Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
UBS
ab The Sacramento Regional Institutional Sales Group offers a collaborative team approach in helping clients reach their investment goals, with a focus on fixed income. The Group, headed by Kelly Mahoney, Managing Director, is comprised of five members whose combined industry experience exceeds 100 years. The Group integrates sales, trading, and operations into one efficient structure and strives to provide the pinnacle of client service that distinguishes itself from the competition. The team’s partnership structure helps them provide responsive service to their clients, who demand the highest level of personal attention and the power of a leading force on Wall Street. The team offers municipalities, depository institutions, investment managers, and corporations an array of financial services tailored to the specialized requirements of a highly selective client base, and works with each client individually to provide the most appropriate combination of advice and strategy. Our team specializes in offering competitive pricing in the following investments: – U.S. Treasury securities – Federal agency securities – Short-term money market securities – Corporate/medium-term notes – Municipal securities – Repurchase Agreements Sacramento Regional Institutional Sales Group UBS Financial Services Inc. Sacramento Regional Institutional Sales Group 1610 Arden Way, Suite 200 Sacramento, CA 95815 800-354-3895 916-648-7287 Fax ubs.com/team/sacrisg About UBS With more than 150 years of wealth management expertise at its core, and drawing upon an integrated mix of investment banking and asset management businesses, UBS focuses on providing relevant guidance, differentiated global perspectives and diverse strategies and solutions for private, corporate and institutional clients worldwide. UBS Financial Advisors are dedicated and passionate professionals who recognize that financial goals and life goals are uniquely intertwined. Through a comprehensive, yet customized approach, they access the deep resources and wealth management expertise of this firm, and deliver the trusted financial advice clients seek today to confidently move forward. Kelly J. Mahoney Managing Director 916-648-7234 kelly.mahoney@ubs.com Kelly began his financial services career in 1983 with Kidder, Peabody & Co., Inc. and has been with the firm throughout the mergers with UBS AG. He is Series 7, 63 and 65 licensed. He graduated from California State University, Sacramento with a bachelor’s degree in finance. He is an active member and sponsor of Government Investment Officers Association and the California Association of County Treasurers and Tax Collectors. Jodi L. Pieczynski Vice President–Investments 916-648-7293 jodi.pieczynski@ubs.com Jodi joined our firm and the Sacramento Regional Institutional Sales Group in 1993. She is Series 7, 63 and 65 licensed. She graduated from California State University, Sacramento with a bachelor’s degree in finance. She is an active member and sponsor of California Municipal Treasurers Association and the California Society of Municipal Finance Officers. Steven E. Rutledge Vice President–Investments 916-648-7275 steve.rutledge@ubs.com Steven began his career in 1993 with Hambrecht & Quist, which was subsequently purchased by JPMorgan Chase & Co. He is Series 7, 63 and 65 licensed. He was previously V.P., Portfolio Manager at JPMorgan Fleming Asset Management and holds a bachelor’s degree in business administration-finance from San Diego State University. He’s an associate member of Government Finance Officers Association. June Nelson Senior Registered Client Service Associate 916-648-7231 june.nelson@ubs.com June is a Senior Registered Client Service Associate with our firm. She has over 27 years of experience in the brokerage industry. June is Series 7, 63, and 65 licensed. She began her financial services career with Morgan Stanley Dean Witter and joined our firm in March 1994. Rebecca O’Brien Client Service Associate 916-648-7228 rebecca.obrien@ubs.com Rebecca is a Client Service Associate with our firm. She has over 12 years’ experience in the brokerage industry. Rebecca began her career with Morgan Stanley and joined our firm in July 2001. Investment in securities is not without risk. UBS Financial Services Inc. does not provide tax, legal or accounting advice. Clients should seek this advice from tax or accounting professionals. Income from municipal bonds may be subject to state and local taxes and the Alternative Minimum Tax. Call features that impact yield may exist. If sold prior to maturity, investments in municipal securities are subject to gains/losses. Important information about Advisory & Brokerage Services It is important that you understand the ways in which UBS Financial Services Inc. (UBS) conducts business and the applicable laws and regulations that govern the firm. As a firm providing wealth management services to clients, UBS is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser and a broker-dealer, offering both investment advisory and brokerage services. Though there are similarities among these services, the investment advisory programs and brokerage accounts UBS offers are separate and distinct, differ in material ways and are governed by different laws and separate contracts. It is important that you carefully read the agreements and disclosures UBS provides to you about the products or services offered. While UBS strives to ensure that these materials clearly describe the nature of the services provided, please do not hesitate to contact your Financial Advisor team, Sacramento Regional Institutional Sales Group, if you would like clarification on the nature of your accounts or services you receive from us. For more information, please visit our website at ubs.com/workingwithus. UBS Financial Services Inc. is a subsidiary of UBS AG. ©2011 UBS Financial Services Inc. All rights reserved. Member SIPC. BIO_SO0328_Beck BrokerCheck ReportJODI LYNN PIECZYNSKISection TitleReport SummaryBroker QualificationsRegistration and Employment HistoryCRD# 220772112 - 45Page(s) About BrokerCheck®BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.āWhat is included in a BrokerCheck report?āBrokerCheck reports for individual brokers include information such as employment history, professionalqualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.āPlease note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with no admissionor finding of wrongdoing.āWhere did this information come from?āThe information contained in BrokerCheck comes from FINRA’s Central Registration Depository, orCRD® and is a combination of:Rinformation FINRA and/or the Securities and Exchange Commission (SEC) require brokers andbrokerage firms to submit as part of the registration and licensing process, andRinformation that regulators report regarding disciplinary actions or allegations against firms or brokers.āHow current is this information?āGenerally, active brokerage firms and brokers are required to update their professional and disciplinaryinformation in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.āWhat if I want to check the background of an investment adviser firm or investment adviserrepresentative?āTo check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact your statesecurities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.āAre there other resources I can use to check the background of investment professionals?āFINRA recommends that you learn as much as possible about an investment professional before decidingto work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.āThank you for using FINRA BrokerCheck.For more information aboutFINRA, visit www.finra.org.Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound atFor additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.brokercheck.finra.org JODI L. PIECZYNSKICRD# 2207721Currently employed by and registered with thefollowing Firm(s):UBS FINANCIAL SERVICES INC.1610 ARDEN WAYSACRAMENTO, CA 95815CRD# 8174Registered with this firm since: 01/28/1995Report Summary for this BrokerThis report summary provides an overview of the broker's professional background and conduct. Additionalinformation can be found in the detailed report.Disclosure EventsAll individuals registered to sell securities or provideinvestment advice are required to disclose customercomplaints and arbitrations, regulatory actions,employment terminations, bankruptcy filings, andcriminal or civil judicial proceedings.Are there events disclosed about this broker?NoInvestment Adviser RepresentativeInformationhttps://www.adviserinfo.sec.govThe information below represents the individual'srecord as a broker. For details on this individual'srecord as an investment adviser representative,visit the SEC's Investment Adviser PublicDisclosure website atBroker QualificationsThis broker is registered with:9 Self-Regulatory Organizations14 U.S. states and territoriesThis broker has passed:0 Principal/Supervisory Exams2 General Industry/Product Exams2 State Securities Law ExamsRegistration HistoryThis broker was previously registered with thefollowing securities firm(s):KIDDER, PEABODY & CO. INCORPORATEDCRD# 7613NEW YORK, NY08/1993 - 01/1995EVEREN SECURITIES, INC.CRD# 19616ST. LOUIS, MO02/1992 - 06/1993www.finra.org/brokercheckUser Guidance1©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. www.finra.org/brokercheckUser GuidanceBroker QualificationsRegistrationsThis section provides the self-regulatory organizations (SROs) and U.S. states/territories the broker is currentlyregistered and licensed with, the category of each license, and the date on which it became effective. This section alsoprovides, for every brokerage firm with which the broker is currently employed, the address of each branch where thebroker works.This individual is currently registered with 9 SROs and is licensed in 14 U.S. states and territories through hisor her employer.Employment 1 of 1Firm Name:Main Office Address:Firm CRD#:UBS FINANCIAL SERVICES INC.81741200 HARBOR BOULEVARDWEEHAWKEN, NJ 07086SRO Category Status DateFINRAGeneral Securities RepresentativeAPPROVED01/28/1995BOX Exchange LLCGeneral Securities RepresentativeAPPROVED05/16/2012Cboe Exchange, Inc.General Securities RepresentativeAPPROVED01/28/1995NYSE American LLCGeneral Securities RepresentativeAPPROVED01/28/1995NYSE Arca, Inc.General Securities RepresentativeAPPROVED01/28/1995Nasdaq ISE, LLCGeneral Securities RepresentativeAPPROVED01/23/2008Nasdaq PHLX LLCGeneral Securities RepresentativeAPPROVED01/28/1995Nasdaq Stock MarketGeneral Securities RepresentativeAPPROVED07/12/2006New York Stock ExchangeGeneral Securities RepresentativeAPPROVED01/28/1995U.S. State/TerritoryCategory Status DateArizona AgentAPPROVED02/10/2000California AgentAPPROVED01/28/1995Florida AgentAPPROVED11/20/2018Georgia AgentAPPROVED12/08/2016Hawaii AgentAPPROVED07/20/2009Idaho AgentAPPROVED02/11/2000U.S. State/TerritoryCategory Status DateIllinois AgentAPPROVED03/04/2019Louisiana AgentAPPROVED10/10/2016Missouri AgentAPPROVED10/04/2016Nevada AgentAPPROVED02/10/2000Ohio AgentAPPROVED10/12/2017Oregon AgentAPPROVED02/10/20002©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. www.finra.org/brokercheckUser GuidanceBroker QualificationsEmployment 1 of 1, continuedU.S. State/TerritoryCategory Status DateTexas AgentAPPROVED10/06/2016Washington AgentAPPROVED02/10/2000Branch Office LocationsUBS FINANCIAL SERVICES INC.1610 ARDEN WAYSACRAMENTO, CA 958153©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. www.finra.org/brokercheckUser GuidanceBroker QualificationsIndustry Exams this Broker has PassedThis individual has passed 0 principal/supervisory exams, 2 general industry/product exams, and 2 statesecurities law exams.This section includes all securities industry exams that the broker has passed. Under limited circumstances, a brokermay attain a registration after receiving an exam waiver based on exams the broker has passed and/or qualifying workexperience. Any exam waivers that the broker has received are not included below.Exam Category DatePrincipal/Supervisory ExamsNo information reported.Exam Category DateGeneral Industry/Product ExamsSecurities Industry Essentials Examination10/01/2018SIEGeneral Securities Representative Examination02/03/1992Series 7Exam Category DateState Securities Law ExamsUniform Investment Adviser Law Examination09/05/1997Series 65Uniform Securities Agent State Law Examination10/05/1993Series 63Additional information about the above exams or other exams FINRA administers to brokers and other securitiesprofessionals can be found at www.finra.org/brokerqualifications/registeredrep/.4©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. www.finra.org/brokercheckUser GuidanceRegistration and Employment HistoryRegistration HistoryRegistration Dates Firm Name CRD# Branch LocationThe broker previously was registered with the following firms:08/1993 - 01/1995 KIDDER, PEABODY & CO. INCORPORATED 7613 NEW YORK, NY02/1992 - 06/1993 EVEREN SECURITIES, INC. 19616 ST. LOUIS, MOEmployment HistoryEmployment Dates Employer Name Employer LocationThis section provides up to 10 years of an individual broker's employment history as reported by the individual broker onthe most recently filed Form U4.Please note that the broker is required to provide this information only while registered with FINRA or a nationalsecurities exchange and the information is not updated via Form U4 after the broker ceases to be registered.Therefore, an employment end date of "Present" may not reflect the broker's current employment status.08/1993 - Present UBS FINANCIAL SERVICES INC. SACRAMENTO, CAOther Business ActivitiesThis section includes information, if any, as provided by the broker regarding other business activities the broker iscurrently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise. This sectiondoes not include non-investment related activity that is exclusively charitable, civic, religious or fraternal and isrecognized as tax exempt.No information reported.5©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. www.finra.org/brokercheckUser GuidanceEnd of ReportThis page is intentionally left blank.6©2019 FINRA. All rights reserved. Report about JODI L. PIECZYNSKI. BrokerCheck ReportSTEVEN EDWARD RUTLEDGESection TitleReport SummaryBroker QualificationsRegistration and Employment HistoryCRD# 218839012 - 45Page(s) About BrokerCheck®BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.āWhat is included in a BrokerCheck report?āBrokerCheck reports for individual brokers include information such as employment history, professionalqualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.āPlease note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with no admissionor finding of wrongdoing.āWhere did this information come from?āThe information contained in BrokerCheck comes from FINRA’s Central Registration Depository, orCRD® and is a combination of:Rinformation FINRA and/or the Securities and Exchange Commission (SEC) require brokers andbrokerage firms to submit as part of the registration and licensing process, andRinformation that regulators report regarding disciplinary actions or allegations against firms or brokers.āHow current is this information?āGenerally, active brokerage firms and brokers are required to update their professional and disciplinaryinformation in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.āWhat if I want to check the background of an investment adviser firm or investment adviserrepresentative?āTo check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact your statesecurities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.āAre there other resources I can use to check the background of investment professionals?āFINRA recommends that you learn as much as possible about an investment professional before decidingto work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.āThank you for using FINRA BrokerCheck.For more information aboutFINRA, visit www.finra.org.Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound atFor additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.brokercheck.finra.org STEVEN E. RUTLEDGECRD# 2188390Currently employed by and registered with thefollowing Firm(s):UBS FINANCIAL SERVICES INC.1610 ARDEN WAYSACRAMENTO, CA 95815CRD# 8174Registered with this firm since: 04/04/2003Report Summary for this BrokerThis report summary provides an overview of the broker's professional background and conduct. Additionalinformation can be found in the detailed report.Disclosure EventsAll individuals registered to sell securities or provideinvestment advice are required to disclose customercomplaints and arbitrations, regulatory actions,employment terminations, bankruptcy filings, andcriminal or civil judicial proceedings.Are there events disclosed about this broker?NoInvestment Adviser RepresentativeInformationhttps://www.adviserinfo.sec.govThe information below represents the individual'srecord as a broker. For details on this individual'srecord as an investment adviser representative,visit the SEC's Investment Adviser PublicDisclosure website atBroker QualificationsThis broker is registered with:9 Self-Regulatory Organizations13 U.S. states and territoriesThis broker has passed:0 Principal/Supervisory Exams2 General Industry/Product Exams2 State Securities Law ExamsRegistration HistoryThis broker was previously registered with thefollowing securities firm(s):J.P. MORGAN SECURITIES INC.CRD# 18718NEW YORK, NY02/2000 - 12/2002HAMBRECHT & QUIST LLCCRD# 940SAN FRANCISCO, CA10/1993 - 02/2000www.finra.org/brokercheckUser Guidance1©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. www.finra.org/brokercheckUser GuidanceBroker QualificationsRegistrationsThis section provides the self-regulatory organizations (SROs) and U.S. states/territories the broker is currentlyregistered and licensed with, the category of each license, and the date on which it became effective. This section alsoprovides, for every brokerage firm with which the broker is currently employed, the address of each branch where thebroker works.This individual is currently registered with 9 SROs and is licensed in 13 U.S. states and territories through hisor her employer.Employment 1 of 1Firm Name:Main Office Address:Firm CRD#:UBS FINANCIAL SERVICES INC.81741200 HARBOR BOULEVARDWEEHAWKEN, NJ 07086SRO Category Status DateFINRAGeneral Securities RepresentativeAPPROVED04/04/2003BOX Exchange LLCGeneral Securities RepresentativeAPPROVED05/16/2012Cboe Exchange, Inc.General Securities RepresentativeAPPROVED04/04/2003NYSE American LLCGeneral Securities RepresentativeAPPROVED04/04/2003NYSE Arca, Inc.General Securities RepresentativeAPPROVED04/04/2003Nasdaq ISE, LLCGeneral Securities RepresentativeAPPROVED01/28/2008Nasdaq PHLX LLCGeneral Securities RepresentativeAPPROVED04/04/2003Nasdaq Stock MarketGeneral Securities RepresentativeAPPROVED07/12/2006New York Stock ExchangeGeneral Securities RepresentativeAPPROVED04/04/2003U.S. State/TerritoryCategory Status DateArizona AgentAPPROVED04/11/2003California AgentAPPROVED04/04/2003Florida AgentAPPROVED11/20/2018Georgia AgentAPPROVED12/07/2016Hawaii AgentAPPROVED04/11/2003Idaho AgentAPPROVED04/11/2003U.S. State/TerritoryCategory Status DateLouisiana AgentAPPROVED10/07/2016Missouri AgentAPPROVED10/03/2016Nevada AgentAPPROVED04/11/2003Ohio AgentAPPROVED10/09/2017Oregon AgentAPPROVED04/11/2003Texas AgentAPPROVED10/05/20162©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. www.finra.org/brokercheckUser GuidanceBroker QualificationsEmployment 1 of 1, continuedU.S. State/TerritoryCategory Status DateWashington AgentAPPROVED04/11/2003Branch Office LocationsUBS FINANCIAL SERVICES INC.1610 ARDEN WAYSACRAMENTO, CA 958153©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. www.finra.org/brokercheckUser GuidanceBroker QualificationsIndustry Exams this Broker has PassedThis individual has passed 0 principal/supervisory exams, 2 general industry/product exams, and 2 statesecurities law exams.This section includes all securities industry exams that the broker has passed. Under limited circumstances, a brokermay attain a registration after receiving an exam waiver based on exams the broker has passed and/or qualifying workexperience. Any exam waivers that the broker has received are not included below.Exam Category DatePrincipal/Supervisory ExamsNo information reported.Exam Category DateGeneral Industry/Product ExamsSecurities Industry Essentials Examination10/01/2018SIEGeneral Securities Representative Examination10/22/1993Series 7Exam Category DateState Securities Law ExamsUniform Investment Adviser Law Examination07/24/2000Series 65Uniform Securities Agent State Law Examination06/16/1994Series 63Additional information about the above exams or other exams FINRA administers to brokers and other securitiesprofessionals can be found at www.finra.org/brokerqualifications/registeredrep/.4©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. www.finra.org/brokercheckUser GuidanceRegistration and Employment HistoryRegistration HistoryRegistration Dates Firm Name CRD# Branch LocationThe broker previously was registered with the following firms:02/2000 - 12/2002 J.P. MORGAN SECURITIES INC. 18718 NEW YORK, NY10/1993 - 02/2000 HAMBRECHT & QUIST LLC 940 SAN FRANCISCO, CAEmployment HistoryEmployment Dates Employer Name Employer LocationThis section provides up to 10 years of an individual broker's employment history as reported by the individual broker onthe most recently filed Form U4.Please note that the broker is required to provide this information only while registered with FINRA or a nationalsecurities exchange and the information is not updated via Form U4 after the broker ceases to be registered.Therefore, an employment end date of "Present" may not reflect the broker's current employment status.04/2003 - Present UBS FINANCIAL SERVICES INC. SACRAMENTO, CAOther Business ActivitiesThis section includes information, if any, as provided by the broker regarding other business activities the broker iscurrently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise. This sectiondoes not include non-investment related activity that is exclusively charitable, civic, religious or fraternal and isrecognized as tax exempt.No information reported.5©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. www.finra.org/brokercheckUser GuidanceEnd of ReportThis page is intentionally left blank.6©2019 FINRA. All rights reserved. Report about STEVEN E. RUTLEDGE. BrokerCheck ReportUBS FINANCIAL SERVICES INC.Section TitleReport SummaryFirm HistoryCRD# 8174110Firm Profile 2 - 9Page(s)Firm Operations 11 - 34Disclosure Events 35 About BrokerCheck®BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.āWhat is included in a BrokerCheck report?āBrokerCheck reports for individual brokers include information such as employment history, professionalqualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.āPlease note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with noadmission or finding of wrongdoing.āWhere did this information come from?āThe information contained in BrokerCheck comes from FINRA’s Central Registration Depository, orCRD® and is a combination of:Rinformation FINRA and/or the Securities and Exchange Commission (SEC) require brokers andbrokerage firms to submit as part of the registration and licensing process, andRinformation that regulators report regarding disciplinary actions or allegations against firms or brokers.āHow current is this information?āGenerally, active brokerage firms and brokers are required to update their professional and disciplinaryinformation in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.āWhat if I want to check the background of an investment adviser firm or investment adviserrepresentative?āTo check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact yourstate securities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.āAre there other resources I can use to check the background of investment professionals?āFINRA recommends that you learn as much as possible about an investment professional beforedeciding to work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.āThank you for using FINRA BrokerCheck.For more information aboutFINRA, visit www.finra.org.Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound atFor additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.brokercheck.finra.org UBS FINANCIAL SERVICES INC.CRD# 8174SEC# 8-16267Main Office Location1200 HARBOR BOULEVARDWEEHAWKEN, NJ 07086Regulated by FINRA Woodbridge OfficeMailing Address1000 HARBOR BLVD8TH FL, COMPLIANCE DEPARTMENTWEEHAWKEN, NJ 07086This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:Business Telephone Number201-352-3000https://www.adviserinfo.sec.govReport Summary for this FirmThis report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.Disclosure EventsBrokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.Are there events disclosed about this firm?YesThe following types of disclosures have beenreported:TypeCountRegulatory Event 450Civil Event 5Arbitration 433Firm ProfileThis firm is classified as a corporation.This firm was formed in Delaware on 06/30/1969.Its fiscal year ends in December.Firm HistoryInformation relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.Firm OperationsIs this brokerage firm currently suspended with anyregulator?NoThis firm conducts 24 types of businesses.This firm is affiliated with financial or investmentinstitutions.This firm has referral or financial arrangements withother brokers or dealers.This firm is registered with:• the SEC• 10 Self-Regulatory Organizations• 53 U.S. states and territorieswww.finra.org/brokercheckUser Guidance1©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThis firm is classified as a corporation.This firm was formed in Delaware on 06/30/1969.CRD#This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.Firm ProfileFirm Names and LocationsIts fiscal year ends in December.UBS FINANCIAL SERVICES INC.SEC#81748-16267Main Office LocationMailing AddressBusiness Telephone NumberDoing business as UBS FINANCIAL SERVICES INC.201-352-3000Regulated by FINRA Woodbridge Office1200 HARBOR BOULEVARDWEEHAWKEN, NJ 070861000 HARBOR BLVD8TH FL, COMPLIANCE DEPARTMENTWEEHAWKEN, NJ 070862©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThis section provides information relating to all direct owners and executive officers of the brokerage firm.Direct Owners and Executive OfficersFirm ProfilePositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?UBS AMERICAS INC.OWNER75% or moreNoDomestic Entity11/2000YesIs this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):PositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?CHANDLER, JASON RICHARDDIRECTORLess than 5%NoIndividual03/2014Yes2382465Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):PositionPosition Start DateFRANCOMANO, LISA M.CHIEF COMPLIANCE OFFICER FOR THE ADVISORY BUSINESSIndividual10/20062263875Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):3©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDirect Owners and Executive Officers (continued)Firm ProfilePercentage of OwnershipIs this a public reportingcompany?Does this owner direct themanagement or policies ofthe firm?Less than 5%NoNoPositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?HANDELSMAN, SHARYN JCHIEF COMPLIANCE OFFICERLess than 5%NoIndividual08/2015No4272996Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):PositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?HATCH, PAUL MARTINDIRECTORLess than 5%NoIndividual04/2016Yes1350155Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):HULL, BRIAN PATRICKLegal Name & CRD# (if any):4©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDirect Owners and Executive Officers (continued)Firm ProfilePositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?PRESIDENTLess than 5%NoIndividual06/2015Yes1304241Is this a domestic or foreignentity or an individual?PositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?MOLINARO, SAMUEL LEONARDDIRECTORLess than 5%NoIndividual04/2016Yes2414084Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):PositionPercentage of OwnershipPosition Start DateNARATIL, THOMASCHAIRMAN UBS FINANCIAL SERVICES INCLess than 5%Individual01/20161192911Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):5©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDirect Owners and Executive Officers (continued)Firm ProfileIs this a public reportingcompany?Does this owner direct themanagement or policies ofthe firm?NoYesPositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?NARCY, HELENECHIEF FINANCIAL OFFICERLess than 5%NoIndividual03/2018No6854116Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):PositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?NEWCOMB, CATHERINE ANNMANAGING DIRECTORLess than 5%NoIndividual05/2018No4517197Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):SANBORN, MARK WILSON1805781Legal Name & CRD# (if any):6©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDirect Owners and Executive Officers (continued)Firm ProfilePositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?MANAGING DIRECTORLess than 5%NoIndividual11/2017NoIs this a domestic or foreignentity or an individual?PositionPercentage of OwnershipIs this a public reportingcompany?Position Start DateDoes this owner direct themanagement or policies ofthe firm?TAYLOR, BRENT HENRICKSENGENERAL COUNSEL, MANAGING DIRECTORLess than 5%NoIndividual03/2017No3042416Is this a domestic or foreignentity or an individual?Legal Name & CRD# (if any):7©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThis section provides information relating to any indirect owners of the brokerage firm.Indirect OwnersFirm ProfileUBS AGSHAREHOLDERUBS AMERICAS HOLDING LLC75% or moreYesForeign Entity11/2001YesLegal Name & CRD# (if any):Is this a domestic or foreignentity or an individual?Company through whichindirect ownership isestablishedRelationship to Direct OwnerRelationship EstablishedPercentage of OwnershipDoes this owner direct themanagement or policies ofthe firm?Is this a public reportingcompany?UBS AMERICAS HOLDING LLCSHAREHOLDERUBS AMERICAS INC.75% or moreNoDomestic Entity08/2015YesLegal Name & CRD# (if any):Is this a domestic or foreignentity or an individual?Company through whichindirect ownership isestablishedRelationship to Direct OwnerRelationship EstablishedPercentage of OwnershipDoes this owner direct themanagement or policies ofthe firm?Is this a public reportingcompany?UBS GROUP AGForeign EntityLegal Name & CRD# (if any):Is this a domestic or foreignentity or an individual?8©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceIndirect Owners (continued)Firm ProfileSHAREHOLDERUBS AG75% or moreYes11/2014YesCompany through whichindirect ownership isestablishedRelationship to Direct OwnerRelationship EstablishedPercentage of OwnershipDoes this owner direct themanagement or policies ofthe firm?Is this a public reportingcompany?9©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm HistoryThis section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.No information reported.10©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsRegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.This firm is currently registered with the SEC, 10 SROs and 53 U.S. states and territories.SEC Registration QuestionsThis firm is registered with the SEC as:A broker-dealer:A broker-dealer and government securities broker or dealer:A government securities broker or dealer only:This firm has ceased activity as a government securities broker or dealer:YesYesNoNoFederal Regulator Status Date EffectiveSEC Approved 01/22/1971Self-Regulatory Organization Status Date EffectiveFINRA Approved 10/13/1936BOX Options Exchange LLC Approved 05/09/2012Cboe Exchange, Inc. Approved 06/17/1981Chicago Stock Exchange Approved 12/01/1970NYSE American LLC Approved 02/25/1988NYSE Arca, Inc. Approved 02/17/1958Nasdaq ISE, LLC Approved 07/06/2000Nasdaq PHLX LLC Approved 01/22/1971Nasdaq Stock Market Approved 07/12/2006New York Stock Exchange Approved 11/17/198211©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsRegistrations (continued)U.S. States &TerritoriesStatus Date EffectiveAlabama Approved 01/20/1966Alaska Approved 07/10/1970Arizona Approved 01/09/1957Arkansas Approved 07/13/1967California Approved 11/30/1970Colorado Approved 02/01/1983Connecticut Approved 12/01/1970Delaware Approved 10/06/1981District of Columbia Approved 12/01/1970Florida Approved 04/27/1983Georgia Approved 09/22/1981Hawaii Approved 12/01/1970Idaho Approved 10/29/1981Illinois Approved 07/01/1942Indiana Approved 10/21/1981Iowa Approved 07/14/1983Kansas Approved 12/01/1970Kentucky Approved 07/16/1982Louisiana Approved 04/20/1983Maine Approved 02/13/1984Maryland Approved 10/03/1981Massachusetts Approved 07/31/1981Michigan Approved 02/03/1983Minnesota Approved 07/15/1982Mississippi Approved 10/14/1981Missouri Approved 07/18/1983Montana Approved 05/05/1983Nebraska Approved 10/08/1981Nevada Approved 07/18/1983New Hampshire Approved 02/02/1983New Jersey Approved 07/14/1983New Mexico Approved 10/07/1981New York Approved 12/02/1982U.S. States &TerritoriesStatusDate EffectiveNorth Carolina Approved 07/15/1982North Dakota Approved 10/21/1981Ohio Approved 07/16/1982Oklahoma Approved 07/17/1982Oregon Approved 10/24/1981Pennsylvania Approved 10/01/1970Puerto Rico Approved 09/01/1984Rhode Island Approved 02/01/1983South Carolina Approved 10/28/1981South Dakota Approved 07/15/1982Tennessee Approved 08/17/1981Texas Approved 07/25/1983Utah Approved 04/21/1983Vermont Approved 02/13/1984Virgin Islands Approved 03/30/2005Virginia Approved 09/22/1981Washington Approved 04/20/1983West Virginia Approved 09/30/1981Wisconsin Approved 07/15/1983Wyoming Approved 03/10/196712©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsTypes of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.Other Types of BusinessThis firm currently conducts 24 types of businesses.Types of BusinessExchange member engaged in exchange commission business other than floor activitiesExchange member engaged in floor activitiesBroker or dealer making inter-dealer markets in corporation securities over-the-counterBroker or dealer retailing corporate equity securities over-the-counterBroker or dealer selling corporate debt securitiesUnderwriter or selling group participant (corporate securities other than mutual funds)Mutual fund underwriter or sponsorMutual fund retailerU S. government securities dealerU S. government securities brokerMunicipal securities dealerMunicipal securities brokerBroker or dealer selling variable life insurance or annuitiesSolicitor of time deposits in a financial institutionBroker or dealer selling oil and gas interestsPut and call broker or dealer or option writerBroker or dealer selling securities of non-profit organizations (e.g., churches, hospitals)Investment advisory servicesBroker or dealer selling tax shelters or limited partnerships in primary distributionsBroker or dealer selling tax shelters or limited partnerships in the secondary marketTrading securities for own accountPrivate placements of securitiesBroker or dealer selling interests in mortgages or other receivablesBroker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency13©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThis firm does effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.Non-Securities Business Description:TO COMPLY WITH SWAP REGISTRATION REQUIREMENTS ASSOCIATEDWITH DODD FRANK, UBS FINANCIAL SERVICES INC WAS APPROVED ASA SWAP FIRM ON 12/28/201214©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsClearing ArrangementsThis firm does hold or maintain funds or securities or provide clearing services for other broker-dealer(s).Introducing ArrangementsThis firm does refer or introduce customers to other brokers and dealers.Name:PERSHING LLCBusiness Address:ONE PERSHING PLAZAJERSEY CITY, NJ 07399CRD #:7560Effective Date:03/16/2016Description:FULLY-DISCLOSED CLEARING ARRANGEMENT FOR CERTAINCUSTOMER ACCOUNTS.15©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsIndustry ArrangementsThis firm does not have books or records maintained by a third party.This firm does not have accounts, funds, or securities maintained by a third party.This firm does have customer accounts, funds, or securities maintained by a third party.This firm does not have individuals who control its management or policies through agreement.This firm does not have individuals who wholly or partly finance the firm's business.Control Persons/FinancingName:PERSHING LLCBusiness Address:ONE PERSHING PLAZAJERSEY CITY, NJ 07399CRD #:7560Effective Date:03/16/2016Description:FULLY-DISCLOSED CLEARING ARRANGEMENT FOR CERTAINCUSTOMER ACCOUNTS.16©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.This firm is, directly or indirectly:· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.NoYesITALYYes11/01/2007VIA SANTA MARGHERITA 16MILANO, ITALYUBS ITALIA SIM SPA is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS ITALIA SIM SPA FORMERLYUBS CORPORATE FINANCE ITALIA SPADescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesNo11/03/2016315 DEADERICK STREETNASHVILLE, TN 37238UBS BUSINESS SOLUTIONS US LLC is under common control with the firm.UBS AG OWNS 100% OF UBS AMERICAS HOLDINGS LLC WHICH OWNS100% OF UBS BUSINESS SOLUTIONS US LLC.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:LEVEL 7, WISMA HONG LEONGUBS SECURITIES MALAYSIA SDN BHD is under common control with the firm.Business Address:17©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesYesMALAYSIAYes09/19/200518 JALAN PERAKKUALA LUMPUR, MALAYSIA 50450UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES MALAYSIA SDNBHDDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:YesYesCANADAYes12/23/2004154 UNIVERSITY AVENUESUITE 800TORONTO, CANADA M5H 3Z4UBS INVESTMENT MANAGEMENT CANADA INC. is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS INVESTMENT MANAGEMENTCANADA INC.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoNo03/16/2016242 TRUMBULL STREETHARTFORD, CT 06103-1212107754UBS AGRIVEST LLC is under common control with the firm.Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:18©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesUBS REALTY INVESTORS LLC DIRECTLY OR INDIRECTLY OWNS 90% OFUBS FARMLAND INVESTORS LLC.(F/K/A UBS AGRIVEST LLC)AND UBSAMERICAS INC OWNS 10%. UBS AMERICAS IS WHOLLY OWNED BY UBS AG.Description:Investment AdvisoryActivities:NoYesUNITED KINGDOMYes06/12/198721 LOMBARD STREETLONDON, UNITED KINGDOM EC3V 9AHUBS O'CONNOR LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS O'CONNOR LIMITEDDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesNoTAIWANYes04/27/19965F, NO.7SUNG JEN ROADTAIPEI 100, TAIWANUBS SECURITIES INVESTMENT ADVISORY (TAIWAN) LTD is under common control with the firm.UNDER COMMON OWNERSHIP OF UBS AG.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:Yes06/09/2003VIA SANTA MARGHERITA 1620121 MILANO, ITALYUBS CORPORATE FINANCE ITALIA SPA is under common control with the firm.Foreign Entity:Effective Date:Business Address:19©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoNoITALYUNDER COMMON OWNERSHIP OF UBS AG.Description:Investment AdvisoryActivities:Securities Activities:Country:NoNoLUXEMBOURGYes12/01/201636-38 GRANDE-RUE1660 LUXEMBOURG, LUXEMBOURGUBS EUROPE SE is under common control with the firm.FORMERLY, UBS (LUXEMBOURG) SA;UBS EUROPE SE IS DIRECTLY ORINDIRECTLY OWNED BY UBS AG.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesNo11/01/2004111 PAVONIA AVE. EASTJERSEY CITY, NJ 073102692UBS CAPITAL MARKETS L.P. is under common control with the firm.UBS CAPITAL MARKETS L.P. (A REGISTERED BROKER-DEALER) ANDAPPLICANT ARE ULTIMATELY OWNED BY UBS A.G. (A SWISS BANK).Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:SUITE 1606, WISMA GKBIPT UBS SECURITIES INDONESIA is under common control with the firm.Business Address:20©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoYesINDONESIAYes11/03/2000JI, JEND. SUIDRMAN NO.JAKARTA, INDONESIA 10210UBS AG DIRECTLY OR INDIRECTLY OWNS PT UBS SECURITIES INDOSNESIAFORMERLY PT UBS WARBURG INDONESIA.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:YesYesGERMANYYes06/03/2005FRIEDENSSTRASSE 6-10FRANKFURT AM MAIN, GERMANY 60311UBS DEUTSCHLAND AG is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS DEUTSCHLAND AGFORMERLY SCHRODER MUNCHMEYER HENGST AG AND UBS WEALTHMANAGEMENT AG.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesBAHAMASYes11/03/2000P.O. BOX N-7757UBS HOUSE EAST BAY STREETNASSAU, BAHAMASUBS (BAHAMAS) LTD is under common control with the firm.Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:21©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)UBS AG DIRECTLY OR INDIRECTLY OWNS UBS (BAHAMAS) LTD.Description:YesYesCAYMAN ISLANDSYes11/03/2000227 ELGIN AVENUEP.O. BOS 509 GTGRAND CAYMAN, CAYMAN ISLANDS KYUBS FUND SERVICES (CAYMAN) LTD is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS FUND SERVICES (CAYMAN)LTD FORMERLY UBS WARBURG (CAYMEN ISLAND)LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesPRINCIPAUTE DE MONACOYes11/03/20002 AVENUE DE GRADE-BRETAGNEMONTE CARLO, PRINCIPAUTE DE MONACOUBS (MONACO) S.A. is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS (MONACO) S.A.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:PANAMAYes11/03/2000CALLE 53 E. MARBELLASWISS TOWERPANAMA, REPUBLIC OF PANAMAUBS (PANAMA) SA is under common control with the firm.Country:Foreign Entity:Effective Date:Business Address:22©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesYesUBS AG DIRECTLY OR INDIRECTLY OWNS UBS (PANAMA) S.A.Description:Investment AdvisoryActivities:Securities Activities:YesNoCANADAYes11/03/2000154 UNIVERSITY AVENUETORONTO, ONTARIO, CANADAUBS BANK (CANADA) is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS BANK (CANADA).Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesNo11/03/200010 STATE HOUSE SQUARE15TH FLOORHARTFORD, CT 06103-360441848UBS FUND SERVICES (USA) LLC is under common control with the firm.UBS AMERICAS HOLDING LLC OWNS 100% OF UBS AMERICAS INC. THAT INTURN OWNS 100% OF ARI ACQUISITION CORP. AND 26.125% OF UBSREALTY INVESTORS LLC. ARI ACQUISITION CORP. OWNS 73.875% OF UBSREALTY INVESTORS LLC. IN TURN, UBS REALTY INVESTORS LLC OWNS99% OF THE APPLICANT AND ARI ACQUISITION CORP. OWNS 1% OF THEAPPLICANT.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:23©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesNoNo11/03/2000677 WASHINGTON BLVDSTAMFORD, CT 06901UBS O'CONNOR LLC is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS O'CONNOR.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesNoNo11/03/200010 STATE HOUSE SQUARE15TH FLHARTFORD, CT 06103-3604UBS REALTY INVESTORS LLC is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS REALTY INVESTORS LLC.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesCANADAYes11/03/2000154 UNIVERSITY AVENUETORONTO, CANADA M5 3Z4UBS SECURITIES (CANADA) LTD is under common control with the firm.Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:24©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES (CANADA) LTD.Description:YesYesFRANCEYes11/03/200165, URE DE COURCELLESPARIS, FRANCE 75008UBS SECURITIES FRANCE S.A. is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES FRANCE S.A.FORMERLY UBS WARBURG (FRANCE) S.A.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesISREALYes11/03/200021 SDEROT SHAUL HAMELECHTEL AVIV, ISREALUBS SECURITIES ISREAL LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES ISREALLIMITED FORMERLY UBS WARBURG (ISREAL) LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:JAPANYes11/03/2000EAST TOWER, OETMACHI FIRST SQUARE5-1 NOTEMACHI 1-CHOMECHIYOADA-KU, TOKOYO, JAPAN 100-004UBS SECURITIES JAPAN LTD is under common control with the firm.Country:Foreign Entity:Effective Date:Business Address:25©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoYesUBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES JAPAN LTDFORMERLY UBS WARBURG (JAPAN) LIMITED.Description:Investment AdvisoryActivities:Securities Activities:YesYesTHE NETHERLANDSYes11/03/2000HERENGRAPCHT 600AMSTERDAM, THE NETHERLANDSUBS INVESTMENT BANK NEDERLAND BV is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS INVESTMENT BANKNEDERLAND BV FORMERLY UBS WARBURG (NEDERLAND) BV.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesHONG KONGYes11/03/2000ONE EXCHANGE SQUARE, 25TH FLOOR28 CONNAUGHT PLACE CENTRALHONG KONG, CHINAUBS SECURITIES ASIA LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES ASIA LIMITEDFORMERLY UBS WARBURG ASIA LIMITED.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:LEVEL 25, GOVERNOR PHILLIP TOWER1 FARRAR PLACESYDNEY, AUSTRALIA 2000UBS SECURITIES AUSTRALIA LTD is under common control with the firm.Business Address:26©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesYesAUSTRALIAYes11/03/2000UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES AUSTRALIA LTDFORMERLY UBS WARBURG AUSTRALIA EQUITIES LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:NoYesHONG KONGYes11/03/200025TH FLOOR, ONE EXCHANGE SQUARECONNAUGHT PLACE CENTRALHONG KONG, CHINAUBS SECURITIES HONG KONG LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES HONG KONGLIMITED FORMERLY UBS WARBURG HONG KONG LIMITED.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesNEW ZEALANDYes11/03/2000LEVEL 23, STOCK EXCHANGE HOURSE119 QUEEN STREETAUKLAND, NEW ZEALANDUBS SECURITIES NEW ZEALAND LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES NEW ZEALANDDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:27©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)LIMITED FORMERLY UBS WARBURG NEW ZEALAND LTD.YesYesNEW ZEALANDYes11/03/2000LEVEL 23, STOCK EXCHANGE HOUSE119 QUEEN STREETAUKLAND, NEW ZEALANDUBS NEW ZEALAND LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS NEW ZEALAND LIMITEDFORMERLY UBS WARBURG NEW ZEALAND, EQUITIES LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesSOUTH AFRICAYes05/11/200464 WIERDA VALLEYSANDTON, SOUTH AFRICAUBS SOUTH AFRICA (PROPRIETARY) LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SOUTH AFRICA(PROPRIETARY) LIMITED FORMERLY UBS WARBURG SECURITIES (SOUTHAFRICA)(PTY)LTD AND UBS SECURITIES SOUTH AFRICA (PROPRIETARY)LIMITEDDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:Yes11/03/200093/1 DIETHELM, TOWER A, 2ND FLOORWIRELESS ROAD PAUTHUMWANBANGKOK, THAILAND 10330UBS SECURITIES (THAILAND) LTD. is under common control with the firm.Foreign Entity:Effective Date:Business Address:28©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoYesTHAILANDUBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES (THAILAND)LTD. FORMERLY UBS WARBURG SECURITIES CO., LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:YesYesINDIAYes11/03/20002/F, HOECHST HOUSENARIMAN POINTMUMBAI, INDIAUBS SECURITIES INDIA PRIVATE LIMITED is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES INDIA PRIVATELIMITED FORMERLY UBS WARBURG SECURITIES INDIA PRIVATE LIMITED.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesTAIWANYes11/03/200015F, #167, TUN HWANORTH ROADTAIPEI, TAIWAN, ROC 105UBS SECURITIES LIMITED TAIWAN BRANCH is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES LIMITEDTAIWAN BRANCH FORMERLY UBS WARBURG SECURITIES LIMITED, TAIWANBRANCHDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:29©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoYesPHILLIPPINESYes11/03/200019/F TOWER ONE, AYALA TRIANGLEAYALA AVENUEMAKATI, PHILIPPINES 1254UBS SECURITIES PHILIPPINES INC. is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES PHILIPPINESINC.FORMERLY UBS WARBURG SECURITIES PHILIPPINES, INC.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesSPAINYes11/03/2000FORTUNY 18, SECOND FLOORMADRID, SPAIN 28010UBS SECURITIES ESPANA SOCIEDAD DE VELORES S.A. is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS UBS SECURITIES ESPANASOCIEDAD DE VELORES S.A. FORMERLY UBS WARBURG SECURITIES(ESPANA), S.V.