinum
Luke Landes founded Consumerism Commentary in 2003 and has been building online communities since 1990. Luke, also known as Flexo, has contributed to PC World Magazine, US News, Forbes, and other publications. 
{ 3 comments… read them below or add one }
I think the article is a little misleading about the cost per trade. I imagine UBS accounts mentioned were in Wrap account where they charge a fixed percentage of assets. So dividing that cost by the number of trades is inaccurate. Clearly the company has incentive to sell clients the most expensive product just as a car dealership tries to sell a car with options the client doesn’t need. In itself this not a problem, however often times clients are misled by unscrupulous agents to buy things that they don’t understand. The article here doesn’t give enough to detail to know what really happened.
I think it’s understood that the “cost per trade” in accounts is not really a transaction fee for each trade, but a way of breaking down the total fees by a measurement that makes sense to most people — the same way a car’s expenses can be broken down as a car’s “cost per mile,” which takes all expenses into account and then breaks them down in a way in which the costs can be compared across cars. Also, a piece of clothing’s “cost per wear” doesn’t mean you have to pay that amount each time you wear it.
I don’t think i could go through 90+ :)