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesARGENTIAYes11/03/200025 DE MAYO NO 555, 15TH FLOORBUENOS AIRES, ARGENTINA C1002ABKUBS TRADING S.A. is under common control with the firm.Securities Activities:Country:Foreign Entity:Effective Date:Business Address:30©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoUBS AG DIRECTLY OR INDIRECTLY OWNS UBS TRADING S.A. FORMERLYUBS WARBURG TRADING S.A.Description:Investment AdvisoryActivities:NoYesRUSSIAYes09/21/200552/4 KOSMODAMIANSKAYANABAREZHNAYAMOSCO, RUSSIACJSC UBS SECURITIES is under common control with the firm.UBS AG DIRECTLY OR INDIRECTLY OWNS CJSC UBS SECURITIESFORMERLY ZAO BRUNSWICK UBS WARBURG AND CJSC BRUNSWICK UBSDescription:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:YesYesNo11/03/2000677 WASHINGTON BLVDSTAMFORD, CT7654UBS SECURITIES LLC is under common control with the firm.UBS AMERICAS HOLDING LLC OWNS 32% OF APPLICANT WHICH IS OWNEDBY UBS AMERICAS HOLDING LLC.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:677 WASHINGTON BLVDSTAMFORD, CT 06901UBS AMERICAS INC. controls the firm.Business Address:31©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)NoNoNo11/03/2000UBS AMERICAS INC. OWNS 100% OF APPLICANT.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:YesNoNo11/03/2000209 SOUTH LASALLE STREETCHICAGO,, ILUBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC is under common control with the firm.UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC FORMERLY BRINSONPARTNERS IS A FEDERALLY COVERED INVESTMENT ADVISOR AND UNDERCOMMON CONTROL WITH THE APPLICANT.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:NoYesENGLANDYes08/31/19891 FINSBURY AVENUELONDON, ENGLAND EC2M 2PAUBS LIMITED is under common control with the firm.UBS AMERICAS INC.,DIRECTLY OR INDIRECTLY OWNS 100% OF THE STOCKOF UBS LIMITED FORMERLY KNOWN AS UBS INTERNATIONAL (UK) LTD,FORMERLY KNOWN AS UBS WARBURG LTD.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:32©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)YesYesNo03/28/199051 WEST 52ND STREETNEW YORK, NY 10019583UBS GLOBAL ASSET MANAGEMENT (US) INC. is controlled by the firm.UBS AMERICAS HOLDING LLC OWNS 100% OF UBS AMERICAS INC. THAT INTURN OWNS 100% OF APPLICANT.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:YesYesNo07/20/1987CHASE MANHATTEN BANK BUILDINGHATO REY, PR 0091813042UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO is controlled by the firm.UBS AMERICAS HOLDING LLC OWNS 100% OF UBS AMERICAS INC. THAT INTURN OWNS 100% OF UBS FINANCIAL SERVICES INC., THAT IN TURNOWNS 100% OF APPLICANT.Description:Investment AdvisoryActivities:Securities Activities:Country:Foreign Entity:Effective Date:Business Address:CRD #:This firm is directly or indirectly, controlled by the following:· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union33©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm OperationsOrganization Affiliates (continued)·or foreign bankEffective Date:Business Address:Description:APPLICANT IS 100% OWNED BY UBS AMERICAS INC. A DELAWARECORPORATION. UBS AMERICAS IS 100% OWNED BY UBS AG, A SWISSBANK. UBS AG, A SWISS BANK IS NOW MAJORITY OWNED BY UBS GROUPAG.UBS GROUP AG is a Bank Holding Company and controls the firm.11/28/2014BAHNHOFSTRASSE 45ZURICH, SWITZERLAND CH-8001Effective Date:Business Address:Description:APPLICANT IS 100% OWNED BY UBS AMERICAS INC., A DELAWARECORPORATION. UBS AMERICAS INC. IS OWNED BY UBS AG, A SWISSBANK.UBS AG is a Foreign Bank and controls the firm.11/03/2000BAHNHOFSTRASSE 45ZURICH, SWITZERLAND34©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure EventsAll firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.Final On AppealPendingRegulatory Event 0 450 0Civil Event 0 5 0Arbitration N/A 433 N/A35©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure Event DetailsWhat you should know about reported disclosure events:1.BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.2.Certain thresholds must be met before an event is reported to CRD, for example:RA law enforcement agency must file formal charges before a brokerage firm is required to disclose aparticular criminal event.3.Disclosure events in BrokerCheck reports come from different sources:RDisclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.4.There are different statuses and dispositions for disclosure events:RA disclosure event may have a status ofpending, on appeal,orfinal.A "pending" event involves allegations that have not been proven or formally adjudicated.An event that is "on appeal" involves allegations that have been adjudicated but are currentlybeing appealed.A "final" event has been concluded and its resolution is not subject to change.RA final event generally has a disposition ofadjudicated, settledorotherwise resolved.An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.5.You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.Regulatory - FinalThis type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.Disclosure 1 of 450Reporting Source:RegulatorCurrent Status:Final36©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:11/22/2017Docket/Case Number:2015047864601Principal Product Type:No ProductOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT SUBMITTED38 ROES TO OATS THAT CONTAINED INACCURATE, INCOMPLETE ORIMPROPERLY FORMATTED DATA. THE FINDINGS STATED THAT THE FIRM,ON 35 INSTANCES, SUBMITTED TO OATS, REPORTS THAT CONTAINEDORDER RECEIVED TIMESTAMPS THAT DID NOT MATCH THE RECEIPT TIMEON THE FIRM'S ORDER TICKETS; ON TWO INSTANCES SUBMITTED OATSREPORTS CONTAINING INACCURATE ORDER RECEIVED TIMESTAMPS FORAFTER-MARKET ORDERS; AND, ON TWO INSTANCES SUBMITTED OATSREPORTS CONTAINING IMPROPERLY RECORDED BUY/SELL CODES. THEFINDINGS ALSO STATED THAT THE FIRM SUBMITTED EIGHT ORDERTICKETS THAT CONTAINED INACCURATE, INCOMPLETE, OR IMPROPERLYFORMATTED DATA. THE FINDINGS ALSO INCLUDED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS AND FINRA RULESCONCERNING OATS REPORTING. SPECIFICALLY, THE FIRM FAILED TOCONDUCT PERIODIC REVIEWS OF ACCEPTED OATS REPORTS AGAINSTITS BOOKS AND RECORDS FOR ACCURACY, WHICH WAS CRITICAL INDETECTING THE VIOLATIONS IN THIS MATTER.Resolution Date:11/22/2017Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $20,000.00Acceptance, Waiver & Consent(AWC)37©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $20,000.00. FINES PAID IN FULL ONDECEMBER 13, 2017.iReporting Source:FirmInitiated By:FINANCIAL INDUSTRY REGULATORY AUTHORITYPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:11/22/2017Docket/Case Number:2105047864601Principal Product Type:No ProductOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT 38 OATSSUBMISSIONS CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLYFORMATTED DATA. THE FINDINGS STATED THE FIRM, ON 35 INSTANCES,SUBMITTED OATS REPORTS CONTAINING ORDER RECEIVED TIMESTAMPSTHAT DID NOT MATCH THE RECEIPT TIME ON THE FIRM'S ORDER TICKETS;ON TWO INSTANCES SUBMITTED OATS REPORTS CONTAININGINACCURATE ORDER RECEIVED TIMESTAMPS FOR AFTER-MARKETORDERS; AND, ON TWO INSTANCES SUBMITTED OATS REPORTSCONTAINING IMPROPERLY RECORDED BUY/SELL CODES. THE FINDINGSSTATED THAT THE FIRM SUBMITTED EIGHT ORDER TICKETS THATCONTAINED INACCURATE, INCOMPLETE, OR IMPROPERLY FORMATTEDDATA. THE FINDINGS STATED THE FIRM DID NOT CONDUCT PERIODICREVIEWS OF ACCEPTED OATS REPORTS AGAINST ITS BOOKS ANDRECORDS AND DID NOT PROVIDE FOR SUPERVISION REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO APPLICABLESECURITIES LAWS, REGULATIONS AND FINRA RULES CONCERNING OATSREPORTING.Current Status:FinalResolution Date:11/22/2017Resolution:Sanctions Ordered:CensureAcceptance, Waiver & Consent(AWC)38©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $20000.00Monetary/Fine $20,000.00Disclosure 2 of 450iReporting Source:RegulatorAllegations:SEC ADMIN RELEASE 33-10433/34-81974/IA RELEASE 4803/OCTOBER 27,2017: THE SECURITIES AND EXCHANGE COMMISSION (COMMISSION)DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIESACT OF 1933 (SECURITIES ACT), SECTION 15(B) OF THE SECURITIESEXCHANGE ACT OF 1934 (EXCHANGE ACT), AND SECTION 203(E) OF THEINVESTMENT ADVISERS ACT OF 1940 (ADVISERS ACT), AGAINST UBSFINANCIAL SERVICES INC. FROM AT LEAST JANUARY 2010 THROUGH JUNE2015, THE FIRM DISADVANTAGED CERTAIN RETIREMENT PLAN ANDCHARITABLE ORGANIZATION BROKERAGE CUSTOMERS (ELIGIBLECUSTOMERS) BY FAILING TO ASCERTAIN THAT THEY WERE ELIGIBLE FORA LESS EXPENSIVE SHARE CLASS, AND RECOMMENDING AND SELLINGTHEM MORE EXPENSIVE SHARE CLASSES IN CERTAIN OPEN-ENDREGISTERED INVESTMENT COMPANIES (MUTUAL FUNDS) WHEN LESSEXPENSIVE SHARE CLASSES WERE AVAILABLE. THE FIRM DID SOWITHOUT DISCLOSING THAT IT WOULD RECEIVE GREATERCOMPENSATION FROM THE ELIGIBLE CUSTOMERS' PURCHASES OF THEMORE EXPENSIVE SHARE CLASSES. ELIGIBLE CUSTOMERS DID NOT HAVESUFFICIENT INFORMATION TO UNDERSTAND THAT THE FIRM HAD ACONFLICT OF INTEREST RESULTING FROM COMPENSATION IT RECEIVEDFOR SELLING THE MORE EXPENSIVE SHARE CLASSES. SPECIFICALLY, THEFIRM RECOMMENDED AND SOLD THESE ELIGIBLE CUSTOMERS CLASS ASHARES WITH AN UP-FRONT SALES CHARGE, ORCLASS B OR CLASS C SHARES WITH A BACK-END CONTINGENTDEFERRED SALES CHARGE (CDSC) (A DEFERRED SALES CHARGE THEPURCHASER PAYS IF THE PURCHASER SELLS THE SHARES DURING ASPECIFIED TIME PERIOD FOLLOWING THE PURCHASE) AND HIGHERONGOING FEES AND EXPENSES, WHEN THESE ELIGIBLE CUSTOMERSWERE ELIGIBLE TO PURCHASE LOAD-WAIVED CLASS A AND/OR NO-LOADCLASS R SHARES. THE FIRM OMITTED MATERIAL INFORMATIONCONCERNING ITS COMPENSATION WHEN IT RECOMMENDED THE MOREEXPENSIVE SHARE CLASSES. THE FIRM ALSO DID NOT DISCLOSE THATTHE PURCHASE OF THE MORE EXPENSIVE SHARE CLASSES WOULDNEGATIVELY IMPACT THE OVERALL RETURN ON THE ELIGIBLECurrent Status:Final39©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:10/27/2017Docket/Case Number:3-18270Principal Product Type:Mutual Fund(s)Other Product Type(s):CUSTOMERS' INVESTMENTS, IN LIGHT OF THE DIFFERENT FEESTRUCTURES FOR THE DIFFERENT FUND SHARE CLASSES. IN MAKINGTHOSE RECOMMENDATIONS OF MORE EXPENSIVE SHARE CLASSESWHILEOMITTING MATERIAL FACTS, THE FIRM WILLFULLY VIOLATED SECTIONS17(A)(2) AND 17(A)(3) OF THE SECURITIES ACT.Resolution Date:10/27/2017Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, THEFIRM HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. IN DETERMINING TO ACCEPTTHE OFFER, THE COMMISSION CONSIDERED REMEDIAL ACTS PROMPTLYUNDERTAKEN BY THE FIRM, ITS UNDERTAKING AND COOPERATIONAFFORDED THE COMMISSION STAFF. IN VIEW OF THE FOREGOING, THECOMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST TOIMPOSE THE SANCTIONS AGREED TO IN THE FIRM'S OFFER.ACCORDINGLY, PURSUANT TO SECTION 8A OF THE SECURITIES ACT,SECTION 15(B)(4) OF THE EXCHANGE ACT, AND SECTION 203(E) OF THEADVISERS ACT, IT IS HEREBY ORDERED THAT: THE FIRM IS CENSURED,Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:CensureMonetary/Fine $3,500,000.00Cease and Desist/InjunctionOrder40©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANYVIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 17(A)(2) AND17(A)(3) OF THE SECURITIES ACT, AND SHALL, WITHIN 30 DAYS OF THEENTRY OF THIS ORDER, PAY A CIVIL MONEY PENALTY OF $3,500,000 TOTHE COMMISSION FOR TRANSFER TO THE GENERAL FUND OF THEUNITED STATES TREASURY. THE FIRM ALSO UNDERTAKES TO MAKEREASONABLE ADDITIONAL EFFORTS TO LOCATE AND/OR CONTACTELIGIBLE CUSTOMERS WHO EITHER HAVE NOT YET CASHED ORDEPOSITED THEIR PAYMENTS, OR WHO HAVE CHANGED ADDRESSES, TOATTEMPT TO COMPLETE DISTRIBUTION OF APPROXIMATELY $617,490 TOAPPROXIMATELY 970 OUTSTANDING PAYEES AS OF SEPTEMBER 11, 2017.iReporting Source:FirmInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONDate Initiated:10/27/2017Docket/Case Number:3-18270Principal Product Type:Mutual Fund(s)Allegations:ON OCTOBER 27, 2017, UBS FINANCIAL SERVICES INC. ("UBSFSI")ENTERED INTO A SETTLEMENT WITH THE SEC RESULTING IN THE SECISSUING AN ORDER (THE "ORDER") TO WHICH UBSFSI CONSENTED. THEORDER CHARGED THAT UBSFI VIOLATED SECTIONS 17(A)(2) AND 17(A)(3)OF THE SECURITIES ACT OF 1933 BASED ON THE SEC'S FINDING THAT,FROM AT LEAST JANUARY 2010 THROUGH JUNE 2015, UBSFSI DID NOTHAVE ADEQUATE SYSTEMS AND CONTROLS TO DETERMINE WHETHERRETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS WEREELIGIBLE TO RECEIVE WAIVERS OF SALES CHARGES ON CERTAIN MUTUALFUND PURCHASES. AS A RESULT, UBSFI RECOMMENDED AND SOLD AMORE EXPENSIVE MUTUAL FUND SHARE CLASS TO THESE CUSTOMERSWHEN THEY WERE ELIGIBLE FOR A LESS EXPENSIVE SHARE CLASS.UBSFSI DID NOT DISCLOSE THAT IT WOULD RECEIVE GREATERCOMPENSATION FROM THESE CUSTOMERS' PURCHASES OF THE MOREEXPENSIVE SHARE CLASS, OR THAT THE PURCHASE OF THE MOREEXPENSIVE SHARE CLASS WOULD NEGATIVELY IMPACT THE OVERALLRETURN ON THE CUSTOMERS' INVESTMENTS, IN LIGHT OF THEDIFFERENT FEE STRUCTURES FOR THE DIFFERENT FUND SHARECLASSES. THE ORDER NOTED THAT UBSFI ALREADY HAS ISSUEDPAYMENTS TO THE AFFECTED CUSTOMERS REFUNDING THE EXCESSFEES, AND ALREADY HAS CONVERTED EXISTING ELIGIBLE CUSTOMERSTO THE LOWER COST SHARES CLASSES.Current Status:Final41©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CIVIL MONEY PENALTY OF $3.5 MILLION, CENSURE, CEASE AND DESISTINJUNCTIONOther Product Type(s):Resolution Date:10/27/2017Resolution:Other Sanctions Ordered:Sanction Details:UBS PAID THE $3.5 MILLION CIVIL MONEY PENALTY ON 11/13/2017Firm StatementSOLELY FOR THE PURPOSE OF SETTLING THESE PROCEEDINGS, UBSFSICONSENTED TO THE ORDER WITHOUT ADMITTING OR DENYING THEFINDINGS IN THE ORDER, EXCEPT AS TO THE SEC'S JURISDICTION OVERIT AND THE SUBJECT MATTER. THE ALLEGATIONS, DISPOSITIONS,FINDINGS AND SANCTIONS OF THE ORDER ARE DESCRIBED ABOVE INITEMS 7 AND 12.Sanctions Ordered:CensureMonetary/Fine $3,500,000.00Cease and Desist/InjunctionOrderDisclosure 3 of 450iReporting Source:RegulatorAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EFFECTED87 CUSTOMER TRANSACTIONS IN A MUNICIPAL SECURITY IN AN AMOUNTLOWER THAN THE MINIMUM DENOMINATION OF THE ISSUE WHICH WERENOT SUBJECT TO AN EXCEPTION UNDER THE RULE. THE FINDINGSSTATED THAT THE FIRM FAILED TO DISCLOSE ALL MATERIAL FACTSCONCERNING 59 MUNICIPAL SECURITIES TRANSACTIONS AT OR PRIOR TOTHE TIME OF TRADE. SPECIFICALLY, THE FIRM FAILED TO INFORM ITSCUSTOMERS THAT THE MUNICIPAL SECURITIES TRANSACTIONS WERE INAMOUNTS BELOW THE MINIMUM DENOMINATION OF THE ISSUE. THEFINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND THE MUNICIPAL SECURITIES RULEMAKING BOARD(MSRB) RULES, CONCERNING MUNICIPAL SECURITIES TRANSACTIONSEFFECTED ON BEHALF OF A CUSTOMER BELOW AN ISSUE'S MINIMUMCurrent Status:Final42©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/11/2017Docket/Case Number:2015046579201Principal Product Type:Debt - MunicipalOther Product Type(s):DENOMINATION AS STATED ON RELEVANT OFFERING STATEMENTS. THEFIRM'S SUPERVISORY SYSTEM REMAINED DEFICIENT EVEN AFTER THESEC IMPOSED AN UNDERTAKING AS PART OF ITS NOVEMBER 4, 2014ORDER AGAINST THE FIRM, IN WHICH THE FIRM WAS REQUIRED TOREVIEW, AND THEREAFTER MAKE SUCH CHANGES AS NECESSARY TO ITSPOLICIES AND PROCEDURES TO ENSURE COMPLIANCE WITH MSRB RULEG-15(F). AS A RESULT OF THE DEFICIENCIES IN ITS SUPERVISORYSYSTEM, THE FIRM EXECUTED ANOTHER 19 TRANSACTIONS BELOW THEMINIMUM DENOMINATIONS OF AN ISSUE. SPECIFICALLY, AS REQUIRED BYMSRB RULE G-27, THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDEWRITTEN SUPERVISORY PROCEDURES PROVIDING FOR: (1) THEIDENTIFICATION OF THE PERSON RESPONSIBLE FOR SUPERVISION WITHRESPECT TO THE APPLICABLE RULES; (2) A STATEMENT OF THESUPERVISORY STEPS TO BE TAKEN BY THE IDENTIFIED PERSON(S); (3) ASTATEMENT AS TO HOW OFTEN SUCH PERSON SHOULD TAKE SUCHSTEPS; AND (4) A STATEMENT AS TO HOW THE COMPLETION OF THESTEPS INCLUDED IN THE WRITTEN SUPERVISORY PROCEDURES SHOULDBE DOCUMENTED. ADDITIONALLY, THE FIRM FAILED TO HAVE A CONTROLIN PLACE TO PREVENT THE FIRM FROM TRANSACTING MUNICIPALSECURITIES WITH CUSTOMERS BELOW AN ISSUE'S MINIMUMDENOMINATION.Resolution Date:07/11/2017Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureAcceptance, Waiver & Consent(AWC)43©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:UNDERTAKING: REQUIRED TO REVISE THE FIRM'S WRITTENSUPERVISORY PROCEDURESSanction Details:THE FIRM WAS CENSURED, FINED $190,000 AND UNDERTAKES TO REVISEITS WRITTEN SUPERVISORY PROCEDURES. FINRA TOOK INTOCONSIDERATION THAT THE FIRM HAS MADE OFFERS OF RESCISSION.FINES PAID IN FULL ON AUGUST 7, 2017.Monetary/Fine $190,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:07/11/2017Docket/Case Number:2015046579201Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EFFECTED87 CUSTOMER TRANSACTIONS IN A MUNICIPAL SECURITY IN AN AMOUNTLOWER THAN THE MINIMUM DENOMINATION OF THE ISSUE. THE FINDINGSSTATED THAT THE FIRM FAILED TO DISCLOSE ALL MATERIAL FACTSCONCERNING 59 MUNICIPAL SECURITIES TRANSACTIONS AT OR PRIORTO THE TIME OF TRADE. SPECIFICALLY, THE FIRM FAILED TO INFORM ITSCUSTOMERS THAT THE MUNICIPAL SECURITIES TRANSACTIONS WERE INAMOUNTSBELOW THE MINIMUM DENOMINATION OF THE ISSUE. THE FINDINGS ALSOSTATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, ANDMUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) RULES. AS A RESULTOF THE DEFICIENCIES IN ITS SUPERVISORY SYSTEM, THE FIRMEXECUTED ANOTHER 19 TRANSACTIONS BELOW THE MINIMUMDENOMINATIONS OF AN ISSUE.SPECIFICALLY, AS REQUIRED BY MSRB RULE G-27, THE FIRM'SSUPERVISORY SYSTEM DID NOT INCLUDE ADEQUATE WRITTENSUPERVISORY PROCEDURES OR AN ADEQUATE CONTROL IN PLACE TOPREVENT THE FIRM FROM TRANSACTING MUNICIPAL SECURITIES WITHCUSTOMERS BELOW AN ISSUE'S MINIMUM DENOMINATION.Current Status:Final44©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSURE, UNDERTAKINGResolution Date:07/11/2017Resolution:Other Sanctions Ordered:UNDERTAKING: REQUIRED TO REVISE THE FIRM'S WRITTENSUPERVISORY PROCEDURESSanction Details:THE FIRM WAS CENSURED, FINED $190,000 AND UNDERTAKES TO REVISEITS WRITTEN SUPERVISORY PROCEDURES. FINRA TOOK INTOCONSIDERATION THAT THE FIRM HAS MADE OFFERS OF RESCISSION.Sanctions Ordered:CensureMonetary/Fine $190,000.00Acceptance, Waiver & Consent(AWC)Disclosure 4 of 450iReporting Source:RegulatorAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD THE TIME OF ORDER RECEIPT BY ITS FINANCIALADVISORS FOR MANUALLY HANDLED NON-CONVERTIBLE PREFERREDORDERS, FAILED TO ACCURATELY RECORD THE TIME OF ORDER RECEIPTAT ITS TAXABLE FIXED INCOME (TFI) DESK FOR MANUALLY HANDLED NON-CONVERTIBLE PREFERRED ORDERS, AND FAILED TO ACCURATELYRECORD THE TIME OF EXECUTION FOR MANUALLY HANDLED NON-CONVERTIBLE PREFERRED ORDERS. THE FINDINGS STATED THAT THEFIRM FAILED TO ACCURATELY REPORT TO THE ORDER AUDIT TRAILSYSTEM (OATS) THE TIME OF ORDER RECEIPT BY FINANCIAL ADVISORS,FAILED TO ACCURATELY REPORT THE TIME OF ORDER RECEIPT AT THETFI DESK FOR MANUALLY HANDLED NON-CONVERTIBLE PREFERREDORDERS, AND FAILED TO ACCURATELY REPORT THE TIME OF EXECUTIONFOR MANUALLY HANDLED NON-CONVERTIBLE PREFERRED ORDERS. THEFINDINGS ALSO STATED THAT THE FIRM FAILED TO REPORT THEACCURATE TIME OF EXECUTION TO EITHER THE FINRA/NASDAQ TRADEREPORTING FACILITY (FNTRF) OR THE OVER-THE-COUNTER REPORTINGFACILITY (OTCRF) FOR MANUALLY HANDLED NON-CONVERTIBLEPREFERRED TRADES, AND FAILED TO REPORT MANUALLY HANDLED NON-CONVERTIBLE PREFERRED TRANSACTIONS TO THE TRF WITHIN 30 OR 10SECONDS OF EXECUTION. THE FINDINGS ALSO INCLUDED THAT THE FIRMFAILED TO PROVIDE BEST EXECUTION WITH RESPECT TO TRANSACTIONSEXECUTED IN OTC SECURITIES WITH CUSTOMERS OR CUSTOMERS OFANOTHER BROKER-DEALER, BY FAILING TO USE REASONABLE DILIGENCECurrent Status:Final45©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/15/2017Docket/Case Number:2014042190801Principal Product Type:OtherOther Product Type(s):NON-CONVERTIBLE PREFERRED SECURITIESTO ASCERTAIN THE BEST MARKET FOR THE SUBJECT SECURITY AND BYFAILING TO BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANTPRICES TO THE CUSTOMERS WERE AS FAVORABLE AS POSSIBLE UNDERPREVAILING MARKET CONDITIONS. FINRA FOUND THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOAPPLICABLE SECURITIES LAWS AND REGULATIONS, AND/OR FINRA RULESRELATED TO RECORDKEEPING, OATS REPORTING AND TRADEREPORTING. FINRA ALSO FOUND THAT THE FIRM'S SUPERVISORY SYSTEMDID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIESLAWS AND REGULATIONS, AND THE RULES OF FINRA, CONCERNING FINRARULE 5310. SPECIFICALLY, THE FIRM'S SUPERVISORY SYSTEM DID NOTINCLUDE WRITTEN SUPERVISORY PROCEDURES (WSPS) THAT IDENTIFIEDTHE PERSON(S) RESPONSIBLE FOR SUPERVISION. IN ADDITION, THEFIRM'S SUPERVISORY SYSTEM WAS NOT REASONABLY DESIGNED TOENSURE COMPLIANCE WITH FINRA RULE 5310 WITH RESPECT THEEXECUTION OF NEW ISSUE NON-CONVERTIBLE PREFERRED OTCSECURITIES.Resolution Date:05/15/2017Resolution:Other Sanctions Ordered:UNDERTAKINGDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $110,000.00Acceptance, Waiver & Consent(AWC)46©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:THE FIRM WAS CENSURED, FINED $110,000 AND REQUIRED TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES (WSPS). FINES PAID IN FULL ON5/23/17.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:05/15/2017Docket/Case Number:2014042190801Principal Product Type:OtherOther Product Type(s):NON-CONVERTIBLE PREFERRED SECURITIESAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOACCURATELY RECORD AND ACCURATELY REPORT TO THE ORDER AUDITTRAIL SYSTEM (OATS) THE TIME OF EXECUTION AND THE TIME OF ORDERRECEIPT BY ITS FINANCIAL ADVISORS AND ITS TAXABLE PREFERREDINCOME DESK, FOR MANUALLY HANDLED NON-CONVERTIBLE PREFERREDORDERS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOACCURATELY RECORD AND ACCURATELY REPORT TIME OF EXECUTIONTO EITHER THE FINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) ORTHE OVER-THE-COUNTER REPORTING FACILITY (OTCRF) FOR MANUALLYHANDLED NON-CONVERTIBLE PREFERRED TRADES, AND FAILED TOREPORT MANUALLY HANDLED NON-CONVERTIBLE PREFERREDTRANSACTIONS TO THE TRF WITHIN 30 OR 10 SECONDS OF EXECUTION.THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO PROVIDE BESTEXECUTION WITH RESPECT TO CERTAIN TRANSACTIONS EXECUTED INNON CONVERTIBLE PREFERRED SECURITIES WITH CUSTOMERS ORCUSTOMERS OF ANOTHER BROKER-DEALER. FINRA ALSO FOUND THATTHE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDE WRITTENSUPERVISORY PROCEDURES (WSPS) THAT IDENTIFIED THE PERSON(S)RESPONSIBLE FOR SUPERVISION AND DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRULE 5310, APPLICABLE SECURITIES LAWS AND REGULATIONS, AND/ORFINRA RULES RELATED TO RECORDKEEPING, OATS REPORTING, ANDTRADE REPORTING WITH RESPECT TO TRANSACTIONS IN NON-CONVERTIBLE PREFERRED SECURITIES.Current Status:Final47©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSURE, UNDERTAKINGResolution Date:05/15/2017Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:THE FIRM WAS CENSURED, FINED $110,000 AND REQUIRED TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES (WSPS).Sanctions Ordered:CensureMonetary/Fine $110,000.00Acceptance, Waiver & Consent(AWC)Disclosure 5 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/28/2017Docket/Case Number:2016050047501Principal Product Type:Debt - CorporateOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT 43 LARGE BLOCK S1 TRANSACTIONS WITHIN 15 MINUTES OF THETIME OF EXECUTION TO THE TRADE REPORTING AND COMPLIANCEENGINE (TRACE).Current Status:FinalResolution Date:04/28/2017Resolution:Acceptance, Waiver & Consent(AWC)48©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FIND $32,500. FINES PAID IN FULL ON MAY30, 2017.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $32,500.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREDate Initiated:04/28/2017Docket/Case Number:2016050047501Principal Product Type:Debt - CorporateOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT 43 LARGE BLOCK S1 TRANSACTIONS WITHIN 15 MINUTES OF THETIME OF EXECUTION TO THE TRADE REPORTING AND COMPLIANCEENGINE (TRACE).Current Status:FinalResolution Date:04/28/2017Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FIND $32,500.Sanctions Ordered:CensureMonetary/Fine $32,500.00Acceptance, Waiver & Consent(AWC)49©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 6 of 450iReporting Source:RegulatorAllegations:SEC ADMIN RELEASE 34-78958, SEPTEMBER 28, 2016: THE SEC DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTEDPURSUANT TO SECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF1934, AGAINST UBS FINANCIAL SERVICES INC. IN ANTICIPATION OF THEINSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED ANOFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TOACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANYOTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THECOMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, AND WITHOUTADMITTING OR DENYING THE FINDINGS HEREIN, EXCEPT AS TO THECOMMISSION'S JURISDICTION OVER IT AND THE SUBJECT MATTER OFTHESE PROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENTSTO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVEPROCEEDINGS PURSUANT TO SECTION 15(B)(4) OF THE SECURITIESEXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIALSANCTIONS. ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER,THE COMMISSION FINDS THAT DURING THE PERIOD FROM 2011 THROUGH2014 ("RELEVANT PERIOD") UBS FAILED REASONABLY TO SUPERVISE ITSPERSONNEL WITH A VIEW TOWARD PREVENTING VIOLATIONS OF THEFEDERAL SECURITIES LAWS. UBS, THROUGH ITS CAPITAL MARKETSSTRUCTURED SOLUTIONS UNIT (THE "STRUCTURED SOLUTIONS DESK"),FAILED TO DEVELOP AND IMPLEMENT POLICIES AND PROCEDURESREASONABLY DESIGNED TO EDUCATE AND TRAIN UBS REGISTEREDREPRESENTATIVES IN CONNECTION WITH THE STRUCTURED SOLUTIONSDESK'S SINGLE STOCK-LINKED REVERSE CONVERTIBLE NOTES ("RCNS")BUSINESS SO THAT THEY COULD ADEQUATELY UNDERSTAND THE RISKSAND REWARDS OF THE PRODUCT SUCH THAT THE REGISTEREDREPRESENTATIVES COULD FORM A REASONABLE BASIS TO MAKESUITABLE RECOMMENDATIONS TO CERTAIN CUSTOMERS. WITHOUTADEQUATE EDUCATION AND TRAINING, CERTAIN REGISTEREDREPRESENTATIVES MADE UNSUITABLE RECOMMENDATIONS IN RELATIONTO THE OFFER AND SALE OF THESE RCNS TO CERTAIN CUSTOMERS INLIGHT OF THEIR INVESTMENT PROFILES. DURING THE RELEVANT PERIOD,THE STRUCTURED SOLUTIONS DESK STRUCTURED APPROXIMATELY 2,500DIFFERENT RCNS BASED UPON 425 DIFFERENT UNDERLYING STOCKS.THESE PRODUCTS CONTAINED EMBEDDED DERIVATIVES. AMONG OTHERCRITERIA, THE STRUCTURED SOLUTIONS DESK SELECTED UNDERLYINGSINGLE STOCKS WITH IMPLIED VOLATILITY SUFFICIENT TO SUPPORTCurrent Status:Final50©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:09/28/2016Docket/Case Number:3-17587Principal Product Type:OtherOther Product Type(s):SINGLE STOCK-LINKED REVERSE CONVERTIBLE NOTESATTRACTIVE COUPONS AND DOWNSIDE PROTECTION LEVELS ANDINCORPORATED INTO THE PRODUCTS RISK-NEUTRAL, MODEL-DERIVEDRISKS OF LOSS WHICH RANGED FROM A MINIMUM OF A 10% RISK OF A20% LOSS TO A MAXIMUM OF A 40% RISK OF SOME LOSS. UBS SOLDAPPROXIMATELY $10.7 BILLION OF NOTIONAL RCNS TO APPROXIMATELY44,000 CUSTOMER ACCOUNTS DURING THE RELEVANT PERIOD. THESERCNS WERE OFFERED FOR PURCHASE BY RETAIL CUSTOMERS AS A WAYTO ENHANCE YIELD WHILE PROVIDING SOME DOWNSIDE PROTECTION.DURING THE RELEVANT PERIOD, UBS SOLD APPROXIMATELY $548 MILLIONOF NOTIONAL RCNS (ABOUT 5.1% OF TOTAL SALES) TO 8,743 UBS RETAILCUSTOMER ACCOUNTS, MANY OF WHOM HAD LITTLE OR NO RELEVANTINVESTING EXPERIENCE AND HAD IDENTIFIED TO UBS MODESTREPORTED INCOME AND NET WORTH, PRIMARILY MODERATE ORCONSERVATIVE INVESTMENT OBJECTIVES, AND SOME OF WHOM WERERETIRED. NEARLY ALL OF THESE TRANSACTIONS WERE RECOMMENDEDTRANSACTIONS BY UBS REGISTERED REPRESENTATIVES. BECAUSE OFTHE FIRM'S INADEQUATE EDUCATION AND TRAINING, CERTAIN UBSREGISTERED REPRESENTATIVES DID NOT ADEQUATELY UNDERSTANDCERTAIN ASPECTS OF THE RCNS, AND THUS THEY DID NOT ALWAYS FORMA REASONABLE BASIS TO DETERMINE THAT THE RCNS WERE SUITABLEFOR CERTAIN CUSTOMERS. AS A RESULT OF THIS CONDUCT, UBS FAILEDREASONABLY TO FULFILL ITS SUPERVISORY RESPONSIBILITIES WITHINTHE MEANING OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT BECAUSEUBS FAILED TO ESTABLISH REASONABLE POLICIES AND PROCEDURES,AND A SYSTEM FOR APPLYING SUCH PROCEDURES, THAT WOULDREASONABLY BE EXPECTED TO PREVENT AND DETECT THE VIOLATIONSOF SECTION 17(A)(3) OF THE SECURITIES ACT.Resolution Date:09/28/2016Resolution:Order51©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:PREJUDGMENT INTERESTSanction Details:THE FIRM IS CENSURED; SHALL PAY DISGORGEMENT OF $8,227,566 ANDPREJUDGMENT INTEREST OF $798,316; AND SHALL PAY A CIVIL MONEYPENALTY IN THE AMOUNT OF $6,000,000.Regulator StatementIN DETERMINING TO ACCEPT THE OFFER, THE COMMISSION CONSIDEREDREMEDIAL ACTS PROMPTLY UNDERTAKEN BY UBS AND COOPERATIONAFFORDED THE COMMISSION STAFF.IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATEAND IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO INRESPONDENT UBS'S OFFER. ACCORDINGLY, PURSUANT TO SECTION15(B)(4) OF THE EXCHANGE ACT, IT IS HEREBY ORDERED THATRESPONDENT IS CENSURED; SHALL, WITHIN TWENTY (20) DAYS OF THEENTRY OF THIS ORDER, PAY DISGORGEMENT OF $8,227,566 ANDPREJUDGMENT INTEREST OF $798,316 TO THE SEC; AND SHALL, WITHINTWENTY (20) DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVIL MONEYPENALTY IN THE AMOUNT OF $6,000,000 TO THE SEC.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $6,000,000.00Disgorgement/RestitutioniReporting Source:FirmAllegations:ON SEPTEMBER 28, 2016, THE U.S. SECURITIES AND EXCHANGECOMMISSION ("SEC") FILED A SETTLED ORDER ("ORDER"), FINDING THATDURING THE PERIOD OF 2011-2014, UBS FINANCIAL SERVICES INC. ("UBS"OR "THE FIRM") FAILED REASONABLY TO FULFILL SUPERVISORYRESPONSIBILITIES WITHIN THE MEANING OF SECTION 15(B)(4)(E) OF THESECURITIES EXCHANGE ACT OF 1934 ("ACT") BECAUSE UBS FAILED TOESTABLISH REASONABLE POLICIES AND PROCEDURES, AND A SYSTEMFOR APPLYING SUCH PROCEDURES, THAT WOULD REASONABLY BEEXPECTED TO PREVENT AND DETECT VIOLATIONS OF SECTION 17(A)(3)OF THE ACT. THE PRODUCT UNDER REVIEW WAS THE REVERSECONVERTIBLE NOTE ("RCN") WITH A SINGLE STOCK AS THE UNDERLYINGASSET, ALSO CALLED SINGLE-STOCK-LINKED RCNS. THE ORDER FINDSTHAT THE FIRM FAILED REASONABLY TO SUPERVISE ITS RCN SALES BYCurrent Status:Final52©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITY AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREDISGORGEMENTPREJUDGMENT INTERESTDate Initiated:09/28/2016Docket/Case Number:3-17587Principal Product Type:OtherOther Product Type(s):SINGLE STOCK LINKED REVERSE CONVERTIBLE NOTESFAILING TO DEVELOP AND IMPLEMENT ADEQUATE EDUCATION ANDTRAINING FOR ITS FINANCIAL ADVISORS REGARDING CERTAIN ASPECTSOF SINGLE STOCK-LINKED RCNS, INCLUDING FOR EXAMPLE, THE ROLEOF IMPLIED VOLATILITY OF THE UNDERLYING STOCK IN THE SELECTIONOF THE STOCK AS THE ASSET UNDERLYING THE RCN. THE ORDERHIGHLIGHTED THE FIRM'S SIGNIFICANT COOPERATION AND PROMPTENHANCEMENT OF PROCEDURES ADDRESSING THE SEC'S CONCERNS.WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS ANDWITHOUT ADJUDICATION OF ANY ISSUE OF LAW OR FACT, THE FIRMCONSENTED TO THE ORDER.Resolution Date:09/28/2016Resolution:Other Sanctions Ordered:PREJUDGMENT INTERESTSanction Details:WITHOUT ADMITTING OR DENYING THE UNDERLYING ALLEGATIONS ANDWITHOUT ADJUDICATION OF ANY ISSUE OF LAW OR FACT, THE FIRMCONSENTED TO THE ORDER OF CENSURE, AND PAYMENT OFDISGORGEMENT IN THE AMOUNT OF $8,227,566, PREJUDGMENT INTERESTIN THE AMOUNT OF $798,316, AND A CIVIL MONEY PENALTY OF $6,000,000,ALL COMPONENTS OF WHICH WERE PAID ON SEPTEMBER 30, 2016.Sanctions Ordered:CensureMonetary/Fine $6,000,000.00Disgorgement/RestitutionOrderDisclosure 7 of 450iReporting Source:RegulatorCurrent Status:Final53©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/15/2016Docket/Case Number:2013038351701Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOPROVIDE SALES CHARGE WAIVERS TO MUTUAL FUND CUSTOMERSENTITLED TO SUCH WAIVERS THROUGH RIGHTS OF REINSTATEMENT. THEFINDINGS STATED THAT IN ADDITION, THE FIRM FAILED TO ESTABLISH,MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURE THATALL ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERSAVAILABLE THROUGH RIGHTS OF REINSTATEMENT.Resolution Date:08/15/2016Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $250,000. FINE PAID IN FULL ONSEPTEMBER 16, 2016.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $250,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THATCurrent Status:Final54©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREDate Initiated:08/15/2016Docket/Case Number:2013038351701Principal Product Type:Mutual Fund(s)Other Product Type(s):IT FAILED TO PROVIDE SALES CHARGE WAIVERS TO MUTUAL FUNDCUSTOMERS ENTITLED TO SUCH WAIVERS THROUGH RIGHTS OFREINSTATEMENT. THE FINDINGS STATED THAT IN ADDITION, THE FIRMFAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEMAND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE THAT ALL ELIGIBLE CUSTOMERSRECEIVED SALES CHARGE WAIVERS AVAILABLE THROUGH RIGHTS OFREINSTATEMENT.Resolution Date:08/15/2016Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $250,000.Sanctions Ordered:CensureMonetary/Fine $250,000.00Acceptance, Waiver & Consent(AWC)Disclosure 8 of 450iReporting Source:RegulatorInitiated By:FINRAAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)THE ACCURATE TIME OF EXECUTION FOR 99 AGENCY/SECURITIZEDPRODUCT (SP) TRANSACTIONS AND FAILED TO RECORD THE CORRECTTIME OF EXECUTION ON THE MEMORANDUM OF 99 BROKERAGE ORDERSOF SP TRANSACTIONS.Current Status:Final55©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/02/2016Docket/Case Number:2015044192701Principal Product Type:OtherOther Product Type(s):AGENCY/SECURITIZED PRODUCTSResolution Date:03/02/2016Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $17,500.FINE PAID IN FULL ON APRIL 6, 2016.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $17,500.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:FINRADate Initiated:02/18/2016Docket/Case Number:20150441927-01Principal Product Type:No ProductOther Product Type(s):Allegations:DURING 10/1/2014 AND 12/31/2014 FINRA ALLEGED THAT UBS FINANCIALSERVICES INC. VIOLATED FINRA RULE 4511 AND RULE 17A-3 OF THESECURITIES EXCHANGE ACT. THE FIRM NEITHER ADMITTED OR DENIEDTHE FINDINGS.Current Status:Final56©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINEResolution Date:02/29/2016Resolution:Other Sanctions Ordered:Sanction Details:CENSURE AND A FINE OF $17,500Sanctions Ordered:CensureMonetary/Fine $17,500.00Acceptance, Waiver & Consent(AWC)Disclosure 9 of 450iReporting Source:FirmInitiated By:NORTH CAROLINA DEPARTMENT OF THE SECRETARY OF STATESECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:09/09/2015Docket/Case Number:NC FILE NO. 15SEC001Principal Product Type:No ProductOther Product Type(s):Allegations:THE NORTH CAROLINA DEPARTMENT OF THE SECRETARY OF STATESECURITIES DIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1,2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1) MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM NORTHCAROLINA CUSTOMERS WERE REGISTERED IN THE STATE OF NORTHCAROLINA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final57©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:09/17/2015Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $25,000 TO THESTATE OF NORTH CAROLINA. ADDITIONALLY, $126,705.94 WAS PAID TO THESTATE FOR COSTS OF INVESTIGATION. IN ADDITION, UBS WAS ORDEREDTO CEASE AND DESIST THE ACCEPTANCE OF ORDERS IN NORTHCAROLINA BY CLIENT SERVICE ASSOCIATES NOT REGISTERED IN THESTATE OF NORTH CAROLINA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $151,705.94Cease and Desist/InjunctionConsentDisclosure 10 of 450iReporting Source:RegulatorAllegations:SEC ADMIN RELEASES 33-9937; 34-76034; SEPTEMBER 30, 2015: THESECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST UBSFINANCIAL SERVICES INC. ("RESPONDENT"). RESPONDENT WILLFULLYVIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT. THIS MATTERINVOLVES VIOLATIONS OF AN ANTIFRAUD PROVISION OF THE FEDERALSECURITIES LAWS IN CONNECTION WITH RESPONDENT'S UNDERWRITINGOF CERTAIN MUNICIPAL SECURITIES OFFERINGS. RESPONDENT, AREGISTERED BROKER-DEALER, CONDUCTED INADEQUATE DUEDILIGENCE IN CERTAIN OFFERINGS AND AS A RESULT, FAILED TO FORM AREASONABLE BASIS FOR BELIEVING THE TRUTHFULNESS OF CERTAINMATERIAL REPRESENTATIONS IN OFFICIAL STATEMENTS ISSUED INCONNECTION WITH THOSE OFFERINGS. THIS RESULTED IN RESPONDENTOFFERING AND SELLING MUNICIPAL SECURITIES ON THE BASIS OFMATERIALLY MISLEADING DISCLOSURE DOCUMENTS. THE VIOLATIONSWERE SELF-REPORTED BY RESPONDENT TO THE COMMISSIONPURSUANT TO THE DIVISION OF ENFORCEMENT'S (THE "DIVISION")MUNICIPALITIES CONTINUING DISCLOSURE COOPERATION (MCDC)INITIATIVE.Current Status:Final58©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:09/30/2015Docket/Case Number:3-16871Principal Product Type:Debt - MunicipalOther Product Type(s):Resolution Date:09/30/2015Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2)OF THE SECURITIES ACT, PAY A CIVIL MONEY PENALTY IN THEAMOUNT OF $480,000 AND COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER OF SETTLEMENT.Regulator StatementIN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THEPURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGSBROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THECOMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THEFINDINGS, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT ANDTHE SUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TOSECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTION 15(B) OF THESECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSINGREMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER. IN VIEW OF THEDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $480,000.00Cease and Desist/InjunctionOrder59©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFOREGOING, THE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO INRESPONDENT'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED THATRESPONDENT SHALL, CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF 17(A)(2)OFTHE SECURITIES ACT; WITHIN TEN (10) DAYS OF THE ENTRY OF THISORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $480,000 TO THESECURITIES AND EXCHANGE COMMISSION; AND RETAIN AN INDEPENDENTCONSULTANT TO CONDUCT A REVIEW OF RESPONDENT'S POLICIES ANDPROCEDURES AS THEY RELATE TO MUNICIPAL SECURITIESUNDERWRITING DUE DILIGENCE.iReporting Source:FirmInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONAllegations:ON SEPTEMBER 30, 2015 UBS FINANCIAL SERVICES INC. CONSENTED TOAND BECAME THE SUBJECT OF AN ORDER BY THE U.S. SECURITIES ANDEXCHANGE COMMISSION ("SEC") IN CONNECTION WITH THE SEC'SMUNICIPALITIES CONTINUING DISCLOSURE COOPERATION INITIATIVE("MCDC INITIATIVE"). AT APPROXIMATELY THE SAME TIME, 21 OTHER FIRMSALSO CONSENTED TO AND BECAME THE SUBJECT OF SIMILAR ORDERSBY THE SEC.UNDER THE MCDC INITIATIVE, THE FIRM AND OTHER UNDERWRITERS, INTHEIR CAPACITY AS UNDERWRITERS INVOLVED IN THE OFFER AND SALEOF MUNICIPAL SECURITIES, SELF-REPORTED POSSIBLE VIOLATIONSINVOLVING MATERIALLY INACCURATE STATEMENTS, RELATING TO ISSUERPRIOR COMPLIANCE WITH CONTINUING DISCLOSURE OBLIGATIONSSPECIFIED IN RULE 15C2-12, MADE IN OFFICIAL STATEMENTS. THE ORDERCONTAINS A FINDING THAT THE FIRM VIOLATED SECTION 17(A)(2) OF THESECURITIES ACT OF 1933 BY FAILING TO FORM A REASONABLE BASISTHROUGH ADEQUATE DUE DILIGENCE FOR BELIEVING THETRUTHFULLNESS OF ASSERTIONS BY ISSUERS AND/OR OBLIGORSREGARDING THEIR COMPLIANCE WITH PREVIOUS CONTINUINGDISCLOSURE UNDERTAKINGS PURSUANT TO RULE 15C2-12 INCONNECTION WITH THE FIRM'S UNDERWRITING OF MUNICIPALSECURITIES. WITHOUT ADMITTING OR DENYING THE UNDERLYINGALLEGATIONS AND WITHOUT ADJUDICATION OF ANY ISSUE OF LAW ORFACT, THE FIRM CONSENTED TO A CEASE AND DESIST ORDER IMPOSING ACENSURE, A CIVIL MONETARY PENALTY OF $480,000 AND ORDERING ANUNDERTAKING TO RETAIN AN INDEPENDENT CONSULTANT TO PROVIDERECOMMENDATIONS REGARDING THE FIRM'S MUNICIPAL UNDERWRITINGDUE DILIGENCE AND PROCEDURES.Current Status:Final60©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL PENALTY, UNDERTAKINGSDate Initiated:09/30/2015Docket/Case Number:3-16871Principal Product Type:Debt - MunicipalOther Product Type(s):Resolution Date:09/30/2015Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS CONTAINED IN THEMCDC ORDER, WITH THE EXCEPTION OF THE COMMISSION'SJURISDICTION OVER IT AND THE SUBJECT MATTER OF THEPROCEEDINGS, UBS FINANCIAL SERVICES INC. AGREED TO CONSENT TO:(A) CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONSAND ANY FUTURE VIOLATIONS OF SECTION 17(A)(2) OF THE SECURITIESACT, (B) PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $480,000.00 AND(C) COMPLY WITH CERTAIN UNDERTAKINGS.Firm StatementTHE MCDC WAS A VOLUNTARY INITIATE IN WHICH THE SEC ENCOURAGEDMUNICIPAL ISSUERS AND UNDERWRITERS TO SELF-REPORT VIOLATIONSINVOLVING MATERIALLY INACCURATE STATEMENTS RELATING TO PRIORCOMPLIANCE WITH THE CONTINUING DISCLOSURE OBLIGATIONSSPECIFIED IN RULE 15C2-12 UNDER THE SECURITIES EXCHANGE ACT.Sanctions Ordered:Monetary/Fine $480,000.00Cease and Desist/InjunctionOrderDisclosure 11 of 450iReporting Source:RegulatorAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOPROPERLY RETAIN AND REVIEW ATTACHMENTS TO CERTAIN WRITTENELECTRONIC COMMUNICATIONS SENT TO OR RECEIVED BY FIRMEMPLOYEES. THE FIRM'S EMPLOYEES, IN ADDITION TO USING FIRM'SEMAIL SYSTEMS, ALSO USED BLOOMBERG L.P, (BLOOMBERG)ELECTRONIC MAIL AND INSTANT MESSAGES (COLLECTIVELY, BLOOMBERGCurrent Status:Final61©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/03/2015Docket/Case Number:2011030806901Principal Product Type:No ProductOther Product Type(s):MESSAGES) SERVICE TO COMMUNICATE INTERNALLY AND EXTERNALLY.EACH DAY, BLOOMBERG PROVIDED THE FIRM WITH COPIES OF ALL OF ITSBLOOMBERG MESSAGES AND THEIR ATTACHMENTS SO THAT THE FIRMCOULD INGEST THEM INTO ITS EMAIL REVIEW SYSTEM AND RETAIN THEM.BLOOMBERG POSTED TO A FILE-TRANSFER PROTOCOL (FTP) SITE ONEFILE CONTAINING ALL OF THE BLOOMBERG MESSAGES AND ANOTHERFILE CONTAINING ALL OF THEIR ATTACHMENTS. THE FIRM THENDOWNLOADED THOSE TWO FILES INTO ITS OWN SYSTEM FOR RETENTIONAND SUPERVISION. HOWEVER, WITHOUT INFORMING THE FIRM,BLOOMBERG CHANGED THE WAY IT POSTED ELECTRONIC FILES TO THEFTP SITE. BECAUSE THE FIRM WAS NOT NOTIFIED OF THE CHANGE, ONDAYS WHEN BLOOMBERG POSTED MULTIPLE ATTACHMENT FILES, THEFIRM'S SYSTEM DOWNLOADED ONLY ONE OF THE FILES FROM THE FTPSITE FOR RETENTION AND SUPERVISION AND DID NOT DOWNLOAD ANYADDITIONAL FILES CONTAINING ATTACHMENTS. BECAUSE THE FIRM DIDNOT DOWNLOAD THE ADDITIONAL FILES, IT WAS NOT ABLE TO REVIEWTHE ATTACHMENTS CONTAINED IN THOSE FILES. THE FIRM'S SYSTEM DIDNOT DETECT ANY ERROR BECAUSE IT WAS PROGRAMMED TO DOWNLOADONE ATTACHMENT FILE. FOR OVER TWO YEARS, THE FIRM'S EMPLOYEESSENT AND RECEIVED APPROXIMATELY 13 MILLION BLOOMBERGMESSAGES WITH ATTACHMENTS; ABOUT 8 MILLION SUCH MESSAGES HADATTACHMENTS THAT WERE NOT INGESTED INTO THE FIRM'S ARCHIVE ANDTHEREFORE NOT AVAILABLE FOR SUPERVISORY REVIEW. NONE OF THEATTACHMENTS WAS DELETED OR LOST. THE FIRM DISCOVERED THEPROBLEM THEREAFTER, AND CORRECTED IT WITHIN A MONTH. THEFINDINGS STATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE A SUPERVISORY SYSTEM AND/OR WRITTEN SUPERVISORYPROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVE THEFIRM'S COMPLIANCE WITH APPLICABLE RULES REGARDING THE REVIEWAND STORAGE OF ELECTRONIC COMMUNICATIONS.Resolution:Acceptance, Waiver & Consent(AWC)62©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:09/03/2015Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES INC. WAS CENSURED AND FINED $200,000. FINEPAID IN FULL ON SEPTEMBER 23, 2015.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $200,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:09/02/2015Docket/Case Number:2011030806901Principal Product Type:No ProductOther Product Type(s):Allegations:SINCE BEFORE 2008, BLOOMBERG PROVIDED UBS WITH COPIES OF ALLOF ITS BLOOMBERG MESSAGES AND THEIR ATTACHMENTS BY POSTINGTHEM TO A FILE-TRANSFER PROTOCOL SITE. IN OR AROUND EARLY 2008,WITHOUT INFORMING UBS, BLOOMBERG CHANGED THE WAY IT POSTEDELECTRONIC FILES TO THE FTP SITE. BECAUSE UBS WAS NOT NOTIFIEDOF THE CHANGE, ON DAYS WHEN BLOOMBERG POSTED MULTIPLEATTACHMENT FILES, UBS'S SYSTEM DOWNLOADED ONLY ONE OF THEFILES FROM THE FTP SITE FOR RETENTION AND SUPERVISION AND DIDNOT DOWNLOAD ANY ADDITIONAL FILES CONTAINING ATTACHMENTS. THEISSUE AFFECTED ONLY ATTACHMENTS, NOT THE MESSAGESTHEMSELVES, AND NONE OF THE ATTACHMENTS WAS DELETED OR LOST.UBS DISCOVERED THIS ISSUE IN OCTOBER 2011 AND CORRECTED IT INNOVEMBER 2011. UBS SELF-REPORTED THIS MATTER TO FINRA INDECEMBER 2011.Current Status:Final63©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSUREResolution Date:09/02/2015Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES, INC. WAS ISSUED A CENSURE AND A FINE OF$200,000.00.Sanctions Ordered:CensureMonetary/Fine $200,000.00Acceptance, Waiver & Consent(AWC)Disclosure 12 of 450iReporting Source:RegulatorAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT FROM JULY2009 THROUGH DECEMBER 2013, THE FIRM FAILED TO REASONABLYSUPERVISE AND TO HAVE AN ADEQUATE SUPERVISORY SYSTEM,INCLUDING ADEQUATE WRITTEN SUPERVISORY PROCEDURES, TOADDRESS SHORT POSITIONS IN TAX-EXEMPT MUNICIPAL BONDS THATRESULTED PRIMARILY FROM TRADING ERRORS AT THE FIRM'S RETAILBRANCHES. THE FINDINGS STATED THAT AS A RESULT OF THESESUPERVISORY FAILURES, THE FIRM INACCURATELY REPRESENTED TOAPPROXIMATELY 4,371 CUSTOMERS THAT APPROXIMATELY $1,174,000 ININTEREST THAT THE FIRM PAID TO THOSE CUSTOMERS WAS EXEMPTFROM TAXATION. IN FACT, THE FIRM DID NOT HOLD THE BONDS ONBEHALF OF THE CUSTOMERS AND THE INTEREST THAT THE CUSTOMERSRECEIVED WAS PAID BY THE FIRM AND THUS TAXABLE AS ORDINARYINCOME. THIS RESULTED IN THE UNDERPAYMENT OF NOT LESS THAN$282,261 IN FEDERAL INCOME TAXES. THE FIRM FAILED TO CONSIDER,AND ITS AUTOMATED SYSTEM THAT CALCULATED THE INTEREST OWEDTO CUSTOMERS DID NOT TAKE INTO ACCOUNT, WHETHER THE INTERESTIT PAID TO CUSTOMERS SHOULD BE CODED AS NON-TAXABLE WHEN THEINTEREST WAS PAID BY THE FIRM RATHER THAN THE MUNICIPAL ISSUER.THE FINDINGS ALSO STATED THAT THE FIRM DID NOT PROVIDE ADEQUATEGUIDANCE OR OVERSIGHT ON HOW AND WHEN MUNICIPAL SHORTPOSITIONS SHOULD BE COVERED. THIS DEFICIENCY MAY HAVE BEENPROLONGED DUE TO THE DIFFICULTY OF COVERING THESE POSITIONS INLIGHT OF THE CHARACTERISTICS OF MUNICIPAL SECURITIES AS WELL ASTHE LIMITED AMOUNT OUTSTANDING OF A PARTICULAR MUNICIPAL BOND.BEGINNING IN 2012, THE FIRM RECOGNIZED THAT SHORT POSITIONSCurrent Status:Final64©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/12/2015Docket/Case Number:2014041645601Principal Product Type:Debt - MunicipalOther Product Type(s):WERE NOT BEING COVERED IN A TIMELY FASHION AND UNDERTOOKEFFORTS THAT REDUCED THE NUMBER OF SHORT POSITIONS.NEVERTHELESS, DURING THE RELEVANT PERIOD, THE FIRM OFTEN DIDNOT COVER MUNICIPAL SHORT POSITIONS FOR A MONTH OR MORE, ANDSOME OF THE SHORT POSITIONS WERE NOT COVERED FOR MORE THAN AYEAR. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TODISCLOSE TO CUSTOMERS THAT THEY WERE NOT RECEIVING TAX-EXEMPT INTEREST WHEN THE FIRM WAS SHORT MUNICIPAL SECURITIES.IN ADDITION, AS A RESULT OF THE FOREGOING, THE FIRM SENTINACCURATE FORMS 1099 TO CUSTOMERS WHO RECEIVED FIRM-PAIDINTEREST FOR CALENDAR YEARS 2009 THROUGH 2012 AND ALSO SENTINACCURATE ACCOUNT STATEMENTS TO CERTAIN CUSTOMERS DURINGTHE REVIEW PERIOD THAT INCORRECTLY CLASSIFIED FIRM-PAIDINTEREST AS TAX-EXEMPT WHEN IT SHOULD HAVE BEEN CLASSIFIED ASTAXABLE. THE FIRM DID NOT MAINTAIN RECORDS IDENTIFYINGPARTICULAR CUSTOMER ACCOUNTS THAT OFFSET ITS SHORT MUNICIPALBOND POSITIONS. THE FIRM'S SHORT POSITIONS WERE HELD INAGGREGATE AND NOT ALLOCATED TO SPECIFIED CUSTOMERS. BECAUSETHE FIRM'S SHORT MUNICIPAL BOND POSITIONS WERE NOT OFFSETAGAINST SPECIFIC CUSTOMER HOLDINGS, IT WAS UNABLE TOACCURATELY REPORT TAXABLE INCOME TO ITS CUSTOMERS WHO WERERECEIVING FIRM-PAID INTEREST AS TAXABLE INCOME.Resolution Date:08/12/2015Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoAcceptance, Waiver & Consent(AWC)65©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $750,000. FINE PAID IN FULL ONSEPTEMBER 14, 2015.Sanctions Ordered:CensureMonetary/Fine $750,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREDate Initiated:08/12/2015Docket/Case Number:2014041645601Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, UBS FINANCIALSERVICES, INC. ("UBS") CONSENTED TO THE ENTRY OF A LETTER OFACCEPTANCE, WAIVER AND CONSENT ("AWC") THAT ALLEGED THAT UBSFAILED TO REASONABLY SUPERVISE AND TO HAVE AN ADEQUATESUPERVISORY SYSTEM, INCLUDING ADEQUATE WRITTEN SUPERVISORYPROCEDURES, TO ADDRESS CERTAIN SHORT POSITIONS IN TAX-EXEMPTMUNICIPAL BONDS IN VIOLATION OF MSRB RULES G-8,G-17 AND G-27. FINRA ALLEGED THAT UBS INACCURATELY REPRESENTEDTO APPROXIMATELY 4,371 CUSTOMERS THAT AT LEAST $1,165,000 ININTEREST THAT THE FIRM PAID TO THOSE CUSTOMERS WAS EXEMPTFROM TAXATION, WHICH RESULTED IN THE UNDERPAYMENT OF NOT LESSTHAN $282,261 IN FEDERAL INCOME TAXES.Current Status:FinalResolution Date:08/12/2015Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES, INC. WAS CENSURED AND FINED $750,000.Sanctions Ordered:CensureMonetary/Fine $750,000.00Acceptance, Waiver & Consent(AWC)66©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 13 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/18/2015Docket/Case Number:2013038746301Principal Product Type:OtherOther Product Type(s):SECURITIZED PRODUCTS AND AGENCY DEBT.Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT THE ACCURATE TIME OF EXECUTION OF TRANSACTIONS INTRADE REPORTING AND COMPLIANCE ENGINE (TRACE)-ELIGIBLESECURITIZED PRODUCTS TO TRACE. THE FINDINGS STATED THAT THEFIRM FAILED TO RECORD THE CORRECT TIME OF EXECUTION ON THEMEMORANDUM OF BROKERAGE ORDERS OF SECURITIZED PRODUCTTRANSACTIONS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREPORT TRANSACTIONS IN TRACE-ELIGIBLE S1 AGENCY DEBTSECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION TO TRACE.Current Status:FinalResolution Date:06/18/2015Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $45,000. FINE PAID IN FULL ONSEPTEMBER 9, 2015.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $45,000.00Acceptance, Waiver & Consent(AWC)67©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREDate Initiated:06/18/2015Docket/Case Number:2013038746301Principal Product Type:OtherOther Product Type(s):SECURITIZED PRODUCTS AND AGENCY DEBTAllegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOREPORT THE ACCURATE TIME OF EXECUTION OFTRANSACTIONS IN TRADE REPORTING AND COMPLIANCE ENGINE(TRACE)-ELIGIBLE SECURITIZED PRODUCTS TO TRACE. THE FINDINGSSTATED THAT THE FIRM FAILED TO RECORD THE CORRECTTIME OF EXECUTION ON THE MEMORANDUM OF BROKERAGE ORDERS OFSECURITIZED PRODUCT TRANSACTIONS. THE FINDINGS ALSO STATEDTHAT THE FIRM FAILED TO REPORT TRANSACTIONS IN TRACE-ELIGIBLE S1AGENCY DEBT SECURITIES WITHIN 15 MINUTES OF THE TIME OFEXECUTION TO TRACE.Current Status:FinalResolution Date:06/18/2015Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $45,000.Sanctions Ordered:CensureMonetary/Fine $45,000.00Acceptance, Waiver & Consent(AWC)Disclosure 14 of 450iReporting Source:RegulatorAllegations:NFA RELEASE, MARCH 18, 2015: HAVING REVIEWED THE COMPLAINTCurrent Status:Final68©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL FUTURES ASSOCIATIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/18/2015Docket/Case Number:15-BCC-006Principal Product Type:OtherOther Product Type(s):SECURED AMOUNT FUNDS ACCOUNT; NON-SECURED AMOUNT FUNDSACCOUNTISSUED BY THE BUSINESS CONDUCT COMMITTEE OF NFA, AND HAVINGCONSIDERED THE OFFER OF SETTLEMENT SUBMITTED BY UBS FINANCIALSERVICES, LLC. AND HAVING ACCEPTED THE OFFER, THIS COMMITTEEHEREBY ISSUES THIS DECISION AS TO UBS. THE COMMITTEE ISSUED ACOMPLAINT AGAINST UBS, A FUTURES COMMISSION MERCHANT MEMBEROF NFA. THE COMPLAINT ALLEGED THAT, ON OCTOBER 7, 2014,APPROXIMATELY $12 MILLION WAS AUTO-SWEPT OVERNIGHT BY UBS'SBANK DEPOSITORY FROM A CUSTOMER SECURED AMOUNT FUNDSACCOUNT TO A NON-SECURED AMOUNT FUNDS ACCOUNT; THAT THISTRANSFER CONSTITUTED A WITHDRAWAL OF MORE THAN 25% OF THETARGET RESIDUAL INTEREST AMOUNT; THAT, ON OCTOBER 8, 2014, THEMONEY WAS SWEPT BACK INTO THE SECURED AMOUNT FUNDSACCOUNTS; AND THAT, AS THE TRANSFER OF FUNDS WAS GENERATED BYTHE FIRM'S DEPOSITORY, UBS DID NOT OBTAIN WRITTEN PRE-APPROVALOF A FINANCIAL PRINCIPAL AND SUBMIT THE PRE-APPROVAL TO NFAPRIOR TO THE TRANSFER OF SUCH FUNDS, IN VIOLATION OF NFAFINANCIAL REQUIREMENTS SECTIONS 16(A) AND (C). THE COMPLAINTFURTHER ALLEGES THAT, ON OCTOBER 24, 2014, A UBS EMPLOYEEMOVED APPROXIMATELY $11.7 MILLION FROM UBS'S CUSTOMERSECURED AMOUNT FUNDS ACCOUNT TO A NON-SECURED AMOUNTFUNDS ACCOUNT; THAT TRANSFER ALSO CONSTITUTED A WITHDRAWALOF MORE THAN 25% OF THE TARGET RESIDUAL INTEREST AMOUNT; ANDTHAT UBS DID NOT OBTAIN WRITTEN PRE-APPROVAL OF A FINANCIALPRINCIPAL AND SUBMIT THE PRE-APPROVAL TO NFA PRIOR TO THETRANSFER OF THESE FUNDS, IN VIOLATION OF NFA FINANCIALREQUIREMENTS SECTIONS 16(A) AND (C).Resolution Date:03/18/2015Resolution:Decision69©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE FIRM WAS FINED $17,500.Regulator StatementPURSUANT TO THE OFFER, THE COMMITTEE FINDS THAT UBS VIOLATEDNFA FINANCIAL REQUIREMENTS SECTION 16, AS ALLEGED IN THECOMPLAINT. PURSUANT TO THE OFFER, THE COMMITTEE ORDERS UBS TOPAY A $17,500 FINE TO NFA WITHIN 30 DAYS OF THE EFFECTIVE DATE OFTHIS DECISION. THE COMPLAINT IN THIS CASE AS WELL AS THIS DECISIONACCEPTING UBS'S OFFER MAY BE INTRODUCED INTO EVIDENCE BY NFA INANY FUTURE PROCEEDING AGAINST UBS FOR THE PURPOSE OFSHOWING UBS'S DISCIPLINARY HISTORY.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $17,500.00iReporting Source:FirmInitiated By:NATIONAL FUTURES ASSOCIATIONDate Initiated:03/18/2015Docket/Case Number:15-BCC-006Principal Product Type:OtherAllegations:THE NFA ALLEGED THAT, ON OCTOBER 7, 2014, THE FIRM'S BANKDEPOSITORY AUTO-SWEPT FUNDS FROM A CUSTOMER SECUREDAMOUNT FUNDS ACCOUNT TO A NON-SECURED AMOUNT FUNDSACCOUNT IN AN AMOUNT EXCEEDING 25% OF THE TARGET RESIDUALINTEREST AMOUNT WITHOUT OBTAINING WRITTEN PRE-APPROVAL OF AFINANCIAL PRINCIPAL AND SUBMITTING THE PRE-APPROVAL TO THE NFA.THE FUNDS WERE SWEPT BACK INTO THE SECURED AMOUNT FUNDSACCOUNT ON OCTOBER 8, 2014. THE NFA FURTHER ALLEGES THAT, ONOCTOBER 24, 2014, A FIRM EMPLOYEE INADVERTENTLY MOVED FUNDSFROM THE FIRM'S CUSTOMER SECURED AMOUNT FUNDS ACCOUNT TO ANON-SECURIED AMOUNT FUNDS ACCOUNT IN AN AMOUNT EXCEEDING25% OF THE TARGET RESIDIUAL INTEREST AMOUNT WITHOUT OBTAININGWRITTEN PRE-APPROVAL OF A FINANCIAL PRINCIPAL AND SUBMITTINGTHE PRE-APPROVAL TO THE NFA. NO CLIENTS WERE HARMED.Current Status:Final70©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Other Product Type(s):SECURED AMOUNT FUNDS ACCOUNT; NON-SECURED AMOUNT FUNDSACCOUNTResolution Date:03/18/2015Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS FINED $17,500.Sanctions Ordered:Monetary/Fine $17,500.00DecisionDisclosure 15 of 450iReporting Source:RegulatorInitiated By:FINRADate Initiated:03/10/2015Docket/Case Number:2013037118101Principal Product Type:No ProductOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOAMEND, OR TIMELY AMEND, THE FORM U4 FOR REGISTEREDREPRESENTATIVES TO REPORT UNSATISFIED TAX LIENS AND CIVILJUDGMENTS. THE FINDINGS STATED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURE THATIT DISCLOSED REPORTABLE UNSATISFIED LIENS AND JUDGMENTS OFREGISTERED REPRESENTATIVES ON THE FORM U4. THE FIRM'S PAYROLLDEPARTMENT PROCESSED NUMEROUS WAGE GARNISHMENT ORDERSFOR REGISTERED REPRESENTATIVES THAT CLEARLY INDICATED THATTHERE WAS AN UNSATISFIED LIEN OR JUDGMENT ASSOCIATED WITH THEGARNISHMENT ACTION. NEVERTHELESS, THE FIRM DID NOT HAVE ANYSUPERVISORY PROCEDURES IN PLACE TO ENSURE THAT THE PAYROLLDEPARTMENT NOTIFIED COMPLIANCE OR SUPERVISORY PERSONNEL TODETERMINE IF THE GARNISHMENT INVOLVED A REPORTABLE EVENT.Current Status:Final71©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/AResolution Date:03/10/2015Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $500,000. 4/2/2015 FINE PAID INFULL.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $500,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:03/10/2015Docket/Case Number:2013037118101Principal Product Type:No ProductOther Product Type(s):Allegations:FINRA ALLEGED THAT THE FIRM DID NOT HAVE ANY SUPERVISORYPROCEDURES IN PLACE TO ENSURE THAT THE PAYROLL DEPARTMENTNOTIFIED COMPLIANCE OR SUPERVISORY PERSONNEL TO DETERMINE IFTHE WAGE GARNISHMENTS THEY RECEIVED INVOLVED A REPORTABLEEVENT ON A FORM U4. WITHOUT ADMITTING OR DENYING THE FINDINGS,THE FIRM CONSENTED TO THE SANCTIONS AND TO FINDINGS THAT ITFAILED TO AMEND, OR TIMELY AMEND, THE FORM U4 FOR A SMALLNUMBER OF REGISTERED REPRESENTATIVES TO REPORT UNSATISFIEDTAX LIENS AND CIVIL JUDGMENTS.Current Status:Final72©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSUREResolution Date:03/10/2015Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED AND FINED $500,000.Sanctions Ordered:CensureMonetary/Fine $500,000.00Acceptance, Waiver & Consent(AWC)Disclosure 16 of 450iReporting Source:FirmInitiated By:STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:11/24/2014Docket/Case Number:14-089-SPrincipal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATIONALLEGED THAT UBS HAD INADEQUATE SUPERVISORY PROCESSES ANDPROCEDURES REGARDING THE RECOMMENDATION AND ENGAGEMENTOF A THIRD PARTY INVESTMENT MANAGER ON ONE OF THE FIRM'SSEPARATELY MANAGED ACCOUNT PLATFORMS IN CONNECTION WITHCERTAIN VERMONT CLIENTS.Current Status:FinalResolution Date:12/01/2014Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $325,000.00Cease and Desist/InjunctionConsent73©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:FINE OF $325,000 PAID.Firm StatementUBS IMPLEMENTED CERTAIN ENHANCEMENTS TO ITS SUPERVISORYPROCESSES AND PROCEDURES TO ADDRESS AND RESOLVE THECONCERNS RAISED.Disclosure 17 of 450iReporting Source:RegulatorAllegations:SEC ADMIN RELEASE 34- 73505 / NOVEMBER 3, 2014: THE SECURITIES ANDEXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B), 15B(C)(2) AND 21C OF THE SECURITIES EXCHANGE ACTOF 1934 ("EXCHANGE ACT") AGAINST UBS FINANCIAL SERVICES, INC.("UBS" OR "RESPONDENT"). IN ANTICIPATION OF THE INSTITUTION OFTHESE PROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OFSETTLEMENT (THE "OFFER") WHICH THE COMMISSION HAS DETERMINEDTO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS ANDANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THECOMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, AND WITHOUTADMITTING OR DENYING THE FINDINGS HEREIN, EXCEPT AS TO THECOMMISSION'S JURISDICTION OVER IT AND THE SUBJECT MATTER OFTHESE PROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENTSTO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTIONS 15(B),15B(C)(2) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER. ON THE BASIS OF THIS ORDER AND RESPONDENT'SOFFER, THE COMMISSION FINDS THAT: THESE PROCEEDINGS INVOLVETHE SALE OF NON-INVESTMENT GRADE OR "JUNK" BONDS ISSUED BY THECOMMONWEALTH OF PUERTO RICO ("PUERTO RICO") BY UBS, AREGISTERED BROKER-DEALER AND MUNICIPAL SECURITIES DEALER, TOCUSTOMERS IN AMOUNTS BELOW THE MINIMUM DENOMINATION OF THEISSUE. RULE G-15(F) PROMULGATED BY THE MUNICIPAL SECURITIESRULEMAKING BOARD ("MSRB") PROHIBITS DEALERS FROM EFFECTINGCUSTOMER TRANSACTIONS IN MUNICIPAL SECURITIES IN AMOUNTSBELOW THE MINIMUM DENOMINATIONS OF THE ISSUES. MINIMUMDENOMINATIONS ARE GENERALLY INTENDED TO LIMIT SALES OFMUNICIPAL SECURITIES TO RETAIL CUSTOMERS FOR WHOM SUCH BONDSMAY NOT BE SUITABLE, BUT THE PROSCRIPTIONS OF RULE G-15(F) APPLYTO ALL TRANSACTIONS WITH CUSTOMERS, REGARDLESS OF WHETHERTHE SECURITIES ARE SUITABLE FOR THE CUSTOMER. IN MARCH 2014,Current Status:Final74©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:11/03/2014Docket/Case Number:3-16239Principal Product Type:OtherOther Product Type(s):NON-INVESTMENT GRADE OR "JUNK" BONDSUBS VIOLATED MSRB RULE G-15(F) BY EXECUTING FIVE UNSOLICITEDSALES TRANSACTIONS IN THE PUERTO RICO BONDS WITH CUSTOMERS INAMOUNTS BELOW THE $100,000 MINIMUM DENOMINATION OF THE ISSUEESTABLISHED BY THE ISSUER, PUERTO RICO, AND SPECIFIED IN THEOFFICIAL STATEMENT. THE LIMITED EXCEPTIONS PROVIDED UNDER MSRBRULE G-15(F) FOR CUSTOMER TRANSACTIONS IN MUNICIPAL SECURITIESBELOW THE MINIMUM DENOMINATION OF AN ISSUE DID NOT APPLY TOTHESE TRANSACTIONS. RESPONDENT INFORMED THE CUSTOMERS OFTHE RISKS OF TRADING IN THE 2014 BONDS BEFORE EXECUTING THETRADES. AS A RESULT OF THE CONDUCT, RESPONDENT WILLFULLYVIOLATED MSRB RULE G-15(F). AS A RESULT OF RESPONDENT'S WILLFULVIOLATIONS OF MSRB RULE G-15(F), RESPONDENT WILLFULLY VIOLATEDSECTION 15B(C)(1) OF THE EXCHANGE ACT.Resolution Date:11/03/2014Resolution:Other Sanctions Ordered:Sanction Details:ACCORDINGLY, IT IS HEREBY ORDERED THAT: RESPONDENT CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF SECTION 15B(C)(1) OF THE EXCHANGE ACT ANDMSRB RULE G-15(F) . RESPONDENT IS CENSURED. RESPONDENT SHALL,Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $56,400.00Cease and Desist/InjunctionOrder75©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWITHIN SEVEN (7) DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVILMONEY PENALTY IN THE AMOUNT OF $56,400. RESPONDENT WILLFULLYVIOLATED MSRB RULE G-15(F). AS A RESULT OF RESPONDENT'S WILLFULVIOLATIONS OF MSRB RULE G-15(F), RESPONDENT WILLFULLY VIOLATEDSECTION 15B(C)(1) OF THE EXCHANGE ACT.Regulator StatementIN DETERMINING TO ACCEPT THE OFFER, THE COMMISSION CONSIDEREDREMEDIAL ACTS PROMPTLY UNDERTAKEN BY RESPONDENT. AFTER ITBECAME AWARE THAT IT HAD EFFECTED CUSTOMER TRANSACTIONS INTHE 2014 BONDS BELOW THE MINIMUM DENOMINATION OF THE ISSUE,RESPONDENT CANCELLED THE TRANSACTIONS AND AMENDED ITSPOLICIES AND PROCEDURES TO ENSURE COMPLIANCE WITH MSRB RULEG-15(F). RESPONDENT WILL UNDERTAKE TO REVIEW THE ADEQUACY OFITS EXISTING POLICIES AND PROCEDURES RELATING TO COMPLIANCEWITH MSRB RULE G-15(F). AFTER THAT REVIEW, RESPONDENT WILL MAKESUCH CHANGES AS ARE NECESSARY TO EFFECT COMPLIANCE WITHMSRB RULE G-15(F), INCLUDING ADOPTING NEW POLICIES ANDPROCEDURES OR SUPPLEMENTING EXISTING POLICIES ANDPROCEDURES. RESPONDENT WILL IMPLEMENT THESE POLICIES ANDPROCEDURES, AND CONDUCT TRAINING AS TO THE POLICIES ANDPROCEDURES AND COMPLIANCE WITH MSRB RULE G-15(F). RESPONDENTWILL INFORM COMMISSION STAFF NO LATER THAN SIX (6) MONTHS AFTERTHE ENTRY OF THIS ORDER THAT IT HAS COMPLIED WITH THE ABOVEUNDERTAKINGS.iReporting Source:FirmInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistDate Initiated:11/03/2014Docket/Case Number:3-16239Principal Product Type:OtherOther Product Type(s):NON-INVESTMENT GRADE OR "JUNK" BONDSAllegations:THE SEC FOUND THAT THE FIRM VIOLATED THE EXCHANGE ACT SECTION15B(C)(1) AND MSRB RULE G-15(F)BY EFFECTING FOUR TRANSACTIONS INMUNICIPAL BONDS UNDER THE MINIMUM DENOMINATION REQUIREMENTIN THE PROSPECTUS.THE FIRM HAS NEITHER ADMITTED NOR DENIEDTHESE FINDINGS.Current Status:Final76©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:FINE, CENSUREResolution Date:11/03/2014Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM WAS CENSURED, ORDERED TO PAY A CIVIL MONETARY PENALTYOF $56,400 AND TO CEASE AND DESIST FROM COMMITTING OR CAUSINGANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 15B(C)(1) OFTHE EXCHANGE ACT AND MSRB RULE G-15(F).Sanctions Ordered:CensureMonetary/Fine $56,400.00Cease and Desist/InjunctionOrderDisclosure 18 of 450iReporting Source:FirmInitiated By:STATE OF LOUISIANA OFFICE OF FINANCIAL INSTITUTIONSCOMMISSIONER OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:09/03/2014Docket/Case Number:OFI-2013-0001Principal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF LOUISIANA OFFICE OF FINANCIAL INSTITUTIONSCOMMISSIONER OF SECURITIES ALLEGED THAT DURING THE PERIODJANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM LOUISIANA CUSTOMERS WERE REGISTERED IN THE STATE OFLOUISIANA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final77©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CEASE AND DESISTResolution Date:09/25/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $70,922.36 TO THESTATE OF LOUISIANA. $50,000 OF THIS WAS A BASE ASSESSMENT,$20,922.36 WAS REIMBURSEMENT FOR PAST DUE AGENT REGISTRATIONFEES. ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN LOUISIANA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN THE STATE OF LOUISIANA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $70,922.36Cease and Desist/InjunctionConsentDisclosure 19 of 450iReporting Source:RegulatorInitiated By:OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL PENALTYDate Initiated:06/26/2014Docket/Case Number:14-015URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:STATE SECURITIES REGULATORS INITIATED AN INVESTIGATION IN MARCH,2010 OF THE PRACTICES OF UBS IN CONNECTION WITH CLIENT SERVICEASSOCIATES REGISTRATIONSCurrent Status:FinalResolution:Consent78©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:06/26/2014Other Sanctions Ordered:Sanction Details:CEASE AND DESIST FROM ENGAGING IN ACCEPTANCE OF ORDERS FORPURCHASES OR SALES OF SECURITIES IN OKLAHOMA THROUGHPERSONS NOT REGISTERED UNDER THE OKLAHOMA SECURITIES ACT ASAN AGENT OF USB.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $64,265.25Cease and Desist/InjunctioniReporting Source:FirmInitiated By:STATE OF OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:06/20/2014Docket/Case Number:14-015Principal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF OKLAHOMA DEPARTMENT OF SECURITIES ALLEGED THATDURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM OKLAHOMA CUSTOMERS WERE REGISTERED IN THE STATE OFOKLAHOMA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final79©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:06/26/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $64,265.25 TO THESTATE OF OKLAHOMA. $50,000 OF THIS WAS A CIVIL PENALTY, $14,265.25WAS REIMBURSEMENT FOR PAST DUE AGENT REGISTRATION FEES.ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN OKLAHOMA BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN THE STATE OF OKLAHOMA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $64,265.25Cease and Desist/InjunctionConsentDisclosure 20 of 450iReporting Source:FirmInitiated By:SOUTH DAKOTA, DEPARTMENT OF LABOR AND REGULATION, DIVISION OFSECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:05/22/2014Docket/Case Number:Principal Product Type:No ProductOther Product Type(s):Allegations:THE SOUTH DAKOTA, DEPARTMENT OF LABOR AND REGULATION,DIVISION OF SECURITIES ALLEGED THAT DURING THE PERIOD JANUARY 1,2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1) MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM SOUTHDAKOTA CUSTOMERS WERE REGISTERED IN THE STATE OF SOUTHDAKOTA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIEDTHE EMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final80©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:REPRIMAND AND CEASE AND DESISTResolution Date:05/27/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $71,133.70 TO THESTATE OF SOUTH DAKOTA. $50,000 OF THIS WAS AN ADMINSTRATIVEPENALTY, $21,133.70 WAS REIMBURSEMENT FOR PAST DUE AGENTREGISTRATION FEES. ADDTIONALLY, UBS WAS ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN SOUTH DAKOTA BY CLIENTSERVICE ASSOCIATES NOT REGISTERED IN THE STATE OF SOUTHDAKOTA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $71,133.70Cease and Desist/InjunctionConsentDisclosure 21 of 450iReporting Source:FirmInitiated By:NEBRASKA DEPARTMENT OF BANKING AND FINANCEDate Initiated:04/03/2014Docket/Case Number:Principal Product Type:No ProductAllegations:THE NEBRASKA DEPARTMENT OF BANKING AND FINANCE ALLEGED THATDURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM NEBRASKA CUSTOMERS WERE REGISTERED IN THE STATE OFNEBRASKA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final81©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTOther Product Type(s):Resolution Date:04/04/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $60,355.51 TO THESTATE OF NEBRASKA. $50,000 OF THIS WAS AN ADMINSTRATIVEMONETARY ASSESSMENT AND $10,000 WAS REIMBURSEMENT FOR PASTDUE AGENT REGISTRATION FEES. ADDTIONALLY, UBS WAS ORDERED TOCEASE AND DESIST THE ACCEPTANCE OF ORDERS IN NEBRASKA BYCLIENT SERVICE ASSOCIATES NOT REGISTERED IN THE STATE OFNEBRASKA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $60,355.51Cease and Desist/InjunctionConsentDisclosure 22 of 450iReporting Source:FirmInitiated By:INVESTOR PROTECTION BUREAU, NEW YORK STATE ATTORNEYGENERAL'S OFFICEAllegations:THE INVESTOR PROTECTION BUREAU, NEW YORK STATE ATTORNEYGENERAL'S OFFICE ALLEGED THAT DURING THE PERIOD JANUARY 1, 2004THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORYSYSTEM REASONABLY DESIGNED TO (1) MONITOR THE STATEREGISTRATION STATUS OF CLIENT SERVICE ASSOCIATES ACCEPTINGUNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATESWHO ACCEPTED UNSOLICITED ORDERS FROM NEW YORK CUSTOMERSWERE REGISTERED IN NEW YORK, AND (3) ENSURE THAT ORDER TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDERFROM THE CUSTOMER.Current Status:Final82©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:03/17/2014Docket/Case Number:13-469Principal Product Type:No ProductOther Product Type(s):Resolution Date:03/17/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $126,186.99 TONEW YORK. ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESISTTHE ACCEPTANCE OF ORDERS IN NEW YORK BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN NEW YORK.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $126,186.99Cease and Desist/InjunctionConsentDisclosure 23 of 450iReporting Source:FirmInitiated By:U.S. VIRGIN ISLANDS DIVISION OF BANKING AND INSURANCEAllegations:THE U.S. VIRGIN ISLANDS DIVISION OF BANKING AND INSURANCEALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM U.S. VIRGIN ISLANDS CUSTOMERS WEREREGISTERED IN THE U.S. VIRGIN ISLANDS, AND (3) ENSURE THAT ORDERTICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THEORDER FROM THE CUSTOMER.Current Status:Final83©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:02/11/2014Docket/Case Number:NO. 02-2014Principal Product Type:No ProductOther Product Type(s):Resolution Date:02/19/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$52,641.71 TO THE U.S. VIRIGIN ISLANDS. ADDTIONALLY, UBS WASORDERED TO CEASE AND DESIST THE ACCEPTANCE OF ORDERS IN THEU.S. VIRGIN ISLANDS BY CLIENT SERVICE ASSOCIATES NOT REGISTEREDIN THE U.S. VIRGIN ISLANDS.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $52,641.71Cease and Desist/InjunctionConsentDisclosure 24 of 450iReporting Source:FirmAllegations:THE COMMONWEALTH OF KENTUCKY, PUBLIC PROTECTION CABINET,DEPARTMENT OF FINANCIAL INSTITUTIONS ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM KENTUCKY CUSTOMERS WERE REGISTERED IN KENTUCKY, AND (3)ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEEWHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final84©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:COMMONWEALTH OF KENTUCKY, PUBLIC PROTECTION CABINET,DEPARTMENT OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:01/16/2014Docket/Case Number:2013-AH-227Principal Product Type:No ProductOther Product Type(s):Resolution Date:01/24/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$66,642.79 TO KENTUCKY. ADDTIONALLY, UBS WAS ORDERED TO CEASEAND DESIST THE ACCEPTANCE OF ORDERS IN KENTUCKY BY CLIENTSERVICE ASSOCIATES NOT REGISTERED IN KENTUCKY.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $66,642.79Cease and Desist/InjunctionConsentDisclosure 25 of 450iReporting Source:RegulatorInitiated By:KANSASAllegations:UBS EMPLOYEES ACCEPTED ORDERS FOR SECURITIES TRANSACTIONSIN KANSAS WITHOUT BEING PROPERLY REGISTERED; THE FIRM FAILED TOESTABLUSH AN ADEQUATE SYSTEM TO MONITOR THE REGISTRATIONSTATUS OF PERSONS ACCEPTING CLIENT ORDERS AND FAILED TOMAINTAIN ORDER TICKETS WHICH CONTAINED THE IDENTITY OF THEPERSON ACCEPTING THE CLIENT ORDERCurrent Status:Final85©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CENSURE AND CIVIL MONETARY PENALTY AND FINEDate Initiated:03/01/2010Docket/Case Number:14E005/2014-6131URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:01/26/2014Resolution:Other Sanctions Ordered:Sanction Details:THE SUM OF $68,888.25 IS TO BE PAID TO THE OFFICE OF THE KANSASSECURITIES COMMISSIONER WITHIN 20 DAYS OF THE DATE OF THEORDERRegulator StatementDURING THE PERIOD OF 1/1/04 THROUGH 12/31/10, UBS EMPLOYEESACCEPTED ORDERS FOR PURCHASES AND SALES OF SECURITIES INKANSAS THROUGH SALES REPRESENTATIVES NOT REGISTERED INKANSAS. THE FIRM IS ORDERED TO CEASE AND DESIST ENGAGING INTHE SALE OF SECURITIES THROUGH UNREGISTERED SALESREPRESENTATIVES. THIS ORDER CONCLUDES THE MULTI-STATEINVESTIGATION WITH A CENSURE AND MONETARY FINE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $68,888.25Cease and Desist/InjunctionConsentiReporting Source:FirmAllegations:THE KANSAS OFFICE OF THE SECURITIES COMMISSIONER ALLEGED THATDURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSCurrent Status:Final86©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:KANSAS OFFICE OF THE SECURITIES COMMISSIONERPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:01/24/2014Docket/Case Number:KSC NO: 2014 6131Principal Product Type:No ProductOther Product Type(s):DID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM KANSAS CUSTOMERS WERE REGISTERED IN KANSAS, AND (3)ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEEWHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:01/28/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$68,888.25 TO KANSAS. ADDTIONALLY, UBS WAS ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN KANSAS BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN KANSAS.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $68,888.25Cease and Desist/InjunctionConsentDisclosure 26 of 450iReporting Source:RegulatorAllegations:N/ACurrent Status:Final87©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FLORIDA OFFICE OF FINANCIAL REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:01/28/2014Docket/Case Number:0738-S-09/13URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:01/28/2014Resolution:Other Sanctions Ordered:N/ASanction Details:01/28/2014 - $114,986.13 ADMINISTRATIVE FINE PAID IN FULL.Regulator StatementON JANUARY 28, 2014, THE OFFICE OF REGULATION ENTERED A FINALORDER AGAINST UBS FINANCIAL SERVICES, INC. FOR FAILING TOESTABLISH AN ADEQUATE SYSTEM TO MONITOR THE REGISTRATIONSTATUS OF CLIENT SERVICES ASSOCIATES AND MAINTAIN ALL BOOKS ANDRECORDS; AND FOR ENGAGING IN THE SALE OF SECURITIES IN THESTATE OF FLORIDA THROUGH UNREGISTERED CLIENT SERVICEASSOCIATES. THE FINAL ORDER FOLLOWS AN INVESTIGATION INTO THEREGISTRATION OF UBS'S CLIENT SERVICE ASSOCIATES ANDSUPERVISORY SYSTEM BY THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION (NASAA) MULTI-STATE WORKING GROUP.UBS FINANCIAL SERVICES, INC. AGREED TO PAY A $114,986.13ADMINISTRATIVE FINE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $114,986.13Cease and Desist/InjunctionOrderiReporting Source:Firm88©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FLORIDA FINANCIAL SERVICES COMMISSION OFFICE OF FINANCIALREGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:01/07/2014Docket/Case Number:0738-S-09/13Principal Product Type:No ProductOther Product Type(s):Allegations:THE FLORIDA FINANCIAL SERVICES COMMISSION OFFICE OF FINANCIALREGULATION ALLEGED THAT DURING THE PERIOD JANUARY 1, 2004THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORYSYSTEM REASONABLY DESIGNED TO (1) MONITOR THE STATEREGISTRATION STATUS OF CLIENT SERVICE ASSOCIATES ACCEPTINGUNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATESWHO ACCEPTED UNSOLICITED ORDERS FROM FLORIDA CUSTOMERSWERE REGISTERED IN FLORIDA, AND (3) ENSURE THAT ORDER TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDERFROM THE CUSTOMER.Current Status:FinalResolution Date:01/28/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $114,986.13 TOFLORIDA. ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN FLORIDA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN FLORIDA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $114,986.13Cease and Desist/InjunctionConsentDisclosure 27 of 450i89©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorInitiated By:MAINE OFFICE OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/12/2013Docket/Case Number:13-9687URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):NASAA MULTISTATEAllegations:FAILURE TO SUPERVISE, UNLICENSED ACTIVITYCurrent Status:FinalResolution Date:01/23/2014Resolution:Other Sanctions Ordered:Sanction Details:THE SETTLEMENT AMOUNT FOR MAINE IS $63,208.56. THIS AMOUNTINCLUDES A $50,000 BASE FOR EACH JURISDICTION PLUS AN ADDITIONALSUM REPRESENTING AN ASSESSMENT OF REGISTRATION FEES UBS MAYHAVE AVOIDED PAYING YOUR SPECIFIC JURISDICTION DURING THEPERIOD 2004 THROUGH 2010.Regulator StatementTHIS SETTLEMENT IS IN CONNECTION WITH A MULTI-STATE TASK FORCEINVESTIGATION RELATED TO UBS'S FAILURE TO REGISTER ITS CLIENTSERVICE ASSOCIATES ("CSAS") IN NECESSARY JURISDICTIONS. UBS HASAGREED TO PAY $4,586,555 TO BE DISTRIBUTED AMONG THE 50 STATES,THE DISTRICT OF COLUMBIA, PUERTO RICO, AND THE U.S. VIRGINISLANDS.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $63,208.56Cease and Desist/InjunctionOrder90©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:STATE OF MAINE OFFICE OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:01/17/2014Docket/Case Number:13-9687Principal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF MAINE OFFICE OF SECURITIES ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM MAINE CUSTOMERS WERE REGISTERED IN MAINE, AND (3) ENSURETHAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:FinalResolution Date:01/23/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$63,208.56 TO MAINE. ADDTIONALLY, UBS WAS ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN MAINE BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN MAINE.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $63,208.56Cease and Desist/InjunctionConsent91©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 28 of 450iReporting Source:RegulatorInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CONSENT ORDERDate Initiated:01/21/2014Docket/Case Number:CO-2014-0001URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):PRIOR SALESAllegations:IN MARCH 2010, STATE SECURITIES REGULATORS INITIATED ANINVESTIGATION INTO THE PRACTICES OF UBS IN CONNECTION WITH ITSCSA REGISTRATIONS. THE MULTI-STATE INVESTIGATION FOCUSED ONSYSTEMATIC ISSUES WITH UBS'S CSA REGISTRATIONS AND RELATEDSUPERVISORY STRUCTURE. THE MULTI-STATE INVESTIGATION FOUNDTHAT ON CERTAIN OCCASIONS SOME UBS CSAS, WHILE SERIES 7REGISTERED AND REGISTERED IN ONE OR MORE OTHER STATES,ACCEPTED UNSOLICITED ORDERS TO BUY OR SELL SECURITIES FROMCLIENTS RESIDING IN THE STATE OF ALABAMA AS TIMES WHEN THE CSASWERE NOT APPROPRIATELY REGISTERED IN ALABAMA. UBS IS HEREBYORDERED TO PAY THE SUM OF $67,435.30 TO THE ALABAMA SECURITIESCOMMISSION WHICH WILL BE DIVIDED AS SUCH: RESPONDENT SHALL PAY$60,000.00 TO THE ASC AS REIMBURSEMENT OF DIRECT AND INDIRECTCOSTS AND EXPENSES OF THE COMMISSION'S COST FOR INVESTIGATINGTHIS MATTER. RESPONDENT SHALL PAY $7,435.30 TO THE INVESTORPROTECTION TRUST (IPT), A NONPROFIT CORPORATION AND SUCHFUNDS ARE DESIGNATED SPECIFICALLY FOR INVESTOR EDUCATION ANDINVESTOR PROTECTION IN THE STATE OF ALABAMA. THIS ORDER IS AFINAL ORDER OF THE COMMISSION AS IT RELATES TO UBS FINANCIALSERVICES, INC.Current Status:FinalResolution Date:01/21/2014Resolution:Consent92©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN MARCH 2010, STATE SECURITIES REGULATORS INITIATED ANINVESTIGATION INTO THE PRACTICES OF UBS IN CONNECTION WITH ITSCSA REGISTRATIONS. THE MULTI-STATE INVESTIGATION FOCUSED ONSYSTEMATIC ISSUES WITH UBS'S CSA REGISTRATIONS AND RELATEDSUPERVISORY STRUCTURE. THE MULTI-STATE INVESTIGATION FOUNDTHAT ON CERTAIN OCCASIONS SOME UBS CSAS, WHILE SERIES 7REGISTERED AND REGISTERED IN ONE OR MORE OTHER STATES,ACCEPTED UNSOLICITED ORDERS TO BUY OR SELL SECURITIES FROMCLIENTS RESIDING IN THE STATE OF ALABAMA AS TIMES WHEN THE CSASWERE NOT APPROPRIATELY REGISTERED IN ALABAMA. UBS IS HEREBYORDERED TO PAY THE SUM OF $67,435.30 TO THE ALABAMA SECURITIESCOMMISSION WHICH WILL BE DIVIDED AS SUCH: RESPONDENT SHALL PAY$60,000.00 TO THE ASC AS REIMBURSEMENT OF DIRECT AND INDIRECTCOSTS AND EXPENSES OF THE COMMISSION'S COST FOR INVESTIGATINGTHIS MATTER. RESPONDENT SHALL PAY $7,435.30 TO THE INVESTORPROTECTION TRUST (IPT), A NONPROFIT CORPORATION AND SUCHFUNDS ARE DESIGNATED SPECIFICALLY FOR INVESTOR EDUCATION ANDINVESTOR PROTECTION IN THE STATE OF ALABAMA. THIS ORDER IS AFINAL ORDER OF THE COMMISSION AS IT RELATES TO UBS FINANCIALSERVICES, INC.Regulator StatementFOR ADDITIONAL INFORMATION, CONTACT SPECIAL AGENT ROSSIEPETERS WITH THE ALABAMA SECURITIES COMMISSION. (334)242-2984Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $67,435.30iReporting Source:FirmAllegations:THE ALABAMA SECURITIES COMMISSION ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM ALABAMA CUSTOMERS WERE REGISTERED IN ALABAMA, AND (3)ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEECurrent Status:Final93©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:01/14/2014Docket/Case Number:CO-2014-0001Principal Product Type:No ProductOther Product Type(s):WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:01/21/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $67,435.30 TOALABAMA. $60,000 WAS PAYABLE TO THE ALABAMA SECURITIESCOMMISSION FOR REIMBURSEMENT OF INVESTIGATIVE COSTS ANDEXPENSES AND $7,435.30 PAYABLE TO THE INVESTOR PROTECTIONTRUST. ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN ALABMA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN ALABAMA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $67,435.30Cease and Desist/InjunctionConsentDisclosure 29 of 450iReporting Source:FirmAllegations:THE COLORADO DIVISION OF SECURITIES ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSCurrent Status:Final94©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:COLORADO DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:12/06/2013Docket/Case Number:14-1-06Principal Product Type:No ProductOther Product Type(s):FROM COLORADO CUSTOMERS WERE REGISTERED IN COLORADO, AND(3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THEEMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:12/30/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$63,314.23 TO COLORADO. ADDTIONALLY, UBS WAS ORDERED TO CEASEAND DESIST THE ACCEPTANCE OF ORDERS IN COLORADO BY CLIENTSERVICE ASSOCIATES NOT REGISTERED IN COLORADO.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $63,314.23Cease and Desist/InjunctionConsentDisclosure 30 of 450iReporting Source:FirmAllegations:THE NEW MEXICO REGULATION AND LICENSING DEPARTMENTSECURITIES DIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1,2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1) MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICECurrent Status:Final95©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW MEXICO REGULATION AND LICENSING DEPARTMENT SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST AND REPRIMANDDate Initiated:01/09/2014Docket/Case Number:13-10-0000Principal Product Type:No ProductOther Product Type(s):ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM NEW MEXICO CUSTOMERS WERE REGISTERED IN NEW MEXICO,AND (3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THEEMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:01/13/2014Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $73,775.41 TO NEW MEXICO. ADDTIONALLY, UBS WAS ORDERED TOCEASE AND DESIST THE ACCEPTANCE OF ORDERS IN NEW MEXICO BYCLIENT SERVICE ASSOCIATES NOT REGISTERED IN NEW MEXICO.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $73,775.41Cease and Desist/InjunctionConsentDisclosure 31 of 450iReporting Source:FirmAllegations:THE TENNESSEE DEPARTMENT OF COMMERCE & INSURANCE SECURITIESDIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATESCurrent Status:Final96©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:TENNESSEE DEPARTMENT OF COMMERCE & INSURANCE SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/14/2013Docket/Case Number:ORDER NO. 13004Principal Product Type:No ProductOther Product Type(s):ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM TENNESSEECUSTOMERS WERE REGISTERED IN TENNESSEE, AND (3) ENSURE THATORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:12/19/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS ORDERED TO PAY A CIVIL MONETARY FINE OF $75,096.27 TOTENNESSEE. OF THAT $25,096.27 PAYABLE TO THE SECURITIES DIVISIONBROKER DEALER REGISTRATION ACCOUNT, AND $50,000.00 PAYABLE TOTHE SECURITIES DIVISION ENFORCEMENT/LEGAL TRAINING FUND.ADDTIONALLY, UBS WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN TENNESSEE BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN TENNESSEE.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $75,096.27Cease and Desist/InjunctionConsentDisclosure 32 of 450iReporting Source:FirmAllegations:THE SECURITIES COMMISSIONER OF SOUTH CAROLINA ALLEGED THATCurrent Status:Final97©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SECURITIES COMMISSIONER OF SOUTH CAROLINAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:REPRIMAND AND CEASE AND DESISTDate Initiated:12/06/2013Docket/Case Number:FILE NO. 13086Principal Product Type:No ProductOther Product Type(s):DURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM SOUTH CAROLINA CUSTOMERS WERE REGISTERED IN SOUTHCAROLINA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:12/17/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $112,185.92 TO SOUTH CAROLINA. ADDTIONALLY, UBS WAS ORDEREDTO CEASE AND DESIST THE ACCEPTANCE OF ORDERS IN SOUTHCAROLINA BY CLIENT SERVICE ASSOCIATES NOT REGISTERED IN SOUTHCAROLINA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $112,185.92Cease and Desist/InjunctionConsentDisclosure 33 of 450iReporting Source:RegulatorCurrent Status:Final98©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDAQ OMX BX, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/16/2013Docket/Case Number:2010021491501Principal Product Type:OptionsOther Product Type(s):Allegations:CHAPTER III, SECTIONS 2(A)(I), 10 OF THE BOSTON OPTIONS EXCHANGE(BOX) TRADING RULES - UBS FINANCIAL SERVICES INC. FILED INCONCERT GROUP SUBMISSIONS TO THE OPTIONS CLEARINGCORPORATION OCC) IN WHICH THE ACCOUNT NUMBER FIELD IN THEFIRM'S LARGE OPTIONS POSITIONS REPORT (LOPR) SUBMISSIONS TO THEOCC CONTAINED DIGITS USED FOR THE FIRM'S INTERNAL SURVEILLANCETHAT WERE NOT CONTAINED IN THE SAME FIELD IN THE FIRM'S INCONCERT GROUP SUBMISSIONS TO THE OCC, WHICH PREVENTED THEOCC FROM AUTOMATICALLY IDENTIFYING AND MATCHING THE LOPRPOSITION FILES WITH THOSE REPORTED IN THE FIRM'S IN CONCERTGROUP SUBMISSIONS. AS A RESULT, NONE OF THE FIRM'S POSITIONS INTHE OCC LOPR INCLUDED IN CONCERT GROUP IDENTIFICATION. THE FIRMHAD A PROGRAMMING ERROR IN ITS PROPRIETARY SYSTEM WHICHCAUSED THE FIRM TO FAIL TO REPORT TO THE OCC LOPR NUMEROUSACTING IN CONCERT (AIC) IDENTIFICATION NUMBERS FOR ACCOUNTSTHAT ACTED IN CONCERT. THE FIRM FAILED TO REPORT AICIDENTIFICATION NUMBERS FOR APPROXIMATELY 767,744 POSITIONSLINKED TO 899 ACCOUNTS. THE FIRM FAILED TO MAINTAIN AN ADEQUATESYSTEM OF SUPERVISION, INCLUDING ADEQUATE WRITTENSUPERVISORY PROCEDURES AND EFFECTIVE MONITORING, REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH EXCHANGE RULES RELATINGTO THE OBLIGATIONS CONNECTED TO OPTIONS REPORTING ANDACCOUNTS ACTING IN CONCERT.Resolution Date:12/16/2013Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoAcceptance, Waiver & Consent(AWC)99©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN ACCEPTING THIS AWC, THE EXCHANGE CONSIDERED THE FIRM'S SELF-DETECTION DURING THE FIRST QUARTER OF 2013 AND SUBSEQUENTPROMPT AND DETAILED SELF-REPORTING TO FINRA OF ITS SYSTEMISSUE THAT IMPACTED THE REPORTING OF AIC IDENTIFICATIONNUMBERS; AND THE FIRM'S EXPENDITURE OF SIGNIFICANT RESOURCESAND EXPENSE TOWARDS THE COMPLETE OVERHAUL OF ITS INTERNALLOPR REPORTING SYSTEM, INCLUDING ITS IMPLEMENTATION OF ANADDITIONAL REPORT TO MONITOR OPTIONS POSITION LIMITS AND ITSENHANCEMENT OF ITS TECHNOLOGY SYSTEMS REGARDING IN CONCERTREPORTING AND POSITION LIMITS. WITHOUT ADMITTING OR DENYING THEFINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TOTHE ENTRY OF FINDINGS; THEREFORE THE FIRM IS CENSURED ANDFINED $540,000.Sanctions Ordered:CensureMonetary/Fine $540,000.00iReporting Source:FirmInitiated By:NASDAQ OMX BX, INC.Date Initiated:12/16/2013Docket/Case Number:2010021491501Principal Product Type:OptionsOther Product Type(s):Allegations:UBS FINANCIAL SERVICES INC. HAD A PROGRAMMING ERROR IN ITSPROPRIETARY SYSTEM WHICH CAUSED THE FIRM TO FAIL TO REPORT TOTHE OPTIONS CLEARING CORPORATION (OCC) LARGE OPTIONSPOSITIONS REPORT (LOPR) NUMEROUS ACTING IN CONCERT (AIC)IDENTIFICATION NUMBERS FOR ACCOUNTS THAT ACTED IN CONCERT. THEFIRM FAILED TO REPORT AIC IDENTIFICATION NUMBERS FORAPPROXIMATELY 767,744 POSITIONS LINKED TO 899 ACCOUNTS. THE FIRMFAILED TO MAINTAIN AN ADEQUATE SYSTEM OF SUPERVISION, INCLUDINGADEQUATE WRITTEN SUPERVISORY PROCEDURESAND EFFECTIVE MONITORING, REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH EXCHANGE RULES RELATING TO THE OBLIGATIONSCONNECTED TO OPTIONS REPORTING AND ACCOUNTS ACTING INCONCERT.Current Status:Final100©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREResolution Date:12/16/2013Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $540,000.Firm StatementIN ACCEPTING THIS AWC, THE EXCHANGE CONSIDERED THE FIRM'S SELF-DETECTION DURING THE FIRST QUARTER OF 2013 AND SUBSEQUENTPROMPT AND DETAILED SELF-REPORTING TO FINRA OFITS SYSTEM ISSUE THAT IMPACTED THE REPORTING OF AICIDENTIFICATION NUMBERS; AND THE FIRM'S EXPENDITURE OFSIGNIFICANT RESOURCES AND EXPENSE TOWARDS THE COMPLETEOVERHAUL OF ITS INTERNAL LOPR REPORTING SYSTEM, INCLUDING ITSIMPLEMENTATION OF AN ADDITIONAL REPORT TO MONITOR OPTIONSPOSITION LIMITS AND ITS ENHANCEMENT OF ITSTECHNOLOGY SYSTEMS REGARDING IN CONCERT REPORTING ANDPOSITION LIMITS.Sanctions Ordered:CensureMonetary/Fine $540,000.00Acceptance, Waiver & Consent(AWC)Disclosure 34 of 450iReporting Source:FirmInitiated By:IOWA SECURITIES AND REGULATED INDUSTRIES BUREAUDate Initiated:12/05/2013Allegations:THE IOWA SECURITIES AND REGULATED INDUSTRIES BUREAU ALLEGEDTHAT DURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31,2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLYDESIGNED TO (1) MONITOR THE STATE REGISTRATION STATUS OFCLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2)ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM IOWA CUSTOMERS WERE REGISTERED INIOWA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIEDTHE EMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final101©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDocket/Case Number:67550Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/10/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $68,174.98 TOIOWA, OF THIS $33,837.49 WENT TO THE IOWA SECURITIES INVESTOREDUCATION AND TRAINING FUND, $500 WENT TO THE IOWA INSURANCEDIVISION FOR INVESTIGATIVE COSTS AND $33,837.49 WENT TO THEINVESTOR PROTECTION TRUST. ADDTIONALLY, UBS WAS ORDERED TOCEASE AND DESIST THE ACCEPTANCE OF ORDERS IN IOWA BY CLIENTSERVICE ASSOCIATES NOT REGISTERED IN IOWA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $68,174.98Cease and Desist/InjunctionConsentDisclosure 35 of 450iReporting Source:RegulatorInitiated By:UTAHDate Initiated:12/05/2013Docket/Case Number:SD-13-0051Allegations:THE DIVISION ALLEGED FAILURE TO REASONABLY SUPERVISE UNDERSECTION 61-1-6 OF THE UTAH UNIFORM SECURITIES ACT ("ACT"), FAILURETO MAINTAIN BOOKS AND RECORDS AS REQUIRED UNDER SECTION 61-1-5OF THE ACT AND EMPLOYMENT OF UNLICENSED AGENTS UNDERSECTION 61-1-3 OF THE ACT.Current Status:Final102©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTURL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/05/2013Resolution:Other Sanctions Ordered:Sanction Details:THE FINE WAS PAID IN ITS ENTIRETY.Regulator StatementA PDF OF THE STIPULATION AND CONSENT ORDER MAY BE VIEWED AT:HTTP://SECURITIES.UTAH.GOV/DOCKETS/13005101.PDF (NOTE: THE WEBADDRESS MUST BE ENTERED IN ALL LOWER CASE LETTERS).Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $70,288.35Cease and Desist/InjunctionStipulation and ConsentiReporting Source:FirmInitiated By:UTAH DEPARTMENT OF COMMERCE DIVISION OF SECURITIESDate Initiated:10/24/2013Allegations:THE UTAH DEPARTMENT OF COMMERCE DIVISION OF SECURITIESALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM UTAH CUSTOMERS WERE REGISTERED INUTAH, AND (3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIEDTHE EMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final103©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, CENSUREDocket/Case Number:SD-13-0051Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/05/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$70,288.35 TO UTAH, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN UTAH BY CLIENT SERVICE ASSOCIATES NOTREGISTERED IN UTAH.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $70,288.35Cease and Desist/InjunctionConsentDisclosure 36 of 450iReporting Source:RegulatorInitiated By:OHIO DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistDate Initiated:11/20/2013Docket/Case Number:13-036URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:NASAA GLOBAL SETTLEMENTCurrent Status:Final104©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CEASE AND DESIST WITH ADMINISTRATIVE FINE.Resolution Date:11/20/2013Resolution:Other Sanctions Ordered:Sanction Details:DIVISION ORDER NO. 13-036, WITH CONSENT, WAS ISSUED ON NOV. 20,2013. UBS PAID A FINE OF $87,723.66.Regulator StatementAS PART OF A NASAA GOBAL SETTLEMENT, UBS CONSENTED TO ANADMINISTRATIVE ORDER FINDING THAT UNLICENSED CSA'S ENGAGED INTHE PURCHASE AND SALE OF SECURITIES ON BEHALF OF UBS CLIENTS INVIOLATION OF R.C. 1707.44(A). THE ORDER FURTHER FOUND THAT UBSFAILED TO MAINTAIN REQUIRED RECORDS RELATED TO THOSETRANSACTIONS IN VIOLATION OF O.A.C. 1301:6-3-19(B)(9). DIVISIONORDER NO. 13-036, WITH CONSENT, WAS ISSUED ON 11/20/13. UBS PAID AFINE OF $87,723.66.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $87,723.66Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:OHIO DIVISION OF SECURITIESDate Initiated:11/14/2013Allegations:THE OHIO DIVISION OF SECURITIES ALLEGED THAT DURING THE PERIODJANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISHA SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1) MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM OHIOCUSTOMERS WERE REGISTERED IN OHIO, AND (3) ENSURE THAT ORDERTICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final105©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDocket/Case Number:13-036Principal Product Type:No ProductOther Product Type(s):Resolution Date:11/20/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $87,723.66 TOOHIO, AND ORDERED TO CEASE AND DESIST THE ACCEPTANCE OFORDERS IN OHIO BY CLIENT SERVICE ASSOCIATES NOT REGISTERED INOHIO.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $87,723.66Cease and Desist/InjunctionConsentDisclosure 37 of 450iReporting Source:RegulatorInitiated By:VIRGINIADate Initiated:11/22/2013Allegations:DURING THE PERIOD OF JANUARY 1, 2004 THROUGH DECEMBER 31, 2010,THE DIVISION ALLEGED: (1) UBS FAILED TO ESTABLISH AN ADEQUATESYSTEM TO MONITOR THE REGISTRATION STATUS OF PERSONSACCEPTING CLIENT ORDERS, PURSUANT TO COMMISSION RULE 21 VAC5-20-260 B, (2) UBS'S MAINTENANCE OF ORDER TICKETS DID NOTACCURATELY IDENTIFY THE PERSON WHO ACCEPTED CLIENT ORDERS,PURSUANT TO 21 VAC 5-20-240, (3) UBS ACCEPTED ORDERS FORPURCHASES AND SALES OF SECURITIES FROM CLIENTS RESIDING INVIRGINIA THROUGH CSAS NOT REGISTERED IN VIRGINIA, PURSUANT TO §13.1-504 A AND B OF THE VIRGINIA SECURITIES ACT.Current Status:Final106©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Docket/Case Number:SEC-2013-00028URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:11/22/2013Resolution:Other Sanctions Ordered:Sanction Details:THE FINE AMOUNT OF $75,677.45 REPRESENTS THE AMOUNT DUE TOVIRGINIA IN AN AGREED UPON SETTLEMENT WITH ALL 50 STATES, THEDISTRICT OF COLUMBIA, PUERTO RICO, AND THE US VIRGIN ISLANDS.THE TOTAL FINES/PENALTIES CALCULATED BY THE MULTI-STATEWORKING GROUP FOR THE SETTLEMENT WAS $4,586,555. PAYMENT DATEDECEMBER 6, 2013.Regulator StatementDURING THE PERIOD OF JANUARY 1, 2004 THROUGH DECEMBER 31, 2010,THE DIVISION ALLEGED THAT; (1) UBS FAILED TO ESTABLISH ANADEQUATE SYSTEM TO MONITOR THE REGISTRATION STATUS OFPERSONS ACCEPTING CLIENT ORDERS, PURSUANT TO COMMISSIONRULE 21 VAC 5-20-260 B, (2) UBS'S MAINTENANCE OF ORDER TICKETS DIDNOT ACCURATELY IDENTIFY THE PERSON WHO ACCEPTED CLIENTORDERS, PURSUANT TO 21 VAC 5-20-240, (3) UBS ACCEPTED ORDERSFOR PURCHASES AND SALES OF SECURITIES FROM CLIENTS RESIDING INVIRGINIA THROUGH CSAS NOT REGISTERED IN VIRGINIA, PURSUANT TO §13.1-504 A AND B OF THE VIRGINIA SECURITIES ACT.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $75,677.45OrderiReporting Source:FirmCurrent Status:Final107©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:11/18/2013Docket/Case Number:SEC-2013-00028Principal Product Type:No ProductOther Product Type(s):Allegations:THE COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSIONALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM VIRGINIA CUSTOMERS WERE REGISTEREDIN VIRGINIA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:11/22/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $75,677.45 TOVIRGINIA. $50,000 OF THIS WAS A CIVIL PENALTY AND $25,677.45 AREIMBURSMENT TO THE DIVISION.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $75,677.45ConsentDisclosure 38 of 450iReporting Source:RegulatorAllegations:UBS: A) FAILED TO ESTABLISH AN ADEQUATE SYSTEM TO MONITOR THECurrent Status:Final108©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MISSOURIPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:12/04/2013Docket/Case Number:AP-13-23URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):REGISTRATION STATUS OF PERSONS ACCEPTING CLIENT ORDERSCONSTITUTING A FAILURE TO REASONABLY SUPERVISE PERSONSACCEPTING CLIENT ORDERS; B) FAILED TO MAINTAIN REQUIRED BOOKSAND RECORDS; AND C) ACCEPTED ORDERS IN MISSOURI THROUGHPERSONS NOT PROPERLY REGISTEREDResolution Date:12/04/2013Resolution:Other Sanctions Ordered:Sanction Details:MONETARY/FINE: $74,039.59Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $74,039.59Cease and Desist/InjunctionConsentiReporting Source:FirmAllegations:THE OFFICE OF SECRETARY OF STATE, STATE OF MISSOURI, SECURITIESDIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDCurrent Status:Final109©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:OFFICE OF SECRETARY OF STATE, STATE OF MISSOURI, SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE, CEASE AND DESISTDate Initiated:12/03/2013Docket/Case Number:AP-13-23Principal Product Type:No ProductOther Product Type(s):ORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM MISSOURI CUSTOMERS WERE REGISTEREDIN MISSOURI, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:12/04/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$74,039.59 TO MISSOURI, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN MISSOURI BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN MISSOURI.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $74,039.59Cease and Desist/InjunctionConsentDisclosure 39 of 450iReporting Source:FirmAllegations:THE DEPARTMENT OF BUSINESS REGULATION STATE OF RHODE ISLANDALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMCurrent Status:Final110©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:DEPARTMENT OF BUSINESS REGULATION STATE OF RHODE ISLANDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:11/14/2013Docket/Case Number:13-055Principal Product Type:No ProductOther Product Type(s):REASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM RHODE ISLAND CUSTOMERS WEREREGISTERED IN RHODE ISLAND, AND (3) ENSURE THAT ORDER TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDERFROM THE CUSTOMER.Resolution Date:11/18/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $66,484.29 TORHODE ISLAND, AND ORDERED TO CEASE AND DESIST THE ACCEPTANCEOF ORDERS IN RHODE ISLAND BY CLIENT SERVICE ASSOCIATES NOTREGISTERED IN RHODE ISLAND.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $66,484.29Cease and Desist/InjunctionConsentDisclosure 40 of 450iReporting Source:RegulatorAllegations:THE ARKANSAS SECURITIES COMMISSIONER ENTERED INTO A CONSENTORDER (ORDER NO. S-13-0129-13-OR01) WITH UBS FINANCIAL SERVICES,INC., ON NOVEMBER 14, 2013. THE CONSENT ORDER WAS BASED ON ACurrent Status:Final111©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ARKANSAS SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:11/14/2013Docket/Case Number:S-13-0129URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):GLOBAL SETTLEMENT BETWEEN UBS AND A NUMBER OF STATES, LED BYA MEMBER TASK FORCE OF THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION ("NASAA"), REGARDING UBS'S FAILURETO ESTABLISH AN ADEQUATE SUPERVISORY SYSTEM TO MONITOR THEREGISTRATION STATUS OF PERSONS ACCEPTING CLIENT ORDERS,MAINTENANCE OF ORDER TICKETS WHICH DID NOT ACCURATELYIDENTIFY THE PERSON WHO ACCEPTED CLIENT ORDERS, ANDACCEPTANCE OF ORDERS FOR PURCHASES AND SALES OF SECURITIESFROM CLIENTS RESIDING IN ARKANSAS THROUGH CLIENT SERVICEASSOCIATES NOT REGISTERED IN ARKANSAS. AS A RESULT, UBSENGAGED IN CONDUCT GIVING RISE TO LIABILITY UNDER ARK. CODE ANN.§ 23-42-308. UBS AGREED TO PAY $4,586,555.00 TO BE DISTRIBUTEDAMONG THE 50 STATES, THE DISTRICT OF COLUMBIA, PUERTO RICO, ANDTHE U.S. VIRGIN ISLANDS. THE CONSENT ORDER IMPOSED A FINE OF$70,605.36 AS ARKANSAS'S PORTION OF THE TOTAL AMOUNT.Resolution Date:11/14/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES, INC., PAID A FINE OF $70,605.36 TO THEARKANSAS SECURITIES DEPARTMENT WITHIN TWENTY DAYS OF THEENTRY OF THE CONSENT ORDER.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $70,605.36Consent112©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRegulator StatementTHE CONSENT ORDER WAS BASED ON A GLOBAL SETTLEMENT BETWEENUBS FINANCIAL SERVICES, INC., AND A NUMBER OF STATES, WHICHRESULTED FROM AN INVESTIGATION AND SETTLEMENT NEGOTIATION LEDBY A MEMBER TASK FORCE OF NASAA.iReporting Source:FirmInitiated By:ARKANSAS SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:11/14/2013Docket/Case Number:S-13-0129Principal Product Type:No ProductOther Product Type(s):Allegations:THE ARKANSAS SECURITIES DEPARTMENT ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DIDNOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM ARKANSAS CUSTOMERS WERE REGISTERED IN ARKANSAS, AND (3)ENSURE THAT ORDERS TICKETS ACCURATELY IDENTIFIED THE EMPLOYEEWHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:FinalResolution Date:11/14/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $70,605.36 TOARKANSAS, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN ARKANSAS BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN ARKANSAS.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYSanctions Ordered:Monetary/Fine $70,605.36Cease and Desist/InjunctionConsent113©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Disclosure 41 of 450iReporting Source:FirmInitiated By:PUERTO RICO COMMISSION OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST AND REPRIMANDDate Initiated:11/06/2013Docket/Case Number:C13-V-011Principal Product Type:No ProductOther Product Type(s):Allegations:THE PUERTO RICO COMMISSION OF FINANCIAL INSTITUTIONS ALLEGEDTHAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM PUERTO RICO CUSTOMERS WEREREGISTERED IN PUERTO RICO, AND (3) ENSURE THAT ORDERS TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:FinalResolution Date:11/13/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $59,510.17 TO PUERTO RICO, AND ORDERED TO CEASE AND DESISTTHE ACCEPTANCE OF ORDERS IN PUERTO RICO BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN PUERTO RICO.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYSanctions Ordered:Monetary/Fine $59,510.17Cease and Desist/InjunctionConsent114©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Disclosure 42 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Date Initiated:11/19/2013Docket/Case Number:2009018081101Principal Product Type:Debt - MunicipalOther Product Type(s):TRACE-ELIGIBLE AGENCY DEBT SECURITIES, TRACE-ELIGIBLECORPORATE DEBT SECURITIESAllegations:FINRA RULES 2010, 6730(A), NASD RULES 2110, 2320, MSRB RULES G-17, G-30(A) - UBS FINANCIAL SERVICES INC. PURCHASED MUNICIPALSECURITIES FOR ITS OWN ACCOUNT FROM CUSTOMERS AND/OR SOLDMUNICIPAL SECURITIES FOR ITS OWN ACCOUNT TO CUSTOMERS AT ANAGGREGATE PRICE (INCLUDING ANY MARKDOWN OR MARKUP) THAT WASNOT FAIR AND REASONABLE, TAKING INTO CONSIDERATION ALLRELEVANT FACTORS, INCLUDING THE BEST JUDGMENT OF THE BROKER,DEALER OR MUNICIPAL SECURITIES DEALER AS TO THE FAIR MARKETVALUE OF THE SECURITIES AT THE TIME OF THE TRANSACTION AND OFANY SECURITIES EXCHANGED OR TRADED IN CONNECTION WITH THETRANSACTIONS, THE EXPENSE INVOLVED IN EFFECTING THETRANSACTIONS, THE FACT THAT THE BROKER, DEALER, OR MUNICIPALSECURITIES DEALER IS ENTITLED TO A PROFIT, AND THE TOTAL DOLLARAMOUNT OF THE TRANSACTIONS. IN TRANSACTIONS FOR OR WITHCUSTOMERS, THE FIRM FAILED TO USE REASONABLE DILIGENCE TOASCERTAIN THE BEST INTER-DEALER MARKET AND FAILED TO BUY ORSELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO ITSCUSTOMERS WAS AS FAVORABLE AS POSSIBLE. THE FIRM FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)BLOCK S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIESAND TRACE-ELIGIBLE CORPORATE DEBT SECURITIES WITHIN 15 MINUTESOF THE EXECUTION TIME. THIS CONDUCT CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF FINRA RULE 6730(A) AND A PATTERN ORPRACTICE OF LATE REPORTING WITHOUT EXCEPTIONALCIRCUMSTANCES IN VIOLATION OF FINRA RULE 2010.Current Status:Final115©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:11/19/2013Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $260,000, OF WHICH$20,000 IS FOR THE MSRB RULE VIOLATIONS. THE FIRM HAS PAID A TOTALOF $131,534.81 IN RESTITUTION TO ADDRESS THE VIOLATIONS OF MSRBRULES G-17, G-30(A), NASD RULES 2110, 2320, AND FINRA RULE 2010.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $260,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:11/19/2013Docket/Case Number:2009018081101Principal Product Type:Debt - MunicipalOther Product Type(s):TRACE-ELIGIBLE AGENCY DEBT SECURITIES, TRACE-ELIGIBLECORPORATE DEBT SECURITIES.Allegations:THE FIRM WAS FINED A TOTAL OF $260,000 FOR VIOLATIONS INVOLVING:FAIR PRICING OF 5 MUNICIPAL TRANSACTIONS (MSRB G-17 AND 30(A));BEST EXECUTION OBLIGATIONS WITH RESPECT TO 51 TRANSACTIONS(NASD RULES 2010 AND 2320); AND LATE REPORTING TO TRACEINVOLVING 303 TRADES (FINRA RULE 6730(A)). THE VIOLATIONSOCCURRED DURING SPORADIC PERIODS DATING BACK TO 2008 TO 2012.Current Status:Final116©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSUREResolution Date:11/19/2013Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $260,000.Sanctions Ordered:CensureMonetary/Fine $260,000.00Acceptance, Waiver & Consent(AWC)Disclosure 43 of 450iReporting Source:FirmInitiated By:WISCONSIN DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OFSECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST AND CENSUREDate Initiated:10/21/2013Docket/Case Number:S-229037(LX)Principal Product Type:No ProductOther Product Type(s):Allegations:THE WISCONSIN DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OFSECURITIES ALLEGED THAT DURING THE PERIOD JANUARY 1, 2004THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORYSYSTEM REASONABLY DESIGNED TO (1) MONITOR THE STATEREGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM WISCONSINCUSTOMERS WERE REGISTERED IN WISCONSIN, AND (3) ENSURE THATORDERS TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:FinalResolution:Consent117©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:10/22/2013Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$93,112.75 TO STATE OF WISCONSIN, AND ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN WISCONSIN BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN WISCONSIN.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $93,112.75Cease and Desist/InjunctionDisclosure 44 of 450iReporting Source:FirmInitiated By:STATE OF INDIANA, OFFICE OF THE SECRETARY OF STATE, SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/21/2013Docket/Case Number:13-0426COPrincipal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF INDIANA, OFFICE OF THE SECRETARY OF STATE,SECURITIES DIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1,2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROMINDIANA CUSTOMERS WERE REGISTERED IN INDIANA, AND (3) ENSURETHAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final118©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:10/24/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $62,680.22 TO THE STATE OFINDIANA. THE FIRM WAS ALSO ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN INDIANA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN INDIANA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $62,680.22Cease and Desist/InjunctionConsentDisclosure 45 of 450iReporting Source:RegulatorInitiated By:WASHINGTONDate Initiated:10/22/2013Allegations:ON OCTOBER 22, 2013, THE SECURITIES DIVISION ENTERED INTO ACONSENT ORDER WITH UBS FINANCIAL SERVICES, INC. ("RESPONDENT"),IN CONNECTION WITH RESPONDENT'S ALLEGED FAILURE TO PROPERLYREGISTER ITS CLIENT SERVICE ASSOCIATES IN NECESSARYJURISDICTIONS, INCLUDING WASHINGTON STATE. THE DIVISION ALLEGEDTHAT RESPONDENT FAILED TO REASONABLY SUPERVISE ITS AGENTS BYNOT ESTABLISHING AN ADEQUATE SYSTEM TO MONITOR THEREGISTRATION STATUS OF PERSONS ACCEPTING CLIENT ORDERS AND BYNOT ENFORCING ITS ESTABLISHED WRITTEN PROCEDURES REGARDINGTHE REGISTRATION REQUIREMENT OF CLIENT SERVICE ASSOCIATES. THEDIVISION FURTHER ALLEGED THAT SUCH CONDUCT RESULTED INRESPONDENT'S EMPLOYMENT OF UNREGISTERED SECURITIESSALESPERSONS. THE DIVISION ALSO ALLEGED THAT UBS FAILED TOMAINTAIN ALL BOOKS AND RECORDS WHEN ITS ORDER TICKETS DID NOTACCURATELY IDENTIFY THE EMPLOYEE WHO ACCEPTED CLIENT ORDERS.RESPONDENT NEITHER ADMITTED NOR DENIED THE ALLEGATIONS, BUTAGREED TO CEASE AND DESIST FROM VIOLATING THE SECURITIES ACTOF WASHINGTON. RESPONDENT AGREED TO PAY $80,432.53 AS A CIVILMONETARY PENALTY. RESPONDENT WAIVED ITS RIGHT TO A HEARING ANDTO JUDICIAL REVIEW OF THIS MATTER.Current Status:Final119©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL MONETARY PENALTY $80,432.53Docket/Case Number:S-13-1311-13-CO01URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/22/2013Resolution:Other Sanctions Ordered:$80,432.53 CIVIL MONETARY PENALTYSanction Details:$80,432.53 CIVIL MONETARY PENALTYRegulator StatementBRIAN GUERARD 360-902-8782Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $80,432.53Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:STATE OF WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONSAllegations:THE STATE OF WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONSALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM WASHINGTON CUSTOMERS WEREREGISTERED IN WASHINGTON, AND (3) ENSURE THAT ORDER TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDERFROM THE CUSTOMER.Current Status:Final120©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/14/2013Docket/Case Number:S-13-1311-13-CO01Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/22/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $80,432.53 TO THE STATE OFWASHINGTON. THE FIRM WAS ALSO ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN WASHINGTON BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN WASHINGTON.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $80,432.53Cease and Desist/InjunctionConsentDisclosure 46 of 450iReporting Source:RegulatorInitiated By:NEW HAMPSHIREBUREAU OF SECURITIES REGULATIONDate Initiated:07/12/2013Docket/Case Number:I-2013-00030URL for Regulatory Action:Principal Product Type:OptionsAllegations:FROM 2004 TO 2010, RESPONDENT FAILED TO PROPERLY LICENSE SALESASSISTANCE TO ACCEPT TRADE ORDERS AND FAILED TO SUPERVISETHAT PROCESS.Current Status:Final121©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE AND BACK LICENSING FEES. CENSURE.Other Product Type(s):Resolution Date:10/22/2013Resolution:Other Sanctions Ordered:BACK OWED LICENSING FEES $34,342.26.Sanction Details:SAME AS ABOVE.Regulator StatementSAME AS ABOVE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $50,000.00Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:THE STATE OF NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONDate Initiated:10/17/2013Docket/Case Number:INV2013-00030Allegations:THE STATE OF NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM NEW HAMPSHIRE CUSTOMERS WEREREGISTERED IN NEW HAMPSHIRE, AND (3) ENSURE THAT ORDER TICKETSACCURATELY IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDERFROM THE CUSTOMER.Current Status:Final122©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, CENSUREPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:10/22/2013Resolution:Other Sanctions Ordered:$34,342.26 BACK OWED LICENSING FEESSanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $84,342.26 TO THE STATE OF NEWHAMPSHIRE, $50,000 OF THIS IS A FINE, AND THE BALANCE OF $34,342.26IS TO COVER BACK OWED LICENSING FEES. THE FIRM WAS ALSOCENSURED AND ORDERED TO CEASE AND DESIST THE ACCEPTANCE OFORDERS IN NEW HAMPSHIRE BY CLIENT SERVICE ASSOCIATES NOTREGISTERED IN NEW HAMPSHIRE.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $50,000.00Cease and Desist/InjunctionConsentDisclosure 47 of 450iReporting Source:FirmInitiated By:ALASKA DEPT. OF COMMUNITY AND ECONOMIC DEVELOPMENT DIVISIONOF BANKING, SECURITIES AND CORPORATIONSAllegations:THE ALASKA DEPT. OF COMMUNITY AND ECONOMIC DEVELOPMENTDIVISION OF BANKING, SECURITIES AND CORPORATIONS ALLEGED THATDURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM ALASKA CUSTOMERS WERE REGISTERED IN ALASKA, AND (3)ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEEWHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final123©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/08/2013Docket/Case Number:13-1828-SPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:10/14/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $64,661.51 TO THE STATE OFALASKA. THE FIRM WAS ALSO ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN ALASKA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN ALASKA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $64,661.51Cease and Desist/InjunctionConsentDisclosure 48 of 450iReporting Source:FirmInitiated By:MISSISSIPPI OFFICE OF THE SECRETARY OF STATE, SECURITIES ANDAllegations:THE MISSISSIPPI OFFICE OF THE SECRETARY OF STATE, SECURITIES ANDCHARITIES DIVISION ALLEGED THAT DURING THE PERIOD JANUARY 1,2004 THROUGH DECEMBER 31, 2010 UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM MISSISSIPPICUSTOMERS WERE REGISTERED IN MISSISSIPPI , AND (3) ENSURE THATORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final124©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCHARITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/02/2013Docket/Case Number:LS-13-0762Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/03/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $60,302.68 TO THE STATE OFMISSISSIPPI. THE FIRM WAS ALSO ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN MISSISSIPPI BYCLIENT SERVICE ASSOCIATES NOT REGISTERED IN MISSISSIPPI.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $60,302.68Cease and Desist/InjunctionConsentDisclosure 49 of 450iReporting Source:RegulatorInitiated By:PENNSYLVANIA CONTACT: COUNSEL CAROLYN MENDELSON (412)-565-5083Date Initiated:10/24/2013Docket/Case Number:2013-10-11 (#130065)Allegations:UBS FINANCIAL SERVICES, INC. FAILED TO ESTABLISH AN ADEQUATESYSTEM TO MONITOR THE REGISTRATIONS STATUS OF PERSONSACCEPTING CLIENT ORDERS, CONSTITUTING A FAILURE TO REASONABLYSUPERVISE ITS AGENTS IN VIOLATION OF THE PA SECURITIES ACT OF1972.Current Status:Final125©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:CIVIL & ADMINISTRATIVE PENALTIESURL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):NO PRODUCTResolution Date:10/24/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES, INC. IS ORDERED TO PAY THE SUM OF$143,960.00 TO THE PA DEPARTMENT OF BANKING AND SECURITIESWITHIN 20 DAYS OF THE EFFECTIVE DATE OF THIS ORDER.Regulator StatementCONSENT AGREEMENT AND ORDER ISSUED TO UBS FINANCIAL SERVICES,INC.Sanctions Ordered:Monetary/Fine $143,960.00ConsentiReporting Source:FirmInitiated By:PENNSYLVANIA SECURITIES COMMISSIONDate Initiated:10/08/2013Docket/Case Number:2013-10-11 (#130065)Principal Product Type:No ProductOther Product Type(s):Allegations:THE PENNSYLVANIA SECURITIES COMMISSION ALLEGED THAT DURINGTHE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DIDNOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM PENNSYLVANIA CUSTOMERS WERE REGISTERED INPENNSYLVANIA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final126©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSUREResolution Date:10/24/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A TOTAL OF $143,960.00 TOTHE STATE OF PENNSYLVANIA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $143,960.00ConsentDisclosure 50 of 450iReporting Source:FirmInitiated By:OFFICE OF THE SECRETARY OF THE COMMONWEALTH OFMASSACHUSETTS SECURITIES DIVISIONDate Initiated:10/17/2013Docket/Case Number:E-2013-0081Principal Product Type:No ProductOther Product Type(s):Allegations:THE OFFICE OF THE SECRETARY OF THE COMMONWEALTH OFMASSACHUSETTS SECURITIES DIVISION ALLEGED THAT DURING THEPERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM MASSACHUSETTS CUSTOMERS WERE REGISTERED INMASSACHUSETTS, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final127©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTResolution Date:10/18/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $113,797.36 TO STATE OFMASSACHUSETTS AND WAS ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN MASSACHUSETTS BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN MASSACHUSETTS.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $113,797.36Cease and Desist/InjunctionConsentDisclosure 51 of 450iReporting Source:RegulatorInitiated By:OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,DIVISION OF FINANCE AND CORPORATE SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistDate Initiated:10/14/2013Docket/Case Number:S-13-0169URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:EMPLOYING UNLICENSED SALESPERSONS, FAILURE TO ESTABLISH ANADEQUATE SYSTEM TO MONITOR THE LICENSE STATUS OF PERSONSACCEPTING CLIENT ORDERS, FAILURE TO MAINTAIN REQUIRED BOOKSAND RECORDSCurrent Status:Final128©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CIVIL PENALTY, PAYMENT TO DCBS CONSUMER FINANCIAL EDUCATIONACCOUNTResolution Date:10/14/2013Resolution:Other Sanctions Ordered:$4,190.70 FOR THE OREGON DCBS CONSUMER FINANCIAL EDUCATIONACCOUNTSanction Details:ORDER TO CEASE AND DESIST,CIVIL PENALTY OF $79,623.22 ANDPAYMENT OF $4,190.70 FOR THE OREGON DEPARTMENT OF CONSUMERAND BUSINESS SERVICES CONSUMER FINANCIAL EDUCATION ACCOUNTRegulator StatementTHIS MATTER AROSE FROM A MULT-STATE INVESTIGATION BYNASAARGARDING LICENSING OF CLIENT SERVICE ASSOCIATES AT UBSFINANCIAL SERVICES, INC, AND UBS'S SUPERVISION SYSTEM WITHRESPECT TO THE LICENSES OFCLIENT SERVICES ASSOCIATESDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $79,623.22Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:OREGON DEPARTMENT OF CONSUMER & BUSINESS SERVICES, DIVISIONOF FINANCE & CORPORATE SECURITIESDate Initiated:10/08/2013Allegations:THE OREGON DEPARTMENT OF CONSUMER & BUSINESS SERVICES,DIVISION OF FINANCE & CORPORATE SECURITIES ALLEGED THAT DURINGTHE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DIDNOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM OREGON CUSTOMERS WERE REGISTERED IN OREGON, AND (3)ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final129©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDocket/Case Number:S-13-0169Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/14/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $83,813.92 TO STATE OFOREGON,CIVIL PENALTY OF $79,623.33 FOR THE GENERAL FUND OF THEOREGON STATE TREASURY AND $4,190.70 FOR THE DCBS CONSUMERFINANCIAL EDUCATION ACCOUNT. UBS WAS ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN OREGON BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN OREGON.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $83,813.92Cease and Desist/InjunctionConsentDisclosure 52 of 450iReporting Source:FirmAllegations:THE OFFICE OF THE GEORGIA COMMISSIONER OF SECURITIESALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM GEORGIA CUSTOMERS WERE REGISTEREDIN GEORGIA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Current Status:Final130©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE OFFICE OF THE GEORGIA COMMISSIONER OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE AND CEASE AND DESISTDate Initiated:10/17/2013Docket/Case Number:ENSC-140351Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/18/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A TOTAL OF $88,569.00 TO THE STATE OFGEORGIA, $73,569.00 OF THIS WAS A CIVIL PENALTY AND $15,000.00 AREIMBURSMENT TO THE COMMISONER FOR INVESTIGATIVE COSTS. THEFIRM WAS ALSO ORDERED TO CEASE AND DESIST THE ACCEPTANCE OFORDERS IN GEORGIA BY CLIENT SERVICE ASSOCIATES NOT REGISTEREDIN GEORGIA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $88,569.00Cease and Desist/InjunctionConsentDisclosure 53 of 450iReporting Source:FirmAllegations:THE NORTH DAKOTA SECURITIES DEPARTMENT ALLEGED THAT DURINGTHE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DIDNOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM NORTH DAKOTA CUSTOMERS WERE REGISTERED IN NORTHCurrent Status:Final131©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NORTH DAKOTA SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:10/08/2013Docket/Case Number:Principal Product Type:No ProductOther Product Type(s):DAKOTA, AND (3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIEDTHE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:10/14/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $57,925.14 TOSTATE OF NORTH DAKOTA, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN NORTH DAKOTA BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN NORTH DAKOTA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $57,925.14Cease and Desist/InjunctionConsentDisclosure 54 of 450iReporting Source:FirmAllegations:THE MINNESOTA DEPARTMENT OF COMMERCE ALLEGED THAT DURINGTHE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBS DIDNOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM MINNESOTA CUSTOMERS WERE REGISTERED IN MINNESOTA, ANDCurrent Status:Final132©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MINNESOTA DEPARTMENT OF COMMERCEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST AND CENSUREDate Initiated:10/03/2013Docket/Case Number:FILE NUMBER 29070Principal Product Type:No ProductOther Product Type(s):(3) ENSURE THAT ORDER TICKETS ACCURATELY IDENTIFIED THEEMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:10/09/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS CENSURED AND ORDERED TO PAY A CIVIL MONETARY FINE OF$78,794.67 TO STATE OF MINNESOTA, AND ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN MINNESOTA BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN MINNESOTA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $78,794.67Cease and Desist/InjunctionConsentDisclosure 55 of 450iReporting Source:RegulatorAllegations:NASD RULES 2110, 3010: THE FIRM FAILED ADEQUATELY TO SUPERVISETHE RECOMMENDATIONS OF ALTERNATIVE INVESTMENTS MADE BY ONEOF ITS REGISTERED REPRESENTATIVES TO AN INSTITUTIONALCUSTOMER OF THE FIRM, FOR THE PURCHASE OF PRIVATE EQUITYFUNDS TOTALING $3 MILLION. THE FIRM WAS UNAWARE OF THEINVESTMENT POLICY MAINTAINED BY THE INSTITUTIONAL CUSTOMER ATTHE TIME OF THE TRANSACTIONS AND DID NOT ASSESS THECurrent Status:Final133©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:10/29/2013Docket/Case Number:2009019434801Principal Product Type:OtherOther Product Type(s):PRIVATE EQUITY FUNDSCONCENTRATION OF ALTERNATIVE INVESTMENTS AGAINST THECUSTOMER'S INVESTMENT POLICY. THE RECOMMENDATIONS WEREINCONSISTENT WITH THE INVESTMENT POLICY MAINTAINED BY THECUSTOMER, AND THE INSTITUTIONAL CUSTOMER'S EFFORTS TO IMPROVEITS CASH FLOW WERE HAMPERED, IN PART, BY THE ILLIQUIDITY OF THEALTERNATIVE INVESTMENTS. THE FIRM FAILED TO ESTABLISH, MAINTAINAND ENFORCE ADEQUATE WRITTEN SUPERVISORY PROCEDURES (WSPS)DESIGNED TO ENSURE THE PROPER SUPERVISION OF CERTAININSTITUTIONAL ACCOUNTS THAT ARE SUBJECT TO ASSET ALLOCATIONRESTRICTIONS, AND WHICH PROVIDED TOOLS TO SUPERVISORSREGARDING THE REVIEW AND ASSESSMENT OF CONCENTRATION LEVELSIN ALTERNATIVE INVESTMENTS. WITH RESPECT TO THE SUPERVISION OFRECOMMENDATIONS BY REGISTERED REPRESENTATIVES, THE FIRMPROCEDURES REQUIRED THAT ITS BRANCH MANAGERS CONDUCTREGULAR REVIEWS OF TRANSACTIONS IN THE ACCOUNTS OF THEREGISTERED REPRESENTATIVES UNDER THEIR SUPERVISION. HOWEVER,THE WSPS MAINTAINED BY THE FIRM DID NOT EXPLICITLY DIRECTBRANCH MANAGERS TO REVIEW AND ASSESS DOCUMENTS, PROVIDEDBY THE CUSTOMER TO THE FIRM AND, BEARING ON THE AUTHORITY OFCERTAIN INSTITUTIONAL CUSTOMERS TO PURCHASE SPECIFIEDINVESTMENTS, INCLUDING ANY INVESTMENT POLICY LIMITING ORRESTRICTING THE CUSTOMER'S AUTHORITY TO MAKE CERTAININVESTMENTS. THE FIRM MAINTAINED NO MECHANISM TO ASSESS ANDREVIEW THE CONCENTRATION LEVELS OF ALTERNATIVE INVESTMENTSHELD BY CUSTOMERS.Resolution Date:10/29/2013Resolution:Acceptance, Waiver & Consent(AWC)134©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $50,000.FINE PAID IN FULL ON NOVEMBER 18, 2013.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $50,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:10/29/2013Docket/Case Number:2009019434801Principal Product Type:OtherOther Product Type(s):PRIVATE EQUITY FUNDSAllegations:BETWEEN MARCH AND MAY 2007, UBS FAILED TO ADEQUATELYSUPERVISE THE RECOMMENDATIONS OF ALTERNATIVEINVESTMENTS MADE BY ONE OF ITS REGISTERED REPRESENTATIVES TOAN INSTITUTIONAL CUSTOMER OF THE FIRM. THOSE RECOMMENDATIONSWERE INCONSISTENT WITH THE INVESTMENT POLICY MAINTAINED BY THECUSTOMER. IN ADDITION, UBS FAILED TO ESTABLISH, MAINTAIN ANDENFORCE WRITTEN SUPERVISORYPROCEDURES (WSPS) REASONABLY DESIGNED TO ENSURE THE PROPERSUPERVISION OF CERTAIN INSTITUTIONAL ACCOUNTS SUBJECT TO ASSETALLOCATION RESTRICTIONS AND PROVIDE ITS SUPERVISORS WITHTOOLS PERMITTING THE REVIEW AND ASSESSMENT OF CONCENTRATIONLEVELS IN ALTERNATIVE INVESTMENTS. AS A RESULT OF THEREFERENCED ACTS OR OMISSIONS, UBS VIOLATED NASD RULES 3010AND 2110.Current Status:Final135©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSUREResolution Date:10/29/2013Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM WAS CENSURED AND FINED$50,000.Sanctions Ordered:CensureMonetary/Fine $50,000.00Acceptance, Waiver & Consent(AWC)Disclosure 56 of 450iReporting Source:RegulatorInitiated By:CALIFORNIAPrincipal Sanction(s)/ReliefSought:ReprimandOther Sanction(s)/ReliefSought:FINE OF $72,454.56Date Initiated:10/04/2013Docket/Case Number:URL for Regulatory Action:Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):MULTIPLEAllegations:CSAS ACTING AS BROKER REPRESENTATIVES WERE NOT SUPERVISEDADEQUATELY, TRACKED ADEQUATELY, OR REGISTERED ASREPRESENTATIVES PURSUANT TO STATE LAWS.Current Status:FinalResolution Date:10/04/2013Resolution:Consent136©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:SYSTEMS AND PROCEDURES PUT IN PLACE TO BETTER SUPERVISE ANDTRACK CSAS AND RELATED ACTIVITIESSanction Details:UBS HAS MADE ENHANCEMENTS TO TRADE ENTRY SYSTEM TO ADDRESSBOTH THE REGISTRATION AND BOOKS AND RECORDS ISSUESDISCOVERED DURING THE INVESTIGATION.Regulator StatementTHIS WAS A NASAA NEGOTIATED CONSENT ORDER AND FINE. NJ WASTHE LEAD STATE IN A MULTI-STATE TASK FORCE INVESTIGATION. ALL 50STATES AND TERRITORIES PARTICIPATED. TOTAL NEGOTIATED FOR UBSTO PAY TO ALL STATES/TERRITORIES WAS $4,586,555.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $72,454.56iReporting Source:FirmInitiated By:STATE OF CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:10/03/2013Docket/Case Number:12402Principal Product Type:No ProductOther Product Type(s):Allegations:THE STATE OF CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHTALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICEASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM CALIFORNIACUSTOMERS WERE REGISTERED IN CALIFORNIA, AND (3) ENSURE THATORDER TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final137©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:REPRIMANDResolution Date:10/04/2013Resolution:Other Sanctions Ordered:REPRIMANDSanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $72,454.56. UBS ALSO WAS ORDERED TO DISCONTINUE ENGAGING INTHE ACCEPTANCE OF ORDERS THROUGH PERSONS NOT REGISTERED INCALIFORNIA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $72,454.56ConsentDisclosure 57 of 450iReporting Source:RegulatorInitiated By:CONNECTICUTAllegations:ON OCTOBER 15, 2013, THE BANKING COMMISSIONER ENTERED ACONSENT ORDER (NO. CO-13-8116-S) WITH RESPECT TO UBS FINANCIALSERVICES INC., A CONNECTICUT REGISTERED BROKER-DEALER. THECONSENT ORDER GREW OUT OF A MULTI-STATE INVESTIGATION ANDGLOBAL SETTLEMENT BY THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION, INC. ("NASAA") INTO THE FIRM'SREGISTRATION PRACTICES BETWEEN 2004 AND 2010 REGARDING FIRMCLIENT SERVICE ASSOCIATES, SOME OF WHOM WERE PERMITTED TOACCEPT ORDERS FROM CLIENTS. THE MULTI-STATE INVESTIGATIONFOUND THAT, ON CERTAIN OCCASIONS, SOME UBS CLIENT SERVICEASSOCIATES, ALTHOUGH REGISTERED IN OTHER STATES, ACCEPTEDUNSOLICITED ORDERS TO BUY OR SELL SECURITIES FROM CLIENTSRESIDING IN CONNECTICUT AT A TIME WHEN THE CLIENT SERVICEASSOCIATES WERE NOT ALSO REGISTERED UNDER CONNECTICUT'SSECURITIES LAWS. THE CONSENT ORDER ALLEGED THAT, INCONJUNCTION WITH THE PRACTICE, THE FIRM FAILED TO DISCHARGE ITSSUPERVISORY RESPONSIBILITIES, FAILED TO MAINTAIN ORDER TICKETSACCURATELY IDENTIFYING THE PERSON WHO ACCEPTED CLIENT ORDERSAND FAILED TO ABIDE BY STATE AGENT REGISTRATION REQUIREMENTS.Current Status:Final138©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:10/15/2013Docket/Case Number:CO-13-8116-SURL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/15/2013Resolution:Other Sanctions Ordered:THE CONSENT ORDER DIRECTED THE FIRM TO REFRAIN FROMREGULATORY VIOLATIONS AND TO REMIT $114,457.79 TO THEDEPARTMENT WITHIN TEN DAYS. OF THAT AMOUNT, $50,000CONSTITUTED AN ADMINISTRATIVE FINE AND $64,457.79 REPRESENTEDREIMBURSEMENT FOR PAST DUE AGENT REGISTRATION FEES FOR THEPERIOD FROM 2004 TO 2010.Sanction Details:SEE RESPONSE TO ITEM 13.B.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $114,457.79ConsentiReporting Source:FirmAllegations:THE STATE OF CONNECTICUT DEPARTMENT OF BANKING ALLEGED THATDURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31, 2010 UBSDID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO(1) MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM CONNECTICUT CUSTOMERS WERE REGISTERED IN CONNECTICUT,AND (3) ENSURE THAT ORDERS TICKETS ACCURATELY IDENTIFIED THEEMPLOYEE WHO ACCEPTED THE ORDER FROM THE CUSTOMER.Current Status:Final139©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF CONNECTICUT DEPARTMENT OF BANKINGPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:10/08/2013Docket/Case Number:CO-13-8116-SPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:10/15/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $50,000 AND$64,457.79 FOR REIMBURSEMENT OF PAST DUE AGENT REGISTRATIONFEES. UBS ALSO WAS ORDERED TO REFRAIN FROM VIOLATIONS OFCONNECTICUT LAWS AND REGULATIONS PERTAINING TO REGISTRATION,KEEPING BOOKS AND RECORDS, AND MAINTAINING REASONABLESUPERVISORY SYSTEMS.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $114,457.79ConsentDisclosure 58 of 450iReporting Source:FirmAllegations:THE NEVADA SECRETARY OF STATE SECURITIES DIVISIONALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONSTATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM NEVADA CUSTOMERS WERE REGISTEREDIN NEVADA, AND (3) ENSURE THAT ORDERS TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECurrent Status:Final140©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEVADA SECRETARY OF STATE SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE, CEASE AND DESISTDate Initiated:10/03/2013Docket/Case Number:113-205-DJFPrincipal Product Type:No ProductOther Product Type(s):CUSTOMER.Resolution Date:10/04/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $120,903.57 TOSTATE OF NEVADA, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN NEVADA BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN NEVADA.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:CensureMonetary/Fine $120,903.57Cease and Desist/InjunctionConsentDisclosure 59 of 450iReporting Source:FirmAllegations:THE DELAWARE DEPT OF JUSTICE DIVISION OF SECURITIES ALLEGEDTHAT DURING THE PERIOD JANUARY 1, 2004 THROUGH DECEMBER 31,2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEM REASONABLYDESIGNED TO (1) MONITOR THE STATE REGISTRATION STATUS OF CLIENTSERVICE ASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURETHAT CLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITEDORDERS FROM DELAWARE CUSTOMERS WERE REGISTERED INDELAWARE, AND (3) ENSURE THAT ORDERS TICKETS ACCURATELYCurrent Status:Final141©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:DELAWARE DEPT OF JUSTICE DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:REPRIMAND, CEASE AND DESISTDate Initiated:10/03/2013Docket/Case Number:13-5-2Principal Product Type:No ProductOther Product Type(s):IDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:10/04/2013Resolution:Other Sanctions Ordered:REPRIMANDSanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $70,077.02 TO STATE OF DELAWARE, AND ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN DELAWARE BY CLIENT SERVICEASSOCIATES NOT REGISTERED IN DELAWARE.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $70,077.02Cease and Desist/InjunctionConsentDisclosure 60 of 450iReporting Source:RegulatorAllegations:A MULTI-STATE NASAA INVESTIGATION FOUND THAT ON CERTAINOCCASSIONS SOME UBS CLIENT SERVICE ASSOCIATES, WHILE SERIES 7REGISTERED AND REGISTERED IN ONE OR MORE STATES, ACCEPTEDUNSOLICITED ORDERS TO BUY OR SELL SECURITIES FROM CLIENTSRESIDING IN VERMONT AT TIMES WHEN THE CSA'S WERE NOTAPPROPRIATELY REGISTERED IN VERMONT.Current Status:Final142©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:VERMONT SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:09/13/2013Docket/Case Number:13-025-SURL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:09/19/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY THE SUM OF $63631.24 TO THE VERMONTDEPARTMENT OF FINANCIAL REGULATION WITHIN TEN DAYS OF THE DATEOF THE ORDER. THE MONIES RECEIVED BY THE DEPARTMENT PURSUANTTO THIS PARAGRAPH MAY BE USED, IN ACCORDANCE WITH VERMONTLAWS, TO REIMBURSE THE DEPARTMENT FOR COSTS INCURRED DURINGTHE INVESTIGATION OF THIS MATTER, FOR SECURITIES AND INVESTORPROTECTION PURPOSES, AT THE SOLE DISCRETION OF THECOMMISSIONER.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $63,631.24Cease and Desist/InjunctionOrderiReporting Source:FirmAllegations:THE STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATIONALLEGED THAT DURING THE PERIOD JANUARY 1, 2004 THROUGHDECEMBER 31, 2010 UBS DID NOT ESTABLISH A SUPERVISORY SYSTEMREASONABLY DESIGNED TO (1) MONITOR THE STATE REGISTRATIONCurrent Status:Final143©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:09/13/2013Docket/Case Number:13-025-SPrincipal Product Type:No ProductOther Product Type(s):STATUS OF CLIENT SERVICE ASSOCIATES ACCEPTING UNSOLICITEDORDERS, (2) ENSURE THAT CLIENT SERVICE ASSOCIATES WHO ACCEPTEDUNSOLICITED ORDERS FROM VERMONT CUSTOMERS WERE REGISTEREDIN VERMONT, AND (3) ENSURE THAT ORDERS TICKETS ACCURATELYIDENTIFIED THE EMPLOYEE WHO ACCEPTED THE ORDER FROM THECUSTOMER.Resolution Date:09/19/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY A CIVIL MONETARY FINE OF $63,631.24 TO THESTATE OF VERMONT, AND ORDERED TO CEASE AND DESIST THEACCEPTANCE OF ORDERS IN VERMONT BY CLIENT SERVICE ASSOCIATESNOT REGISTERED IN VERMONT.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $63,631.24Cease and Desist/InjunctionConsentDisclosure 61 of 450iReporting Source:RegulatorAllegations:1.UBS ADMITS THE JURISDICTION OF THE TEXAS STATE SECURITIESBOARD IN THIS MATTER.BACKGROUND ON CLIENT SERVICE ASSOCIATES2.THE CSAS FUNCTION AS SALES ASSISTANTS AND TYPICALLY PROVIDECurrent Status:Final144©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceADMINISTRATIVE AND SALES SUPPORT TO ONE OR MORE OF UBS'SFINANCIAL ADVISORS ("FAS"). THERE ARE DIFFERENT TITLES WITHIN THECSA POSITION, INCLUDING CLIENT SERVICE ASSOCIATE, REGISTEREDCLIENT ASSOCIATE, AND SENIOR REGISTERED CLIENT SERVICEASSOCIATE.3.THE RESPONSIBILITIES OF CSAS SPECIFICALLY INCLUDE, AMONGOTHER THINGS:A.EXTENDING INVITATIONS TO UBS-SPONSORED EVENTS;B.PROVIDING PUBLISHED QUOTATIONS TO CLIENTS, IF ASKED;C.INQUIRING WHETHER A CURRENT OR PROSPECTIVE CLIENT WISHES TODISCUSS INVESTMENTS WITH A REGISTERED REPRESENTATIVE OF UBS;ANDD.ENTERING AN ORDER, PROVIDED THE ORDER WAS ACCEPTED BY ANAPPROPRIATELY REGISTERED INDIVIDUAL IN THOSE INSTANCES WHERETHE CSA IS NOT REGISTERED IN THE STATE IN WHICH THE CLIENT ISLOCATED.4.IN ADDITION TO THE RESPONSIBILITIES DESCRIBED ABOVE, AND OFPARTICULAR SIGNIFICANCE TO THIS ORDER, SOME CSAS ARE PERMITTEDTO ACCEPT ORDERS FROM CLIENTS. AS DISCUSSED BELOW, UBS'SWRITTEN POLICIES AND PROCEDURES REQUIRE THAT ANY CSASACCEPTING CLIENT ORDERS FIRST OBTAIN THE NECESSARY LICENSESAND COMPLY WITH SELF-REGULATORY ORGANIZATION AND STATEREGISTRATION REQUIREMENTS.5.UBS ISSUED A REVISED POLICY ON REGISTRATION REQUIREMENTS ONMARCH 28, 2007, WHICH STATED, INTER ALIA, THAT MANAGERS ARERESPONSIBLE FOR ENSURING THAT ALL EMPLOYEES UNDER THEIRSUPERVISION ARE APPROPRIATELY REGISTERED AND LICENSED TOPERFORM THE FUNCTIONS OF THEIR POSITION.6.DURING THE PERIOD OF 2004 TO 2010, UBS EMPLOYED, ON AVERAGE,APPROXIMATELY 2,277 CSAS PER YEAR.REGISTRATION REQUIRED7.SECTION 12.A OF THE TEXAS SECURITIES ACT SPECIFIES THAT ANAGENT CANNOT SELL, OFFER FOR SALE, OR MAKE SALE OF ANYSECURITIES ON BEHALF OF A DEALER WITHIN TEXAS UNLESS HE OR SHEIS REGISTERED AS AN AGENT FOR THAT PARTICULAR DEALER.8.PURSUANT TO THE GENERAL PROHIBITION UNDER SECTION 12.A OFTHE TEXAS SECURITIES ACT, A PERSON CANNOT ACCEPT UNSOLICITEDORDERS IN TEXAS WITHOUT BEING REGISTERED AS AN AGENT OF THERELEVANT DEALER.9.PURSUANT TO SECTION 14.A.5(A) OF THE TEXAS SECURITIES ACT, ADEALER MAY BE REPRIMANDED FOR SELLING SECURITIES IN TEXASTHROUGH AN AGENT OTHER THAN A REGISTERED AGENT.UBS REQUIRES REGISTRATION OF CLIENT SERVICE ASSOCIATES10.UBS REQUIRES CSAS TO BECOME PROPERLY REGISTERED, LICENSED,AND APPOINTED WITH THE NECESSARY SELF-REGULATORY145©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:TEXASPrincipal Sanction(s)/ReliefSought:ReprimandOther Sanction(s)/ReliefSought:Date Initiated:09/13/2013Docket/Case Number:IC13-CAF-08URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):ORGANIZATIONS, STATE REGULATORS, AND BUSINESS ENTITIES BEFORETAKING SOLICITED OR UNSOLICITED TRANSACTION ORDERS FROMCLIENTS IN SECURITIES OR OTHER FINANCIAL PRODUCTS, RECEIVINGTRANSACTION-RELATED COMPENSATION, OR OTHERWISE ENGAGING INTHE OFFER OR SALE OF SECURITIES OR OTHER FINANCIAL PRODUCTS.11.UBS'S POLICIES AND PROCEDURES STATE THAT CSAS ENGAGING INSECURITIES ACTIVITIES MUST REGISTER IN, AT A MINIMUM, THE STATEFROM WHICH THEY CONDUCT BUSINESS (I.E. HOME STATE).12. ADDITIONALLY, UBS ALSO REQUIRED CSAS TO REGISTER IN STATES INWHICH A CSA ANTICIPATED:A.MAINTAINING AN ADDITIONAL PLACE OF BUSINESS;B.PROSPECTING CLIENTS;C.SOLICITING NEW ACCOUNTS;D.SERVICING EXISTING ACCOUNTS; ORE.EFFECTING ANY SECURITIES TRANSACTIONS AND/OR RECEIVINGCOMPENSATION AS A RESULT OF SUCH TRANSACTIONS.REGULATORY INVESTIGATION AND FINDINGS13.IN MARCH 2010, STATE SECURITIES REGULATORS INITIATED ANINVESTIGATION INTO THE PRACTICES OF UBS IN CONNECTION WITH ITSCSA REGISTRATIONS.14.THE MULTI-STATE INVESTIGATION FOCUSED ON SYSTEMIC ISSUESWITH UBS'S CSA REGISTRATIONS AND RELATED SUPERVISORYSTRUCTURE INSTEAD OF ATTEMPTING TO IDENTIFY EACH INCIDENCE OFUNREGISTERED ACTIVITY. SPECIFICALLY, WITH RESPECT TO THE ORDERENTRY PROCESS, THE INVESTIGATION FOUND:A.AFTER ACCEPTING A CLIENT ORDER, UBS CSAS ACCESSED UBS'SAUTOMATED CONSOLIDATED ORDER ENTRY SYSTEM ("COE") TO ENTERTHE ORDER;Resolution Date:09/16/2013Resolution:Consent146©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:REPRIMANDSanction Details:LETTER OF REPRIMAND SENT.Regulator StatementB.WHEN ENTERING AN ORDER THROUGH THE COE, CSAS WERE ASKEDBY THE SYSTEM "DID ANOTHER PERSON RECEIVE THIS ORDER?"1.UBS'S FAILURE TO ESTABLISH AN ADEQUATE SYSTEM TO MONITOR THEREGISTRATION STATUS OF PERSONS ACCEPTING CLIENT CONSTITUTES AFAILURE TO ESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH THE TEXAS SECURITIES ACT AND RULESAND REGULATIONS OF THE TEXAS STATE SECURITIES BOARD ("BOARDRULES"). THIS IS A VIOLATION OF §115.10(A) OF THE BOARD RULES.2.UBS'S MAINTENANCE OF CERTAIN ORDER TICKETS WHICH DID NOTIDENTIFY OR IDENTIFY ACCURATELY THE PERSON WHO ACCEPTEDCLIENT ORDERS CONSTITUTES A VIOLATION OF §115.5(B)(6)(A) OF THEBOARD RULES.3.PURSUANT TO SECTION 14.A(5), UBS'S ACCEPTANCE OF ORDERS FORPURCHASES AND SALES OF SECURITIES FROM CLIENTS RESIDING INTEXAS THROUGH CSAS NOT REGISTERED IN TEXAS CONSTITUTE BASESFOR THE ISSUANCE OF AN ORDER REPRIMANDING UBS.4.PURSUANT TO SECTION 23-1.A.(3) OF THE TEXAS SECURITIES ACT, THEBOARD RULE VIOLATIONS DESCRIBED ABOVE CONSTITUTE BASES FORTHE ASSESSMENT OF AN ADMINISTRATIVE PENALTY AGAINST UBS.III.ORDERON THE BASIS OF THE FINDINGS OF FACTS, CONCLUSIONS OF LAW, ANDUBS'S CONSENT TO THE ENTRY OF THIS ORDER,IT IS HEREBY ORDERED:1.THIS ORDER CONCLUDES THE INVESTIGATION BY THE TEXAS STATESECURITIES BOARD AND ANY OTHER ACTION THAT THE TEXAS STATESECURITIES BOARD COULD COMMENCE AGAINST UBS AND ITS OFFICERS,DIRECTORS AND PRESENT OR FORMER EMPLOYEES UNDER APPLICABLETEXAS LAW ON BEHALF OF TEXAS AS IT RELATES TO UNREGISTEREDACTIVITY IN TEXAS BY UBS'S CSAS AND UBS'S SUPERVISION OF CSAREGISTRATIONS DURING THE PERIOD FROM JANUARY 1, 2004 THROUGHDECEMBER 31, 2010.2.THIS ORDER IS ENTERED INTO SOLELY FOR THE PURPOSE OFDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $364,707.23147©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRESOLVING THE REFERENCED MULTI-STATE INVESTIGATION, AND IS NOTINTENDED TO BE USED FOR ANY OTHER PURPOSE. FOR ANY PERSON ORENTITY NOT A PARTY TO THE ORDER, THIS ORDER DOES NOT LIMIT ORCREATE ANY PRIVATE RIGHTS OR REMEDIES AGAINST UBS, LIMIT ORCREATE LIABILITY OF UBS, OR LIMIT OR CREATE DEFENSES OF UBS, TOANY CLAIMS.3.UBS IS HEREBY REPRIMANDED.4.UBS IS HEREBY ORDERED TO PAY THE SUM OF THREE HUNDRED SIXTYFOUR THOUSAND SEVEN HUNDRED SEVEN DOLLARS TWENTY THREECENTS ($364,707.23) TO THE GENERAL FUND OF THE STATE OF TEXASWITHIN TEN (10) DAYS OF THE DATE OF THIS ORDER.5.THIS ORDER IS NOT INTENDED BY THE SECURITIES COMMISSIONER TOSUBJECT ANY COVERED PERSON TO ANY DISQUALIFICATIONS UNDERTHE LAWS OF THE UNITED STATES, ANY STATE, THE DISTRICT OFCOLUMBIA, PUERTO RICO, OR THE U.S. VIRGIN ISLANDS, OR UNDER THERULES OR REGULATIONS OF ANY SECURITIES OR COMMODITIESREGULATOR OR SELF-REGULATORY ORGANIZATION, INCLUDING,WITHOUT LIMITATION, ANY DISQUALIFICATION FROM RELYING UPON THESTATE OR FEDERAL REGISTRATION EXEMPTIONS OR SAFE HARBORPROVISIONS. "COVERED PERSON," MEANS UBS OR ANY OF ITSAFFILIATES AND THEIR CURRENT OR FORMER OFFICERS OR FORMEROFFICERS, DIRECTORS, EMPLOYEES, OR OTHER PERSONS THAT COULDOTHERWISE BE DISQUALIFIED AS A RESULT OF THE ORDERS (AS DEFINEDBELOW).6.THIS ORDER AND THE ORDER OF ANY OTHER STATE IN ANYPROCEEDING RELATED TO UBS'S AGREEMENT TO RESOLVE THE ABOVEREFERENCED MULTI-STATE INVESTIGATION (COLLECTIVELY, THE "ORDERS") SHALL NOT DISQUALIFY ANY COVERED PERSON FROM ANYBUSINESS THAT THEY OTHERWISE ARE QUALIFIED, LICENSED ORPERMITTED TO PERFORM UNDER APPLICABLE SECURITIES LAWS ORREGULATIONS OF THE STATE OF TEXAS AND ANY DISQUALIFICATIONSFROM RELYING UPON THIS STATE'S REGISTRATION EXEMPTIONS OR SAFEHARBOR PROVISIONS THAT ARISE FROM THE ORDERS ARE HEREBYWAIVED.7.THIS ORDER SHALL BE BINDING UPON UBS AND ITS SUCCESSORS ANDASSIGNS AS WELL AS TO SUCCESSORS AND ASSIGNS OF RELEVANTAFFILIATES WITH RESPECT TO ALL CONDUCT SUBJECT TO THEPROVISIONS ABOVE AND ALL FUTURE OBLIGATIONS, RESPONSIBILITIES,UNDERTAKINGS, COMMITMENTS, LIMITATIONS, RESTRICTIONS, EVENTS,AND CONDITIONS.iReporting Source:FirmCurrent Status:Final148©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:TEXAS STATE SECURITIES BOARDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:REPRIMANDDate Initiated:09/13/2013Docket/Case Number:IC13-CAF-08Principal Product Type:No ProductOther Product Type(s):Allegations:THE TEXAS STATE SECURITIES BOARD ALLEGED THAT UBS DID NOTESTABLISH A SUPERVISORY SYSTEM REASONABLY DESIGNED TO (1)MONITOR THE STATE REGISTRATION STATUS OF CLIENT SERVICEASSOCIATES ACCEPTING UNSOLICITED ORDERS, (2) ENSURE THATCLIENT SERVICE ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERSFROM TEXAS CUSTOMERS WERE REGISTERED IN TEXAS, AND (3) ENSURETHAT ORDERS TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:09/16/2013Resolution:Other Sanctions Ordered:REPRIMANDSanction Details:UBS WAS REPRIMANDED AND ORDERED TO PAY A CIVIL MONETARY FINEOF $364,707.23.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $364,707.23ConsentDisclosure 62 of 450iReporting Source:RegulatorAllegations:FAILURE TO ESTABLISH A REASONABLY DESIGNED SUPERVISORY SYSTEMAND/OR FAILURE TO ESTABLISH, MAINTAIN AND ENFORCE REASONABLEDESIGNED PROCEDURES.FAILURE TO MAKE AND KEEP ACCURATE BOOKS AND RECORDS.Current Status:Final149©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:08/23/2013Docket/Case Number:URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):EMPLOYMENT OF UNREGISTERED AGENTS.A MULTI-STATE NASAA INVESTIGATION FOUND THAT ON CERTAINOCCASIONS SOME UBS CLIENT SERVICE ASSOCIATES, WHILE SERIES 7REGISTERED AND REGISTERED IN ONE OR MORE OTHER STATES,ACCEPTED UNSOLICITED ORDERS TO BUY OR SELL SECURITIES FROMCLIENTS RESIDING IN NEW JERSEY AT TIMES WHEN THE CSAS WERE NOTAPPROPRIATELY REGISTERED IN NEW JERSEY.Resolution Date:08/23/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS ORDERED TO PAY THE SUM OF NINETY-EIGHT THOUSAND ONEHUNDRED EIGHTY-FOUR DOLLARS AND EIGHT-FOUR CENT ($98,184.84) TOTHE BUREAU WITHIN TEN DAYS OF THE DATE OF THE ORDER. UBS WILLPAY $10,000.00 TO NASAA WITHIN TEN DAYS OF THE DATE OF THE ORDERIN CONSIDERATION OF THE COSTS ASSOCIATED WITH NASAA'SASSISTANCE IN THE INVESTIGATION. UBS SHALL PAY UP TO A TOTAL OFFOUR MILLION FIVE HUNDRED EIGHTY-SIX THOUSAND FIVE HUNDREDFIFTY FIVE DOLLARS (S4,586,555.00) IN FINES, PENALTIES AND ANY OTHERMONETARY SANCTIONS AMONG THE 50 STATES, THE DISTRICT OFDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $98,184.94Cease and Desist/InjunctionConsent150©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCOLUMBIA, PUERTO RICO, AND THE U.S. VIRGIN ISLANDS PURSUANT TOTHE TERMS OF UBS'S AGREEMENT WITH THE MULTI-STATE WORKINGGROUP.Regulator StatementUBS'S FAILURE TO ESTABLISH AN ADEQUATE SYSTEM TO MONITOR THEREGISTRATION STATUS OF PERSONS ACCEPTING CLIENT ORDERSCONSTITUTES A FAILURE TO ESTABLISH A REASONABLY DESIGNEDSUPERVISORY SYSTEM AND/OR FAILURE TO ESTABLISH, MAINTAIN ANDENFORCE REASONABLE DESIGNED PROCEDURES PURSUANT TO N.J.S.A.49:3-58(A)(2)(XI).UBS'S MAINTENANCE OF ORDER TICKETS WHICH DO NOT ACCURATELYIDENTIFY THE PERSON WHO ACCEPTED CLIENT ORDERS CONSTITUTES AFAILURE TO MAKE AND KEEP ACCURATE BOOKS AND RECORDSPURSUANT TO N.J.S.A. 49:3-59(B).PURSUANT TO N.J.S.A. 49:3-56(A), UBS'S ACCEPTANCE OF ORDERS FORPURCHASES AND SALES OF SECURITIES FROM CLIENTS RESIDING INNEW JERSEY THROUGH CSAS NOT REGISTERED IN NEW JERSEYCONSTITUTE VIOLATIONS OF N.J.S.A. 49:3-56(H) FOR THE EMPLOYMENTOF UNREGISTERED AGENTS AND IS A BASIS FOR THE ISSUANCE OF ANORDER ASSESSING A PENALTY AGAINST UBS.PURSUANT TO THE SECURITIES LAW, UBS'S ACCEPTANCE OF ORDERSFOR PURCHASES AND SALES OF SECURITIES IN NEW JERSEY THROUGHAGENTS NOT REGISTERED IN NEW JERSEY CONSTITUTES A BASIS TOORDER UBS TO CEASE AND DESIST ENGAGING IN THE SALE OFSECURITIES IN NEW JERSEY THROUGH UNREGISTERED AGENTS.PURSUANT TO N.J.S.A. 49:3-70.1, EACH VIOLATION DESCRIBED ABOVECONSTITUTES A BASIS FOR THE ASSESSMENT OF AN ADMINISTRATIVEPENALTY AGAINST UBS.THE BUREAU CHIEF FINDS THE FOLLOWING RELIEF APPROPRIATE AND INTHE PUBLIC INTEREST.IN NOVEMBER 2010, AFTER THE INITIAL INQUIRY BY STATE SECURITIESREGULATORS, UBS ENHANCED THE COE SYSTEM TO AUTOMATICALLYVALIDATE THE REGISTRATION OF EMPLOYEES DURING THE ORDERENTRY PROCESS.iReporting Source:FirmAllegations:THE BUREAU OF SECURITIES ALLEGED THAT UBS DID NOT ESTABLISH ASUPERVISORY SYSTEM REASONABLY DESIGNED TO (1) MONITOR THESTATE REGISTRATION STATUS OF CLIENT SERVICE ASSOCIATESACCEPTING UNSOLICITED ORDERS, (2) ENSURE THAT CLIENT SERVICECurrent Status:Final151©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:08/23/2013Docket/Case Number:Principal Product Type:No ProductOther Product Type(s):ASSOCIATES WHO ACCEPTED UNSOLICITED ORDERS FROM NEW JERSEYCUSTOMERS WERE REGISTERED IN NEW JERSEY, AND (3) ENSURE THATORDERS TICKETS ACCURATELY IDENTIFIED THE EMPLOYEE WHOACCEPTED THE ORDER FROM THE CUSTOMER.Resolution Date:08/23/2013Resolution:Other Sanctions Ordered:Sanction Details:UBS WAS WARNED, ORDERED TO PAY A CIVIL MONETARY FINE OF$98,184.84 TO THE STATE OF NEW JERSEY, AND ORDERED TO CEASE ANDDESIST THE ACCEPTANCE OF ORDERS IN NEW JERSEY BY CLIENTSERVICE ASSOCIATES NOT REGISTERED IN NEW JERSEY. UBS ALSOAGREED TO PAY $10,000.00 TO NASAA IN CONSIDERATION OF THE COSTSOF INVESTIGATION, AND TO PAY UP TO A TOTAL OF S4,586,555 IN FINESAND PENALTIES AMONG THE 50 STATES, THE DISTRICT OF COLUMBIA,PUERTO RICO, AND THE U.S. VIRGIN ISLANDS PURSUANT TO THE TERMSOF UBS'S AGREEMENT WITH THE NASAA MUTLI-STATE WORKING GROUP.Firm StatementUBS ENHANCED ITS ORDER ENTRY SYSTEMS TO AUTOMATICALLYVALIDATE THAT THE PERSON WHO ACCEPTED THE ORDER FROM THECUSTOMER IS REGISTERED IN THE STATE OF THE CUSTOMER'SRESIDENCE.Sanctions Ordered:Monetary/Fine $98,184.94Cease and Desist/InjunctionConsentDisclosure 63 of 450iReporting Source:RegulatorAllegations:SEC RULES 204T(A), 204T(A)(1) OF REGULATION SHO, NASD RULESCurrent Status:Final152©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/2012Docket/Case Number:2008015161601Principal Product Type:OtherOther Product Type(s):EQUITY SECURITIES, REPORTABLE SECURITIES6130(D)(6), 6955(A) - UBS FINANCIAL SERVICES INC. HAD FAIL TO DELIVERPOSITIONS AT A REGISTERED CLEARING AGENCY IN EQUITY SECURITIESTHAT RESULTED FROM LONG SALES, AND FAILED TO IMMEDIATELYTHEREAFTER CLOSE OUT THE FAIL TO DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY NO LATER THANTHE BEGINNING OF REGULAR TRADING HOURS ON THE THIRDCONSECUTIVE SETTLEMENT DATE FOLLOWING THE SETTLEMENT DATESFOR THE SALE TRANSACTIONS (I.E., T+6). THE FIRM HAD A FAIL TODELIVER POSITION AT A REGISTERED CLEARING AGENCY IN AN EQUITYSECURITY THAT RESULTED FROM A SHORT SALE, AND FAILED TOIMMEDIATELY THEREAFTER CLOSE OUT THE FAIL TO DELIVER POSITIONSBY PURCHASING SECURITIES OF LIKE KIND AND QUANTITY NO LATERTHAN THE BEGINNING OF REGULAR TRADING HOURS ON THE NEXTCONSECUTIVE SETTLEMENT DATE FOLLOWING THE SETTLEMENT DATESFOR THE SHORT SALE TRANSACTION (I.E. T+4). THE FIRM TRANSMITTEDREPORTS TO THE ORDER AUDIT TRAIL SYSTEM (OATS) THAT CONTAINEDINACCURATE BUY/SELL ORDER DESIGNATIONS. THE FIRM FAILED TOREPORT TO THE OVER-THE-COUNTER (OTC) REPORTING FACILITY THECORRECT SYMBOL INDICATING WHETHER A TRANSACTION WAS A BUY,SELL, SELL SHORT, OR CROSS FOR TRANSACTIONS IN REPORTABLESECURITIES.Resolution Date:06/01/2012Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureAcceptance, Waiver & Consent(AWC)153©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $167,500. FINE PAID INFULL ON JUNE 25, 2012.Monetary/Fine $167,500.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureDate Initiated:06/01/2012Docket/Case Number:2008015161601Principal Product Type:OtherOther Product Type(s):EQUITY SECURITIES, REPORTABLE SECURITIESAllegations:UBS FINANCIAL SERVICES INC. HAD FAILED TO DELIVER POSITIONS AT AREGISTERED CLEARING AGENCY IN EQUITY SECURITIES THAT RESULTEDFROM LONG SALES, AND FAILED TO IMMEDIATELY THEREAFTER CLOSEOUT THE FAIL TO DELIVER POSITIONS BYPURCHASING SECURITIES OF LIKE KIND AND QUANTITY NO LATER THANTHE BEGINNING OF REGULAR TRADING HOURS ON THE THIRDCONSECUTIVE SETTLEMENT DATE FOLLOWING THE SETTLEMENT DATESFOR THE SALE TRANSACTIONS (I.E., T+6). THE FIRM HAD A FAIL TODELIVER POSITION AT A REGISTERED CLEARING AGENCY IN AN EQUITYSECURITY THAT RESULTED FROM A SHORT SALE, AND FAILED TOIMMEDIATELY THEREAFTER CLOSE OUT THE FAIL TO DELIVERPOSITIONS BY PURCHASING SECURITIES OF LIKE KIND AND QUANTITY NOLATER THAN THE BEGINNING OF REGULAR TRADING HOURS ON THE NEXTCONSECUTIVE SETTLEMENT DATE FOLLOWING THE SETTLEMENT DATESFOR THE SHORT SALE TRANSACTION (I.E. T+4). THE FIRM TRANSMITTEDREPORTS TO THE ORDER AUDIT TRAIL SYSTEM (OATS) THAT CONTAINEDINACCURATE BUY/SELL ORDER DESIGNATIONS. THE FIRM FAILED TOREPORT TO THE OVER-THECOUNTER (OTC) REPORTING FACILITY THECORRECT SYMBOL INDICATING WHETHER A TRANSACTION WAS A BUY,SELL, SELL SHORT, OR CROSS FOR TRANSACTIONS IN REPORTABLESECURITIES. SEC RULES 204T(A), 204T(A)(1) OF REGULATION SHO, NASDRULES 6130(D)(6),6955(A)WERE VIOLATED.Current Status:Final154©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:FINE $167,500.00Resolution Date:06/01/2012Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM NEITHER ADMITTED NOR DENIED THE FINDINGS, THE FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, THE FIRM WAS CENSURED AND FINED $167,500.Sanctions Ordered:CensureMonetary/Fine $167,500.00Acceptance, Waiver & Consent(AWC)Disclosure 64 of 450iReporting Source:RegulatorInitiated By:FINRADate Initiated:05/01/2012Docket/Case Number:2009018229201Principal Product Type:OtherOther Product Type(s):NON-TRADITIONAL EXCHANGE-TRADED FUNDSAllegations:FINRA RULE 2010, NASD RULES 2110, 2310, 3010 - UBS FINANCIALSERVICES INC. FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORYSYSTEM, INCLUDING WRITTEN PROCEDURES, REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH NASD AND FINRA RULES IN CONNECTIONWITH THE SALE OF NON-TRADITIONAL EXCHANGE-TRADED FUNDS (ETFS)IN ACCOUNTS WHERE THE FIRM PROVIDED BROKERAGE SERVICES TOCERTAIN RETAIL CUSTOMERS AND THE FIRM FAILED TO PROVIDEADEQUATE FORMAL TRAINING AND GUIDANCE TO ITS REGISTEREDREPRESENTATIVES AND SUPERVISORS REGARDING NON-TRADITIONALETFS. THE FIRM ALLOWED ITS REGISTERED REPRESENTATIVES TORECOMMEND A NON-TRADITIONAL ETF TO CUSTOMERS WITHOUTPERFORMING REASONABLE DILIGENCE TO UNDERSTAND THE RISKS ANDFEATURES ASSOCIATED WITH IT. CERTAIN FIRM REGISTEREDREPRESENTATIVES MADE UNSUITABLE RECOMMENDATION OF NON-TRADITIONAL ETFS TO CERTAIN CUSTOMERS WITH A PRIMARYCONSERVATIVE RISK TOLERANCE PROFILE.Current Status:Final155©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:05/01/2012Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $1.5 MILLION AND ORDEREDTO PAY $431,488 IN RESTITUTION. A REGISTERED FIRM PRINCIPAL SHALLSUBMIT SATISFACTORY PROOF OF PAYMENT OF RESTITUTION OR OFREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION TO FINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCEOF THE AWC. ANY UNDISTRIBUTED RESTITUTION SHALL BE FORWARDEDTO THE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. THE FIRM SHALL PROVIDE SATISFACTORY PROOF OF SUCHACTION TO FINRA WITHIN 14 DAYS OF FORWARDING THE UNDISTRIBUTEDRESTITUTION TO THE APPROPRIATE STATE AUTHORITY. FINE PAID IN FULLON MAY 9, 2012.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $1,500,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:FINRA ALLEGED THAT DURING THE PERIOD JANUARY 2008 THROUGHJUNE 2009, UBS FS FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORYSYSTEM, INCLUDING WRITTEN PROCEDURES, REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH NASD RULES 3010, 2310 AND 2110 ANDFINRA RULE 2010 IN CONNECTION WITH THE SALE OF LEVERAGED,INVERSE, AND INVERSE-LEVERAGED EXCHANGE TRADED FUNDS ("NON-Current Status:Final156©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CENSURE$431,488 OF RESTITUTIONDate Initiated:05/01/2012Docket/Case Number:2009018229201Principal Product Type:OtherOther Product Type(s):NON-TRADITIONAL EXCHANGE-TRADED FUNDSTRADITIONAL ETFS"). FINRA FURTHER ALLEGED THAT UBS FS VIOLATEDTHESE RULES BY ALLOWING ITS REGISTERED REPRESENTATIVES TORECOMMEND TO CUSTOMERS A NON-TRADITIONAL ETF WITHOUTPERFORMING REASONABLE DILIGENCE TO UNDERSTAND THE RISKS ANDFEATURES ASSOCIATED WITH IT. CERTAIN UBS FS REGISTEREDREPRESENTATIVES MADE UNSUITABLE RECOMMENDATIONS OF NON-TRADITIONAL ETFS TO CERTAIN CUSTOMERS WITH A PRIMARYCONSERVATIVE RISK TOLERANCE PROFILE, IN FURTHER VIOLATION OFNASD RULES 2310 AND 2110 AND FINRA RULE 2010.Resolution Date:05/01/2012Resolution:Other Sanctions Ordered:Sanction Details:$1,500,000 FINE, CENSURE, $431,488 OF RESTITUTIONFirm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS, UBS FS RESOLVED THEMATTER WITH A LETTER OF ACCEPTANCE, WAIVER AND CONSENT INWHICH UBS FS AGREED TO A $1,500,000 FINE, A CENSURE, ANDRESTITUTION IN THE AMOUNT OF $431,488.Sanctions Ordered:CensureMonetary/Fine $1,500,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)Disclosure 65 of 450iReporting Source:FirmAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final157©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:HAWAII DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS DIVISIONOF BUSINESS REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:06/24/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESResolution Date:03/07/2012Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $326,618.99 TO HAWAII.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,HAWAII WILL RECEIVE A TOTAL PAYMENT OF $326,618.99 FROM UBS, FROMA TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THISFILING FURTHER CLARIFIES OCCURRENCE NUMBER 1408448 PREVIOUSLYFILED.Sanctions Ordered:Monetary/Fine $326,618.99Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 66 of 450iReporting Source:RegulatorAllegations:UBS FINANCIAL SERVICES, INC. FAILED TO REASONABLY SUPERVISE ITSCurrent Status:Final158©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:PENNSYLVANIA CONTACT: COUNSEL CAROLYN MENDELSON (412)-565-5083Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:UBS FINANCIAL SERVICES INC. IS ORDERED TO PAY A $200,000.00ADMINISTRATIVE ASSESSMENT AND $75,000.00 IN INVESTIGATIVE ANDLEGAL COSTS.Date Initiated:02/22/2012Docket/Case Number:2010-08-02, 2009-08-05, 2011-09-02URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):NOTES (STRUCTURED PRODUCTS)AGENTS OR EMPLOYEES RELATING TO THE SALE OF CERTAINSTRUCTURED PRODUCTS ISSUED BY LEHMAN BROTHERS, INC.Resolution Date:02/22/2012Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES, INC. IS ORDERED TO PAY WITHIN 30 DAYSAFTER ENTRY OF THIS ORDER A $200,000.00 ADMINISTRATIVEASSESSMENT AND $75,000.00 IN INVESTIGATIVE AND LEGAL COSTS TOTHE COMMONWEALTH OF PA.Regulator StatementFINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TO UBSFINANCIAL SERVICES, INC.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $200,000.00SettlediReporting Source:FirmAllegations:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE PENNSYLVANIASECURITIES COMMISSION FOUND THAT THE FIRM FAILED TOCurrent Status:Final159©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:PENNSYLVANIA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:02/22/2012Docket/Case Number:2010-08-02, 2009-08-05, 2011-09-02Principal Product Type:OtherOther Product Type(s):LEHMAN STRUCTURED PRODUCTSREASONABLY SUPERVISE THREE AGENTS IN ONE BRANCH OFFICERELATING TO THE SALE OF CERTAIN STRUCTURED PRODUCTS ISSUED BYLEHMAN BROTHERS TO TWO INVESTORS AND THAT SUCH CONDUCTFORMED A BASIS TO SANCTION THE FIRM UNDER SECTION 305 (A)(VII) OFTHE PENNSYLVANIA SECURITIES ACT OF 1972, 70 P.S. SECTION 1-305(A)(VII).Resolution Date:02/22/2012Resolution:Other Sanctions Ordered:LEGAL AND INVESTIGATION COSTS OF $75,000.00Sanction Details:ADMINSTRATIVE ASSESSMENT OF $200,000; LEGAL AND INVESTIGATIONCOSTS OF $75,000.Firm StatementWITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE COMMISSION'S FINDINGS OF FACT, CONCLUSION OFLAW AND ORDER AND AGREED TO PAY AN ADMINISTRATIVE ASSESSMENTOF $200,000 ON MARCH 22, 2012; AND PAY LEGAL AND INVESTIGATIONCOSTS OF $75,000 ON MARCH 22, 2012.Sanctions Ordered:Monetary/Fine $200,000.00SettledDisclosure 67 of 450iReporting Source:FirmInitiated By:NORTH CAROLINA SECURITIES DIVISIONDate Initiated:06/24/2008Allegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final160©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESResolution Date:02/10/2012Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $784,535.02 TO NORTH CAROLINA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, NORTH CAROLINA WILL RECEIVE A TOTAL PAYMENT OF$784,535.02 FROM UBS, FROM A TOTAL FINE OF $75MM PREVIOUSLYAGREED UPON WITH THE STATE OF MASSACHUSETTS AND THE NORTHAMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. THIS FILINGFURTHER CLARIFIES OCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $784,535.02Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 68 of 450iReporting Source:FirmInitiated By:NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONDate Initiated:05/22/2008Allegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final161©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESResolution Date:10/26/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $488,179.84 TO NEW HAMPSHIRE.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, NEW HAMPSHIRE WILL RECEIVE A TOTAL PAYMENT OF$488,179.84 FROM UBS, FROM A TOTAL FINE OF $75MM PREVIOUSLYAGREED UPON WITH THE STATE OF MASSACHUSETTS AND THE NORTHAMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. THIS FILINGFURTHER CLARIFIES OCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $488,179.84Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 69 of 450iReporting Source:RegulatorAllegations:MSRB RULE G-27: THE FIRM LACKED A REASONABLE SYSTEM TOSUPERVISE MUNICIPAL BOND CROSS-TRADES IN THE ACCOUNTS OFRETAIL CUSTOMERS WHERE THOSE CROSS TRADES WERE SOLICITED ONBOTH SIDES OF THE CROSS TRANSACTION BY THE SAME BROKER. ANINDIVIDUAL EXERCISED DISCRETION TO ENGAGE IN SHORT-TERMTRADING OF MUNICIPAL BONDS FOR AT LEAST TEN CUSTOMERCurrent Status:Final162©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefN/ADate Initiated:09/30/2011Docket/Case Number:2007009401302Principal Product Type:Debt - MunicipalOther Product Type(s):ACCOUNTS. THE INDIVIDUAL WAS A HIGH-PRODUCING BROKER WHOSEHIGH NET-WORTH CLIENTS OFTEN GAVE HIM DISCRETIONARY TRADINGAUTHORITY. MANY OF THESE TRADES WERE SUSPICIOUS AS THEYRESULTED FROM CROSS-TRADES OF MUNICIPAL BONDS BETWEEN THEINDIVIDUAL'S CUSTOMER ACCOUNTS, WHERE THE INDIVIDUAL SOLICITEDBOTH SIDES OF THE TRADES. THE FIRM FAILED TO REASONABLYSUPERVISE THE CROSS-TRADING OF MUNICIPAL BONDS BECAUSE ITLACKED ADEQUATE POLICIES AND PROCEDURES TO MONITOR THIS TYPEOF TRADING. ALTHOUGH THE INDIVIDUAL AND THE FIRM EARNEDTRANSACTION COMPENSATION ON THESE TRADES, THE TRANSACTIONSRESULTED IN LOSSES TO CERTAIN CUSTOMERS. IN ADDITION, ALTHOUGHTHE FIRM IDENTIFIED THE INDIVIDUAL'S TRADING AS REQUIRINGFURTHER INVESTIGATION, THE FIRM DID NOT TAKE SUFFICIENT STEPS TOADDRESS THE RED FLAGS. THESE RED FLAGS INCLUDED MULTIPLEEXCEPTION REPORTS GENERATED BY THE FIRM'S COMPLIANCEDEPARTMENT, INDICATING A POSSIBLE PATTERN OF IMPROPER SHORT-TERM TRADING IN MUNICIPAL BONDS FOR MULTIPLE CUSTOMERACCOUNTS. BECAUSE OF THESE FAILURES THE INDIVIDUAL WAS ABLE TOENGAGE IN A PATTERN OF EXCESSIVE AND UNSUITABLE CROSS-TRADING.THE FIRM PROVIDED NO WRITTEN OR VERBAL GUIDANCE REGARDINGWHAT CRITERIA SHOULD BE UTILIZED TO DETERMINE WHETHER A CROSSTRADE IS "BENEFICIAL TO BOTH CLIENTS," OR WHO SHOULD MAKE THISDETERMINATION. THE STANDARD TO DETERMINE WHETHER A CROSS-TRADE COULD BE DEEMED "BENEFICIAL" TO CUSTOMERS ON BOTH SIDESOF A RESPECTIVE TRADE WAS UNCLEAR. THE FIRM CONDUCTED ANNUALAUDITS ON THE FIRM'S MUNICIPAL BOND TRADING DESKS ANDDEFICIENCIES IN SUPERVISION OF MUNICIPAL CROSS-TRADES WEREIDENTIFIED. THE COMPLIANCE DEPARTMENT CONDUCTED TWO REVIEWSOF THE INDIVIDUAL'S CROSS-TRADING AND CREATED SPREADSHEETSIDENTIFYING MUNICIPAL BOND CROSS-TRADES WHERE BOTH SIDES OFTHE TRADES WERE MARKED AS SOLICITED. BOTH OF THESE REVIEWSWERE PROVIDED TO BRANCH MANAGEMENT FOR THEIR REVIEW. THEBRANCH MANAGERS, HOWEVER, FAILED TO ADEQUATELY REVIEW THESECROSS-TRADES FOR APPROPRIATENESS.163©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Resolution Date:09/30/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE, THE FIRM IS CENSURED AND FINED $300,000.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $300,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:09/30/2011Docket/Case Number:2007009401302Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:FINRA ALLEGED THAT DURING THE PERIOD NOVEMBER 2004 THROUGHSEPTEMBER 2006, UBS FINANCIAL SERVICES INC. VIOLATED MUNICIPALSECURITIES RULEMAKING BOARD ("MSRB") RULE 0-27 BY FAILING TOREASONABLY SUPERVISE CERTAIN CROSS-TRADING OF MUNICIPALBONDS BY RETAIL CUSTOMERS, IN THAT THE FIRM LACKED ADEQUATEPOLICIES AND PROCEDURES TO MONITOR THIS TYPE OF TRADING. INADDITION, THE FIRM FAILED TO CONDUCT ADEQUATE FOLLOW-UP ON REDFLAGS WHICH PUT IT ON NOTICE THAT ONE OF ITS REGISTEREDREPRESENTATIVES MAY HAVE BEENEXERCISING DISCRETION IN CUSTOMER ACCOUNTS TO ENGAGE INUNSUITABLE CROSS-TRADING OF MUNICIPAL BONDS.Current Status:Final164©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSUREResolution Date:09/30/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS ANDWAS CENSURED AND FINED $300,000.Sanctions Ordered:CensureMonetary/Fine $300,000.00Acceptance, Waiver & Consent(AWC)Disclosure 70 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/20/2011Docket/Case Number:2009019559301Principal Product Type:OtherOther Product Type(s):TRACE-ELIGIBLE SECURITIES, TRACE-ELIGIBLE DEBT SECURITIESAllegations:FINRA RULES 2010, 6730(A) - UBS FINANCIAL SERVICES, INC. FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)BLOCK TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15MINUTES OF THE TIME OF EXECUTION. THE FIRM FAILED TO REPORT TOTRACE S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES AND TRACE-ELIGIBLE DEBT SECURITIES WITHIN 15 MINUTES OF THE TIME OFEXECUTION. THIS CONDUCT CONSTITUTES SEPARATE AND DISTINCTVIOLATIONS OF FINRA RULE 6730(A) AND A PATTERN OR PRACTICE OFLATE REPORTING WITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATIONOF FINRA RULE 2010.Current Status:FinalResolution Date:09/20/2011Resolution:Acceptance, Waiver & Consent(AWC)165©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $60,000.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $60,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE $60,000.00Date Initiated:09/20/2011Docket/Case Number:2009019559301Principal Product Type:OtherOther Product Type(s):TRACE-ELIGIBLE SECURITIES, TRACE-ELIGIBLE DEBT SECURITIESAllegations:UBS FINANCIAL SERVICES, INC. FAILED TO REPORT TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) BLOCK TRANSACTIONS INTRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE TIME OFEXECUTION. THE FIRM FAILED TO REPORT TO TRACE S1 TRANSACTIONSIN TRACE-ELIGIBLE SECURITIES AND TRACE-ELIGIBLE DEBT SECURITIESWITHIN 15 MINUTES OF THE TIME OF EXECUTION. THIS CONDUCTCONSTITUTES VIOLATIONS OF FINRA RULE 6730(A) AND FINRA RULE 2010.Current Status:FinalResolution Date:09/20/2011Resolution:Sanctions Ordered:CensureMonetary/Fine $60,000.00Acceptance, Waiver & Consent(AWC)166©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS- CENSURED AND FINED $60,000.Disclosure 71 of 450iReporting Source:FirmInitiated By:NEVADA SECRETARY OF STATE SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:04/10/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:09/10/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,099,850.65 TO NEVADA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,NEVADA WILL RECEIVE A TOTAL PAYMENT OF $1,099,850.65 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESanctions Ordered:Monetary/Fine $1,099,850.65Disgorgement/RestitutionCease and Desist/InjunctionConsent167©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Disclosure 72 of 450iReporting Source:FirmInitiated By:KANSAS OFFICE OF THE SECURITIES COMMISSIONERPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:06/11/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:08/16/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $579,165.76 TO KANSAS.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,KANSAS WILL RECEIVE A TOTAL PAYMENT OF $579,165.76 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESSanctions Ordered:Monetary/Fine $579,165.76Disgorgement/RestitutionCease and Desist/InjunctionConsent168©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Disclosure 73 of 450iReporting Source:FirmInitiated By:MINNESOTA DEPARTMENT OF COMMERCEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:06/17/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:08/19/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $2,012,922.92 TO MINNESOTA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MINNESOTA WILL RECEIVE A TOTAL PAYMENT OF $2,012,922.92 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESSanctions Ordered:Monetary/Fine $2,012,922.92Disgorgement/RestitutionCease and Desist/InjunctionConsent169©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Disclosure 74 of 450iReporting Source:RegulatorInitiated By:OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:12/08/2010Docket/Case Number:10-080URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE; DISHONEST AND UNETHICAL PRACTICES.Current Status:FinalResolution Date:12/08/2010Resolution:Other Sanctions Ordered:BUY BACK OF ELIGIBLE ARS FROM ELIGIBLE CUSTOMERS.Sanction Details:RECEIVED PAYMENT FOR INVESTOR EDUCATION REVOLVING FUNDRegulator StatementMULTI-STATE INVESTIGATION COORDINATED BY NASAA, CONCERNINGAUCTION RATE SECURITIES.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $274,539.17Cease and Desist/InjunctionConsentiReporting Source:FirmCurrent Status:Final170©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:10-080Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESResolution Date:12/08/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $274,539.17 TO OKLAHOMA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,OKLAHOMA WILL RECEIVE A TOTAL PAYMENT OF $274,539.17 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $274,539.17Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 75 of 450iReporting Source:FirmCurrent Status:Final171©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SOUTH CAROLINA OFFICE OF THE ATTORNEY GENERAL SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESResolution Date:09/24/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $390,657.47 TO SOUTH CAROLINA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,SOUTH CAROLINA WILL RECEIVE A TOTAL PAYMENT OF $390,657.47 FROMUBS, FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITHTHE STATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $390,657.47Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 76 of 450iReporting Source:FirmCurrent Status:Final172©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:DEPARTMENT OF BUSINESS REGULATION STATE OF RHODE ISLANDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:08/06/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESResolution Date:05/25/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $247,677.36 TO RHODE ISLAND.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,RHODE ISLAND WILL RECEIVE A TOTAL PAYMENT OF $247,677.36 FROMUBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $247,677.36Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 77 of 450iReporting Source:FirmCurrent Status:Final173©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ALASKA DEPT. OF COMMUNITY AND ECONOMIC DEVELOPMENT DIVISIONOF BANKING, SECURITIES AND CORPORATIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:08/01/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESResolution Date:12/14/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $733,465.61 TO ALASKA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,ALASKA WILL RECEIVE A TOTAL PAYMENT OF $733,465.61 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. THISFILING FURTHER CLARIFIES OCCURRENCE NUMBER 1408448 PREVIOUSLYFILED.Sanctions Ordered:Monetary/Fine $733,465.61Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 78 of 450iReporting Source:Firm174©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ILLINOIS OFFICE OF THE SECRETARY OF STATE SECURITIESDEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:08/10/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $3,359,459.67 TO ILLINOIS.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,ILLINOIS WILL RECEIVE A TOTAL PAYMENT OF $3,359,459.67 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. THISFILING FURTHER CLARIFIES OCCURRENCE NUMBER 1408448 PREVIOUSLYFILED.Sanctions Ordered:Monetary/Fine $3,359,459.67Disgorgement/RestitutionCease and Desist/InjunctionStipulation and ConsentDisclosure 79 of 450i175©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:WYOMING SECRETARY OF STATE SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:08/07/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:06/01/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $288,945.81 TO WYOMING.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,WYOMING WILL RECEIVE A TOTAL PAYMENT OF $288,945.81 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $288,945.81Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 80 of 450i176©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:WISCONSIN DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OFSECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:12/08/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS HAS PAID THE SUM OF $462,788.27 TO WISCONSINFirm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,WISCONSIN WILL RECEIVE A TOTAL PAYMENT OF $462,788.27 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $462,788.27Disgorgement/RestitutionConsentDisclosure 81 of 450iReporting Source:Firm177©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:WEST VIRGINIA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/17/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $155,754.80 TO WEST VIRGINIA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,WEST VIRGINIA WILL RECEIVE A TOTAL PAYMENT OF $155,754.80 FROMUBS, FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITHTHE STATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $155,754.80Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 82 of 450iReporting Source:Firm178©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:U.S. VIRGIN ISLANDS DIVISION OF BANKING AND INSURANCEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:06/25/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $258,154.66 TO THE VIRGIN ISLANDS.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, THEVIRGIN ISLANDS WILL RECEIVE A TOTAL PAYMENT OF $258,154.66 FROMUBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $258,154.66Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 83 of 450iReporting Source:Firm179©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF VERMONT DEPARTMENT OF BANKING, INSURANCE, SECURITIESAND HEALTH CARE ADMINISTRATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:STATE DID NOT OPEN ITS OWN INVESTIGATION, USING TEXAS FILING DATEAS TEXAS CONCLUDED THE NAASA MODEL AGREEMENT.Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:04/27/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $243,236.37 TO VERMONT.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,VERMONT WILL RECEIVE A TOTAL PAYMENT OF $243,263.37 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $243,263.37Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 84 of 450iReporting Source:Firm180©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:TENNESSEE DEPARTMENT OF COMMERCE & INSURANCE SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/08/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,046,609.84 TO TENNESSEE.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,TENNESSEE WILL RECEIVE A TOTAL PAYMENT OF $1,046,609.84 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $1,046,609.84Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 85 of 450iReporting Source:Firm181©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:PUERTO RICO COMMISSION OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/07/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $207,429.35 TO PUERTO RICO.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,PUERTO RICO WILL RECEIVE A TOTAL PAYMENT OF $207,429.35 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $207,429.35Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 86 of 450iReporting Source:Firm182©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW MEXICO REGULATION AND LICENSING DEPARTMENT SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/08/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $277,205.48 TO NEW MEXICO.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, NEWMEXICO WILL RECEIVE A TOTAL PAYMENT OF $277,205.48 FROM UBS,FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $277,205.48Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 87 of 450i183©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:NEBRASKA DEPARTMENT OF BANKING AND FINANCEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/01/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $406,414.94 TO NEBRASKA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,NEBRASKA WILL RECEIVE A TOTAL PAYMENT OF $406,414.94 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $406,414.94Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 88 of 450i184©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:MISSISSIPPI OFFICE OF THE SECRETARY OF STATE, SECURITIES ANDCHARITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/26/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $498,250.77 TO MISSISSIPPI.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MISSISSIPPI WILL RECEIVE A TOTAL PAYMENT OF $498.250.77 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $498,250.77Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 89 of 450i185©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:STATE OF MICHIGAN OFFICE OF FINANCIAL AND INSURANCE REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/13/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $2,227,163.33 TO MICHIGANFirm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MICHIGAN WILL RECEIVE A TOTAL PAYMENT OF $2,227,163.33 FROM UBS,FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $2,227,163.33Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 90 of 450i186©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:FLORIDA FINANCIAL SERVICES COMMISSION OFFICE OF FINANCIALREGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:11/04/2010Docket/Case Number:0535-S-7/10Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:11/05/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $6,581,232.48 TO FLORIDA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,FLORIDA WILL RECEIVE A TOTAL PAYMENT OF $6,581,232.48 FROM UBS,FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $6,581,232.48Disgorgement/RestitutionCease and Desist/InjunctionConsenti187©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 91 of 450Reporting Source:FirmInitiated By:ARKANSAS SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:11/16/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $265,036.69 TO ARKANSASFirm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,ARKANSAS WILL RECEIVE A TOTAL PAYMENT OF $265,036.69 FROM UBS,FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $265,036.69Disgorgement/RestitutionCease and Desist/InjunctionConsenti188©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 92 of 450Reporting Source:RegulatorInitiated By:DISTRICT OF COLUMBIAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ADMINISTRATIVE CONSENT ORDERDate Initiated:07/07/2011Docket/Case Number:SB-CO-14-11URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUTION RATE SECURITIESAllegations:USB FINANCIAL SERVICES INC./UBS SECURITIES LLC COLLECTIVELY("UBS") VIOLATED D.C. OFFICIAL CODE § 31-5602.07(A)(12)FOR FAILURE TOSUPERVISE ITS EMPLOYEES AND D.C. OFFICIAL CODE § 31-5602.07(A)9FOR ENGAGING IN DISHONEST AND UNETHICAL BUSINESS PRACTICES INITS SALE OF AUCTION RATE SECURITIES IN THE DISTRICT OF COLUMBIA.Current Status:FinalResolution Date:07/07/2011Resolution:Other Sanctions Ordered:UBS WILL TAKE VARIOUS MEASURES TO RESOLVE OUTSTANDING ARSISSUES.Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING D.C. OFFICIAL CODE §§31-5602.07(A)(9)AND 31-5602(A)(12); AND SHALL PAY THE SUM OF THREEHUNDRED FORTY THOUSAND TWO HUNDRED TWENTY SEVEN DOLLORSAND NINETY CENTS ($340,277.90). THE FINE WAS PAID 08/08/2011.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $340,227.90Cease and Desist/InjunctionOrderi189©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE & SECURITIESREGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:SB-CO-14-11Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/07/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $340,227.90 TO WASHINGTON D.C.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,WASHINGTON D.C. WILL RECEIVE A TOTAL PAYMENT OF $340,227.90 FROMUBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $340,227.90Disgorgement/RestitutionCease and Desist/InjunctionConsenti190©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 93 of 450Reporting Source:FirmInitiated By:INDIANA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:09/21/2009Docket/Case Number:11-0042COPrincipal Product Type:OtherOther Product Type(s):PRIVATE EQUITY FUNDSAllegations:DURING JANUARY 6, 2004 AND APRIL 28, 2009 ISTA INVESTED 16.2 MILLIONIN PRIVATE EQUITY FUNDS WHICH THEY CLAIM WERE UNSUITABLE INVIOLATION OF THE INDIANA UNIFORM SECURITIES ACT 710 IACL-17-L(X).Current Status:FinalResolution Date:06/09/2011Resolution:Other Sanctions Ordered:Sanction Details:FINE OF $450,000.00 AND $227,000 REIMBURSEMENT OF INVESTIGATIONCOSTS.Firm StatementUBS FINANCIAL SERVICES INC. NEITHER ADMITS OR DENIES THESECLAIMSSanctions Ordered:Monetary/Fine $677,000.00ConsentDisclosure 94 of 450iReporting Source:FirmInitiated By:MARYLAND OFFICE OF THE ATTORNEY GENERAL DIVISION OF SECURITIESDate Initiated:11/14/2008Docket/Case Number:Allegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final191©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESResolution Date:03/14/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $999,562.86 TO THE STATE OF MARYLAND.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MARYLAND WILL RECEIVE A TOTAL PAYMENT OF $999,562.86 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $999,562.86Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 95 of 450iReporting Source:RegulatorInitiated By:UTAH DIVISION OF SECURITIESDate Initiated:05/26/2011Docket/Case Number:SD-11-0040Allegations:THE DIVISION ALLEGES THAT UBS FAILED TO SUPERVISE ITS FINANCIALADVISORS AND ENGAGED IN DISHONEST AND UNETHICAL BUSINESSPRACTICES WITH REGARD TO ITS SALES OF AUCTION RATE SECURITIES.Current Status:Final192©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST; AND VARIOUS MEASURES TO RESOLVE AUCTIONRATE SECURITIES ("ARS") ISSUES.URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESResolution Date:05/26/2011Resolution:Other Sanctions Ordered:UBS WILL TAKE VARIOUS MEASURES TO RESOLVE OUTSTANDING ARSISSUES.Sanction Details:TOTAL FINE AMOUNT IS $372,147.18 AND IS LEVIED ENTIRELY AGAINST THESUBJECT WITH NO PORTION WAIVED. FINE WAS PAID IN FULL ON06/16/2011.Regulator StatementA PDF VERSION OF THE STIPULATION AND CONSENT ORDER CAN BEVIEWED ONLINE AT:HTTP://SECURITIES.UTAH.GOV/DOCKETS/11004001.PDF(NOTE: THE ADDRESS MUST BE ENTERED IN ALL LOWER CASE LETTERS)Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $372,147.18Cease and Desist/InjunctionStipulation and ConsentiReporting Source:FirmInitiated By:UTAH DEPARTMENT OF COMMERCE DIVISION OF SECURITIESDate Initiated:05/26/2011Docket/Case Number:SD-11-0040Principal Product Type:OtherAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final193©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Other Product Type(s):AUCTION RATE SECURITIESResolution Date:05/26/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $372,147.18 TO THE STATE OF UTAH.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, UTAHWILL RECEIVE A TOTAL PAYMENT OF $372,147.18 FROM UBS, FROM ATOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $372,147.18Disgorgement/RestitutionCease and Desist/InjunctionStipulation and ConsentDisclosure 96 of 450iReporting Source:FirmAllegations:THE SEC COMPLAINT ALLEGED THAT FROM 2000 THROUGH 2004, UBSFINANCIAL SERVICES INC. ENGAGED IN CERTAIN FRAUDULENTPRACTICES INVOLVING THE TEMPORARY INVESTMENT OF PROCEEDSFROM THE SALE OF TAX-EXEMPT MUNICIPAL SECURITIES IN CERTAINREINVESTMENT PRODUCTS BY STATE AND LOCAL GOVERNMENTALENTITIES, AND THAT UBS'S FRAUDULENT PRACTICES ANDMISREPRESENTATIONS BOTH AFFECTED THE PRICES OF THEREINVESTMENT PRODUCTS AND JEOPARDIZED THE TAX-EXEMPT STATUSOF THE UNDERLYING MUNICIPAL SECURITIES, THEREBY INJURINGCurrent Status:Final194©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:InjunctionOther Sanction(s)/ReliefSought:CIVIL PENALTY; DISGORGEMENT; PREJUDGMENT INTERESTDate Initiated:05/04/2011Docket/Case Number:2:11-CV-2539Principal Product Type:OtherOther Product Type(s):MUNICIPAL BOND REINVESTMENT TRANSACTIONAFFECTED MUNICIPALITIES. THE FIRM NEITHER ADMITTED NOR DENIEDTHE ALLEGATIONS IN THECOMPLAINT.Resolution Date:05/06/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS AGREED TO PAY A PENALTY OF $32.5 MILLION AND DISGORGEMENTOF $9,606,543 WITH PREJUDGMENT INTEREST OF $5,100,637.Sanctions Ordered:Monetary/Fine $47,207,180.00Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 97 of 450iReporting Source:FirmInitiated By:OHIO DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final195©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:04/13/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,853,575.31 TO THE STATE OF OHIO.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, OHIOWILL RECEIVE A TOTAL PAYMENT OF $1,853,575.31 FROM UBS, FROM ATOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $1,853,575.31Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 98 of 450iReporting Source:RegulatorAllegations:NASD RULES 2110, 2210(D)(1), 2210(D)(1)(B), 2211, 2310, 3010,INTERPRETATIVE MATERIAL 2310-2 - UBS FINANCIAL SERVICES, INC.DEVELOPED AN OPEN ARCHITECTURE PLATFORM (OAP) TO PROVIDE ITSCUSTOMERS WITH THE OPPORTUNITY TO PURCHASE STRUCTUREDPRODUCTS (SPS) ISSUED BY OTHER APPROVED FINANCIAL INSTITUTIONSIN ADDITION TO THOSE OFFERED BY UBS AG. AFTER THE FIRMEVALUATED A POTENTIAL THIRD-PARTY ISSUER'S PRODUCT CAPABILITIESAND CREDITWORTHINESS AND CONDUCTED A VETTING PROCESS, THEFIRM WOULD APPROVE THE NEW ISSUER IF APPROPRIATE ANDCONDUCTED ONGOING DUE DILIGENCE. MONTHLY, THE FIRM'S SPDEVELOPMENT GROUP (SP DG) WOULD CONSIDER WHAT SPS IT WOULDISSUE THE FOLLOWING MONTH AND GAVE APPROVED ISSUERS ANOPPORTUNITY TO BID TO ESTABLISH THE PRICE AT WHICH THE ISSUERCurrent Status:Final196©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWAS WILLING TO OFFER EACH PRODUCT; THE SP DG WOULD SELECT ANISSUER FOR EACH PRODUCT AND COORDINATE WITH DIFFERENT THIRD-PARTY ISSUERS TO DETERMINE THE FINAL TERMS FOR EACH SP. THEFIRM TRAINED SP REGIONAL CONSULTANTS AND THE SP SALES DESK ONTHE MONTHLY OFFERING AND PLACED EDUCATIONAL AND MARKETINGMATERIALS, ETC. ON ITS INTRANET. THE FIRM OFFERED ONLINE TRAININGREGARDING SPS WHICH BECAME MANDATORY. UBS ADDED A FIRMHOLDING COMPANY AS AN APPROVED THIRD-PARTY ISSUER UNDER THEOAP AND SOLD ITS 100% PRINCIPAL PROTECTION NOTES (PPNS). UBSMADE STATEMENTS AND OMITTED CERTAIN FACTS THROUGH FINANCIALADVISERS (FAS), INCLUDING MATERIAL INFORMATION REGARDING THEPPNS THAT MAY HAVE MISLED CUSTOMERS ABOUT THE RISKS OF THEPPNS AND THE SCOPE OF ITS 100% PRINCIPAL PROTECTION. THEINADEQUACIES OF THE MARKETING MATERIAL MAY HAVE RESULTED INSOME FAS MISUNDERSTANDING THE PRODUCT AND THENCOMMUNICATING INADEQUATE AND/OR INCORRECT INFORMATION TOCUSTOMERS. SOME FAS DID NOT UNDERSTAND THE SOURCE OF THEPRINCIPAL PROTECTION; THE RELATIONSHIP BETWEEN UBS AND THETHIRD-PARTY ISSUER OR THE RELATIONSHIP BETWEEN THE PRICING OFTHE PRODUCTS AND THE CREDITWORTHINESS OF THE ISSUER. THEREWERE CERTAIN MARKET EVENTS REGARDING THE HOLDING COMPANYWHICH CAUSED THE FIRM TO RECOGNIZE THE NEED TO ENHANCE ITSCREDIT CHECK PROCEDURES FOR ITS SP THIRD-PARTY ISSUERS BUT DIDNOT PROVIDE SOME CUSTOMERS WITH MATERIAL INFORMATION TOPROVIDE A FAIR AND BALANCED PRESENTATION OF RISKS AND BENEFITS.THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SYSTEM, INCLUDINGWRITTEN PROCEDURES, TO SUPERVISE THE ACTIVITIES OF ITSEMPLOYEES TO ACHIEVE COMPLIANCE WITH FEDERAL SECURITIES LAWSAND NASD RULES; THE FIRM FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH NASD RULES IN THE MARKETING AND SALE OF PPNS.THE FIRM FAILED TO PROVIDE ADEQUATE TRAINING FOR ITS FASREGARDING THE FEATURES AND CHARACTERISTICS OF PPNS,ESPECIALLY THE CHARACTERISTICS REGARDING AN ISSUER'SCREDITWORTHINESS. THE FIRM PERMITTED FAS TO SELL CERTAIN PPNSREGARDLESS OF RISK PROFILE BECAUSE CERTAIN PPNS HAD NO RISKPROFILE REQUIREMENT. THE PPNS WERE UNSUITABLE FOR CERTAINCUSTOMERS BECAUSE THE FIRM LACKED A REASONABLE BASIS TOBELIEVE THE PRODUCT MET CUSTOMER'S FINANCIAL SITUATION ANDNEEDS BUT THE FIRM, THROUGH ITS FAS, EFFECTED UNSUITABLE SALESOF PPNS TO CERTAIN CUSTOMERS. UBS HAD A HEIGHTENED DUTY TOEDUCATION ITS FAS REGARDING THE RISKS RELATED TO SP SALES. THEFIRM FAILED TO UPDATE ITS MARKETING AND EDUCATIONAL MATERIALSTO EMPHASIZE THE HOLDING COMPANY'S CREDIT RISK AND SUITABILITYOF THE PPN. INTERNAL TRAINING MATERIALS LACKED SUFFICIENT197©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/11/2011Docket/Case Number:2008015443301Principal Product Type:OtherOther Product Type(s):STRUCTURED PRODUCTS, PRINCIPAL PROTECTION NOTESINFORMATION TO PROVIDE A FAIR AND BALANCED EVALUATION;CONTAINED EXAGGERATED, UNWARRANTED, MISLEADING STATEMENTS;FAILED TO PROVIDE A FAIR AND BALANCED PLATFORM FOR EVALUATINGPPNS; OR OMITTED MATERIAL FACTS.Resolution Date:04/11/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $2.5 MILLION, ORDERED TOPAY $8.25 MILLION IN RESTITUTION TO CUSTOMERS WHO PURCHASEDPPNS FROM UBS FROM MARCH 17, 2008 TO JUNE 30, 2008 AND HOLD THEPPNS AS OF THE APPROVAL DATE OF THIS AWC. RESTITUTION IS LIMITEDTO JOINT AND INDIVIDUAL ACCOUNT CUSTOMERS WHO ARE NATURALPERSONS AND JOINT AND INDIVIDUAL TRUST ACCOUNT CUSTOMERSWHERE THE TRUST BENEFICIARY IS A NATURAL PERSON OR PERSONS.WITHIN 60 DAYS FROM THE DATE OF ACCEPTANCE OF THIS AWC, UBSWILL PROVIDE TO FINRA A SCHEDULE OF CUSTOMERS THAT FALL WITHINTHE CLASSES OUTLINED IN THE AWC; UPON APPROVAL BY FINRA,RESTITUTION WILL BE ORDERED TO BE PAID WITHIN 120 DAYS IN THEDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $2,500,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)198©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTOTAL AMOUNT OF $8.25 MILLION, PLUS INTEREST. A REGISTERED FIRMPRINCIPAL SHALL SUBMIT SATISFACTORY PROOF OF PAYMENT OF THERESTITUTION OR OF REASONABLE AND DOCUMENTED EFFORTSUNDERTAKEN TO EFFECT RESTITUTION TO FINRA NO LATER THAN 120DAYS AFTER DATE OF PAYMENT. ANY UNDISTRIBUTED RESTITUTION ANDINTEREST SHALL BE FORWARDED TO THE APPROPRIATE ESCHEAT,UNCLAIMED PROPERTY OR ABANDONED PROPERTY FUND FOR THESTATE IN WHICH THE CUSTOMER LAST RESIDED. UBS SHALL PROVIDESATISFACTORY PROOF OF SUCH ACTION TO FINRA WITHIN 45 DAYS OFFORWARDING THE UNDISTRIBUTED RESTITUTION AND INTEREST TO THEAPPROPRIATE STATE AUTHORITY.iReporting Source:FirmAllegations:THE FIRM IS ALLEGED TO HAVE VIOLATED NASD RULES 2110, 2210, 2211,2310, 3010, AND INTERPRETATIVE MATERIAL 2310-2 IN CONNECTION WITHCERTAIN SALES THROUGH ITS FINANCIAL ADVISORS ("FAS") TO CERTAINCUSTOMERS OF 100% PRINCIPAL PROTECTION NOTES ISSUED BYLEHMAN BROTHERS ("LEHMAN PPNS") DURING THE TIME PERIOD MARCH17, 2008 THROUGH JUNE 30, 2008 (THE "RELEVANT PERIOD").SPECIFICALLY, IN VIOLATION OF RULE 2110, DURING THE RELEVANTPERIOD, THE FIRM MADE STATEMENTS AND OMITTED CERTAIN FACTSTHROUGH COMMUNICATIONS THROUGH SOME OF ITS FAS, WHICH HADTHE EFFECT OF MISLEADING CERTAIN CUSTOMERS REGARDINGCHARACTERISTICS AND RISKS ASSOCIATED WITH INVESTING IN LEHMANPPNS, INCLUDING MATERIAL INFORMATION REGARDING THE PRODUCT'S "100% PRINCIPAL PROTECTION FEATURE." THE FIRM ALSO FAILED TODISSEMINATE ADEQUATELY TO ITS FAS AND PROVIDE SUFFICIENTGUIDANCE ON THE USE OF CERTAIN INFORMATION, INCLUDING ISSUERCREDIT RISK AND WIDENING OF CREDIT DEFAULT SWAP SPREADS, ASTHEY RELATED TO LEHMAN'S FINANCIAL STRENGTH DURING THERELEVANT PERIOD. IN ADDITION, IN VIOLATION OF NASD RULES 2110,2210, AND 2211, THE FIRM CREATED AND USED CERTAIN ADVERTISINGAND MARKETING MATERIALS THAT WERE NOT FAIR AND BALANCED,WHICH HAD THE EFFECT OF MISLEADING CERTAIN CUSTOMERSREGARDING SPECIFIC CHARACTERISTICS OF STRUCTURED PRODUCTS,INCLUDING LEHMAN PPNS, RELATED TO ISSUER CREDIT RISK.IN VIOLATION OF RULES 2110, 2310, AND 3010, DURING THE RELEVANTPERIOD, THE FIRM FAILED TO ESTABLISH AN ADEQUATE SUPERVISORYSYSTEM, INCLUDING ADEQUATE TRAINING OF FAS AND WRITTENSUPERVISORY POLICIES AND PROCEDURES, IN CONNECTION WITH THECurrent Status:Final199©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:CIVIL FINE, CENSUREDate Initiated:04/11/2011Docket/Case Number:2008015443301Principal Product Type:OtherOther Product Type(s):STRUCTURED PRODUCTS, PRINCIPAL PROTECTION NOTESMARKETING AND SALE OF LEHMAN PPNS. ADDITIONALLY, IN VIOLATIONOF RULE 2310, THE FIRM DID NOT, DURING THE RELEVANT PERIOD,ADEQUATELY ANALYZE THE SUITABILITY OF SALES OF LEHMAN PPNS TOCERTAIN UBS CUSTOMERS THROUGH SOME OF ITS FAS.Resolution Date:04/11/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A CENSURE, A $2.5 MILLION FINE AND TO PAY APPROXIMATELY $8.25MILLION IN RESTITUTION TO CERTAIN CUSTOMERS, TO BE APPROVED BYFINRA, WHO PURCHASED 100% PRINCIPAL PROTECTION NOTES ISSUEDBY LEHMAN BROTHERS ("LEHMAN PPNS) FROM UBSFS IN THE TIMEPERIOD MARCH 17, 2008 THROUGH JUNE 30, 2008 AND HOLD THE LEHMANPPNS AS OF THE APPROVAL DATE OF THE AWC. THE $2.5 MILLION FINEWAS PAID ON APRIL 21, 2011, AND THE APPROXIMATELY $8.25 MILLION INRESTITUTION IS TO BE PAID WITHIN 120 DAYS OF FINRA'S APPROVAL OFTHE LIST OF CUSTOMERS WHO WILL RECEIVE RESTITUTION.Sanctions Ordered:CensureMonetary/Fine $2,500,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)Disclosure 99 of 450iReporting Source:RegulatorAllegations:ON MAY 27, 2010, THE SECURITIES DIVISION ENTERED INTO A CONSENTORDER WITH UBS SECURITIES LLC AND UBS FINANCIAL SERVICES INC.(COLLECTIVELY "RESPONDENTS"), IN ORDER TO SETTLE THECurrent Status:Final200©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:WASHINGTONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:05/27/2010Docket/Case Number:S-08-228-10-CO01URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESALLEGATIONS THAT RESPONDENTS ENGAGED IN DISHONEST ANDUNETHICAL PRACTICES IN THE SALE OF AUCTION RATE SECURITIES("ARS"), AND FAILED TO REASONABLY SUPERVISE ITS SALESPERSONS INTHE MARKETING AND SALE OF ARS. RESPONDENTS NEITHER ADMITTEDNOR DENIED THE ALLEGATIONS, BUT AGREED TO CEASE AND DESISTFROM VIOLATING THE SECURITIES ACT OF WASHINGTON. RESPONDENTSAGREED TO OFFER TO PURCHASE AT PAR FROM CERTAIN CURRENT ANDFORMER CUSTOMERS ARS THAT FAILED AT LEAST ONCE IN AUCTIONSBETWEEN AUGUST 8, 2008 AND OCTOBER 7, 2008. RESPONDENTSAGREED TO PAY $1,805,294.31 AS A CIVIL MONETARY PENALTY.RESPONDENTS EACH WAIVED THEIR RIGHT TO A HEARING AND TOJUDICIAL REVIEW OF THIS MATTER.Resolution Date:05/27/2010Resolution:Other Sanctions Ordered:Sanction Details:CIVIL MONETARY PENALTY OF $1,805,294.31 WHICH AMOUNTCONSTITUTES THE STATE OF WASHINGTON'S PROPORTIONATE SHARE.Regulator StatementBRIDGETT FISHER 360-902-8783Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $1,805,294.31Consenti201©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONS SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:05/21/2008Docket/Case Number:S-08-228-10-CO01Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIES.Current Status:FinalResolution Date:05/27/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,805,294.31 TO THE STATE OF WASHINGTON.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIALSERVICES,INC.AND UBS SECURITIES LLC CONSENTED TO ENTRY OF ANORDER PURSUANT TO WHICH UBS WILL REPURCHASE UP TO ANADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, WASHINGTON WILL RECEIVE A TOTAL PAYMENT OF$1,805,294.31 FROM UBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION. THIS FILING FURTHER CLARIFIESOCCURRENCE NUMBER 1408448 PREVIOUSLY FILED.Sanctions Ordered:Monetary/Fine $1,805,294.31Disgorgement/RestitutionCease and Desist/InjunctionConsenti202©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 100 of 450Reporting Source:RegulatorInitiated By:PENNSYLVANIA CONTACT: COUNSEL CAROLYN MENDELSON (412)-565-5083Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:UBS FINANCIAL SERVICES INC. AND OTHER NAMED RESPONDENT AREORDERED TO PAY $1,941,058.74 ADMINISTRATIVE ASSESSMENT.Date Initiated:02/15/2011Docket/Case Number:2008-07-16URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:UBS FINANCIAL SERVICES INC. AND OTHER NAMED RESPONDENT SOLDAUCTION RATE SECURITIES IN PA IN A MANNER CONSTITUTINGDISHONEST OR UNETHICAL PRACTICES IN THE SECURITIES BUSINESSAND FAILED TO REASONABLY SUPERVISE ITS AGENTS IN VIOLATION OFTHE PA SECURITIES ACT OF 1972.Current Status:FinalResolution Date:02/15/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS FINANCIAL SERVICES INC. AND OTHER NAMED RESPONDENT AREORDERED TO PAY A TOTAL OF $2,588,077.74, OF WHICH $1,941,058.74REPRESENTS AN ADMINISTRATIVE ASSESSMENT AND THE REMAINING$647,019.00 IS PAYABLE TO THE INVESTOR PROTECTION TRUST. UBSFINANCIAL SERVICES INC. AND OTHER NAMED RESPONDENT WEREORDERED TO BUY BACK AUCTION RATE SECURITIES FROM ELIGIBLE PAINVESTORS.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $1,941,058.74Disgorgement/RestitutionSettled203©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRegulator StatementFINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TO UBSFINANCIAL SERVICES INC. AND OTHER NAMED RESPONDENT.iReporting Source:FirmInitiated By:PENNSYLVANIA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:STATE DID NOT OPEN ITS OWN INVESTIGATION, USING TEXAS FILING DATEAS TEXAS CONCLUDED THE NAASA MODEL AGREEMENT.Date Initiated:07/22/2008Docket/Case Number:2008-07-16Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:02/15/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $2,588,077.74 OF WHICH $647,019.00 ISPAYABLE TO THE INVESTOR PROTECTION TRUST AND $1,941,058.74 ISPAYABLE TO THE COMMONWEALTH OF PENNSYLVANIA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC AGREED TO AN OFFER OF SETTLEMENTPURSUANT TO WHICH UBS AGREED TO REPURCHASE UP TO ANADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, PENNSYLVANIA WILL RECEIVE A TOTAL PAYMENT OF$2,588,077.74 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLYSanctions Ordered:Monetary/Fine $1,941,058.74Disgorgement/RestitutionCease and Desist/InjunctionSettled204©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAGREED UPON WITH THE STATE OF MASSACHUSETTS AND THE NORTHAMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disclosure 101 of 450iReporting Source:RegulatorInitiated By:OREGON DEPARTMENT OF CONSUMER & BUSINESS SERVICES, DIVISIONOF FINANCE & CORPORATE SECURITIES.Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:10/06/2010Docket/Case Number:S-10-0008URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIES.Allegations:FAILURE TO SUPERVISE; DISHONEST AND UNETHICAL PRACTICES.Current Status:FinalResolution Date:10/06/2010Resolution:Other Sanctions Ordered:1) BUY BACK OF ELIGIBLE ARS FROM ELIGIBLE CUSTOMERS.2) $61,868.04 PAYMENT FOR CONSUMER FINANCIAL EDUCATION ACCOUNT.Sanction Details:1) BUY BACK OF ELIGIBLE ARS FROM ELIGIBLE CUSTOMERS.2) CIVIL PENALTY AND PAYMENT FOR CONSUMER FINANCIAL EDUCATIONACCOUNT WERE PAID IN FULL AND RECEIVED 10/15/2010.Regulator StatementMULTI-STATE INVESTIGATION COORDINATED BY NASAA, CONCERNINGAUCTION RATE SECURITIES.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $1,175,492.68Cease and Desist/InjunctionConsent205©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:OREGON DEPARTMENT OF CONSUMER & BUSINESS SERVICES, DIVISIONOF FINANCE & CORPORTE SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:S-10-0008Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIES.Current Status:FinalResolution Date:10/06/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,237,360.72. THAT SUM INCLUDES A CIVILPENALTY OF $1,175,492.68 AND $61,868.04 FOR THE OREGONDEPARTMENT OF CONSUMER AND BUSINESS SERVICES CONSUMERFINANCIAL EDUCATION ACCOUNT.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,OREGON WILL RECEIVE A TOTAL PAYMENT OF $1,237,360.72 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDSanctions Ordered:Monetary/Fine $1,237,360.72Disgorgement/RestitutionCease and Desist/InjunctionConsent206©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disclosure 102 of 450iReporting Source:RegulatorInitiated By:NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL MONETARY PENALTIES, RESTITUTIONDate Initiated:05/27/2010Docket/Case Number:2010-030URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:UBS MARKETED ARS TO CLIENTS AS SAFE, LIQUID INSTRUMENTS. UBSDID NOT DISCLOSE ASPECTS OF ITS ARS PROGRAM TO ITS CLIENTS.UBS'S ARS PROGRAM WAS INCONSISTENT WITH HOW IT WAS PROMOTEDTO CLIENTS AND FINANCIAL ADVISORS. UBS DID NOT PROVIDE ITSFINANCIAL ADVISORS WITH ANY MANDATORY TRANING WITH RESPECT TOARS.Current Status:FinalResolution Date:02/03/2011Resolution:Other Sanctions Ordered:UBS SHALL TAKE CERTAIN MEASURES WITH RESPECT TO CERTAINCURRENT AND FORMER CUSTOMERS TO OFFER TO PURCHASE ELIGIBLEARS AT PAR.Sanction Details:UBS'S CONDUCT CONSTITUTES DISHONEST AND UNETHICAL CONDUCT INDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $3,790,487.02Disgorgement/RestitutionCease and Desist/InjunctionConsent207©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE SECURITIES BUSINESS. UBS'S CONDUCT CONSTITUTES A FAILURETO REASONABLY SUPERVISE IT'S AGENTS.iReporting Source:FirmInitiated By:STATE OF NEW JERSEY, BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:2010-030Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:02/03/2011Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $3,790,487.02 TO THE STATE OF NEW JERSEY.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, NEWJERSEY WILL RECEIVE A TOTAL PAYMENT OF $3,790,487.02 FROM UBS,FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $3,790,487.02Disgorgement/RestitutionCease and Desist/InjunctionConsent208©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 103 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/05/2011Docket/Case Number:2008012355401Principal Product Type:Debt - CorporateOther Product Type(s):Allegations:NASD RULES 2110, 2320 - UBS FINANCIAL SERVICES, INC. INTRANSACTIONS FOR OR WITH A CUSTOMER, FAILED TO USE REASONABLEDILIGENCE TO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILEDTO BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO ITSCUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDER PREVAILINGMARKET CONDITIONS.Current Status:FinalResolution Date:01/05/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $30,000 AND REQUIRED TOMAKE RESTITUTION TO FIRM CUSTOMERS DISADVANTAGED BY THETRANSACTIONS IN THE TOTAL AMOUNT OF $15,051.88, PLUS INTEREST. ADoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $30,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)209©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREGISTERED PRINCIPAL OF THE FIRM SHALL SUBMIT SATISFACTORYPROOF OF PAYMENT OF THE RESTITUTION, OR OF REASONABLE ANDDOCUMENTED EFFORTS UNDERTAKEN TO EFFECT RESTITUTION TOFINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE AND RESTITUTIONDate Initiated:01/05/2011Docket/Case Number:2008012355401Principal Product Type:Debt - CorporateOther Product Type(s):Allegations:FROM OCTOBER 1, 2007 THROUGH DECEMBER 31, 2007, THE FIRM FAILEDTO USE REASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO FIVE OF ITS CUSTOMERS WAS AS FAVORABLE ASPOSSIBLE UNDER PREVAILING MARKET CONDITIONS.Current Status:FinalResolution Date:01/05/2011Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $30,000 AND REQUIRED TOMAKE RESTITUTION TO FIVE FIRM CUSTOMERS DISADVANTAGED BY THETRANSACTIONS IN THE TOTAL AMOUNT OF $15,051.88, PLUS INTERESTSanctions Ordered:CensureMonetary/Fine $30,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)210©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 104 of 450iReporting Source:FirmInitiated By:MAINE SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:05/07/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/08/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $249,018.17 TO THE STATE OF MAINE.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MAINE WILL RECEIVE A TOTAL PAYMENT OF $249,018.17 FROM UBS, FROMA TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $249,018.17Disgorgement/RestitutionCease and Desist/InjunctionConsenti211©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 105 of 450Reporting Source:FirmInitiated By:IOWA INSURANCE DIVISION SECURITIES BUREAUPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/07/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $455,918.09 TO THE STATE OF IOWA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY, IOWAWILL RECEIVE A TOTAL PAYMENT OF $455,918.09 FROM UBS, FROM ATOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $455,918.09Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 106 of 450i212©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorInitiated By:VIRGINIA - DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:HEIGHTENED SUPERVISION. RESCISSIONDate Initiated:10/29/2010Docket/Case Number:SEC201000072URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):LEVERAGED EXCHANGE TRADED FUND SECURITIESAllegations:BASED ON EVIDENCE IN THE INVESTIGATION, UBS THROUGH ITS AGENTMARK C. HUGHES, IS ALLEGED TO HAVE VIOLATED RULE 21 VAC 5-20-280A(3) FOR OFFERING AND SELLING LEVERAGED EXCHANGED TRADEDFUND SECURITIES TO TWO VIRGINIA INVESTORS WHEN THEINVESTMENTS WERE NOT SUITABLE FOR THE INVESTORS, GIVEN THEIROBJECTIVES, FINANCIAL SITUATION, RISK TOLERANCES, EXPERIENCEAND NEEDS. UBS IS ALSO ALLEGED TO HAVE VIOLATED RULE 21 VAC 5-20-260 B BY FAILING TO DILIGENTLY SUPERVISE ITS AGENT, MARK C.HUGHES.Current Status:FinalResolution Date:10/29/2010Resolution:Other Sanctions Ordered:RESCISSION AND RESTITUTION. UBS AGREED TO PLACE MR. HUGHESUNDER HEIGHTENED SUPERVISION FOR A PERIOD OF ONE YEAR FROMTHE DATE OF THE SETTLEMENT ORDER.Sanction Details:IN RESPONSE TO THE ALLEGED VIOLATIONS, UBS FINANCIAL SERVICES,INC. FULLY COOPERATED WITH THE INVESTIGATION AND SETTLEMENTAGREEMENT TO OFFER RESCISSION AND PAY RESTITUTION TO THE TWOVIRGINIA INVESTORS. THE RESTITUTION AMOUNTS WERE $500,000 ANDDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Settled213©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$120,000 RESPECTIVELY. ADDITIONALLY, UBS FINANCIAL SERVICES, INC.AGREED TO PAY $5,000 TO DEFRAY THE COST OF THE INVESTIGATION ANDTHE FIRM ALSO AGREED TO PLACE MR. HUGHES UNDER HEIGHTENEDSUPERVISION FOR A PERIOD OF ONE YEAR FROM DATE OF ORDER. THECASE IS CLOSED ON THE DOCKET BUT SHALL BE REOPENED SHOULDEITHER PARTY FAIL TO COMPLY WITH THE TERMS AND UNDERTAKINGSOUTLINED IN THE SETTLEMENT ORDER. AS OF THE DATE OF ENTRY OFTHE U-6, ALL MONETARY PAYMENTS TO THE INVESTORS AND TO THETREASURER OF VIRGINIA WERE PAID.Regulator StatementCONTACT KEVIN FURR AT 804-371-9081 FOR FURTHER INFORMATION.iReporting Source:FirmInitiated By:VIRGINIA DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:HEIGHTENED SUPERVISON.Date Initiated:10/29/2010Docket/Case Number:SEC201000072Principal Product Type:OtherOther Product Type(s):LEVERAGED EXCHANGE TRADED FUND SECURITIESAllegations:IT WAS ALLEGED THAT MARK HUGHES SOLD SHARES OF LEVERAGED,EXCHANGE TRADED FUND SECURITIES TO TWO VIRGINIA INVESTORSWHEN THE PRODUCTS WERE NOT SUITABLE GIVEN THE INVESTORS'INVESTMENT OBJECTIVES AND RISK TOLERANCE.Current Status:FinalResolution Date:10/29/2010Resolution:Other Sanctions Ordered:Sanction Details:RESTITUTION. UBS PLACED MR. HUGHES UNDER HEIGHTENEDSUPERVISION FOR A PERIOD OF ONE YEAR FROM THE DATE OF THESETTLEMENT ORDER.Firm StatementIT WAS ALLEGED THAT MARK HUGHES SOLD SHARES OF LEVERAGED,EXCHANGE TRADED FUND SECURITIES TO TWO VIRGINIA INVESTORSSanctions Ordered:Settled214©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWHEN THE PRODUCTS WERE NOT SUITABLE GIVEN THE INVESTORS'INVESTMENT OBJECTIVES AND RISK TOLERANCE.Disclosure 107 of 450iReporting Source:RegulatorInitiated By:NEW HAMPSHIRESECURITIES REGULATIONPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:FINE $7500.00 AND COSTS $5000.00.Date Initiated:08/18/2009Docket/Case Number:COM09-0063URL for Regulatory Action:Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ELDERLY INVESTOR WAS SOLD OUT OF A FIXED ANNUITY PAYING ANINCOME STREAM TO A MUTUAL FUND WHEN THE TWO UBS AGENTS WEREUNLICESNED CAUSING LOSSES.Current Status:FinalResolution Date:10/05/2010Resolution:Other Sanctions Ordered:RESTITUTION $60,000 AND COSTS $5,000.Sanction Details:SAME AS ABOVE.Regulator StatementSAME AS ABOVE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $7,500.00ConsentiReporting Source:Firm215©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW HAMPSHIRE SECURITIES REGULATIONPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:FINE $7500.00 AND COSTS $5000.00Date Initiated:08/18/2009Docket/Case Number:COM09-0063Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ELDERLY INVESTOR WAS SOLICITED TO PURCHASE A MUTUAL FUNDWHEN THE TWO UBS AGENTS WERE UNLICENSED IN THE STATE OF NEWHAMPSHIRE AT THE TIME.Current Status:FinalResolution Date:10/05/2010Resolution:Other Sanctions Ordered:RESTITUTION $60,000.00 AND COSTS $5000.00Sanction Details:FINE $7500.00, RESTITUTION $60,000.00 AND COSTS $5000.00Sanctions Ordered:Monetary/Fine $7,500.00ConsentDisclosure 108 of 450iReporting Source:FirmInitiated By:GEORGIA OFFICE OF SECRETARY OF STATE DIVISION OF BUSINESSSERVICES AND REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:Final216©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:05/21/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $1,279,856.07 TO THE STATE OF GEORGIA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIALSERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF ANORDER PURSUANT TO WHICH UBS WILL REPURCHASE UP TO ANADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, GEORGIA WILL RECEIVE A TOTAL PAYMENT OF$1,279,856.07 FROM UBS, FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $1,279,856.07Disgorgement/RestitutionCease and Desist/InjunctionConsentDisclosure 109 of 450iReporting Source:RegulatorAllegations:FINRA RULE 2010, NASD RULES 1021, 1031, 2110, 3010 -UBS FINANCIALSERVICES INC. PERMITTED EMPLOYEES TO FUNCTION AS PRINCIPALSAND REPRESENTATIVES WITHOUT THE REQUISITE REGISTRATION. THEFIRM'S REGISTRATION TRACKING MATERIALS IDENTIFIED THEM ASNEEDING QUALIFICATION EXAMINATIONS, BUT THE FIRM DID NOT TAKETHE NECESSARY STEPS TO HAVE THE EMPLOYEES OBTAIN THEREQUISITE REGISTRATIONS. THE FIRM DID NOT ESTABLISH, MAINTAIN ANDENFORCE A SUPERVISORY SYSTEM AND/OR WRITTEN SUPERVISORYPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE RULES AND REGULATIONS APPLICABLE TO THE REGISTRATION OFPRINCIPALS AND REPRESENTATIVES. THE PROCEDURES DID NOTCLEARLY ASSIGN RESPECTIVE REGISTRATION RESPONSIBILITIESBETWEEN THE FIRM'S COMPLIANCE DEPARTMENT AND THE BUSINESSUNIT SUPERVISORS SO THAT THERE WERE COMMUNICATION GAPS; THECurrent Status:Final217©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/03/2010Docket/Case Number:2009017976301Principal Product Type:No ProductOther Product Type(s):FIRM'S COMPLIANCE DEPARTMENT WAS NOT CONSISTENT IN NOTIFYINGSUPERVISORS ABOUT REGISTRATION ISSUES. FIRM PROCEDURES DIDNOT PROVIDE REASONABLE GUIDANCE AS TO THE SPECIFIC STEPSNEEDED TO BE TAKEN WHEN AN INDIVIDUAL WAS HIRED OR GIVEN NEWRESPONSIBILITIES AFFECTING REGISTRATION STATUS; EMPLOYEESWERE NOT GIVEN DEADLINES FOR TESTING AND OTHER ACTIONS, ORPROVIDE FOR REASONABLE FOLLOW-UP AND REVIEW TO ENSURECOMPLIANCE. THE FIRM SOMETIMES PERMITTED REPRESENTATIVES TODELAY TAKING REQUIRED EXAMS, CONTRIBUTING TO REGISTRATIONVIOLATIONS.Resolution Date:11/03/2010Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $200,000 AND REQUIRED TOUNDERTAKE A COMPREHENSIVE REVIEW AND TESTING OF ITSSUPERVISORY SYSTEM AND PROCEDURES CONCERNING COMPLIANCEWITH APPLICABLE LAWS, REGULATIONS AND RULES RELATING TOREGISTRATION OF PRINCIPALS AND REPRESENTATIVES IN ITS HOMEOFFICE. NO LATER THAN 120 DAYS AFTER THE ISSUANCE OF THIS AWC,Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $200,000.00Acceptance, Waiver & Consent(AWC)218©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE FIRM SHALL PREPARE A WRITTEN REPORT DETAILING ITS REVIEW,FINDINGS, TESTING AND RECOMMENDATIONS AND PROVIDE A COPY TOFINRA. ANY RECOMMENDATIONS FOR ADDITIONAL SYSTEMS ANDPROCEDURES SHALL BE IMPLEMENTED WITHIN 90 DAYS OF SUBMISSIONOF THE WRITTEN REPORT TO FINRA. WITHIN 90 DAYS OF SUBMISSION OFTHE WRITTEN REPORT TO FINRA, A FIRM OFFICER WILL CERTIFY INWRITING TO FINRA THAT IT HAS COMPLETED ITS REVIEW ANDESTABLISHED SYSTEMS AND PROCEDURES REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH THE LAWS, REGULATIONS AND RULESCONCERNING REGISTRATION OF PRINCIPALS AND REPRESENTATIVES.FINRA REVIEW OF THE REVISED PROCEDURES SHALL IN NO WAYCONSTITUTE APPROVAL OF THE REVISED PROCEDURES.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE $200,000.00, UNDERTAKINGDate Initiated:11/03/2010Docket/Case Number:2009017976301Principal Product Type:No ProductOther Product Type(s):Allegations:FINRA ALLEGED THAT THE FIRM PERMITTED CERTAIN HOME OFFICEEMPLOYEES TO FUNCTION AS PRINCIPALS OR REPRESENTATIVESWITHOUT THE REQUISITE REGISTRATION, AND THAT WITH RESPECT TOSUCH EMPLOYEES THE FIRM DID NOT HAVE ADEQUATE POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ENSURE COMPLIANCE WITHAPPLICABLE REGISTRATION RULES.Current Status:FinalResolution Date:11/03/2010Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:UBS WILL PAY THE FINE OF $200,000.00 AND AGREES TO THESanctions Ordered:CensureMonetary/Fine $200,000.00Acceptance, Waiver & Consent(AWC)219©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNDERTKAING AND CENSURE IMPOSED BY FINRAFirm StatementTHE FIRM WILL UNDERTAKE A REVIEW OF ITS SUPERVISORY SYSTEM ANDPROCEDURES CONCERNING COMPLIANCE WITH APPLICABLEREGISTRATION REQUIREMENTS FOR HOME OFFICE EMPLOYEES ANDWILL REPORT TO FINRA THE RESULTS OF THAT REVIEW WITHIN 120 DAYSOF THE ISSUANCE OF THE AWC.Disclosure 110 of 450iReporting Source:FirmInitiated By:DELAWARE DEPT OF JUSTICE DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:07/01/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $269,248.97 TO THE STATE OF DELAWARE.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFSanctions Ordered:Monetary/Fine $269,248.97Disgorgement/RestitutionCease and Desist/InjunctionConsent220©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,DELAWARE WILL RECEIVE A TOTAL PAYMENT OF $269,248.97 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disclosure 111 of 450iReporting Source:RegulatorAllegations:FINRA RULE 2010, NASD RULES 2110, 3010(A), 3010(B): THE FIRM ENABLEDITS CUSTOMERS TO LEND THEIR FULLY PAID SECURITIES TO THE FIRM ONA SOLICITED AND UNSOLICITED BASIS TO FACILITATE, AMONG OTHERTHINGS, SHORT SELLING BY OTHER CUSTOMERS OF THE FIRM, FURTHERCUSTOMERS WHO LENT SECURITIES RECEIVED MONTHLY INTERESTPAYMENTS, CALCULATED AS A PERCENTAGE OF THE MARKET VALUE OFTHE SECURITIES, AND SECURED BY A THIRD-PARTY LETTER OF CREDIT. INORDER FOR THE FIRM TO MAKE DELIVERY OF SHARES FOR SECURITIESIN DEMAND, THE SUPPLY DESK WITHIN THE FIRM'S SECURITIES LENDINGDEPARTMENT MOST TYPICALLY BORROWED THE SECURITIES FROMINTERNAL AND EXTERNAL SOURCES, BUT IF THESE SOURCES WEREEXHAUSTED, THEN THE SECURITIES LENDING STAFF SEARCHED THEFIRM'S DATABASE TO IDENTIFY CUSTOMERS THAT OWNED FULLY PAIDSHARES IN ORDER TO BORROW THE SECURITIES, THEREAFTER THESECURITIES LENDING STAFF THEN DETERMINED THE INTEREST RATETHAT THE FIRM WAS WILLING TO PAY THE CUSTOMER TO BORROW THESECURITIES, ALTHOUGH THERE WAS NO OVERSIGHT AND NOSUPERVISORY APPROVAL REQUIRED FOR SETTING OR CHANGINGINTEREST RATES, AND SUBSEQUENTLY THE SECURITIES LENDING STAFFWOULD CONTACT THE CUSTOMER'S REGISTERED REPRESENTATIVE TOINQUIRE AS TO WHETHER THE CUSTOMER WAS INTERESTED IN LENDINGTHE SECURITY. THE SECURITIES LENDING STAFF DID NOT PROVIDESTANDARDIZED INFORMATION OR MATERIALS TO REGISTEREDREPRESENTATIVES ABOUT FULLY PAID LENDING OR CONTACTED ORPROVIDED ANY INFORMATION TO THE REGISTERED REPRESENTATIVE'SSUPERVISOR, BRANCH MANAGER, OR ANYONE ELSE AT THE BRANCHREGARDING THE REQUESTED LOAN SECURITIES, BUT THE SECURITIESLENDING STAFF SENT THE REGISTERED REPRESENTATIVE, WHO DID NOTRECEIVE TRAINING OR CONSISTENT INFORMATION ABOUT FULLY PAIDLENDING, A PROPOSED CUSTOMER SECURITIES LOAN AGREEMENT(CSLA) FOR FORWARDING TO AND SIGNATURE OF INTERESTEDCUSTOMER. THE FIRM DID NOT ADEQUATELY DISCLOSE CERTAINMATERIAL FACTS IN THE CSLA, THE CUSTOMER'S MONTHLY ACCOUNTSTATEMENT, OR THE CONFIRM, A ONE PAGE CONFIRMATION OF THECurrent Status:Final221©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefN/ADate Initiated:09/29/2010Docket/Case Number:2009017133201Principal Product Type:OtherOther Product Type(s):FULLY PAID SECURITIES LENDINGINITIAL LENDING TRANSACTION, TO CUSTOMERS CONCERNING THE LOANTRANSACTIONS THAT WERE NECESSARY IN ORDER TO MAKE THESTATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICHTHEY WERE MADE, NOT MISLEADING. THE FIRM FAILED TO DISCLOSE ORINADEQUATELY DISCLOSE THAT THE SECURITY WAS HARD TO BORROWDUE TO SHORT SELLING AND WAS FREQUENTLY BEING BORROWED TOFACILITATE SHORT SELLING; THAT THE INTEREST RATES OFFERED ANDAGREED TO COULD BE REDUCED BY THE FIRM; THAT REGISTEREDREPRESENTATIVES RECEIVED COMMISSIONS FOR THE DURATION OF THELOAN; THAT WHILE SECURITIES WERE ON LOAN, DIVIDENDS WERE PAIDAS A "CASH-IN-LIEU" PAYMENT AND THEREFORE SUBJECT TO HIGHER TAXRATES; AND THAT SHARES ON LOAN COULD BE SOLD AT ANY TIME. THEFIRM FAILED TO ESTABLISH AND MAINTAIN A SYSTEM TO SUPERVISE THEACTIVITIES OF EACH REGISTERED REPRESENTATIVE, REGISTEREDPRINCIPAL, AND OTHER ASSOCIATED PERSON RELATED TO FULLY PAIDLENDING THAT WAS REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH APPLICABLE SECURITIES LAWS AND REGULATIONS, AND WITH FINRAAND NASD RULES. THE FIRM DID NOT PROVIDE ANY TRAININGREGARDING FULLY PAID LENDING TO ITS REGISTERED PERSONS, THEFIRM FAILED TO SUPERVISE ITS REGISTERED REPRESENTATIVES WITHRESPECT TO THE FULLY PAID LENDING PROCESS OR THEIRCOMMUNICATIONS WITH CUSTOMERS ABOUT FULLY PAID LENDING, ANDTHE FIRM HAD NO SYSTEM OR PROCEDURES THAT NOTIFIED BRANCHMANAGERS THAT CUSTOMERS IN THEIR BRANCHES WERE PARTICIPATINGIN FULLY PAID LENDING. THE TRADITIONAL TOOLS THAT WERE ALREADYAVAILABLE TO BRANCH MANAGERS AND OTHER SUPERVISORS TOMONITOR CUSTOMER ACCOUNTS WERE SIGNIFICANTLY COMPROMISEDWHEN SHARES WERE LENT THROUGH FULLY PAID LENDING, BECAUSE ACUSTOMER'S ACCOUNT NO LONGER REFLECTED THE CUSTOMER'SPOSITION IN THE SECURITY WHEN THE SHARES WERE LENT THROUGHFULLY PAID LENDING, AND THE FIRM'S ABILITY TO SUPERVISE VALUES OFPOSITIONS, CONCENTRATION LEVELS, AND THE SUITABILITY OF ANYSUBSEQUENT SECURITIES RECOMMENDATIONS FOR THE CUSTOMERSWAS COMPROMISED. (CONT. COMMENT)222©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Resolution Date:09/29/2010Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED, FINED $175,000, AND ANUNDERTAKING THAT, PRIOR TO SOLICITING OR FACILITATING ANY NEWFULLY PAID LOANS FROM CUSTOMERS, THE FIRM SHALL ESTABLISH ANDMAINTAIN A SYSTEM, INCLUDING WRITTEN PROCEDURES, TO SUPERVISETHE ACTIVITIES OF EACH REGISTERED REPRESENTATIVE, REGISTEREDPRINCIPAL, AND OTHER ASSOCIATED PERSON RELATING TO FULLY PAIDLENDING OR SIMILAR PROGRAM THAT IS REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND WITH FINRA AND NASD RULES. FURTHERMORE,PRIOR TO SOLICITING OR FACILITATING ANY NEW FULLY PAID LOANSFROM CUSTOMERS, AN OFFICER OF THE FIRM SHALL CERTIFY THAT THEFIRM'S SYSTEM AND WRITTEN PROCEDURES RELATING TO FULLY PAIDLENDING ARE IN COMPLIANCE WITH NASD RULE 3010(A) AND (B).Regulator StatementTHE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WRITTENPROCEDURES THAT WERE REASONABLY DESIGNED TO SUPERVISE FULLYPAID LENDING AND THESE PROCEDURES WERE NOT ACCESSIBLE TO THEFIRM'S REGISTERED REPRESENTATIVES AND BRANCH MANAGERS, ANDTHERE WERE NO PROCEDURES AT THE BRANCH LEVEL REGARDINGFULLY PAID LENDING.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $175,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:FINRA HAS MADE A DETERMINATION THAT, DURING JANUARY 1, 2006THROUGH JUNE 30, 2009, UBS FAILED TO DISCLOSE MATERIAL FACTS TOCUSTOMERS CONCERNING FULLY PAID LENDING THAT WERE NECESSARYCurrent Status:Final223©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE OF $175,000 AND AN UNDERTAKINGDate Initiated:05/03/2010Docket/Case Number:2009017133201Principal Product Type:OtherOther Product Type(s):FULLY PAID SECURITIES LENDINGIN ORDER TO MAKE THE STATEMENTS MADE IN LIGHT OF THECIRCUMSTANCES UNDER WHICH THEY WERE MADE NOT MISLEADING INVIOLATION OF NASD CONDUCT RULE 2110 AND FINRA RULE 2010. UBSFAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN PROCEDURESTO SUPERVISE THE FULLY PAID LENDING PROCESS, MEMBERS OF THESECURITIES LENDING DEPARTMENT AND THE ACTIVITIES OF FINANCIALADVISORS IN VIOLATION OF NASD CONDUCT RULE 3010(B). UBS FAILEDTO ESTABLISH AND MAINTAIN A SYSTEM TO SUPERVISE THE ACTIVITIESOF THE STAFF OF THE SECURITIES LENDING DEPARTMENT AND THEFIRM'S FINANCIAL ADVISORS RELATING TO FULLY PAID LENDING, THATWAS REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHAPPLICABLE SECURITIES LAWS AND REGULATIONS IN VIOLATION OFNASD CONDUCT RULE 3010 (A).Resolution Date:09/29/2010Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED, FINED $175,000, AND AGREES TO ANUNDERTAKING THAT, PRIOR TO SOLICITING OR FACILITATING ANY NEWFULLY PAID LOANS FROM CUSTOMERS, THE FIRM SHALL ESTABLISH ANDMAINTAIN A SYSTEM, INCLUDING WRITTEN PROCEDURES, TO SUPERVISETHE ACTIVITIES OF EACH REGISTERED REPRESENTATIVE, REGISTEREDPRINCIPAL, AND OTHER ASSOCIATED PERSON RELATING TO FULLY PAIDLENDING OR SIMILAR PROGRAM THAT IS REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND WITH FINRA AND NASD RULES. FURTHERMORE,Sanctions Ordered:CensureMonetary/Fine $175,000.00Acceptance, Waiver & Consent(AWC)224©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePRIOR TO SOLICITING OR FACILITATING ANY NEW FULLY PAID LOANSFROM CUSTOMERS, AN OFFICER OF THE FIRM SHALL CERTIFY THAT THEFIRM'S SYSTEM AND WRITTEN PROCEDURES RELATING TO FULLY PAIDLENDING ARE IN COMPLIANCE WITH NASD RULE 3010(A) AND (B).Disclosure 112 of 450iReporting Source:RegulatorInitiated By:CONNECTICUTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:05/26/2010Docket/Case Number:CO-10-7506-SURL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:ON MAY 26, 2010, THE CONNECTICUT BANKING COMMISSIONER ENTEREDA CONSENT ORDER (DOCKET NO. CO-10-7506-S) WITH RESPECT TO UBSSECURITIES LLC AND UBS FINANCIAL SERVICES INC. THE SETTLEMENTFOLLOWED A MULTI-STATE INVESTIGATION FOCUSING ON THE FIRMS'SALE OF ARS, WHICH BROKERAGE FIRMS MARKETED AS SAFE AND LIQUIDALTERNATIVES TO CASH. THE CONSENT ORDER ALLEGED THAT, INCONNECTION WITH THE SALE OF AUCTION RATE SECURITIES 1) UBSFAILED TO REASONABLY SUPERVISE ITS AGENTS; AND 2) UBS ENGAGEDIN DISHONEST AND UNETHICAL PRACTICES IN VIOLATION OF SECTION36B-4(B) OF THE CONNECTICUT UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:05/26/2010Resolution:Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $2,098,792.26Consent225©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:THE CONSENT ORDER DIRECTED THAT UBS SECURITIES LLC AND UBSFINANCIAL SERVICES INC. PAY A $2,098,792.26 FINE TO THE DEPARTMENTIN RESOLUTION OF THE MATTER.Sanction Details:SEE RESPONSE TO ITEM 13.B.iReporting Source:FirmInitiated By:CONNECTICUT DEPARTMENT OF BANKING SECURITIES AND BUSINESSINVESTMENTS DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:01/28/2009Docket/Case Number:CO-10-7506-SPrincipal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/26/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS HAS PAID THE SUM OF $2,098,792.26 TO THE STATE OF CONNECTICUTFirm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIALSERVICES,INC.AND UBS SECURITIES LLC CONSENTED TO ENTRY OF ANORDER PURSUANT TO WHICH UBS WILL REPURCHASE UP TO ANADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, CONNECTICUT WILL RECEIVE A TOTAL PAYMENT OF$2,098,792.26 FROM UBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFSanctions Ordered:Monetary/Fine $2,098,792.26Disgorgement/RestitutionConsent226©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Disclosure 113 of 450iReporting Source:RegulatorInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENT ORDERDate Initiated:06/02/2008Docket/Case Number:CO-2010-0033URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIES (ARS)Allegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIES.Current Status:FinalResolution Date:06/21/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE ALABAMASECURITIES ACT. UBS HAS PAID THE SUM OF $328,180.42 TO THE STATEOF ALABAMA.Regulator StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS SECURITES LLC ANDDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $328,180.42Disgorgement/RestitutionCease and Desist/InjunctionConsent227©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUBS FINANCIAL SERVICES INC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,ALABAMA WILL RECEIVE A TOTAL PAYMENT OF $328,180.42 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.iReporting Source:FirmInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:06/02/2008Docket/Case Number:CO-2010-0033Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:06/21/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE ALABAMASECURITIES ACT. UBS HAS PAID THE SUM OF $328,180.42 TO THE STATEOF ALABAMA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIALSERVICES,INC.AND UBS SECURITIES LLC CONSENTED TO ENTRY OF ANORDER PURSUANT TO WHICH UBS WILL REPURCHASE UP TO ANSanctions Ordered:Monetary/Fine $328,180.42Disgorgement/RestitutionCease and Desist/InjunctionConsent228©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, ALABAMA WILL RECEIVE A TOTAL PAYMENT OF $328,180.42FROM UBS, FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disclosure 114 of 450iReporting Source:FirmInitiated By:COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/31/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/19/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS HAS PAID THE SUM OF $1,662,029.43 TO THE STATE OF VIRGINIA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,VIRGINIA WILL RECEIVE A TOTAL PAYMENT OF $1,662,029.43 FROM UBS,Sanctions Ordered:Monetary/Fine $1,662,029.43Disgorgement/RestitutionConsent229©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disclosure 115 of 450iReporting Source:FirmInitiated By:SOUTH DAKOTA, DEPARTMENT OF REVENUE AND REGULATION, DIVISONOF SECURITIESPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:05/06/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS HAS PAID THE SUM OF $317,375.71 TO THE STATE OF SOUTH DAKOTA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,SOUTH DAKOTA WILL RECEIVE A TOTAL PAYMENT OF $317,375.71 FROMUBS, FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITHTHE STATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESSanctions Ordered:Monetary/Fine $317,375.71Disgorgement/RestitutionConsent230©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceADMINISTRATORS ASSOCIATION.Disclosure 116 of 450iReporting Source:FirmInitiated By:COMMISSIONER OF SECURITIES AND INSURANCE MONTANA STATEAUDITORPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/07/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $324,542.52 TO THE STATE OF MONTANA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MONTANA WILL RECEIVE A TOTAL PAYMENT OF $324,542.52 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $324,542.52Disgorgement/RestitutionCease and Desist/InjunctionConsent231©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 117 of 450iReporting Source:FirmInitiated By:NORTH DAKOTA SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIES.Current Status:FinalResolution Date:04/26/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $235,194.78 TO THE STATE OF NORTH DAKOTA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,NORTH DAKOTA WILL RECEIVE A TOTAL PAYMENT OF $235,194.78 FROMUBS, FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITHTHE STATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $235,194.78Disgorgement/RestitutionCease and Desist/InjunctionConsenti232©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 118 of 450Reporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/2010Docket/Case Number:2008014720301Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:MSRB RULES G-17, G-30(B) - UBS FINANCIAL SERVICES INC. PURCHASEDOR SOLD MUNICIPAL SECURITIES AS AGENT FOR A CUSTOMER FOR ACOMMISSION OR SERVICE CHARGE THAT WAS IN EXCESS OF A FAIR ANDREASONABLE AMOUNT, TAKING INTO CONSIDERATION ALL RELEVANTFACTORS, INCLUDING THE AVAILABILITY OF THE SECURITIES INVOLVED INTHE TRANSACTION, THE EXPENSE OF EXECUTING OR FILLING THECUSTOMER'S ORDER, THE VALUE OF THE SERVICES RENDERED BY THEBROKER, DEALER OR MUNICIPAL SECURITIES DEALER, AND THE AMOUNTOF ANY OTHER COMPENSATION RECEIVED OR TO BE RECEIVED BY THEBROKER, DEALER OR MUNICIPAL SECURITIES DEALER IN CONNECTIONWITH THE TRANSACTION.Current Status:FinalResolution Date:07/01/2010Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $17,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)233©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHEREFORE, THE FIRM IS CENSURED, FINED $17,000 AND REQUIRED TOPAY $1,620.25, PLUS INTEREST, IN RESTITUTION TO AN INVESTOR. AREGISTERED PRINCIPAL OF THE FIRM SHALL SUBMIT SATISFACTORYPROOF OF PAYMENT OF THE RESTITUTION, OR OF REASONABLE ANDDOCUMENTED EFFORTS UNDERTAKEN TO EFFECT RESTITUTION TOFINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. THE FIRM MADE RESTITUTION TOTALING $6,583.60 FOR THEOTHER CUSTOMER TRANSACTIONS AND FOR WHICH NO ADDITIONALRESTITUTION IS REQUIRED.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/2010Docket/Case Number:2008014720301Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:MSRB RULES G-17, G-30(B) - UBS FINANCIAL SERVICES INC. PURCHASEDOR SOLD MUNICIPAL SECURITIES AS AGENT FOR A CUSTOMER FOR ACOMMISSION OR SERVICE CHARGE THAT WAS IN EXCESS OF A FAIR ANDREASONABLE AMOUNT, TAKING INTO CONSIDERATION ALL RELEVANTFACTORS, INCLUDING THE AVAILABILITY OF THE SECURITIES INVOLVED INTHE TRANSACTION, THE EXPENSE OF EXECUTING OR FILLING THECUSTOMER'S ORDER, THE VALUE OF THE SERVICES RENDERED BY THEBROKER, DEALER OR MUNICIPAL SECURITIES DEALER, AND THE AMOUNTOF ANY OTHER COMPENSATION RECEIVED OR TO BE RECEIVED BY THEBROKER, DEALER OR MUNICIPAL SECURITIES DEALER IN CONNECTIONWITH THE TRANSACTION.Current Status:FinalResolution Date:07/01/2010Resolution:Acceptance, Waiver & Consent(AWC)234©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $17,000 AND REQUIRED TOPAY $1,620.25, PLUS INTEREST, IN RESTITUTION TO AN INVESTOR. AREGISTERED PRINCIPAL OF THE FIRM SHALL SUBMIT SATISFACTORYPROOF OF PAYMENT OF THE RESTITUTION, OR OF REASONABLE ANDDOCUMENTED EFFORTS UNDERTAKEN TO EFFECT RESTITUTION TOFINRA NO LATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. THE FIRM MADE RESTITUTION TOTALING $6,583.60 FOR THEOTHER CUSTOMER TRANSACTIONS AND FOR WHICH NO ADDITIONALRESTITUTION IS REQUIRED.Sanctions Ordered:CensureMonetary/Fine $17,000.00Disgorgement/RestitutionDisclosure 119 of 450iReporting Source:FirmInitiated By:STATE OF LOUISIANA OFFICE OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/06/2010Resolution:Sanctions Ordered:Monetary/Fine $867,350.22Consent235©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $867,350.22 TO THE STATE OF LOUISIANA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,LOUISIANA WILL RECEIVE A TOTAL PAYMENT OF $867,350.22 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disgorgement/RestitutionCease and Desist/InjunctionDisclosure 120 of 450iReporting Source:FirmInitiated By:COMMONWEALTH OF KENTUCKY, PUBLIC PROTECTION CABINET,DEPARTMENT OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:06/06/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:04/27/2010Resolution:Sanctions Ordered:Monetary/Fine $485,558.29Consent236©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $485,558.29 TOTHE STATE OF KENTUCKY.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIALSERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF ANORDER PURSUANT TO WHICH UBS WILL REPURCHASE UP TO ANADDITIONAL $200MM IN ARS FROM INVESTORS NATIONALLY AND ALSOCONFIRMED THEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING ASPART OF REGULATORY SETTLEMENTS ENTERED INTO IN 2008.ADDITIONALLY, KENTUCKY WILL RECEIVE A TOTAL PAYMENT OF$485,558.29 FROM UBS, FROM A TOTAL FINE OF $75MM PREVIOUSLYAGREED UPON WITH THE STATE OF MASSACHUSETTS AND THE NORTHAMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disgorgement/RestitutionCease and Desist/InjunctionDisclosure 121 of 450iReporting Source:FirmInitiated By:STATE OF INDIANA, OFFICE OF THE STATE OF THE SECRETARY OF STATE,SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:04/23/2010Resolution:Consent237©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $705,000.11 TOTHE STATE OF INDIANA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN,UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,INDIANA WILL RECEIVE A TOTAL PAYMENT OF $705,000.11 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $705,000.11Disgorgement/RestitutionCease and Desist/InjunctionDisclosure 122 of 450iReporting Source:FirmInitiated By:DEPARTMENT OF FINANCE OF THE STATE OF IDAHOPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:05/20/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:04/27/2010Resolution:Consent238©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.UBS HAS PAID THE SUM OF $389,031.88 TOTHE STATE OF IDAHO.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,IDAHO WILL RECEIVE A TOTAL PAYMENT OF $389,031.88 FROM UBS, FROMA TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $389,031.88Disgorgement/RestitutionCease and Desist/InjunctionDisclosure 123 of 450iReporting Source:FirmInitiated By:COLORADO DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:05/09/2010Resolution:Consent239©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS HAS PAID THE SUM OF $2,166,411.03 TO THE STATE OF COLORADO.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,COLORADO WILL RECEIVE A TOTAL PAYMENT OF $2,166,411.03 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Sanctions Ordered:Monetary/Fine $2,166,411.03Disgorgement/RestitutionDisclosure 124 of 450iReporting Source:FirmInitiated By:STATE OF CALIFORNIA COMMISSIONER OF CORPORATIONSPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:04/23/2010Resolution:Sanctions Ordered:Monetary/Fine $15,209,146.78Disgorgement/RestitutionConsent240©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.WITHIN TEN DAYS OF THE DATE OF THE ORDER, UBS HAS PAID THE SUMOF $15,209,146.78 TO THE STATE OF CALIFORNIA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,CALIFORNIA WILL RECEIVE A TOTAL PAYMENT OF $15,209,146.78 FROMUBS, FROM A TOTAL FINE OF$75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Cease and Desist/InjunctionDisclosure 125 of 450iReporting Source:FirmInitiated By:ARIZONA CORPORATION COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:07/22/2008Docket/Case Number:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTIONRATE SECURITIESCurrent Status:FinalResolution Date:05/17/2010Resolution:Sanctions Ordered:Monetary/Fine $1,363,942.61Consent241©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE SECURITIES ACT.WITHIN TEN DAYS OF THE DATE OF THIS ORDER, UBS SHALL PAY THE SUMOF $1,363,942.61 TO THE STATE OF ARIZONA.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS SECURITIES LLC ANDUBS FINANCIAL SERVICES, INC. CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,ARIZONA WILL RECEIVE A TOTAL PAYMENT OF $1,363,942.61 FROM UBS,FROM A TOTAL FINE OF $75MMPREVIOUSLY AGREED UPON WITH THE STATE OF MASSACHUSETTS ANDTHE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Disgorgement/RestitutionCease and Desist/InjunctionDisclosure 126 of 450iReporting Source:RegulatorInitiated By:MISSOURI SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:05/13/2010Docket/Case Number:AP-10-14URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:THE MISSOURI SECURITIES DIVISION ALLEGES FAILURE TO SUPERVISEAND ENGAGEMENT IN DISHONEST AND UNETHICAL PRACTICES.Current Status:FinalResolution Date:05/13/2010Resolution:Consent242©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE MISSOURISECURITIES ACT OF 2003 AND WILL COMPLY WITH THE MISSOURISECURITIES ACT OF 2003. WITHIN TEN DAYS OF THE DATE OF THISORDER, UBS SHALL PAY THE SUM OF $1,272,039.07 TO THE STATE OFMISSOURI.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $1,272,039.07Cease and Desist/InjunctioniReporting Source:FirmInitiated By:MISSOURI SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:04/11/2008Docket/Case Number:AP-10-14Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:FAILURE TO SUPERVISE AND UNETHICAL BUSINESS PRACTICES RELATEDTO THE MARKETING AND SALE OF AUCTION RATE SECURITIESCurrent Status:FinalResolution Date:05/13/2010Resolution:Other Sanctions Ordered:Sanction Details:UBS SHALL CEASE AND DESIST FROM VIOLATING THE MISSOURISanctions Ordered:Monetary/Fine $1,272,039.07Disgorgement/RestitutionCease and Desist/InjunctionConsent243©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSECURITIES ACT OF 2003 AND WILL COMPLY WITH THE MISSOURISECURITIES ACT OF 2003. WITHIN TEN DAYS OF THE DATE OF THISORDER, UBS SHALL PAY THE SUM OF $1,272,039.07 TO THE STATE OFMISSOURI.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY AND ALSO CONFIRMEDTHEIR OBLIGATIONS UNDER THE ARS RIGHTS OFFERING AS PART OFREGULATORY SETTLEMENTS ENTERED INTO IN 2008. ADDITIONALLY,MISSOURI WILL RECEIVE A TOTAL PAYMENT OF $1,272,039.07 FROM UBS,FROM A TOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THESTATE OF MASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Disclosure 127 of 450iReporting Source:RegulatorInitiated By:TEXASPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:03/04/2010Docket/Case Number:IC10-CDO-07URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:UBS FINANCIAL SERVICES, INCORPORATED, THROUGH ITS SALESPEOPLE,ADVISED CERTAIN CLIENTS THAT AUCTION RATE SECURITIES WERE SAFE,LIQUID INVESTMENTS, WHEN IN FACT AUCTION RATE SECURITIES HADSIGNIFICANT LIQUIDITY RISKS ASSOCIATED WITH THEM. UBS FINANCIALSERVICES DID NOT ADEQUATELY TRAIN ALL OF ITS BROKERS ANDFINANCIAL ADVISERS REGARDING THE POTENTIAL LIQUIDITY OF AUCTIONRATE SECURITIES, INCLUDING THE FACT UBS FINANCIAL SERVICES,INCORPORATED MAY STOP SUPPORTING THE MARKETCurrent Status:FinalResolution:Order244©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:03/04/2010Other Sanctions Ordered:CEASE & DESISTSanction Details:NO OTHER SANCTIONS FOLLOW.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $6,640,432.94iReporting Source:FirmInitiated By:TEXAS STATE SECURITIES BOARDPrincipal Sanction(s)/ReliefSought:SuspensionOther Sanction(s)/ReliefSought:CEASE AND DESIST, RESCISSION, ADMINISTRATIVE FINEDate Initiated:07/22/2008Docket/Case Number:SOAH DOCKET # IC 10-CDO-07Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:THE NOTICE OF HEARING ALLEGES MISREPRESENTATION, OMISSION,FRAUD, CONFLICT OF INTEREST, AND FAILURE TO PROPERLY TRAINFINANCIAL ADVISORS RELATING TO THE MARKETING AND SALE OFAUCTION RATE SECURITIES. THE FIRM DENIES THE ALLEGATIONSCONTAINED WITHIN THE NOTICE.Current Status:FinalResolution Date:03/04/2010Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $6,530,432.94Disgorgement/RestitutionCease and Desist/InjunctionDecision & Order of Offer of Settlement245©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS OF FACTS ORCONCLUSIONS OF LAW CONTAINED THEREIN, UBS FINANCIAL SERVICES,INC. AND UBS SECURITIES LLC CONSENTED TO ENTRY OF AN ORDERPURSUANT TO WHICH UBS WILL REPURCHASE UP TO AN ADDITIONAL$200MM IN ARS FROM INVESTORS NATIONALLY. ADDITIONALLY, TEXASWILL RECEIVE A TOTAL PAYMENT OF $6,530,432.94 FROM UBS, FROM ATOTAL FINE OF $75MM PREVIOUSLY AGREED UPON WITH THE STATE OFMASSACHUSETTS AND THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION.Firm StatementON AUGUST 11, 2008 THE TEXAS STATE SECURITIES BOARD FILED AMOTION TO DISMISS BASED ON A PROSPECTIVE SETTLEMENTAGREEMENT. THE MOTION TO DISMISS WAS GRANTED ON AUGUST 20,2008. THIS SETTLEMENT WAS FINALIZED ON 3/4/10.Disclosure 128 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:01/20/2010Docket/Case Number:2006006375801Principal Product Type:No ProductOther Product Type(s):Allegations:NASD RULES 2110, 2320: IN TRANSACTIONS FOR OR WITH A CUSTOMER,THE FIRM FAILED TO USE REASONABLE DILIGENCE TO ASCERTAIN THEBEST INTER-DEALER MARKET AND FAILED TO BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICE TO ITS CUSTOMER WAS ASFAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS.Current Status:FinalResolution Date:01/20/2010Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $11,500.00Acceptance, Waiver & Consent(AWC)246©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $11,500.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:N/ADate Initiated:01/20/2010Docket/Case Number:2006006375801Principal Product Type:No ProductOther Product Type(s):Allegations:NASD RULES 2110, 2320: IN TRANSACTIONS FOR OR WITH A CUSTOMER,THE FIRM DID NOT USE REASONABLE DILIGENCE TO ASCERTAIN THEBEST INTER-DEALER MARKET AND DID NOT BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICE TO ITS CUSTOMER WAS ASFAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS.Current Status:FinalResolution Date:01/20/2010Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $11,500.Sanctions Ordered:CensureMonetary/Fine $11,500.00Acceptance, Waiver & Consent(AWC)Disclosure 129 of 450iReporting Source:RegulatorAllegations:THE ENFORCEMENT SECTION OF THE MO SECURITIES DIVISION HASALLEGED THAT UBS FINANCIAL SERVICES, INC.'S FORMER MISSOURI-Current Status:Final247©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MISSOURIPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CONSENTDate Initiated:05/11/2009Docket/Case Number:AP-09-19URL for Regulatory Action:Principal Product Type:Annuity(ies) - VariableOther Product Type(s):REGISTERED REPRESENTATIVE ROBERT T. ANDERSON MADE UNSUITABLERECOMMENDATIONS TO CERTAIN SENIOR CUSTOMERS CAUSING THEM:(1) TO EXCHANGE VARIABLE ANNUITIES THAT WERE NO LONGER SUBJECTTO SURRENDER CHARGES WITH VARIABLE ANNUITIES HAVING NEWSURRENDER PERIODS AND/OR (2) TO PLACE LARGE AMOUNTS OF THEIRNET WORTH INTO ABOVE-AVERAGE RISK CLOSED END FUNDINVESTMENTS. THE ENFORCEMENT SECTION FURTHER ALLEGES THATDURING THE PERIOD FROM 2003 THROUGH 2006, CERTAIN UBSREGISTERED REPRESENTATIVES MADE UNSUITABLE RECOMMENDATIONSTO 6 CUSTOMERS CAUSING THEM TO INVEST IN VARIABLE ANNUITIES ORINCUR SURRENDER CHARGES BY EXCHANGING THEIR VARIABLEANNUITIES BEFORE THE SURRENDER PENALTY HAD EXPIRED. THEENFORCEMENT SECTION ALSO ALLEGES THAT UBS'S FAILURE TOREASONABLY SUPERVISE ANDERSON CONSTITUTES GROUNDS TODISCIPLINE UBS'S REGISTRATION PURSUANT TO SECTION 409.4-412,RSMO. (CUM. SUPP. 2008).Resolution Date:05/20/2009Resolution:Other Sanctions Ordered:UBS IS HEREBY CENSURED. UBS IS ORDER TO DISGORGE $62,675.54 FORTHE LOSSES, SURRENDER CHARGES, AND COMMISSIONS GENERATED BYDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $172,850.98Disgorgement/RestitutionConsent248©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE SALES TO MISSOURI RESIDENTS. UBS SHALL PAY $80,000.00 TO THEINVESTOR EDUCATION AND PROTECTION FUND. UBS SHALL PAY A CIVILPENALTY OF $20,000.00. UBS SHALL PAY THE SUM OF $7,500.00 AS THECOSTS OF THE INVESTIGATION. UBS SHALL PAY ITS OWN COSTS ANDATTORNEYS FEES WITH RESPECT TO THIS MATTER.Sanction Details:SEE ABOVEiReporting Source:FirmInitiated By:STATE OF MISSOURIPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:UBS WAS (1) CENSURED; (2) ORDERED TO DISGORGE $62,675.54; (3)ORDERED TO PAY $80,000 TO THE MISSOURI INVESTOR EDUCATION ANDPROTECTION FUND; (4)ORDERED TO PAY A $20,000 CIVIL PENALTY; AND (5)ORDER TO PAY $7,500 AS COST OF THE INVESTIGATION.Date Initiated:05/20/2009Docket/Case Number:AP-09-19Principal Product Type:Annuity(ies) - VariableOther Product Type(s):MUTUAL FUNDSAllegations:WITHOUT ADMITING OR DENYING THE ALLEGATIONS, UBS FINANCIALSERVICES CONSENTED TO FINDINGS THAT UBS FINANCIAL ADVISORSMADE UNSUITABLE RECOMMENTATIONS RELATED TO VARIABLE ANNUITYAND CLOSED END MUTUAL FUND TRANSACTIONS AND THAT THE FIRMFAILED TO SUPERVISE ONE FINANCIAL ADVISOR RELATED TO CONDUCTTHAT ENDED IN 2005.Current Status:FinalResolution Date:05/20/2009Resolution:Other Sanctions Ordered:UBS WAS (1) CENSURED; (2) ORDERED TO DISGORGE $62,675.54; (3)ORDERED TO PAY $80,000 TO THE MISSOURI INVESTOR EDUCATION ANDPROTECTION FUND; (4)ORDERED TO PAY A $20,000 CIVIL PENALTY; AND (5)ORDER TO PAY $7,500 AS COST OF THE INVESTIGATION.Sanction Details:UBS WAS (1) CENSURED; (2) ORDERED TO DISGORGE $62,675.54; (3)Sanctions Ordered:CensureMonetary/Fine $20,000.00Disgorgement/RestitutionConsent249©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceORDERED TO PAY $80,000 TO THE MISSOURI INVESTOR EDUCATION ANDPROTECTION FUND; (4)ORDERED TO PAY A $20,000 CIVIL PENALTY; AND (5)ORDER TO PAY $7,500 AS COST OF THE INVESTIGATION. PAYMENT WASMADE ON OR ABOUT MAY 27, 2009Firm StatementON MAY 20, 2009, UBS ENTERED INTO A CONSENT ORDER WITH THE STATEOF MISSOURI, PURSUANT TO WHICH THE FIRM, WITHOUT ADMITTING ORDENYING THE ALLEGATIONS, CONSENTED TO FINDINGS THAT UBSFINANCIAL ADVISORS MADE UNSUITABLE RECOMMENTATIONS RELATEDTO VARIABLE ANNUITY AND CLOSED END MUTUAL FUND TRANSACTIONSAND THAT THE FIRM FAILED TO SUPERVISE ONE FINANCIAL ADVISORRELATED TO CONDUCT THAT ENDED IN 2005. UBS AGREED TO THESANCTIONS DETAILED IN THIS FILING.Disclosure 130 of 450iReporting Source:FirmInitiated By:NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:06/03/2009Docket/Case Number:COM08-027Principal Product Type:OtherOther Product Type(s):LEHMAN STRUCTURED PRODUCTSAllegations:THE PETITION ALLEGES THAT UBS SOLD LEHMAN STRUCTUREDPRODUCTS TO CLIENTS WHO WERE NOT MADE AWARE OF THE RISKS OFTHESE PRODUCTS. THE PETITION SPECIFICALLY REFERS TO THREEPARTICULAR INVESTORS. THE ACTION ALSO ALLEGES THAT UBS FAILEDTO INFORM CLIENTS OF LEHMAN'S FINANCIAL CONDITION PRIOR TOLEHMAN'S BANKRUPTCY AND FURTHER ASSERTS THAT THE FIRM'SRECOMMENDATIONS TO A SMALL NUMBER OF NEW HAMPSHIRERESIDENTS TO PURCHASE LEHMAN STRUCTURED PRODUCTS WEREUNSUITABLE.Current Status:FinalResolution Date:08/22/2011Resolution:Sanctions Ordered:Monetary/Fine $100,000.00Consent250©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:INVESTIGATION COSTS OF $200,000; ADMINISTRATIVE PAYMENT OF$700,000Sanction Details:ADMINSTRATIVE FINE OF $100,000; INVESTIGATION COSTS OF $200,000;ADMINISTRATIVE PAYMENT OF $700,000.Firm StatementWITHOUT ADMITTING OR DENYING THE ALLEGATIONS AND FINDINGS, THEFIRM CONSENTED TO THE CONSENT ORDER AND: PAID ANADMINISTRATIVE FINE OF $100,000 ON SEPTEMBER 1, 2011; PAIDINVESTIGATION COSTS OF $200,000 ON SEPTEMBER 1, 2011; AND AGREEDTO ESTABLISH A SEGREGATED INTEREST-BEARING ACCOUNT BYSEPTEMBER 22, 2011 WITH AN ADMINISTRATIVE PAYMENT OF $700,000.Cease and Desist/InjunctionDisclosure 131 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/26/2009Docket/Case Number:2007009520201Principal Product Type:OtherOther Product Type(s):CLOSED END FUNDS (CEFS)Allegations:NASD RULES 2110, 3010(A) AND 3010(B): RESPONDENT UBS FINANCIALSERVICES, INC. DID NOT HAVE A SYSTEM AND PROCEDURESREASONABLY DESIGNED TO DETECT AND PREVENT UNSUITABLEPATTERNS OF SHORT-TERM TRADING OF CEFS, WHICH ARE MOSTSUITABLE FOR LONG-TERM INVESTMENT, PURCHASED AT AN INITIALPUBLIC OFFERING. UBS FAILED TO DETECT AND PREVENT CERTAIN OFITS REGISTERED REPRESENTATIVES FROM ENGAGING IN UNSUITABLESHORT-TERM TRADING OF CEFS PURCHASED AT AN INITIAL PUBLICOFFERING, WHICH RESULTED IN CUSTOMER LOSSES.Current Status:FinalResolution Date:06/26/2009Resolution:Acceptance, Waiver & Consent(AWC)251©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $100,000.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $100,000.00iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINEDate Initiated:06/26/2009Docket/Case Number:2007009520202Principal Product Type:OtherOther Product Type(s):CLOSED-END FUNDSAllegations:ON JUNE 26, 2009, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,UBS FINANCIAL SERVICES CONSENTED TO FINDINGS THAT BETWEENJANUARY 2004 AND DECEMBER 2005 ("RELEVANT PERIOD") THE FIRM DIDNOT HAVE ADEQUATE SYSTEMS AND/OR PROCEDURES, INCLUDINGSUPERVISORY PROCEDURES, REASONABLY DESIGNED TO DETECT ANDPREVENT UNSUITABLE PATTERNS OF SHORT-TERM TRADING OF CLOSEDEND FUNDS ("CEFS") PURCHASED AT THE INITIAL PUBLIC OFFERING ORTO SUPERVISE IT REGISTERED REPRESENTATIVES' SALES OF NEW ISSUECEFS TO THEIR CUSTOMERS. AS A RESULT, DURING THE RELEVANTPERIOD THE FIRM FAILED TO DETECT AND PREVENT CERTAIN OF ITSREGISTERED REPRESENTATIVES FROM ENGAGING IN UNSUITABLESHORT-TERM TRADING OF CEFS PURCHASED AT THE INITIAL PUBLICOFFERING.Current Status:Final252©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:06/26/2009Resolution:Other Sanctions Ordered:Sanction Details:ON JUNE 26, 2009, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,UBS FINANCIAL SERVICES CONSENTED TO FINDINGS THAT BETWEENJANUARY 2004 AND DECEMBER 2005 ("RELEVANT PERIOD") THE FIRM DIDNOT HAVE ADEQUATE SYSTEMS AND/OR PROCEDURES, INCLUDINGSUPERVISORY PROCEDURES, REASONABLY DESIGNED TO DETECT ANDPREVENT UNSUITABLE PATTERNS OF SHORT-TERM TRADING OF CLOSEDEND FUNDS ("CEFS") PURCHASED AT THE INITIAL PUBLIC OFFERING ORTO SUPERVISE IT REGISTERED REPRESENTATIVES' SALES OF NEW ISSUECEFS TO THEIR CUSTOMERS. AS A RESULT, DURING THE RELEVANTPERIOD THE FIRM FAILED TO DETECT AND PREVENT CERTAIN OF ITSREGISTERED REPRESENTATIVES FROM ENGAGING IN UNSUITABLESHORT-TERM TRADING OF CEFS PURCHASED AT THE INITIAL PUBLICOFFERING. IN DETERMINING APPROPRIATE SANCTIONS, FINRACONSIDERED (AMONG OTHER FACTORS) THAT THE FIRM, (1) AFTERRECEIVING THE RESULTS OF AN SEC BRANCH EXAM, BUT IN SOMEINSTANCES PRIOR TO FINRA'S REVIEW, REVIEWED ITS SHORT-TERMSALES OF CEFS PURCHASED AT IPO, AND MADE EXTRAORDINARYREMEDIATION TO CUSTOMERS, AND (2) PRIOR TO THE COMPLETION OFFINRA'S INVESTIGATION, CORRECTED ITS SYSTEMS AND PROCEDURESAND TOOK OTHER STEPS TO PREVENT FUTURE VIOLATIONS.Firm StatementON JUNE 26, 2009, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,UBS FINANCIAL SERVICES CONSENTED TO FINDINGS THAT BETWEENJANUARY 2004 AND DECEMBER 2005 ("RELEVANT PERIOD") THE FIRM DIDNOT HAVE ADEQUATE SYSTEMS AND/OR PROCEDURES, INCLUDINGSUPERVISORY PROCEDURES, REASONABLY DESIGNED TO DETECT ANDPREVENT UNSUITABLE PATTERNS OF SHORT-TERM TRADING OF CLOSEDEND FUNDS ("CEFS") PURCHASED AT THE INITIAL PUBLIC OFFERING ORTO SUPERVISE IT REGISTERED REPRESENTATIVES' SALES OF NEW ISSUECEFS TO THEIR CUSTOMERS. AS A RESULT, DURING THE RELEVANTPERIOD THE FIRM FAILED TO DETECT AND PREVENT CERTAIN OF ITSREGISTERED REPRESENTATIVES FROM ENGAGING IN UNSUITABLESHORT-TERM TRADING OF CEFS PURCHASED AT THE INITIAL PUBLICOFFERING. IN DETERMINING APPROPRIATE SANCTIONS, FINRACONSIDERED (AMONG OTHER FACTORS) THAT THE FIRM, (1) AFTERRECEIVING THE RESULTS OF AN SEC BRANCH EXAM, BUT IN SOMEINSTANCES PRIOR TO FINRA'S REVIEW, REVIEWED ITS SHORT-TERMSALES OF CEFS PURCHASED AT IPO, AND MADE EXTRAORDINARYREMEDIATION TO CUSTOMERS, AND (2) PRIOR TO THE COMPLETION OFSanctions Ordered:CensureMonetary/Fine $100,000.00Acceptance, Waiver & Consent(AWC)253©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFINRA'S INVESTIGATION, CORRECTED ITS SYSTEMS AND PROCEDURESAND TOOK OTHER STEPS TO PREVENT FUTURE VIOLATIONS.Disclosure 132 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/16/2009Docket/Case Number:2006005655201Principal Product Type:No ProductOther Product Type(s):Allegations:NASD RULE 6955(A) - UBS FINANCIAL SERVICES INC. TRANSMITTED TOTHE ORDER AUDIT TRAIL SYSTEM (OATS) REPORTABLE ORDER EVENTS(ROES) THAT WERE REJECTED BY OATS FOR CONTEXT OR SYNTAXERRORS AND THE FIRM FAILED TO REPAIR MANY OF THE REJECTEDROES.Current Status:FinalResolution Date:06/16/2009Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $7,500.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)i254©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/16/2009Docket/Case Number:2006005655201Principal Product Type:No ProductOther Product Type(s):Allegations:NASD RULE 6955(A) - UBS FINANCIAL SERVICES INC. TRANSMITTED TOTHE ORDER AUDIT TRAIL SYSTEM (OATS) REPORTABLE ORDER EVENTS(ROES) THAT WERE REJECTED BY OATS FOR CONTEXT OR SYNTAXERRORS AND THE FIRM FAILED TO REPAIR MANY OF THE REJECTEDROES.Current Status:FinalResolution Date:06/16/2009Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $7,500.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $7,500.Sanctions Ordered:CensureMonetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)Disclosure 133 of 450iReporting Source:RegulatorAllegations:NASD RULES 2110, 6230(A) - UBS FINANCIAL SERVICES INC. FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)LARGE BLOCK TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15Current Status:Final255©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/06/2009Docket/Case Number:2007010313001Principal Product Type:OtherOther Product Type(s):TRACE-ELIGIBLE SECURITIESMINUTES OF THE TIME OF EXECUTION. THESE LATE TRANSACTIONSCONSTITUTE A PATTERN OR PRACTICE OF LATE REPORTING WITHOUTEXCEPTIONAL CIRCUMSTANCES.Resolution Date:04/06/2009Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $8,000.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $8,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:FINRAAllegations:UBS FINANCIAL SERVICES INC. FAILED TO REPORT THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) CERTAIN LARGE BLOCKTRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OFTHE TIME OF EXECUTION DURING THE TIME PERIODS APRIL 1 TO JUNE 30,2007 AND APRIL 1 TO JUNE 30, 2008.Current Status:Final256©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:04/06/2009Docket/Case Number:20070103130Principal Product Type:No ProductOther Product Type(s):Resolution Date:04/06/2009Resolution:Other Sanctions Ordered:Sanction Details:THE FINE OF $8,000 HAS BEEN SUBMITTED FOR PAYMENT.Sanctions Ordered:CensureMonetary/Fine $8,000.00OrderDisclosure 134 of 450iReporting Source:FirmInitiated By:STATE OF ILLINOIS, SECRETARY OF STATE, SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:CONTRIBUTION TO STATE'S INVESTOR EDUCATION FUND.Date Initiated:07/31/2008Docket/Case Number:0500612Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:THE DEPARTMENT ALLEGED THAT UBS FINANCIAL SERVICES INC. (UBS)DID NOT TAKE SUFFICIENT MEASURES TO ENSURE THAT CERTAIN UBSREGISTERED REPRESENTATIVES AND INVETMENT ADVISORS INFORMEDTHEIR MUTUAL FUNDS CLIENTS IN ILLINOIS REGARDING THETRANFERABILITY OF UBS FUNDS. FIVE CLIENTS RECEIVED REMEDIATIONIN THE TOTAL AMOUNT OF $723.27Current Status:Final257©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:08/01/2008Resolution:Other Sanctions Ordered:NO SANCTIONSSanction Details:NO SANCTIONS.REMEDIATION TO FIVE CLIENTS FOR CONTINGENT DEFERRAL SALESCHARGES. CONTRIBUTION TO STATE INVESTO EDUCATION FUND.Firm StatementREMEDATIONS OF CONTINGENT DEFERRED SALES CHARGES TO FIVECLIENTS. CONTRIBUTION TO STATE'S INVESTOR EDUCATION FUND.Sanctions Ordered:Disgorgement/RestitutionSettledDisclosure 135 of 450iReporting Source:RegulatorInitiated By:MASSACHUSETTS SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:CEASE AND DESIST; RECISSION OF SALES OF AUCTION RATE SECURITIESAT PAR OR RESTITUTION TO INVESTORS WHO HAVE ALREADY SOLDTHESE INSTRUMENTS BELOW PAR) ON TERMS/CONDITIONS THAT AHEARING OFFICER DEEMS APPROPRIATE; CENSURE; ADMINSITRATIVEFINE; ANY OTHER ACTION DEEMED IN THE PUBLIC INTEREST/FOR THEPROTECTION OF MASS INVESTORS BY THE HEARING OFFICERDate Initiated:06/26/2008Docket/Case Number:E-2008-0045URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:THE DIVISION CHARGED UBS SECURITIES AND UBS FINANCIAL SERVICESWITH FRAUD AND DISHONEST AND UNETHICAL SALES PRACTICES INCONNECTION WITH ITS MARKETING AND SALES OF AUCTION RATESECURTIES AS WELL AS BOOKS AND RECORDS VIOLATIONSCurrent Status:FinalResolution Date:10/02/2008Resolution:Consent258©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:BUY BACK AUCTION RATE SECURITIES PURSUANT TO SPECIFICATIONS INCONSENT ORDER.CERTAIN RELIEF FOR INVESTORS WHO SOLD BELOW PAR, AS SPECIFIEDIN CONSENT ORDER.$75,000,000.00 WAS DISTRIBUTED AMONG STATES.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $75,000,000.00Disgorgement/RestitutioniReporting Source:FirmInitiated By:MASSACHUSETTS SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:RestitutionOther Sanction(s)/ReliefSought:Date Initiated:06/26/2008Docket/Case Number:E-2008-0045Principal Product Type:OtherOther Product Type(s):AUCTION RATE SECURITIESAllegations:THE ADMINISTRATIVE COMPLAINT ALLEGES FRAUD, DISHONEST ANDUNETHICAL SALES PRACTICES AS WELL AS CERTAIN BOOKS ANDRECORDS VIOLATIONS SURROUNDING THE MARKETING AND SALE OFAUCTION RATE SECURITIES. THE FIRM DENIES THE ALLEGATIONSCONTAINED WITHIN THE COMPLAINT.Current Status:FinalResolution Date:10/02/2008Resolution:Sanctions Ordered:Monetary/Fine $75,000,000.00Disgorgement/RestitutionConsent259©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:MASSACHUSETTS RECEIVED $2,180,875.36 FROM A TOTAL FINE OF $75MMAGREED UPON WITH THE STATE OF MASSACHUSETTS AND THE NORTHAMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.-OFFER TO REPURCHASE ARS FROM CLIENTS WHO HELD ORTRANSACTED ARS AT THE FIRM ON FEBRUARY 13, 2008 OR WHOPURCHASED THEM FROM THE FIRM DURING THE PERIOD OF OCTOBER 1,2007 AND FEBRUARY 12, 2008- REIMBURSE CLIENTS FOR THEIR LOSS IF THEY SOLD THEIR ARS BELOWPAR AND PAY CLIENTS FOR ANY NEGATIVE INTEREST RATE CARRYRELATING TO ARS RELATED LOANSFirm StatementON OCTOBER 2, 2008, UBS FS ENTERED INTO A CONSENT ORDER WITHTHE STATE OF MASSACHUSETTS SECURITIES DIVISION SETTLINGADMINISTRATIVE COMPLAINT (DOCKET # 2008-0045) WITH PREJUDICE.UBS FS DID NOT ADMIT OR DENY ANY ALLEGATIONS IN THEADMINISTRATIVE COMPLAINT AND THE CONSENT ORDER DID NOTCONTAIN AND ADJUDICATIONS OF LAW OR FACT.Disclosure 136 of 450iReporting Source:RegulatorAllegations:NASD RULES 2110, 2310 AND 3010: THIS MATTER ARISES IN PART FROM AREVIEW OF UBS FINANCIAL SERVICES INC. ("UBSFS" OR THE "FIRM") SALEOF CLASS B MUTUAL FUND SHARES BETWEEN JANUARY 1, 2002 AND MAY3 1, 2003 AND THE SALE OF CLASS C MUTUAL FUND SHARES BETWEENJANUARY 1,2002 AND SEPTEMBER 30,2003 (COLLECTIVELY THE "CLASS BAND CLASS C SHARE REVIEW PERIOD"). WITHIN THE CLASS B AND CLASSC SHARE REVIEW PERIOD UBSFS EFFECTED TRANSACTIONS WHERE ITMADE RECOMMENDATIONS TO CUSTOMERS TO PURCHASE CLASS B ANDCLASS C SHARES THROUGH ITS REGISTERED REPRESENTATIVES,KNOWN AS FINANCIAL ADVISORS ("FAS"). IN CONNECTION WITH ITSRECOMMENDATIONS, UBSFS DID NOT CONSIDER ON A CONSISTENTBASIS, THAT AN EQUAL INVESTMENT IN CLASS A SHARES WOULDGENERALLY HAVE BEEN MORE ADVANTAGEOUS FOR CERTAINCUSTOMERS. ACCORDINGLY, UBSFS WILL UNDERTAKE A REMEDIATIONPLAN THAT INCLUDES MORE THAN 8,650 TRANSACTIONS INVOLVINGAPPROXIMATELY 2,000 CUSTOMER HOUSEHOLDS. IN PARTICULAR, THEFIRM DID NOT CONSISTENTLY CONSIDER THAT LARGE INVESTMENTS INCLASS A SHARES OF MUTUAL FUNDS ENTITLE CUSTOMERS TOBREAKPOINT DISCOUNTS ON SALES CHARGES, USUALLY BEGINNING ATCurrent Status:Final260©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/28/2008Docket/Case Number:EAF0401300001Principal Product Type:Mutual Fund(s)Other Product Type(s):THE $50,000 INVESTMENT LEVEL, WHICH ARE GENERALLY NOT AVAILABLEFOR INVESTMENTS IN CLASS B AND CLASS C SHARES. IN FACT,CUSTOMERS MAY BE ENTITLED TO BREAKPOINTS BASED UPON A SINGLEMUTUAL FUND PURCHASE, MULTIPLE PURCHASES IN THE SAME "FAMILYOF FUNDS," AND/OR MUTUAL FUND INVESTMENTS HELD, AT THE TIME OFTHE NEW PURCHASE, BY MEMBERS OF THE CUSTOMER'S "HOUSEHOLD,"AS THAT TERM IS DEFINED IN THE PROSPECTUS OF THE FUND IN WHICHTHE SHARES ARE BEING PURCHASED. UNLIKE CLASS A SHARES, CLASS BSHARES ARE SUBJECT TO CONTINGENT DEFERRED SALES CHARGES("CDSCS") FOR A PERIOD OF TIME, GENERALLY SIX YEARS, AS WELL ASHIGHER ONGOING DISTRIBUTION AND SERVICE FEES ("RULE 12B-1 FEES")FOR AS LONG AS THE CLASS B SHARES ARE HELD. THE CDSCS AND THEHIGHER ONGOING RULE 12B1 FEES AFFECT THE RETURN ONCUSTOMERS' MUTUAL FIND INVESTMENTS. (CONTINUED IN COMMENTSSECTION)Resolution Date:02/28/2008Resolution:Other Sanctions Ordered:(UNDERTAKINGS CONTINUED) THE LETTER SHALL NOT BEUNACCEPTABLE TO FINRA.UBSFS WILL PROVIDE REMEDIATION TOCERTAIN CUSTOMERS WHO, DURING THE PERIOD JANUARY 1, 2002THROUGH THE NOTICE OF ACCEPTANCE (THE "EFFECTIVE DATE") OF THISAWC (THE "RELEVANT TIME PERIOD"), PURCHASED CLASS B AND FORDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $1,000,000.00Acceptance, Waiver & Consent(AWC)261©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCLASS C SHARES OF MUTUAL FUNDS. WITHIN 120 DAYS FROM THENOTICE OF ACCEPTANCE OF THIS AWC, UBSFS SHALL DESIGNATE ANDTRAIN STAFF (THE "RESPONSE TEAM") TO FIELD AND RESPOND TOCUSTOMER INQUIRIES IN CONNECTION WITH BOTH THE NAV AND CLASS BAND C SHARE REMEDIATION PROCESSES. WITHIN 60 DAYS FROM THENOTICE OF ACCEPTANCE OF THIS AWC, UBSFS SHALL RETAIN AT ITS OWNEXPENSE, A THIRD PARTY EXAMINER, NOT UNACCEPTABLE TO FINRA, TOEXAMINE THE FIRM'S PERFORMANCE OF ITS OBLIGATIONS UNDER THETERMS OF THIS AWC. UBSFS SHALL EXCLUSIVELY BEAR ALL COSTS,INCLUDING COMPENSATION AND EXPENSES, ASSOCIATED WITH THERETENTION AND PERFORMANCE OF THE THIRD PARTY EXAMINER. UBSFSSHALL COOPERATE FULLY WITH THE THIRD PARTY EXAMINER AND SHALLPROVIDE THE THIRD PARTY EXAMINER WITH PROMPT ACCESS TO UBSFS'FILES, BOOKS, RECORDS AND PERSONNEL AS THE THIRD PARTYEXAMINER REASONABLY DEEMS NECESSARY OR APPROPRIATE INFULFILLING ANY FUNCTION OR COMPLETING ANY TASK DESCRIBED INTHESE UNDERTAKINGS. UBSFS SHALL COMPLETE THE NAV AND B AND CSHARE REMEDIATION PROCESSES WITHIN 270 DAYS FROM THEEFFECTIVE DATE OF THIS AWC. WITHIN 330 DAYS FOLLOWING THEEFFECTIVE DATE OF THIS AWC, UBSFS SHALL FILE A REPORT WITH FINRA,AND SIMULTANEOUSLY WITH THE THIRD PARTY EXAMINER. AT THECONCLUSION OF THE EXAMINATION, BUT NOT LATER THAN 420 DAYSFOLLOWING EFFECTIVE DATE OF THIS AWC, UBSFS SHALL REQUIRE ITSTHIRD PARTY EXAMINER TO SUBMIT A WRITTEN FINAL REPORT TO UBSFS,AND TO FINRA.Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $1,000,000.00 AND MUSTCOMPLY WITH THE FOLLOWING UNDERTAKINGS: UBSFS WILL PROVIDEREMEDIATION TO CUSTOMERS WHO, DURING THE PERIOD JANUARY 1,2002 THROUGH NOTICE OF ACCEPTANCE (THE "EFFECTIVE DATE") OFTHIS AWC (THE "RELEVANT NAV TIME PERIOD"), PURCHASED SHARES OFMUTUAL FUNDS AND QUALIFIED FOR, BUT DID NOT RECEIVE, THE BENEFITOF AN NAV TRANSFER PROGRAM. UBSFS WILL PROVIDE REMEDIATION INACCORDANCE WITH A METHODOLOGY NOT UNACCEPTABLE TO FINRASTAFF (THE "NAV REMEDIATION METHODOLOGY"). THE NAV REMEDIATIONMETHODOLOGY WILL BE PROVIDED IN WRITING TO FINRA STAFF PRIORTO RETAINING THE THIRD PARTY EXAMINER. THE THIRD PARTY EXAMINERWILL UTILIZE THE NAV REMEDIATION METHODOLOGY TO ASSESS UBSFS'IMPLEMENTATION OF THE REMEDIATION PROCESS. WITHIN 60 DAYS FROMTHE DATE OF THE NOTICE OF ACCEPTANCE OF THIS AWC, AND PRIOR TOANY REMEDIATION PAYMENT, UBSFS SHALL SUBMIT TO FINRA FORREVIEW A SAMPLE LETTER NOTIFYING CUSTOMERS OF REMEDIATIONPAYMENTS CONCERNING THEIR QUALIFYING NAV PURCHASES.(UNDERTAKINGS CONTINUED IN OTHER SANCTIONS ORDERED SECTION)262©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRegulator Statement(FINDINGS CONTINUED) THIS MATTER ALSO ARISES FROM A REVIEW OFUBSFS' SALE OF SHARES OF VARIOUS CLASSES OF MUTUAL FUNDSWHERE, BETWEEN JANUARY 1,2002 THROUGH JUNE 30, 2004 (THE "NAVREVIEW PERIOD"), UBSFS FAILED TO PROVIDE CERTAIN INVESTORS THEOPPORTUNITY TO PURCHASE CLASS A SHARES OF CERTAIN MUTUALFUNDS AT NAV. IN PARTICULAR, CERTAIN MUTUAL FUNDS ALLOWEDQUALIFYING INVESTORS TO PURCHASE CLASS A SHARES AT NAV ANDNOT PAY ANY INITIAL SALES CHARGES, IF THE CUSTOMER INVESTED THEPROCEEDS FROM THE REDEMPTION OF SHARES OF ANOTHER MUTUALFUND, WITHIN SPECIFIED TIME FRAMES, AND PREVIOUSLY HAD PAIDEITHER A FRONT-END OR BACK-END SALES CHARGE. UBSFS FAILED TOEXERCISE REASONABLE DILIGENCE TO IDENTIFY THE ESSENTIAL TERMSAND CONDITIONS OF THE NAV TRANSFER PROGRAMS OF CERTAINMUTUAL FUNDS, AND FAILED TO ESTABLISH, MAINTAIN AND ENFORCESYSTEMS AND PROCEDURES REASONABLY DESIGNED TO PROVIDE ITSCUSTOMERS WITH THE BENEFIT OF NAV TRANSFER PROGRAM PRICINGWHEN THEY QUALIFIED. AS A RESULT, SOME INVESTORS WHO WEREELIGIBLE TO PURCHASE CLASS A SHARES UNDER NAV TRANSFERPROGRAMS: (1) PURCHASED CLASS A SHARES AND INCURRED FRONT-END SALES CHARGES THAT THEY SHOULD NOT HAVE PAID, AND/OR (2)PURCHASED OTHER SHARE CLASSES OF THESE MUTUAL FUNDS ANDTHEREBY BECAME SUBJECT TO BACK-END SALES CHARGES, ALSOKNOWN AS CDSCS, AS WELL AS HIGHER ONGOING RULE 12B-1 FEES,TYPICALLY ASSOCIATED WITH SHARE CLASSES OTHER THAN CLASS ASHARES. DURING THE NAV REVIEW PERIOD, UBSFS FAILED TO ESTABLISH,MAINTAIN AND ENFORCE SUPERVISORY SYSTEMS AND PROCEDURESREASONABLY DESIGNED TO IDENTIFY NAV TRANSFER PROGRAMSOFFERED BY THE MUTUAL FUNDS THAT IT SOLD TO ITS CUSTOMERS.UBSFS' SUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURESDURING THE REVIEW PERIOD WERE NOT REASONABLY ESTABLISHED,MAINTAINED AND/OR ENFORCED SO THAT THE FIRM, AT THE TIME OFEACH SALE, PROVIDED CONSIDERATION TO, ON A CONSISTENT BASIS,THE BENEFITS OF THE VARIOUS MUTUAL FUND SHARE CLASSES AS THEYAPPLIED TO INDIVIDUAL CUSTOMERS.iReporting Source:FirmAllegations:NASD RULES 2110, 2310 AND 3010: THIS MATTER ARISES IN PART FROM AREVIEW OF UBS FINANCIAL SERVICES INC. ("UBSFS" OR THE "FIRM") SALEOF CLASS B MUTUAL FUND SHARES BETWEEN JANUARY 1, 2002 AND MAY31, 2003 AND THE SALE OF CLASS C MUTUAL FUND SHARES BETWEENJANUARY 1, 2002 AND SEPTEMBER 30, 2003 (COLLECTIVELY THE "CLASS BAND CLASS C SHARE REVIEW PERIOD"). WITHIN THE CLASS B AND CLASSCurrent Status:Final263©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:02/28/2008Docket/Case Number:EAF0401300001Principal Product Type:Mutual Fund(s)Other Product Type(s):C SHARE REVIEW PERIOD UBSFS EFFECTED TRANSACTIONS WHERE ITMADE RECOMMENDATIONS TO CUSTOMERS TO PURCHASE CLASS B ANDCLASS C SHARES THROUGH ITS REGISTERED REPRESENTATIVES WHEREAN EQUAL INVESTMENT IN CLASS A SHARES WOULD GENERALLY HAVEBEEN MORE ADVANTAGEOUS FOR CERTAIN CUSTOMERS.THIS MATTER ALSO ARISES FROM A REVIEW OF UBSFS' SALE OF SHARESOF VARIOUS CLASSES OF MUTUAL FUNDS WHERE, BETWEEN JANUARY1,2002 THROUGH JUNE 30, 2004 (THE "NAV REVIEW PERIOD"), UBSFS DIDNOT PROVIDE CERTAIN INVESTORS THE OPPORTUNITY TO PURCHASECLASS A SHARES OF CERTAIN MUTUAL FUNDS AT NAV WHERE THERELEVANT MUTUAL FUND HAD AN NAV TRANSFER PROGRAM APPLICABLETO THOSE PARTICULAR TRANSACTIONS. DURING THE RELEVANT REVIEWPERIOD, UBSFS DID NOT ESTABLISH, MAINTAIN AND ENFORCESUPERVISORY SYSTEMS AND PROCEDURES REASONABLY DESIGNED TOA) IDENTIFY NAV TRANSFER PROGRAMS OFFERED BY THE MUTUALFUNDS THAT IT SOLD TO ITS CUSTOMERS AND B) PROVIDECONSIDERATION TO, ON A CONSISTENT BASIS, THE BENEFITS OF THEVARIOUS MUTUAL FUND SHARE CLASSES AS THEY APPLIED TOINDIVIDUAL CUSTOMERS.Resolution Date:02/28/2008Resolution:Other Sanctions Ordered:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS; THEREFORE THE FIRM IS CENSURED, FINED$1,000,000.00 AND MUST COMPLY WITH THE FOLLOWING UNDERTAKINGS:UBSFS WILL PROVIDE REMEDIATION, IN ACCORDANCE WITH AMETHODOLOGY THAT HAS BEEN APPROVED BY FINRA STAFF, TO CERTAINCUSTOMERS WHO, DURING THE PERIOD JANUARY 1, 2002 THROUGHSanctions Ordered:CensureMonetary/Fine $1,000,000.00Acceptance, Waiver & Consent(AWC)264©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceNOTICE OF ACCEPTANCE OF THIS ACCEPTANCE WAIVER AND CONSENT("AWC"), PURCHASED SHARES OF MUTUAL FUNDS AND QUALIFIED FOR,BUT DID NOT RECEIVE, THE BENEFIT OF AN NAV TRANSFER PROGRAM.UBSFS WILL ALSO PROVIDE REMEDIATION TO CERTAIN CUSTOMERS WHO,DURING THE PERIOD JANUARY 1, 2002 THROUGH THE NOTICE OFACCEPTANCE OF THIS AWC, PURCHASED CLASS B AND CLASS B SHARESOF MUTUAL FUNDS. UBSFS SHALL A) SUBMIT TO FINRA FOR REVIEW ASAMPLE LETTER NOTIFYING CUSTOMERS OF REMEDIATION PAYMENTSCONCERNING THEIR QUALIFYING NAV PURCHASES AND B) RETAIN ATHIRD PARTY EXAMINER, NOT UNACCEPTABLE TO FINRA, TO EXAMINETHE FIRM'S PERFORMANCE OF ITS OBLIGATIONS UNDER THE TERMS OFTHIS AWC. UBSFS SHALL DESIGNATE AND TRAIN STAFF TO FIELD ANDRESPOND TO CUSTOMER INQUIRIES IN CONNECTION WITH BOTH THE NAVAND CLASS B AND C SHARE REMEDIATION PROCESSES. AFTERCOMPLETING THE NAV AND B AND C SHARE REMEDIATION PROCESSES,UBSFS SHALL FILE A REPORT WITH FINRA, AND SIMULTANEOUSLY WITHTHE THIRD PARTY EXAMINER. AT THE CONCLUSION OF THE EXAMINATION,UBSFS SHALL REQUIRE ITS THIRD PARTY EXAMINER TO SUBMIT AWRITTEN FINAL REPORT TO UBSFS, AND TO FINRA.Sanction Details:THE FIRM MUST COMPLY WITH A NUMBER OF UNDERTAKINGS OUTLINEDIN "OTHER SANCTIONS" ABOVE.Disclosure 137 of 450iReporting Source:RegulatorAllegations:NASD RULES 2110, 2320, 3010, 3110, 3360, 3370, 6130, 6955(A) - UBSFINANCIAL SERVICES INC. IN TRANSACTIONS FOR OR WITH CUSTOMERS,FAILED TO USE REASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THATTHE RESULTANT PRICE TO ITS CUSTOMERS WAS AS FAVORABLE ASPOSSIBLE UNDER PREVAILING MARKET CONDITIONS; THE FIRMEXECUTED SHORT SALE ORDERS AND FAILED TO PROPERLY MARK THEORDER TICKETS AS SHORT FOR THE ORDERS; THE FIRM ACCEPTEDCUSTOMER SHORT SALE ORDERS IN CERTAIN SECURITIES AND, FOREACH ORDER, FAILED TO MAKE/ANNOTATE AN AFFIRMATIVEDETERMINATION THAT THE FIRM WOULD RECEIVE DELIVERY OF THESECURITY ON BEHALF OF THE CUSTOMER OR THAT THE FIRM COULDBORROW THE SECURITY ON BEHALF OF THE CUSTOMER FOR DELIVERYBY SETTLEMENT DATE; THE FIRM EXECUTED SHORT SALETRANSACTIONS AND FAILED TO REPORT EACH OF THE TRANSACTIONS TOTHE TRADE REPORTING FACILITY WITH A SHORT SALE MODIFIER. THEFIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONCurrent Status:Final265©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/26/2008Docket/Case Number:2004100003101Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND NASD RULES CONCERNING SHORTSALES AND SHORT INTEREST REPORTING. THE FIRM SUBMITTEDINCORRECT SHORT INTEREST REPORTS TO NASD NKA FINRA. THE FIRMTRANSMITTED TO OATS REPORTS THAT CONTAINED INACCURATE,INCOMPLETE OR IMPROPERLY FORMATTED DATA IN THAT THE REPORTSERRONEOUSLY REPORTED, OR FAILED TO REPORT, DISPLAY FLAGS TOOATS.Resolution Date:02/26/2008Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $110,000, ORDERED TO PAY$2,719.65, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS ANDREQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESREGARDING SHORT SALES AND SHORT INTEREST REPORTING WITHIN 30BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $110,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)266©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePROPERTY FUND FOR THE STATE IN WHICH THE RECIPIENT LASTRESIDED.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Date Initiated:02/26/2008Docket/Case Number:20041000031-01Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESAllegations:NASD RULES 2110, 2320, 3010, 3110, 3360, 3370, 6130, 6955(A) - UBSFINANCIAL SERVICES INC. IN CERTAIN TRANSACTIONS FOR OR WITHCUSTOMERS, DID NOT USE REASONABLE DILIGENCE TO ASCERTAIN THEBEST INTER-DEALER MARKET AND DID NOT BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICE TO ITS CUSTOMERS WAS ASFAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS; THEFIRM EXECUTED SHORT SALE ORDERS AND DID NOT PROPERLY MARKTHE ORDER TICKETS AS SHORT FOR THE ORDERS; THE FIRM ACCEPTEDCUSTOMER SHORT SALE ORDERS IN CERTAIN SECURITIES AND, FOREACH ORDER, DID NOT MAKE/ANNOTATE AN AFFIRMATIVEDETERMINATION THAT THE FIRM WOULD RECEIVE DELIVERY OF THESECURITY ON BEHALF OF THE CUSTOMER OR THAT THE FIRM COULDBORROW THE SECURITY ON BEHALF OF THE CUSTOMER FOR DELIVERYBY SETTLEMENT DATE; THE FIRM EXECUTED SHORT SALETRANSACTIONS AND DID NOT REPORT EACH OF THE TRANSACTIONS TOTHE TRADE REPORTING FACILITY WITH A SHORT SALE MODIFIER. THEFIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND NASD RULES CONCERNING SHORTSALES AND SHORT INTEREST REPORTING. THE FIRM SUBMITTEDINCORRECT SHORT INTEREST REPORTS TO NASD NKA FINRA. THE FIRMTRANSMITTED TO OATS REPORTS THAT CONTAINED INACCURATE,INCOMPLETE OR IMPROPERLY FORMATTED DATA IN THAT THE REPORTSERRONEOUSLY REPORTED, OR DID NOT REPORT, DISPLAY FLAGS TOOATS.Current Status:Final267©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:02/26/2008Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM WAS CENSURED, FINED $110,000, ORDERED TOPAY $2,719.65, PLUS INTEREST, IN RESTITUTION TO CERTAIN PUBLICCUSTOMERS AND REQUIRED TO REVISE ITS WRITTEN SUPERVISORYPROCEDURES REGARDING SHORT SALES AND SHORT INTERESTREPORTING WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BYTHE NATIONAL ADJUDICATORY COUNSEL OF FINRA.Sanctions Ordered:CensureMonetary/Fine $110,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)Disclosure 138 of 450iReporting Source:RegulatorInitiated By:MISSOURIDate Initiated:12/03/2007Docket/Case Number:AP-07-16URL for Regulatory Action:Principal Product Type:Equity Listed (Common & Preferred Stock)Allegations:FROM JANUARY 1999 TO MAY 2001, UBS FINANCIAL SERVICES FAILED TOSUPERVISE CHRISTOPHER WALKER AND WILLIAM KEEN. WALKER ANDKEEN, THROUGH A SERIES OF SEMINARS AND MEETINGS, CONVINCEDSEVERAL MISSOURI RESIDENTS THAT THEY COULD MATCH OR EVENEXCEED THE CUSTOMER'S CURRENT SALARY BY RETIRING ANDINVESTING THEIR RETIREMENT FUNDS WITH WALKER AND KEEN.WALKER AND KEEN IMPLEMENTED AN INVESTMENT STRATEGY FORTHESE AND OTHER RETIRED CUSTOMERS WHICH PLACED THECUSTOMERS' FUNDS IN UNSUITABLY AGGRESSIVE INVESTMENTS.LOSSES IN THE CUSTOMERS' ACCOUNTS FORCED SOME OF THESECUSTOMERS TO RETURN TO WORK. WHEN LOSSES IN THE ACCOUNTSRESULTED IN CUSTOMER DISSATISFACTION, WALKER AND KEENRECOMMENDED THAT THEIR CUSTOMERS SELL SECURITIES IN THE WRAPACCOUNTS AND PURCHASE B SHARE MUTUAL FUNDS.Current Status:Final268©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CONSENT ORDEROther Product Type(s):MUTUAL FUNDSResolution Date:12/03/2007Resolution:Other Sanctions Ordered:UBS (1) IS CENSURED; (2) SHALL PAY TO THE MISSOURI SECRETARY OFSTATE'S INVESTOR RESTITUTION FUND THE SUM OF $247,680.00; (3)SHALL DISGORGE COMMISSIONS RECEIVED FOR THE PURCHASES OF BSHARE MUTUAL FUNDS MADE BY WALKER AND/OR KEEN IN THE AMOUNTOF $135,946.00 TO BE PAID TO THE MISSOURI SECRETARY OF STATE'SINVESTOR RESTITUTION FUND; (4) SHALL PAY A CIVIL PENALTY OF $75,000;(5) SHALL PAY $230,000 TO THE INVESTOR EDUCATION AND PROTECTIONFUND; (6) SHALL PAY $8,584.000 AS COSTS OF INVESTIGATION; AND (7)SHALL PAY THEIR OWN COSTS AND ATTORNEYS FEES.Sanction Details:SEE ABOVE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:CensureMonetary/Fine $697,210.00Disgorgement/RestitutionConsentiReporting Source:FirmAllegations:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, UBS FINANCIALSERVICES CONSENTED TO FINDINGS THAT FROM JANUARY 1999 TO MAY2001, THE FIRM FAILED TO REASONABLY SUPERVISE FORMER FINANCIALADVISORS CHRISTOPHER WALKER AND WILLIAM KEEN. WALKER ANDKEEN, THROUGH A SERIES OF SEMINARS AND MEETINGS, CONVINCEDSEVERAL INDIVIDUALS TO OPEN ACCOUNTS WITH THEM. IN SOME CASES,WALKER AND KEEN UNSUITABLY INVESTED THE CUSTOMERS' MONEY ANDIN SOME CASES INAPPROPRIATELY RECOMMENDED THAT CERTAINCUSTOMERS PURCHASE B SHARE MUTUAL FUNDS. MISSOURI FOUNDTHAT THE FIRM DID NOT ENSURE THAT WALKER AND KEEN WERECurrent Status:Final269©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF MISSOURIPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CONSENT ORDERDate Initiated:12/03/2007Docket/Case Number:AP-07-16Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):MUTUAL FUNDSSUBMITTING THEIR SEMINAR MATERIALS FOR SUPERVISORY APPROVALNOR WAS IT FOLLOWING UP ON THE NEW ACCOUNT DOCUMENTATIONFILLED OUT BY WALKER AND KEEN WHICH LISTED THEIR CUSTOMERS'INVESTMENT OBJECTIVE AS "AGGRESSIVE/SPECULATIVE."Resolution Date:12/03/2007Resolution:Other Sanctions Ordered:UBS (1) IS CENSURED; (2) SHALL PAY TO THE MISSOURI SECRETARY OFSTATE'S INVESTOR RESTITUTION FUND THE SUM OF $247,680.00; (3)SHALL DISGORGE COMMISSIONS RECEIVED FOR THE PURCHASES OF BSHARE MUTUAL FUNDS MADE BY WALKER AND/OR KEEN IN THE AMOUNTOF $135,946.00 TO BE PAID TO THE MISSOURI SECRETARY OF STATE'SINVESTOR RESTITUTION FUND; (4) SHALL PAY A CIVIL PENALTY OF $75,000;(5) SHALL PAY $230,000 TO THE INVESTOR EDUCATION AND PROTECTIONFUND; (6) SHALL PAY $8,584.000 AS COSTS OF INVESTIGATION; AND (7)SHALL PAY THEIR OWN COSTS AND ATTORNEYS FEES.Sanction Details:UBS (1) IS CENSURED; (2) SHALL PAY TO THE MISSOURI SECRETARY OFSTATE'S INVESTOR RESTITUTION FUND THE SUM OF $247,680.00; (3)SHALL DISGORGE COMMISSIONS RECEIVED FOR THE PURCHASES OF BSHARE MUTUAL FUNDS MADE BY WALKER AND/OR KEEN IN THE AMOUNTOF $135,946.00 TO BE PAID TO THE MISSOURI SECRETARY OF STATE'SINVESTOR RESTITUTION FUND; (4) SHALL PAY A CIVIL PENALTY OF $75,000;(5) SHALL PAY $230,000 TO THE INVESTOR EDUCATION AND PROTECTIONFUND; (6) SHALL PAY $8,584.000 AS COSTS OF INVESTIGATION; AND (7)SHALL PAY THEIR OWN COSTS AND ATTORNEYS FEES.Firm StatementWITHOUT ADMITTING OR DENYING THE ALLEGATIONS, UBS FINANCIALSERVICES CONSENTED TO FINDINGS THAT FROM JANUARY 1999 TO MAYSanctions Ordered:CensureMonetary/Fine $697,210.00Disgorgement/RestitutionConsent270©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance2001, THE FIRM FAILED TO REASONABLY SUPERVISE FORMER FINANCIALADVISORS CHRISTOPHER WALKER AND WILLIAM KEEN.UBS IS CENSURED AND ASSESSED FINES AND DISGORGEMENTTOTALLING $697210.00.Disclosure 139 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/24/2007Docket/Case Number:E102004073301Principal Product Type:No ProductOther Product Type(s):Allegations:NASD RULES 2110, 3010, NASD (N/K/A FINRA) BY-LAWS, ART. V, SECT. 2(C),3(A) AND 3(B): FROM JANUARY 1, 2002 THROUGH DECEMBER 31, 2004, UBSFINANCIAL SERVICES INC. (THE "FIRM") FAILED TO TIMELY FILENUMEROUS AMENDMENTS TO FORMS U4 (QUESTION 14 DISCLOSUREQUESTIONS) AND U5 (QUESTION 7 DISCLOSURE QUESTIONS), ASREQUIRED BY NASD (N/K/A FINRA) BY-LAWS, ART. V, SECT. 2(C) AND 3(B).THE LATE FILINGS INVOLVED REPORTABLE CUSTOMER COMPLAINTS,REGULATORY ACTIONS, AND CRIMINAL DISCLOSURES. DURING THIS TIME,THE FIRM'S SUPERVISORY SYSTEM AND PROCEDURES WERE NOTREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE NASD (N/K/AFINRA) BY-LAWS, ART. V, SECT. 2(C) AND 3(B). DURING THAT SAME PERIOD,THE FIRM ALSO FAILED TO FILE AMENDMENTS TO FORMS U4 (QUESTION14I(3)) AND U5 (QUESTION 7E(3)) TO DISCLOSE CERTAIN WRITTENCUSTOMER COMPLAINTS. FINALLY, FROM JANUARY 1, 2002 THROUGHJUNE 18, 2003, THE FIRM FAILED TO FILE CERTAIN FORMS U5 TIMELY ANDWITH ACCURATE TERMINATION DATES FOR RETIRED, REGISTEREDPERSONS WHO PARTICIPATED IN THE FIRM'S RETIRING BROKERPROGRAM, AS REQUIRED BY NASD (N/K/A FINRA) BY-LAWS ART. V, SECT.3(A).Current Status:FinalResolution Date:10/24/2007Resolution:Acceptance, Waiver & Consent(AWC)271©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $370,000 AND MUSTPROMPTLY CONDUCT AN AUDIT, APPLYING REASONABLE AUDITINGSTANDARDS, TO ASSESS THE EFFECTIVENESS OF ITS SYSTEM ANDPROCEDURES DURING THE PERIOD OF JANUARY 1, 2007 THROUGH JUNE30, 2007, FOR ACHIEVING COMPLIANCE WITH ITS REPORTINGOBLIGATIONS UNDER NASD (N/K/A FINRA) BY-LAWS, ART. V, SECT. 2(C) AND3(B) WITH RESPECT TO THE TIMELY FILING OF REQUIRED FORMS U4 ANDU5 AND AMENDMENTS THERETO, RELATING TO QUESTION 14 OF FORMSU4 AND QUESTION 7 ON FORMS U5. THE AUDIT SHALL NOT BECONDUCTED BY PERSONNEL DIRECTLY RESPONSIBLE FOR THE FIRM'SCOMPLIANCE WITH NASD (N/K/A FINRA) BY-LAWS, ART. V, SECT. 2(C) AND3(B) OR THEIR IMMEDIATE SUPERVISORS. WITHIN 90 DAYS, THE FIRMSHALL PREPARE A WRITTEN AUDIT REPORT SUMMARIZING THE FINDINGSAND RECOMMENDATIONS OF THE AUDIT. THE AUDIT REPORT MUSTDESCRIBE THE METHOD AND SCOPE OF THE AUDIT, LIST LATE FILINGS, IFANY, AS IDENTIFIED BY THE AUDIT, AND MAKE ANY APPROPRIATERECOMMENDATIONS TO IMPROVE THE FIRM'S SYSTEM ANDPROCEDURES WITH RESPECT TO THE TIMELY FILING OF REQUIREDFORMS U4 AND U5 AND AMENDMENTS THERETO, RELATING TO QUESTION14 OF FORMS U4 AND QUESTION 7 ON FORMS U5. NO LATER THAN 120DAYS, AN OFFICER OF THE FIRM MUST CERTIFY IN WRITING TO FINRATHAT: THE FIRM HAS CONDUCTED THE REQUIRED AUDIT AND HASPREPARED THE AUDIT REPORT; THE OFFICER HAS REVIEWED THE AUDITREPORT; THE FIRM HAS IMPLEMENTED ANY RECOMMENDATIONS SETFORTH IN THE AUDIT REPORT, OR HAS ENGAGED IN A PROCESS THATWILL RESULT IN THE IMPLEMENTATION OF ANY SUCH RECOMMENDATIONSWITHIN A REASONABLE TIME PERIOD TO BE SPECIFIED IN SUCH WRITTENCERTIFICATION AND THE FIRM HAS IN PLACE PROCESSES TO ESTABLISHSYSTEMS AND PROCEDURES REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE REPORTING REQUIREMENTS SET FORTH IN NASD(N/K/A FINRA) BY-LAWS, ART. V, SECT. 2(C) AND 3(B).Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $370,000.00i272©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:10/24/2007Docket/Case Number:E102004073301Principal Product Type:No ProductOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A FINDING THAT, FROM JANUARY 1, 2002 TO DECEMBER 31, 2004, IT DIDNOT FILE CERTAIN AMENDMENTS TO FORMS U4 AND U5 ON A TIMELYBASIS AND DID NOT HAVE ADEQUATE SUPERVISORY SYSTEMS IN PLACETO ACHIEVE COMPLIANCE WITH THE RULES REQUIRING THAT IT DO SO.THE FIRM ALSO CONSENTED TO A FINDING THAT, FROM JANUARY 1, 2002TO DECEMBER 31, 2004, IT DID NOT FILE CERTAIN AMENDMENTS TOFORMS U4 AND U5 AND THAT, FROM JANUARY 1, 2002 TO JUNE 18, 2003, ITDID NOT FILE CERTAIN FORMS U5 ON A TIMELY BASIS AND WITHACCURATE TERMINATION DATES.Current Status:FinalResolution Date:10/24/2007Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO RECEIVING A CENSURE, TO PAYING A $370,000 FINE, AND TOCONDUCTING AN AUDIT TO ASSESS THE EFFECTIVENESS OF ITSSYSTEMS AND PROCEDURES FOR ACHIEVING COMPLIANCE WITH THEFIRM'S REPORTING OBLIGATION WITH RESPECT TO THE TIMELY FILING OFCERTAIN REQUIRED AMENDMENTS TO FORMS U4 AND U5.Firm StatementWITHOUT ADMITTING OR DENYING THE FINDINGS,THE FIRM CONSENTEDTO A FINDING THAT, FROM JANUARY 1, 2002 TO DECEMBER 31, 2004, IT DIDNOT FILE CERTAIN AMENDMENTS TO FORMS U4 AND U5 ON A TIMELYBASIS AND THAT, FROM JANUARY 1, 2002 TO JUNE 18, 2003, IT DID NOTFILE CERTAIN FORMS U5 ON A TIMELY BASIS AND WITH ACCURATESanctions Ordered:CensureMonetary/Fine $370,000.00Acceptance, Waiver & Consent(AWC)273©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTERMINATION DATES. WITHOUT ADMITTING OR DENYING THE FINDINGS,THE FIRM CONSENTED TO RECEIVING A CENSURE, TO PAYING A $370,000FINE, AND TO CONDUCTING AN AUDIT TO ASSESS THE EFFECTIVENESS OFITS SYSTEMS AND PROCEDURES FOR ACHIEVING COMPLIANCE WITH THEFIRM'S REPORTING OBLIGATION.Disclosure 140 of 450iReporting Source:RegulatorInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/07/2007Docket/Case Number:2005002247001Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPES OF SECURITIESAllegations:NASD RULES 2110, 2320 - UBS FINANCIAL SERVICES, INC. FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICES TO ITS CUSTOMERS WERE AS FAVORABLE ASPOSSIBLE UNDER PREVAILING MARKET CONDITIONS.Current Status:FinalResolution Date:09/07/2007Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $30,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)274©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $30,000 AND REQUIRED TOPAY $11,630, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS. NOLATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC BY THE NAC, AREGISTERED PRINCIPAL OF THE FIRM SHALL SUBMIT TO FINRA ASCHEDULE SHOWING PAYMENTS AND SATISFACTORY PROOF OFPAYMENTS OR EFFORTS UNDERTAKEN TO EFFECT RESTITUTION. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED.iReporting Source:FirmInitiated By:FINRAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:09/07/2007Docket/Case Number:20050022470-01Principal Product Type:No ProductOther Product Type(s):Allegations:NASD CONDUCT RULES 2110 AND 2320 - DURING THE PERIOD JANUARY 1,2005 - MARCH 31, 2005 IN 5 CUSTOMER TRANSACTIONS, UBS FINANCIALSERVICES INC. DID NOT USE REASONABLE DILIGENCE TO ASCERTAIN THEBEST INTER-DEALER MARKET AND DID NOT BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICES TO THE 5 CUSTOMERS WEREAS FAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS.Current Status:FinalResolution Date:09/07/2007Resolution:Other Sanctions Ordered:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE FOLLOWING SANCTIONS: A CENSURE, A $30,000 FINE ANDRESTITUTION TO THE 5 CUSTOMERS IN THE TOTAL AMOUNT OF $11,630,PLUS INTEREST.Sanctions Ordered:CensureMonetary/Fine $30,000.00Acceptance, Waiver & Consent(AWC)275©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:RESTITUTION IS TO BE PAID NO LATER THAN 120 DAYS AFTERACCEPTANCE OF THE AWC BY FINRA.Firm StatementDURING THE PERIOD JANUARY 1, 2005 - MARCH 31, 2005 IN 5 CUSTOMERTRANSACTIONS, UBS FINANCIAL SERVICES INC. DID NOT USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET.WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE FOLLOWING SANCTIONS: A CENSURE, A $30,000 FINE ANDRESTITUTION TO THE 5 CUSTOMERS IN THE TOTAL AMOUNT OF $11,630,PLUS INTEREST.Disclosure 141 of 450iReporting Source:RegulatorInitiated By:NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENTAllegations:**9/7/07**STIPULATION AND CONSENT TO PENALTY FILED BY NYSEREGULATION'S DIVISION OF ENFORCEMENT AND PENDINGCONSENTED TO FINDINGS:WITHOUT ADMITTING OR DENYING GUILT, UBSFINANCIAL SERVICES, INC. CONSENTS TO FINDINGS THAT IT VIOLATED:1.NYSE RULE 401(A) BY FAILING TO ADHERE TO THE PRINCIPLES OF GOODBUSINESS PRACTICE IN THAT THE FIRM FAILED TO ENSURE THE DELIVERYOF PROSPECTUSES IN CONNECTION WITH CERTAIN SALES OFREGISTERED SECURITIES IN VIOLATION OF SECTION 5(B)(2) OF THESECURITIES ACT OF 1933; AND2. NYSE RULE 342 BY FAILING TO PROVIDE FOR, ESTABLISH AND MAINTAINAPPROPRIATE PROCEDURES OF SUPERVISION AND CONTROL INCLUDINGA SYSTEM OF FOLLOW-UP AND REVIEW, WITH RESPECT TO ITSOPERATIONAL AND TECHNOLOGICAL ACTIVITIES RELATING TO THEDELIVERY OF PROSPECTUSES.STIPULATED SANCTION:THE IMPOSITION BY THE NYSE OF:1. CENSURE;2. A FINE IN THE AMOUNTOF $500,000; AND 3. AN UNDERTAKING TO PROVIDE ENFORCEMENT WITH AWRITTEN CERTIFICATION THAT ITS CURRENT POLICIES ANDPROCEDURES, INCLUDING WRITTEN SUPERVISORY AND OPERATIONALPOLICIES AND PROCEDURES, REGARDING THE DELIVERY OFPROSPECTUSES AND PRODUCT DESCRIPTIONS ARE REASONABLYDESIGNED TO ENSURE COMPLIANCE WITH THE FEDERAL SECURITIESLAWS AND NYSE RULES APPLICABLE TO THE DELIVERY OFPROSPECTUSES AND PRODUCT DESCRIPTIONS. THE FIRM WILL PROVIDEENFORCEMENT WITH THIS WRITTEN CERTIFICATION WITHIN 90 DAYSFROM THE DATE THAT A HEARING PANEL DECISION IN THIS MATTERBECOMES FINAL.Current Status:Final276©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/29/2007Docket/Case Number:HBD# 07-126Principal Product Type:OtherOther Product Type(s):Resolution Date:10/04/2007Resolution:Other Sanctions Ordered:CONSENT TO CENSURE, $500,000 FINE AND UNDERTAKING.Sanction Details:**9/7/07** DECISION 07-126 ISSUED BY NYSE HEARING BOARDDECISION: UBS FINANCIAL SERVICES, INC. CONSENTED TO FINDINGSTHAT IT VIOLATED: 1. NYSE RULE 401(A) BY FAILING TO ADHERE TO THEPRINCIPLES OF GOOD BUSINESS PRACTICE IN THAT THE FIRM FAILED TOENSURE THE DELIVERY OF PROSPECTUSES IN CONNECTION WITHCERTAIN SALES OF REGISTERED SECURITIES IN VIOLATION OF SECTION5(B)(2) OF THE SECURITIES ACT OF 1933; AND 2. NYSE RULE 342 BYFAILING TO PROVIDE FOR, ESTABLISH AND MAINTAIN APPROPRIATEPROCEDURES OF SUPERVISION AND CONTROL INCLUDING A SYSTEM OFFOLLOW-UP AND REVIEW, WITH RESPECT TO ITS OPERATIONAL ANDTECHNOLOGICAL ACTIVITIES RELATING TO THE DELIVERY OFPROSPECTUSES.SANCTION: CENSURE, A $500,000 FINE AND AN UNDERTAKING.Regulator Statement**10/4/07** THE DECISION BECAME FINAL AS OF THE CLOSE OF BUSINESSON OCTOBER 2, 2007 AND THE FINE BECAME PAYABLE ON THAT SAMEDATE. CONTACT: PEGGY GERMINO 212-656-8450.Sanctions Ordered:CensureMonetary/Fine $500,000.00DecisioniReporting Source:FirmAllegations:THE FIRM, WITHOUT ADMITTING OR DENYING GUILT, CONSENTED TOFINDINGS THAT IT A) VIOLATED NYSE RULE 401(A) BY NOT ENSURINGDELIVERY OF PROSPECTUSES IN CONNECTION WITH SALES OF CERTAINREGISTERED SECURITIES IN VIOLATION OF SECTION 5(B)(2) OFSECURITIES ACT OF 1933 AND B) VIOLATED NYSE RULE 342 BY NOTCurrent Status:Final277©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:09/07/2007Docket/Case Number:HBD# 07-126Principal Product Type:OtherOther Product Type(s):PROVIDING FOR, ESTABLISHING OR MAINTAINING APPROPRIATEPROCEDURES OF SUPERVISION AND CONTROL, INCLUDING SYSTEM OFFOLLOW UP AND REVIEW, WITH RESPECT TO OPERATIONAL ANDTECHNOLOGICAL ACTIVITIES REGARDING THE DELIVERY OFPROSPECTUSES.Resolution Date:10/02/2007Resolution:Other Sanctions Ordered:CENSURE AND FINE OF $500,000 AND AN UNDERTAKING TO PROVIDEENFORCEMENT, WITHIN 90 DAYS, WITH A WRITTEN CERTIFICATION THATTHE FIRM'S CURRENT POLICIES AND PROCEDURES, INCLUDING WRITTENSUPERVISORY AND OPERATIONAL POLICIES AND PROCEDURES,REGARDING THE DELIVERY OF PROSPECTUSES AND PRODUCTDESCRIPTIONS ARE REASONABLY DESIGNED TO ENSURE COMPLIANCEWITH THE FEDERAL SECURITIES LAWS AND NYSE RULES APPLICABLE TOTHE DELIVERY OF PROSPECTUSES AND PRODUCT DESCRIPTIONS.Sanction Details:CENSURE AND FINE OF $500,000.Firm StatementTHE FIRM, WITHOUT ADMITTING OR DENYING GUILT, CONSENTED TOFINDINGS THAT IT A) VIOLATED NYSE RULE 401(A) BY NOT ENSURINGDELIVERY OF PROSPECTUSES IN CONNECTION WITH SALES OF CERTAINREGISTERED SECURITIES AND B) VIOLATED NYSE RULE 342 BY NOTPROVIDING FOR, ESTABLISHING OR MAINTAINING APPROPRIATEPROCEDURES OF SUPERVISION AND CONTROL.THE FIRM CONSENTED TO A CENSURE AND FINE OF $500,000 AND ANUNDERTAKING TO PROVIDE ENFORCEMENT, WITHIN 90 DAYS, WITH AWRITTEN CERTIFICATION THAT THE FIRM'S CURRENT POLICIES ANDPROCEDURES.Sanctions Ordered:CensureMonetary/Fine $500,000.00Stipulation and Consent278©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 142 of 450iReporting Source:RegulatorInitiated By:CONNECTICUTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:04/16/2007Docket/Case Number:CO-2007-7330-SURL for Regulatory Action:Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:THE APRIL 16, 2007 CONSENT ORDER ALLEGED THAT FROM 2000THROUGH 2002, THE FIRM FAILED TO IMPLEMENT ADEQUATESUPERVISORY CONTROLS OVER MARKET TIMING ACTIVITY INVOLVINGMUTUAL FUNDS, VARIABLE ANNUITIES OR ANY OTHER PRODUCTS HAVINGMUTUAL FUNDS AS THE UNDERLYING INVESTMENT VEHICLE. THECONSENT ORDER ALSO ALLEGED THAT THE FIRM FAILED TO MAINTAINCERTAIN BOOKS AND RECORDS IN VIOLATION OF SECTION 36B-31-14A OFTHE REGULATIONS UNDER THE CONNECTICUT UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:04/16/2007Resolution:Other Sanctions Ordered:THE CONSENT ORDER ACKNOWLEDGED THAT THE FIRM HAD TAKENRECENT STEPS TO IMPROVE ITS OVERSIGHT OF MARKETING TIMINGACTIVITY, AND HAD COOPERATED WITH THE AGENCY'S INVESTIGATIVEEFFORTS. THE CONSENT ORDER FINED THE FIRM $1,500,000. INADDITION, THE CONSENT ORDER DIRECTED THE FIRM TO PAY 1)Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $1,500,000.00Consent279©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$1,250,000 TO THE STATE OF CONNECTICUT DEPARTMENT OF EDUCATIONTO PROMOTE FINANCIAL LITERACY INITIATIVES IN CONNECTICUT PUBLICSCHOOLS AND STATE-FUNDED ADULT EDUCATION PROGRAMS; 2) $1MILLION OVER THREE YEARS TO THE STATE OF CONNECTICUTDEPARTMENT OF HIGHER EDUCATION TO PROMOTE FINANCIAL LITERACYINITIATIVES IN CONNECTICUT COLLEGES AND UNIVERSITIES; 3) $1.5MILLION OVER THREE YEARS TO THE STATE OF CONNECTICUTDEPARTMENT OF SOCIAL SERVICES TO PROMOTE FINANCIAL LITERACYINITIATIVES BENEFITING LOW-INCOME AND ELDERLY PERSONS INCONNECTICUT; AND 4) $250,000 OVER TWO YEARS TO THE NATIONALWHITE COLLAR CRIME CENTER TO TRAIN CONNECTICUT REGULATORYAND LAW ENFORCEMENT PERSONNEL IN INVESTIGATING, PREVENTINGAND PROSECUTING FINANCIAL FRAUD PERPETRATED ON CONNECTICUTSENIOR CITIZENS.Sanction Details:SEE RESPONSE TO ITEM 13.B.iReporting Source:FirmInitiated By:STATE OF CONNECTICUT DEPARTMENT OF BANKINGPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:04/16/2007Docket/Case Number:CO-2007-7330-SPrincipal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ON APRIL 16, 2007, THE FIRM, WITHOUT ADMITTING OR DENYING THEFINDINGS, SIGNED A CONSENT ORDER WITH THE STATE OF CONNECTICUTDEPARTMENT OF BANKING RELATING TO THE MARKET TIMING OF MUTUALFUNDS AND VARIABLE INSURANCE PRODUCTS. IT WAS ALLEGED THATTHE FIRM FAILED TO KEEP CERTAIN BOOKS AND RECORDS PERTAININGTO SUBACCOUNT TRANSFERS WITHIN VARIABLE INSURANCE PRODUCTSAND FAILED TO REASONABLY SUPERVISE AGENTS REGARDINGIMPERMISSIBLE MARKET TIMING.Current Status:FinalResolution Date:04/16/2007Resolution:Consent280©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:IN THE CONSENT ORDER, THE FIRM WAS FINED $1.5 MILLION. THE FIRMWILL ALSO MAKE THE FOLLOWING PAYMENTS: $1,250,000 TO THE STATEOF CONNECTICUT DEPARTMENT OF EDUCATION IN ORDER TO PROMOTEFINANCIAL LITERACY INITIATIVES IN CONNECTICUT PUBLIC SCHOOLS ANDADULT EDUCATION PROGRAMS; $1,000,000 TO THE STATE OFCONNECTICUT DEPARTMENT OF HIGHER EDUCATION IN ORDER TOPROMOTE FINANCIAL LITERACY INITIATIVES IN COLLEGES ANDUNIVERSITIES; $1,500,000 TO THE STATE OF CONNECTICUT DEPARTMENTOF SOCIAL SERVICES IN ORDER TO PROMOTE FINANCIAL LITERACYINITIATIVES FOR THE BENEFIT OF LOW INCOME AND ELDERLY PERSONSIN CONNECTICUT AND $250,000 TO THE NATIONAL WHITE COLLAR CRIMECENTER FOR THE PURPOSE OF TRAINING CONNECTICUT REGULATORYAND LAW ENFORCEMENT PERSONNEL.Sanction Details:SEE "OTHER SANCTIONS ORDERED" ABOVE.Firm StatementON APRIL 16, 2007 UBS SIGNED A CONSENT ORDER WITH THE STATE OFCONNECTICUT DEPARTMENT OF BANKING RELATING TO THE MARKETTIMING OF MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. IT WASALLEGED THAT THE FIRM FAILED TO KEEP CERTAIN BOOKS AND RECORDSPERTAINING TO SUBACCOUNT TRANSFERS WITHIN VARIABLE INSURANCEPRODUCTS AND FAILED TO REASONABLY SUPERVISE AGENTSREGARDING IMPERMISSIBLE MARKET TIMING. THE FIRM PAID FINES IN ATOTAL AMOUNT OF $1,500,000.Sanctions Ordered:Monetary/Fine $1,500,000.00Disclosure 143 of 450iReporting Source:FirmInitiated By:VIRGINIA STATE CORP. COMMISSIONDate Initiated:02/01/2007Allegations:WITHOUT ADMITTING OR DENYING ALLEGATIONS MADE BY THE STATE OFVIRGINIA, THE FIRM SETTLED A MATTER WITH THE STATE FOR $100,000($83,000 PENALTY/$17,000 COST OF INVESTIGATION) IN CONNECTION WITHTHE ACTIVITIES OF A FORMER FINANCIAL ADVISOR DURING THE PERIODOF 2000 AND 2001. THE ALLEGATIONS INCLUDE FAILURE TO PROPERLYMAINTAIN CERTAIN BOOKS AND RECORDS IN THE BRANCH OFFICE ANDINADEQUATE SUPERVISION OF THE FINANCIAL ADVISOR. IN REACHINGTHIS SETTLEMENT, THE STATE TOOK INTO CONSIDERATION THE FIRM'SCOOPERATION DURING THE INVESTIGATION AND SIGNIFICANTIMPROVEMENTS THE FIRM HAS MADE TO ITS SUPERVISORY PROCESSESAND COMPUTER SYSTEMS SINCE THE PERIOD IN QUESTION.Current Status:Final281©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Docket/Case Number:SEC-2006-00040Principal Product Type:No ProductOther Product Type(s):Resolution Date:02/13/2007Resolution:Other Sanctions Ordered:Sanction Details:FINE OF $100,000 ($83,000 PENALTY/$17,000 COST OF INVESTIGATION)Sanctions Ordered:Monetary/Fine $100,000.00SettledDisclosure 144 of 450iReporting Source:RegulatorInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/03/2006Docket/Case Number:2005000062601Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESAllegations:NASD RULES 2110, 2320 - UBS FINANCIAL SERVICES, INC. INTRANSACTIONS FOR OR WITH A CUSTOMER, FAILED TO USE REASONABLEDILIGENCE TO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILEDTO BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO ITSCUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDER PREVAILINGMARKET CONDITIONS.Current Status:FinalResolution:Acceptance, Waiver & Consent(AWC)282©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:11/03/2006Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $10,000 AND REQUIRED TOPAY $938.99, PLUS INTEREST, IN RESTITUTION. SATISFACTORY PROOF OFPAYMENT OF THE RESTITUTION OR OF REASONABLE AND DOCUMENTEDEFFORTS UNDERTAKEN TO EFFECT RESTITUTION SHALL BE PROVIDED TONASD NO LATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC BYTHE NAC. ANY UNDISTRIBUTED RESTITUTION AND INTEREST SHALL BEFORWARDED TO THE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY ORABANDONED PROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMERLAST RESIDED.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $10,000.00Disgorgement/RestitutioniReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:CensureDate Initiated:11/03/2006Docket/Case Number:20050000626-01Principal Product Type:OtherOther Product Type(s):PREFERRED SECURITIESAllegations:NASD ALLEGED VIOLATIONS OF CONDUCT RULES 2110 AND 2320 IN THAT,IN 27 TRANSACTIONS, UBS FINANCIAL SERVICES INC. ("UBS-FS") FAILEDTO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILED TO BUY ORSELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO THECUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDER PREVAILINGMARKET CONDITIONS.Current Status:Final283©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:FINE & RESTITUTIONResolution Date:11/03/2006Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $10,000 AND REQUIRED TOPAY $938.99, PLUS INTEREST, IN RESTITUTION. SATISFACTORY PROOF OFPAYMENT OF THE RESTITUTION OR OF REASONABLE AND DOCUMENTEDEFFORTS UNDERTAKEN TO EFFECT RESTITUTION SHALL BE PROVIDED TONASD NO LATER THAN 120 DAYS AFTER ACCEPTANCE OF THIS AWC BYTHE NAC. ANY UNDISTRIBUTED RESTITUTION AND INTEREST SHALL BEFORWARDED TO THE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY ORABANDONED PROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMERLAST RESIDED.Firm StatementNASD ALLEGED VIOLATIONS OF CONDUCT RULES 2110 AND 2320 IN THAT,IN 27 TRANSACTIONS, UBS FINANCIAL SERVICES INC. ("UBS-FS") FAILEDTO ASCERTAIN THE BEST INTER-DEALER MARKET SO THAT THERESULTANT PRICE TO THE CUSTOMER WAS AS FAVORABLE ASPOSSIBLE.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, UBS-FSCONSENTED TO A CENSURE AND $10,000 FINE.Sanctions Ordered:CensureMonetary/Fine $10,000.00Disgorgement/RestitutionConsentDisclosure 145 of 450iReporting Source:RegulatorAllegations:**5/30/06** STIPULATION AND CONSENT TO PENALTY FILED BY NYSEDIVISION OF ENFORCEMENT AND PENDING CONSENTED TO FINDINGS: 1.VIOLATED NYSE RULE 342 BY FAILING TO EXERCISE REASONABLESUPERVISION AND CONTROL, INCLUDING A SEPARATE SYSTEM OFFOLLOW-UP AND REVIEW, WITH RESPECT TO: A. REVIEW OFCOMMUNICATIONS; B. TRADE CORRECTIONS; C. REVIEW OF TRADES INCUSTOMER ACCOUNTS; D. RECORDS OF CUSTOMER ADDRESSES; E.RESTRICTION OF ACCOUNTS IN WHICH CUSTOMERS HAVE RENEGED ONTRADES. 2. VIOLATED NYSE RULE 410 BY FAILING TO OBTAINAPPROPRIATE SUPERVISORY APPROVAL FOR ACCOUNT DESIGNATIONCurrent Status:Final284©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/30/2006Docket/Case Number:HBD# 06-116Principal Product Type:OtherOther Product Type(s):CHANGES PRIOR TO EFFECTING SUCH CHANGES.3. VIOLATED SECTION 220 OF REGULATION T, PROMULGATED BY THEBOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM BY FAILINGTO FREEZE OR RESTRICT CUSTOMER ACCOUNTS. 4. VIOLATED NYSERULES 410(A) AND 440, AND EXCHANGE ACT RULE 17A-3(A)(6) BY FAILINGTO MAINTAIN MEMORANDA OF ORDERS THAT CONTAINED ALL OF THEREQUIRED ELEMENTS. 5. VIOLATED NYSE RULE 405 BY FAILING TO LEARNTHE ESSENTIAL FACTS RELATIVE TO SEVERAL CUSTOMERS, AND FAILEDTO PROVIDE DILIGENT SUPERVISION OF ALL ACCOUNTS HANDLED BY ITSREGISTERED REPRESENTATIVES.STIPULATED SANCTION: THE IMPOSITION BY THE EXCHANGE OF ACENSURE, AND A $175,000 FINE.Resolution Date:08/02/2006Resolution:Other Sanctions Ordered:Sanction Details:**7/10/06** DECISION 06-116 ISSUED BY NYSE HEARING PANELDECISION: 1. VIOLATED NYSE RULE 342 BY FAILING TO EXERCISEREASONABLE SUPERVISION AND CONTROL, INCLUDING A SEPARATESYSTEM OF FOLLOW-UP AND REVIEW, WITH RESPECT TO REVIEW OFCOMMUNICATIONS; TRADE CORRECTIONS; REVIEW OF TRADES INCUSTOMER ACCOUNTS; RECORDS OF CUSTOMER ADDRESSES;RESTRICTION OF ACCOUNTS IN WHICH CUSTOMERS HAVE RENEGED ONTRADES. 2. VIOLATED NYSE RULE 410 BY FAILING TO OBTAINAPPROPRIATE SUPERVISORY APPROVAL FOR ACCOUNT DESIGNATIONCHANGES PRIOR TO EFFECTING SUCH CHANGES. 3. VIOLATED SECTION220 OF REGULATION T, PROMULGATED BY THE BOARD OF GOVERNORSOF THE FEDERAL RESERVE SYSTEM BY FAILING TO FREEZE OR RESTRICTSanctions Ordered:CensureMonetary/Fine $175,000.00Decision285©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCUSTOMER ACCOUNTS. 4. VIOLATED NYSE RULES 410(A) AND 440, ANDEXCHANGE ACT RULE 17A-3(A)(6) BY FAILING TO MAINTAIN MEMORANDAOF ORDERS THAT CONTAINED ALL OF THE REQUIRED ELEMENTS. 5.VIOLATED NYSE RULE 405 BY FAILING TO LEARN THE ESSENTIAL FACTSRELATIVE TO SEVERAL CUSTOMERS, AND FAILED TO PROVIDE DILIGENTSUPERVISION OF ALL ACCOUNTS HANDLED BY ITS REGISTEREDREPRESENTATIVES.-CONSENT TO CENSURE, AND A FINE OF $175,000.Regulator Statement**8/2/06** THE DECISION IS NOW FINAL AND IS EFFECTIVE IMMEDIATELY.CONTACT: PEGGY GERMINO 212-656-8450.iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE, INC. HEARING BOARDDate Initiated:08/04/2006Docket/Case Number:HEARING PANEL DECISION #06-116Allegations:ON MAY 26, 2006, UBS FINANCIAL SERVICES INC., (FORMERLY KNOWN ASUBS PAINEWEBBER INC.), WITHOUT ADMITTING OR DENYING ANYALLEGATIONS OR FINDINGS, EXECUTED A STIPULATION OF FACTS ANDCONSENT TO PENALTY WITH THE NEW YORK STOCK EXCHANGE ("NYSE")RELATING TO DISCRETE ISSUES IDENTIFIED IN VARIOUS BRANCHOFFICES DURING THE NYSE MEMBER FRIM REGULATION'S ANNUAL SALESPRACTICE EXAMINATIONS IN 2003 AND 2004. THE STIPULATION RESULTEDIN NYSE HEARING BOARD DECISION 06-116, DATED7/5/2006 WHICH WASFINALIZED ON AUGUST 4, 2006, AND WHICH CENSURES THE FIRM ANDIMPOSES A FINE OF $175,000.THE DECISION SETS FORTH THAT, DURING 2003 AND 2004 IN CERTAINBRANCHES, THE FIRM DID NOT: 1)EXCERCISE REASONABLE SUPERVISIONAND CONTROL, INCLUDING A SEPERATE SYSTEM OF FOLLOW-UP ANDREVIEW, WITH RESPECT TO THE REVIEW OF CERTAIN COMMUNICATIONS,TRADE CORRECTIONS, REVIEW OF TRADES IN CUSTOMER ACCOUNTS,RECORDS OF CUSTOMER ADDRESSES, AND RESTRICTIONS OFACCOUNTS IN WHICH CUSTOMERS HAD RENEGED ON TRADES; 2)OBTAINAPPROPRIATE SUPERVISORY APPROVAL FOR CERTAIN ACCOUNTDESIGNATION CHANGES PRIOR TO EFFECTING SUCH CHANGES;3)FREEZE OR RESTRICT CERTAIN CUSTOMER ACCOUNTS IN WHICHCUSTOMERS HAD RENEGED ON TRADES; 4)MAINTAIN ADEQUATEMEMORANDA OF CERTAIN ORDERS THAT CONTAINED ALL OF THEREQUIRED ELEMENTS; AND 5)EXCERCISE DUEDILIGENCE IN CERTAINACCOUNTS THAT USED POST OFFICE BOX ADDRESSES, AND WHEREACCOUNT DOCUMENTS WERE SENT TO A THIRD PARTY.Current Status:Final286©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINEPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:08/04/2006Resolution:Other Sanctions Ordered:Sanction Details:THE STIPULATION RESULTED IN NYSE HEARING BOARD DECISION 06-116,WHICH WAS FINALIZED ON AUGUST 4, 2006, AND WHICH CENSURES THEFIRM AND IMPOSES A FINE OF $175,000.THE DECISION FURTHER SETS FORTH THAT THE NYSE REGULATION TOOKINTO CONSIDERATION THAT NONE OF THE IDENTIFIED DEFICIENCIESINVOLVED SITUATIONS WHERE CUSTOMERS WERE HARMED AND THATTHE FIRM QUICKLY TOOK STEPS TO CORRECT THE AFOREMENTIONEDDEFICIENCIES.Firm StatementUBS FINANCIAL SERVICES INC., (FORMERLY KNOWN AS UBSPAINEWEBBER INC.), WITHOUT ADMITTING OR DENYING ANYALLEGATIONS OR FINDINGS, ENTERED INTO A STIPULATION OF FACTSAND CONSENT TO PENALTY WITH THE NEW YORK STOCK EXCHANGE("NYSE") RELATING TO DISCRETE ISSUES IDENTIFIED IN VARIOUS BRANCHOFFICES DURING THE NYSE MEMBER FRIM REGULATION'S ANNUAL SALESPRACTICE EXAMINATIONS IN 2003 AND 2004. NYSE HEARING BOARDDECISION 06-116 CENSURES THE FIRM AND IMPOSES A FINE OF $175,000.Sanctions Ordered:CensureMonetary/Fine $175,000.00DecisionDisclosure 146 of 450iReporting Source:FirmAllegations:THE NEW JERSEY BUREAU OF SECURITIES ("NJBOS") ALLEGED THAT THEFIRM FAILED TO SUPERVISE BROKERS WHO WITH THEIR CLIENTSENGAGED IN DECEPTIVE MARKET TIMING OF MUTUAL FUNDS ANDVARIABLE INSURANCE PRODUCTS, AND THAT THE FIRM VIOLATED BOOKSAND RECORDS OBLIGATIONS RELATED TO RETENTION OF CERTAININTERNAL EMAILS AND RECORDS OF VARIABLE INSURANCE PRODUCTSSUB-ACCOUNT TRANSFERS.Current Status:Final287©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:AGREED CONSENT ORDERDate Initiated:01/11/2006Docket/Case Number:N/APrincipal Product Type:Mutual Fund(s)Other Product Type(s):Resolution Date:01/11/2006Resolution:Other Sanctions Ordered:Sanction Details:CIVIL PENALTY OF $12 MILLION FOR FAILURE TO SUPERVISE, PLUS$750,000 FOR BOOKS AND RECORDS VIOLATIONS; $12 MILLION FORINVESTIGATION COSTS AND INVESTOR EDUCATION AND OTHERENFORCEMENT INITIATIVES. FIRM ALSO AGREED TO RETAIN OUTSIDECOUNSEL TO REVIEW PROCEDURES RELATED TO THE ALLEGED FAILURESAND VIOLATIONS.PAYMENT OF THE REGULATORY FINES WAS MADE ON1/13/06.Firm StatementNJBOS ALLEGED THAT THE FIRM FAILED TO SUPERVISE BROKERS WHOWITH THEIR CLIENTS ENGAGED IN DECEPTIVE MARKET TIMING OFMUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS.THROUGH ANAGREED CONSENT ORDER THE FIRM WAS FINED A TOTAL OF $24,750,000.Sanctions Ordered:CensureMonetary/Fine $24,750,000.00ConsentDisclosure 147 of 450iReporting Source:RegulatorAllegations:**1/11/06**STIPULATION OF FACTS AND CONSENT TO PENALTY FILED BYNYSE DIVISION OF ENFORCEMENT AND PENDING CONSENTED TOFINDINGS: THAT THE FIRM: 1. VIOLATED NYSE RULE 476(A), IN THAT THEFIRM ENGAGED IN CONDUCT INCONSISTENT WITH JUST AND EQUITABLEPRINCIPLES OF TRADE IN CONNECTION WITH FAILING TO PREVENTCERTAIN OF ITS BROKERS FROM ENGAGING IN DECEPTIVE PRACTICESRELATED TO THE MARKET TIMING OF MUTUAL FUNDS. 2. VIOLATED NYSECurrent Status:Final288©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/11/2006Docket/Case Number:HPD# 06-005Principal Product Type:OtherOther Product Type(s):RULE 401, IN THAT THE FIRM FAILED TO ADHERE TO THE PRINCIPLES OFGOOD BUSINESS PRACTICE IN CONNECTION WITH FAILING TO PREVENTCERTAIN OF ITS BROKERS FROM ENGAGING IN DECEPTIVE PRACTICESRELATED TO THE MARKET TIMING OF MUTUAL FUNDS. 3. VIOLATED NYSERULE 342 BY FAILING REASONABLY TO SUPERVISE CERTAIN BUSINESSACTIVITIES, AND TO ESTABLISH AND MAINTAIN APPROPRIATEPROCEDURES FOR SUPERVISION AND CONTROL WITH RESPECT TOCERTAIN BUSINESS ACTIVITIES INVOLVING THE TRADING OF MUTUALFUNDS AND THE MUTUAL FUND-LIKE SUB-ACCOUNTS OF VARIABLEANNUITIES AND OTHER INSURANCE PRODUCTS. 4. VIOLATED SECTION17(A)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULES 17A-3AND 17A-4 THEREUNDER, AND NYSE RULE 440 IN THAT IT FAILED TO MAKEAND/OR PRESERVE ACCURATE BOOKS AND RECORDS REFLECTINGAND/OR RELATING TO: (A) ORDERS AND/OR CONFIRMATIONS FORTRANSACTIONS EXECUTED BY FIRM EMPLOYEES IN VARIABLE ANNUITIESAND OTHER INSURANCE PRODUCTS' SUB-ACCOUNTS; (B) INTERNAL E-MAIL PRIOR TO AUGUST 2001; AND (C) EXTERNAL AND INTERNAL E-MAILOF CERTAIN FIRM EMPLOYEES PRIOR TO THE LAST QUARTER OF 2004.STIPULATED SANCTION:1. A CENSURE; 2. A TOTAL PAYMENT OF $49,500,000 , HALF OF WHICHSHALL BE PAID TO THE STATE OF NEW JERSEY AND $1,000,000 OF THEREMAINING PAYMENT SHALL BE PAID TO THE STATE OFCONNECTICUT.THE PORTION NOT PAID TO THE STATES OF NEW JERSEYAND CONNECTICUT SHALL BE PAID AS FOLLOWS: DISGORGEMENT OF$18,000,000 TO BE PLACED INTO A DISTRIBUTION FUND AS OUTLINEDBELOW, AND A PENALTY OF $5,750,000 TO BE PAID TO THE NYSE; AND3.THE FOLLOWING UNDERTAKINGS:**CONTINUED ON 13C**Resolution Date:02/28/2006Resolution:Sanctions Ordered:CensureMonetary/Fine $49,500,000.00Decision289©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:**1/19/06**DECISION 06-5 ISSUED BY NYSE HEARING PANELDECISION: VIOLATED NYSE RULES 401 AND 476(A) BY FAILING TOPREVENT BROKERS FROM ENGAGING IN DECEPTIVE PRACTICESRELATED TO MARKET TIMING OF MUTUAL FUNDS; VIOLATED NYSE RULE342 BY FAILING REASONABLY TO SUPERVISE CERTAIN BUSINESSACTIVITIES AND TO ESTABLISH AND MAINTAIN APPROPRIATEPROCEDURES FOR SUPERVISION AND CONTROL WITH RESPECT TOCERTAIN BUSINESS ACTIVITIES INVOLVING TRADING OF MUTUAL FUNDSAND MUTUAL FUND-LIKE SUB-ACCOUNTS OF VARIABLE ANNUITIES ANDOTHER INSURANCE PRODUCTS; VIOLATED SECTION 17(A)(1) OF THESECURITIES EXCHANGE ACT OF 1934 AND RULES 17A-3 AND 17A-4THEREUNDER AND NYSE RULE 440 BY FAILING TO MAKE AND/ORPRESERVE ACCURATE BOOKS AND RECORDS REFLECTING AND/ORRELATING TO: (A) ORDERS AND/OR CONFIRMATIONS FOR TRANSACTIONSEXECUTED IN VARIABLE ANNUITIES AND OTHER INSURANCE PRODUCTS'SUB-ACCOUNTS; (B) INTERNAL E-MAIL PRIOR TO AUGUST 2001; AND (C)EXTERNAL AND INTERNAL E-MAIL OF CERTAIN EMPLOYEES PRIOR TOLAST QUARTER OF 2004 CONSENT TO CENSURE, TOTAL PAYMENT OF$49.5 MILLION AND UNDERTAKINGS.Regulator Statement**2/28/05** THE DECISION IS NOW FINAL AND EFFECTIVE IMMEDIATELY.CONTACT PEGGY GERMINO 212-656-8450.iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGEDate Initiated:01/11/2006Docket/Case Number:06-005Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:THE NEW YORK STOCK EXCHANGE ("NYSE") ALLEGED THAT THE FIRMFAILED TO SUPERVISE BROKERS WHO WITH THEIR CLIENTS ENGAGED INDECEPTIVE MARKET TIMING OF MUTUAL FUNDS AND VARIABLEINSURANCE PRODUCTS, AND THAT THE FIRM VIOLATED BOOKS ANDRECORDS OBLIGATIONS RELATED TO RETENTION OF CERTAIN INTERNALEMAILS AND RECORDS OF VARIABLE INSURANCE PRODUCTS SUB-ACCOUNT TRANSFERS.Current Status:Final290©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:AGREED CONSENT ORDERResolution Date:01/11/2006Resolution:Other Sanctions Ordered:UNDERTAKING TO TO SUPERVISE CERTAIN BUSINESS ACTIVITIES AND TOESTABLISH AND MAINTAIN APPROPRIATE PROCEDURES FORSUPERVISION AND CONTROL WITH RESPECT TO CERTAIN BUSINESSACTIVITIES INVOLVING TRADING OF MUTUAL FUNDS AND MUTUAL FUND-LIKE SUB-ACCOUNTS OF VARIABLE ANNUITIES AND OTHER INSURANCEPRODUCTS.Sanction Details:A TOTAL PAYMENT OF $49,500,000 , HALF OF WHICH SHALL BE PAID TO THESTATE OF NEW JERSEY AND $1,000,000 OF THE REMAINING PAYMENTSHALL BE PAID TO THE STATE OF CONNECTICUT.THE PORTION NOT PAIDTO THE STATES OF NEW JERSEY AND CONNECTICUT SHALL BE PAID ASFOLLOWS: DISGORGEMENT OF $18,000,000 TO BE PLACED INTO ADISTRIBUTION FUND AS OUTLINED BELOW, AND A PENALTY OF $5,750,000TO BE PAID TO THE NYSECENSURE AND CIVIL PENALTY OF $5 MILLIONFOR FAILURE TO SUPERVISE, PLUS $750,000 FOR BOOKS AND RECORDSVIOLATIONS AND $18 MILLION IN DISGORGEMENT. FIRM ALSO AGREED TORETAIN OUTSIDE COUNSEL TO REVIEW PROCEDURES RELATED TO THEALLEGED FAILURES AND VIOLATIONS AND TO HIRE AN INDEPENDENTDISTRIBUTION CONSULTANT TO DEVELOP A PLAN TO DISTRIBUTE THE $18MILLION FUND. PAYMENT OF THE FINES WILL BE MADE WITHIN 25 DAYSAFTER NOTICE OF THE HEARING PANEL DETERMINATION HAS BEENSERVED UPON THE FIRM.Firm StatementTHE NYSE ALLEGED THAT THE FIRM FAILED TO SUPERVISE BROKERSWHO WITH THEIR CLIENTS ENGAGED IN DECEPTIVE MARKET TIMING OFMUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS.THROUGH ANAGREED CONSENT ORDER THE FIRM WAS FINED $23,750,000.Sanctions Ordered:CensureMonetary/Fine $49,500,000.00ConsentDisclosure 148 of 450iReporting Source:RegulatorAllegations:NASD MARKETPLACE RULE 6130(B), NASD CONDUCT RULES 2110 AND3010-RESPONDENT FIRM FAILED TO ACCEPT OR DECLINE IN AUTOMATEDCurrent Status:Final291©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/15/2005Docket/Case Number:2005000099501Principal Product Type:OtherOther Product Type(s):UNSPECIFIED SECURITIESCONFIRMATION TRANSACTION SERVICE (ACT) TRANSACTIONS INELIGIBLE SECURITIES WITHIN TWENTY MINUTES AFTER EXECUTION. THEFINDINGS STATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES ANDREGULATIONS, AND THE RULES OF NASD, CONCERNING TRADEREPORTINGResolution Date:11/15/2005Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED, FINED $42,500, ANDREQUIRED TO REVISE IT'S WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO TRADE REPORTING.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $42,500.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:UBS FINANCIAL SERVICES INC. SIGNED AN ACCEPTANCE WAIVER ANDCurrent Status:Final292©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INCPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:AND FINE OF $42,500.00 AND UNDERTAKING.Date Initiated:11/14/2005Docket/Case Number:20050000995-01Principal Product Type:OtherOther Product Type(s):SECURITIESCONCENT (AWC) PURSUANT TO A REVIEW BY THE MARKET REGULATIONDEPARTMENT WHEREBY IN THE LAST QUARTER OF 2003 AND THE THIRDQUARTER OF 2004, THE FIRM FAILED TO ACCEPT OR DECLINE A NUMBEROF TRANSACTIONS IN THE AUTOMATED CONFIRMATION TRANSACTIONSERVICE (ACT) IN VIOLATION OF NASD CONDUCT RULE 2110 AND NASDMARKETPLACE RULE 6130(B). DURING THE REVIEW PERIODS THE FIRMSSUPERVISORY SYSTEM DID NOT INCLUDE WRITTEN SUPERVISORYPROCEDURES REGARDING TRADE REPORTING AS REQUIRED BY NASDMARKETPLACE RULE 6130(B), A VIOLATION OF NASD CONDUCT RULES2110 AND 3010.Resolution Date:11/14/2005Resolution:Other Sanctions Ordered:UNDERTAKING.Sanction Details:THE $42,500.00 FINES WERE PAID UPON ACCEPTANCE OF THE AWC.Firm StatementUBS FINANCIAL SERVICES INC. SIGNED AN ACCEPTANCE WAIVER ANDCONCENT (AWC) PURSUANT TO A REVIEW BY THE MARKET REGULATIONDEPARTMENT OF THE NASD. THE FIRM ALSO CONSENTED TO A CENSUREAND FINES TOTALLING $42,500.00.Sanctions Ordered:CensureMonetary/Fine $42,500.00Acceptance, Waiver & Consent(AWC)Disclosure 149 of 450iReporting Source:RegulatorAllegations:NASD RULES 2810; 2310; 2110; 3110; 2210 - RESPONDENT FIRM MADEUNSUITABLE INVESTMENT RECOMMENDATIONS TO PUBLIC CUSTOMERSIN IT S FUTURES FUND. RESPONDENT FIRM ALSO FAILED TO MAINTAINCurrent Status:Final293©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/06/2005Docket/Case Number:CE3050009Principal Product Type:OtherOther Product Type(s):NON-PROPRIETARY MANAGED FUTURES PRODUCTRECORDS DISCLOSING THE BASIS UPON WHICH SUITABILITYDETERMINATIONS WERE MADE IN ITS RECOMMENDATIONS AND SALES TOPUBLIC CUSTOMERS IN FUTURES FUND. FURTHER, RESPONDENT FIRMFAILED TO ESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORYSYSTEM WITH RESPECT TO THE MAINTENANCE OF RECORDSDISCLOSING THE BASIS FOR THE FUTURES FUND SUITABILITYDETERMINATIONS. RESPONDENT FIRM'S WEBSITE ADVERTISEMENTFAILED TO ADEQUATELY DISCLOSE AND DESCRIBE THE SUBSTANTIALRISKS OF INVESTING IN MANAGED FUTURES PRODUCTS.Resolution Date:05/06/2005Resolution:Other Sanctions Ordered:PAYMENT OF THE FINE TO NASD SHALL BE MADE WITHIN 10 DAYS OFNOTICE OF ACCEPTANCE OF THIS AWC. FURTHER, FOR THOSECUSTOMERS WHO STILL HOLD UNITS IN THE FUTURES FUND, UBS SHALLPROVIDE RESTITUTION TO EACH SUCH CUSTOMER BY PAYING ANAMOUNT EQUAL TO ANY LOSS SUFFERED BY EACH SUCH CUSTOMER ASFOLLOWS: WITHIN 30 DYAS OF THE NOTICE OF ISSUANCE OF THIS AWC,UBS SHALL PREPARE AND FORWARD TO EACH SUCH CUSTOMER ALETTER, SATISFACTORY TO NASD, ADVISING EACH SUCH CUSTOMER (I)OF THEIR RIGHT TO REDEEM THE UNITS PURSUANT TO AND AS MOREFULLY DESCRIBED IN THE PROSPECTUS FOR THE FUTURES FUND, AND (II)Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $175,000.00Disgorgement/RestitutionBarAcceptance, Waiver & Consent(AWC)294©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHAT IF THEY EXERCISE THEIR RIGHT TO REDEEM THEIR UNITS WITHIN 90DYAS OF THE DATE OF THE LETTER AND THYE INCUR ANY LOSSES AS ARESULT OF THE REDEMPTION, THEN UBS SHALL REIMBURSE THEM FORANY SUCH LOSSES, WHICH SHALL EQUAL THE DIFFERENCE BETWEENTHE SUBSCRIPTION AMOUNT AND THE REDEMPTION AMOUNT.SATISFACTORY PROOF OF UBS'S PERFORMANCE OF THIS UNDERTAKING,OR OF REASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TOEFFECTUATE IT, SHALL BE PROVIDED TO NASD NO LATER THAN 120 DAYSAFTER ACCEPTANCE OF THIS AWC. FOR ANOTHER GROUP OFCUSTOMERS, UBS HAS INCOMPLETE RECORDS TO ENABLE IT TODETERMINE IF THOSE CUSTOMERS EXCEEDED THE INVESTMENTLIMITATION REGARDING NET WORTH. FOR THIS GROUP OF CUSTOMERS,UBS AGREES TO THE FOLLOWING UNDERTAKING NO LATER THAN 120DAYS AFTER ACCEPTANCE OF THIS AWC: A. UBS SHALL DETERMINEWHETHER EACH CUSTOMER'S INVESTMENT EXCEEDED THE NET WORTHLIMITATION SET FORTH IN THE PROSPECTUS. THIS DETERMINATIONSHALL BE MADE THROUG A COMPLETE REVIEW OF CUSTOMER FILES ONTHE CORPORATE AND BRANCH LEVEL, FOLLOWED BY COMMUNICATIONWITH THOSE CUSTOMERS WHOSE INFORMATION CANNOT BE VERIFIEDBY UBS. B. UPON COMPLETION OF THE REVIEW, UBS SHALL PROVIDENASD WITH WRITTEN DOCUMENTATION DEMONSTRATING THAT THISREVIEW HAS BEEN COMPLETED FOR EACH CUSTOMER AND THE RESULTSOF THE REVIEW.Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $175,000.Regulator StatementC. UBS SHALL SEND THE LETTER AND MAKE THE SAME RESTITUTIONOFFER TO THOSE CUSTOMERS THAT EXCEEDED THE NET WORTHLIMITATION SET FORTH IN THE PROSPECTUS. SATISFACTORY PROOF OFUBS'S PERFORMANCE OF THIS UNDERTAKING, OR OF REASONABLE ANDDOCUMENTED EFFORTS UNDERTAKEN TO EFFECTUATE IT, SHALL BEPROVIDED TO NASD.iReporting Source:FirmAllegations:ON MAY 6, 2005, UBS FINANCIAL SERVICES, INC., WITHOUT ADMITTING ORDENYING THE FINDINGS, SIGNED A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT WITH THE NATIONAL ASSOCIATION OF SECURITIES DEALERSINC. ("NASD") RELATING TO THE FIRM'S MARKETING AND SALE OF A NON-PROPRIETARY MANAGED FUTURES FUND (THE "FUND") TO CERTAINCUSTOMERS. THE NASD REVIEWED THE PERIOD JANUARY 2002 TODECEMBER 2003, DURING WHICH TIME MORE THAN 4,000 UBSCurrent Status:Final295©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:AND FINE.Date Initiated:05/06/2005Docket/Case Number:CE3050009Principal Product Type:OtherOther Product Type(s):MANAGED FUTURESCUSTOMERS PURCHASED THE FUND. THE NASD FOUND THAT 14CUSTOMERS MADE INVESTMENTS IN THE FUND THAT EXCEEDED 10% OFTHEIR NET WORTH, WHICH WAS NOT PERMITTED BY THE PROSPECTUS.THE NASD ALSO FOUND THAT THE FIRM DID NOT MAINTAIN CERTAINRECORDS DISCLOSING THE BASIS UPON WHICH SUITABILITYDETERMINATIONS WERE MADE WHEN THE FUND WAS RECOMMENDED TOCUSTOMERS, DID NOT ESTABLISH AND MAINTAIN A SUPERVISORYSYSTEM RELATED TO MAINTAINING THESE RECORDS AND DID NOTADEQUATELY DESCRIBE CERTAIN OF THE RISKS OF INVESTING INMANAGED FUTURES ON THE FIRM'S PUBLIC WEBSITE.Resolution Date:05/06/2005Resolution:Other Sanctions Ordered:Sanction Details:FINE OF $175,000 TO BE PAID WITHIN 10 DAYS OF NOTICE OF ACCEPTANCEOF THE AWC.Firm StatementON MAY 6, 2005, UBS FINANCIAL SERVICES, INC., WITHOUT ADMITTING ORDENYING THE FINDINGS, SIGNED A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT WITH THE NATIONAL ASSOCIATION OF SECURITIES DEALERSINC. ("NASD") RELATING TO THE FIRM'S MARKETING AND SALE OF A NON-PROPRIETARY MANAGED FUTURES FUND (THE "FUND") TO CERTAINCUSTOMERS. TO RESOLVE THIS MATTER, THE FIRM AGREED TO ACENSURE, A FINE OF $175,000, AND AGREED TO OFFER RESTITUTION TOTHE 14 AFFECTED CUSTOMERS.Sanctions Ordered:CensureMonetary/Fine $175,000.00Acceptance, Waiver & Consent(AWC)Disclosure 150 of 450iReporting Source:Firm296©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF ILLINOIS SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:STIPULATIONDate Initiated:02/25/2005Docket/Case Number:FILE # 0100327Principal Product Type:CD(s)Other Product Type(s):Allegations:THE STATE OF ILLINOIS SECURITIES DEPARTMENT FOUND THAT THERESPONDENT:I. PROVIDED INACCURATE AND MISLEADING ACCOUNTSTATEMENTS THAT REPORTED THE CURRENT VALUE OF CALLABLE CDSIN CLIENTS' PORTFOLIOS AT PAR/FACE AND VALUE; ANDII. FAILED TOIMPLEMENT AND SUPERVISE MEASURES TO ENSURE THAT THEINFORMATION GIVEN TO INVESTORS AND POTENTIAL INVESTORSREGARDING THE FEATURES OF CALLABLE CDS WAS ACCURATE.Current Status:FinalResolution Date:03/07/2005Resolution:Other Sanctions Ordered:Sanction Details:SETTLED FOR $95,000 WITHOUT ADMITTING OR DENYING THEALLEGATIONS.Firm StatementTHE STATE OF ILLINOIS SECURITIES DEPARTMENT FOUND THAT THERESPONDENT UBS FINANCIAL SERVICES PROVIDED INACCURATE ANDMISLEADING ACCOUNT STATEMENTS REGARDING CALLABLE CDS ANDFAILED TO IMPLEMENT AND SUPERVISE MEASURES TO ENSURE THAT THEINFORMATION WAS ACCURATE. SETTLED FOR $95,000 WITHOUTADMITTING OR DENYING THE ALLEGATIONS.Sanctions Ordered:Monetary/Fine $95,000.00SettledDisclosure 151 of 450iReporting Source:RegulatorAllegations:SEC RULE 10B-10(A)(2)(II)(B), NASD RULES 2110, 2320 - UBS FINANCIALSERVICES, INC. IN TRANSASCTIONS FOR OR WITH A CUSTOMER THATCurrent Status:Final297©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/15/2004Docket/Case Number:CMS040161Principal Product Type:OtherOther Product Type(s):ELIGIBLE SECURITIESINVOLVED ELIGIBLE SECURITIES REPORTED TO THE CONSOLIDATEDTAPE, FAILED TO USE REASONABLE DILIGENCE TO ASCERTAIN THE BESTINTER-DEALER MARKET AND FAILED TO BUY OR SELL IN SUCH MARKETSO THAT THE RESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLEAS POSSIBLE UNDER PREVAILING MARKET CONDITIONS; IN TRADESINVOLVING ELIGIBLE SECURITIES REPORTED TO THE CONSOLIDATEDTAPE, ACTED AS PRINCIPAL FOR ITS OWN ACCOUNT BUT PROVIDED TOITS CUSTOMER ONLY WRITTEN NOTIFICATION OF YIELD INFORMATIONAND FAILED ALSO TO PROVIDE WRITTEN NOTIFICATION DISCLOSING THEREPORTED TRADE AND THE DIFFERENCE BETWEEN THE REPORTEDTRADE PRICE AND THE PRICE TO THE CUSTOMER; AND IN TRADES THATINVOLVED ELIGIBLE SECURITIES REPORTED TO THE CONSOLIDATEDTAPE, THE FIRM ACTED AS PRINCIPAL FOR ITS OWN ACCOUNT BUT FAILEDTO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER THEREPORTED TRADE PRICE AND THE DIFFERENCE BETWEEN THEREPORTED TRADE PRICE AND THE PRICE TO THE CUSTOMER.Resolution Date:10/15/2004Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, UBS FINANCIALDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $30,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)298©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM IS CENSURED, FINED $30,000,ORDERED TO PAY $2,388.58, PLUS INTEREST, IN RESTITUTION TO PUBLICCUSTOMERS; AND NO LATER THAN 120 DASYS AFTER ACCEPTANCE OFTHIS AWC, A REGISTERED PRINCIPAL OF THE FIRM SHALL SUBMIT TONASD A SCHEDULE SHOWING AMOUNT OF RESTITUTION AND INTERESTPAID TO EACH RECIPIENT, DATE OF PAYMENT, AMOUNTS PAID TOESCHEAT, UNCLAIMED PROPERTY FUNDS, AND SATISFACTORY PROOF OFPAYMENT AND/OR REASONABLE AND DOCUMENTED EFFORTSUNDERTAKEN TO EFFECT RESTITUTION PRIOR TO MAKING PAYMENTS TOESCHEAT OR ABANDONED PROPERTY FUNDS. ANY UNDISTRIBUTEDRESTITUTION AND INTEREST SHALL BE FORWARDED TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY, OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED.iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE AND RESTITUTIONDate Initiated:10/15/2004Docket/Case Number:CMS040161Principal Product Type:OtherOther Product Type(s):PREFERRED SECURITIESAllegations:NASD ALLEGED VIOLATIONS OF CONDUCT RULES 2110 AND 2320 IN THAT,IN 70 TRANSACTIONS, UBS FINANCIAL SERVICES INC. ("UBS-FS") FAILEDTO ASCERTAIN THE BEST INTER-DEALER MARKET SO THAT THERESULTANT PRICE TO THE CUSTOMER WAS AS FAVORABLE AS POSSIBLE.IN ADDITION, NASD ALLEGED VIOLATION OF SEC RULE 10B-10(A)(2)(II)(B),IN THAT 56 TRADES, IN WHICH UBS-FS ACTED AS PRINCIPAL, UBS-FSPROVIDED CUSTOMERS WRITTEN NOTIFICATION OF YIELD INFORMATION,BUT FAILED TO PROVIDE REPORTED TRADE PRICE AND THE DIFFERENCEBETWEEN REPORTED TRADE PRICE AND PRICE TO CUSTOMER AND, INANOTHER 11 INSTANCES, UBS-FS FAILED TO PROVIDE THE CUSTOMERSREPORTED TRADE PRICE AND THE DIFFERENCE BETWEEN REPORTEDTRADE PRICE AND PRICE TO CUSTOMER.Current Status:Final299©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:10/15/2004Resolution:Other Sanctions Ordered:IN ADDITION TO $30,000 FINE, UBS-FS TO MAKE RESTITUTION IN THEAMOUNT OF $2,388.58, PLUS INTEREST.Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, UBS-FSCONSENTED TO A CENSURE AND $30,000 FINE (CONSISTING OF $25,000FOR VIOLATION OF BEST EXECUTION RULES AND $5,000 FOR VIOLATIONSOF SEC RULE 10B-10) AND RESTITUTION IN THE AMOUNT OF $2,388.58,PLUS INTEREST.Sanctions Ordered:CensureMonetary/Fine $30,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)Disclosure 152 of 450iReporting Source:FirmInitiated By:STATE OF MISSOURI, OFFICE OF SECRETARY OF STATEPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:12/10/2003Docket/Case Number:AO-03-20Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 409.204(A)(2)(G) OF THEMISSOURI SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES AS REQUIRED BY SECTION 409.204(A)(2)(J)OFTHE MISSOURI SECURITIES ACT.Current Status:FinalResolution Date:12/10/2003Resolution:Sanctions Ordered:Monetary/Fine $431,117.00Disgorgement/RestitutionConsent300©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 409.204(A)(2)(G) AND (J) OF THE MISSOURISECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTION 409.204(A)(2)(G) AND (J) OF THE MISSOURISECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $431,117 IS ALLOCATEDTO THE STATE OF MISSOURI) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF MISSOURI, OFFICE OFSECRETARY OF STATE CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTION 409.204(A)(2)(G) AND (J) OF THEMISSOURI SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH SECTION 409.204(A)(2)(G) AND (J) OF THE MISSOURISECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $431,117 IS ALLOCATEDTO THE STATE OF MISSOURI) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,Cease and Desist/Injunction301©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 153 of 450iReporting Source:FirmInitiated By:IOWA INSURANCE DIVISION, IOWA SECURITIES BUREAUPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:03/19/2004Docket/Case Number:C04-12-434Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 502.304(1)(G) OF THEIOWA UNIFORM SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION502.304(1)(J) OF THE IOWA UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:03/19/2004Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 502.304(1)(G) AND (J) OF THE IOWA UNIFORMSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTION 502.304(1)(G) AND (J) OF THE IOWA UNIFORMSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent302©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTO THE STATE OF IOWA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE IOWA SECURITIES BUREAU CERTAINCHARGES ARISING FROM AN INVESTIGATION OF RESEARCH ANALYSTCONFLICTS OF INTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITHCERTAIN OTHER BROKERAGE FIRMS, ARE PART OF A GLOBALSETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUS STATEREGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 502.304(1)(G) AND (J) OF THE IOWA UNIFORMSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTION 502.304(1)(G) AND (J) OF THE IOWA UNIFORMSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF IOWA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 154 of 450iReporting Source:RegulatorAllegations:NASD CONDUCT RULES 2110 AND 2210(D)(1)(A) - RESPONDENT MEMBERUBS FINANCIAL SERVICES INC., DISTRIBUTED TO ITS CUSTOMERS, SALESLITERATURE REGARDING PRIVATELY PLACED REGISTERED INVESTMENTCOMPANIES. THE SALES PRESENTATION STATED THAT THE FUND WASCurrent Status:Final303©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/07/2004Docket/Case Number:CAF040051Principal Product Type:OtherOther Product Type(s):SALES LITERATURESEEKING A TARGETED RATE OF RETURN WITHOUT PROVIDING ASUBSTANTIATED BASIS FOR THE TARGET. INCLUDING A TARGETEDRETURN RATE IN THE SALES LITERATURE, WITHOUT PROVIDING A SOUNDBASIS TO ENABLE INVESTORS TO EVALUATE IT.Resolution Date:07/07/2004Resolution:Other Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTMEMBER CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THEFOLLOWING SANCTIONS: CENSURED, FINED $85,000.00; AND ANUNDERTAKING TO FILE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT, WITHIN THIRTY (30) DAYS OF THE EFFECTIVE DATE OF THISAWC, ALL PRESENTATIONS, QUARTERLY CLIENT LETTERS, FACT SHEETSAND QUARTERLY PERFORMANCE UPDATES RELATING TO PRIVATELYPLACED REGISTERED INVESTMENT COMPANIES THAT THE FIRM ISCURRENTLY USING ON THE DATE OF ACCEPTANCE BY THE NAC OF THISAWC. THE FIRM AGREES THAT, UPON RECEIPT OF COMMENTS FROMNASD ON ANY OF THE FILED MATERIALS, UNLESS NOTIFIED OTHERWISEBY NASD, UBS SHALL TAKE ALL REASONABLE STEPS TO WITHHOLD ORCAUSE TO BE WITHHELD SUCH MATERIAL FROM FURTHER PUBLICATIONUNTIL THE CHANGES SPECIFIED BY NASD HAVE BEEN MADE, AND SUCHDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $85,000.00Acceptance, Waiver & Consent(AWC)304©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceMATERIAL WILL BE REVISED AND RE-FILED PRIOR TO ANY USE, UNLESSOTHERWISE AGREED TO BY NASD STAFF AT ITS SOLE DISCRETION.iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:CENSURE, MONETARY FINE OF $85,000.00 AND UNDERTAKINGDate Initiated:06/16/2004Docket/Case Number:CAF040051Principal Product Type:No ProductOther Product Type(s):Allegations:BETWEEN JULY 2002 AND MAY 2003, UBS FINANCIAL SERVICES INC.DISTRIBUTED TWENTY-THREE PIECES OF SALES LITERATURE REGARDINGPRIVATELY PLACED REGISTERED INVESTMENT COMPANIES TO ITSCUSTOMERS THAT DID NOT COMPLY WITH NASD CONDUCT RULES2210(D)(1)(A) AND 2110. THESE INCLUDED ONE SALES PRESENTATION, ANDTWENTY-TWO FUND UPDATES IN THE FORM OF QUARTERLY CLIENTLETTERS OR FUND FACT SHEETS.Current Status:FinalResolution Date:07/07/2004Resolution:Other Sanctions Ordered:AN UNDERTAKING TO FILE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT, WITHIN THIRTY (30) DAYS OF THE EFFECTIVE DATE OF THISAWC, ALL PRESENTATIONS, QUARTERLY CLIENT LETTERS, FACT SHEETSAND QUARTERLY PERFORMANCE UPDATES RELATING TO PRIVATELYPLACED REGISTERED INVESTMENT COMPANIES THAT THE FIRM ISCURRENTLY USING ON THE DATE OF ACCEPTANCE OF THIS AWC.Sanction Details:UBS FINANCIAL SERVICES PAID A FINE OF $85,000.00.Firm StatementUBS FINANCIAL SERVICES SUBMITTED A LETTER OF ACCEPTANCE,WAIVER AND CONSENT REGARDING VIOLATIONS OF NASD CONDUCTRULES 2210(D)(1)(A) AND 2110.THE FIRM ALSO CONSENTED TO THE IMPOSITION OF A CENSURE, A FINESanctions Ordered:CensureMonetary/Fine $85,000.00Acceptance, Waiver & Consent(AWC)305©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOF $85,000 AND AN UNDERTAKING TO TIMELY FILE WITHIN 30 DAYS OF7/7/04 CERTAIN MATERIAL REGARDING PRIVATELY PLACED REGISTEREDINVESTMENT COMPANIES.Disclosure 155 of 450iReporting Source:RegulatorInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/28/2004Docket/Case Number:C05040044Principal Product Type:OtherOther Product Type(s):MUNICIPAL SECURITIESAllegations:MSRB RULES G-17 AND G-30(A) - RESPONDENT MEMBER UBS FINANCIALSERVICES INC. RECEIVED REQUESTS FROM PUBLIC CUSTOMERS TOLIQUIDATE ELEVEN DIFFERENT MUNICIPAL SECURITY POSITIONS.RESPONDENT MEMBER CONTACTED A BROKER'S BROKER AND OBTAINEDBIDS FOR THE CUSTOMERS' SECURITIES. BASED ON THE BIDS PROVIDEDBY THE BROKER'S BROKE, RESPONDENT MEMBER PURCHASED THESECURITIES FROM THE CUSTOMERS FOR ITS OWN ACCOUNT AND THENSOLD THE SECURITIES TO THE BROKER'S BROKER AT A NOMINAL GAIN. INALL ELEVEN INSTANCES, THE PRICES PAID TO THE CUSTOMER, ANDRECEIVED BY RESPONDENT MEMBER, WERE BELOW THE FAIR MARKETVALUE OF EACH SECURITY, IN AMOUNTS RANGING FROM 8.28% TO 53.73%(AND IN ONE INSTANCE 142.55%). BY RELYING SOLELY ON THE BIDSPROVIDED BY THE BROKER'S BROKER TO DETERMINE THE FAIR MARKETVALUE OF THE SECURITY, RESPONDENT MEMBER FAILED TO ENSURETHAT THE TRANSACTIONS WERE EXECUTED AT AGGREGATE PRICES THATWERE FAIR AND REASONABLE.Current Status:FinalResolution Date:06/28/2004Resolution:Acceptance, Waiver & Consent(AWC)306©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:UNDERTAKINGSanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTUBS FINANCIAL SERVICES INC. CONSENTED TO THE FINDING OF THEALLEGATIONS AND TO THE FOLLOWING SANCTIONS: CENSURED ANDFINED $100,000.00, SHALL PAY CUSTOMER RESTITUTION IN THE AMOUNTOF $100,666.05, PLUS INTEREST. SATISFACTORY PROOF OF PAYMENT OFRESTITUTION SHALL BE PROVIDED TO NASD NO LATER THAN 90 DAYSAFTER ACCEPTANCE OF THIS AWC. ADDTIONALLY, WITHIN 90 DAYS OFTHE ACCEPTANCE OF THIS AWC, THE FIRM SHALL PROVIDE NASD WITH ACOPY OF ITS UPDATED WRITTEN SUPERVISORY PROCEDURES AS THEYRELATE TO THE DETERMINATION OF THE FAIR MARKET VALUE OFMUNICIPAL SECURITIES BEING BOUGHT OR SOLD FROM A PUBLICCUSTOMER.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $100,000.00Disgorgement/RestitutioniReporting Source:FirmAllegations:ON JUNE 28, 2004, UBS FINANCIAL SERVICES INC. (FORMERLY UBSPAINEWEBBER INC.), ALONG WITH 7 OTHER FIRMS, WITHOUT ADMITTINGOR DENYING THE FINDINGS, SETTLED WITH THE NATIONAL ASSOCIATIONOF SECURITIES DEALERS INC. ("NASD") AN ACTION CONCERNING THEFIRM'S RELIANCE ON BROKER'S BROKERS TO DETERMINE THE FAIRMARKET VALUE OF CERTAIN OF ITS CUSTOMERS' BONDS. IN PARTICULAR,THE NASD IDENTIFIED ELEVEN INSTANCES DURING THE PERIOD FROMAUGUST 6, 2002 THROUGH JUNE 4, 2003 WHERE A CLIENT REQUESTEDTHAT UBS FINANCIAL SERVICES INC. SELL A BOND IN WHICH THE FIRMDOES NOT MAKE A MARKET. THE FIRM, FOLLOWING INDUSTRY PRACTICE,CONTACTED A BROKER'S BROKER AND OBTAINED BIDS FOR THECUSTOMERS' SECURITIES, AND THEN BOUGHT THE BONDS FROM THECUSTOMERS AT THE BID PRICE. SUBSEQUENT TRADING OF THECUSTOMER'S BONDS OCCURRED AT PRICES HIGHER THAN THECUSTOMERS HAD ORIGINALLY RECEIVED, INDICATING THAT THECUSTOMERS HAD NOT RECEIVED FAIR PRICES FOR THE BONDS THECUSTOMERS SOLD. ALONG WITH OTHER FIRMS IN THE GROUP SETTLINGCurrent Status:Final307©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:RESTITUTIONDate Initiated:06/28/2004Docket/Case Number:C05040044Principal Product Type:Debt - MunicipalOther Product Type(s):WITH THE NASD, UBS FINANCIAL SERVICES, INC. WAS FOUND TO HAVEVIOLATED MSRB RULES G-17 AND G-30 BY RELYING SOLELY ON THEPRICES PROVIDED BY THE BROKER'S BROKERS TO DETERMINE THE FAIRMARKET VALUES OF THE BONDS.Resolution Date:06/28/2004Resolution:Other Sanctions Ordered:Sanction Details:CENSURE AND $100,000.00 FINE PLUS RESTITUTION IN THE AMOUNT OF$100,666.05.Firm StatementTO RESOLVE THE ACTIONS, ALL EIGHT FIRMS AGREED TO MAKERESTITUTION, PAY FINES IN AN AMOUNT ROUGHLY EQUAL TO THERESTITUTION AMOUNT, AND UPDATE THEIR WRITTEN SUPERVISORYPROCEDURES RELATING TO THE DETERMINATION OF THE FAIR MARKETVALUE OF MUNICIPAL SECURITIES BEING BOUGHT OR SOLD FROM APUBLIC CUSTOMER. UBS FINANCIAL SERVICES WILL PAY A FINE OF$100,000. UBS FINANCIAL SERVICES HAS ALREADY MADE RESTITUTIONOF $100,666.05 TO THE IMPACTED CUSTOMERS, AND HAS UPDATED ITSWRITTEN SUPERVISORY PROCEDURES. THESE PROCEDURES WILL BESUBMITTED TO THE NASD FOR ITS REVIEW.Sanctions Ordered:CensureMonetary/Fine $100,000.00Disgorgement/RestitutionAcceptance, Waiver & Consent(AWC)Disclosure 156 of 450iReporting Source:RegulatorAllegations:SEE GLOBAL SETTLEMENT DOCUMENTSCurrent Status:Final308©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NORTH DAKOTAPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:10/10/2003Docket/Case Number:URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):ANALYST CONFLICT OF INTERESTResolution Date:10/10/2003Resolution:Other Sanctions Ordered:Sanction Details:$242,500 ASSESSED AS A CIVIL PENALTY. $7,500 COLLECTED FOR THEINVESTOR EDUCATION AND TECHNOLOGY FUND ADMINISTERED BY THESECURITIES DEPARTMENT. SUCH PAYMENTS WERE JOINT AND SEVERALWITH UBS WARBURG, LLC. OTHER TERMS AS SET FORTH IN GLOBALSETTLEMENT DOCUMENTS.Sanctions Ordered:Monetary/Fine $250,000.00ConsentiReporting Source:FirmInitiated By:NORTH DAKOTA SECURITIES DEPARTMENTDate Initiated:09/10/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 10-04-11(1)(C) OF THENORTH DAKOTA SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION10-04-11(1)(M) OF THE NORTH DAKOTA SECURITIES ACT.Current Status:Final309©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGResolution Date:09/10/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 10-04-11(1)(C) AND 10-04-11(1)(M) OF THE NORTHDAKOTA SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 10-04-11(1)(C) AND 10-04-11(1)(M) OF THE NORTHDAKOTA SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF NORTH DAKOTA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NORTH DAKOTA SECURITIESDEPARTMENT CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent310©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 10-04-11(1)(C) AND 10-04-11(1)(M) OF THE NORTHDAKOTA SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 10-04-11(1)(C) AND 10-04-11(1)(M) OF THE NORTHDAKOTA SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF NORTH DAKOTA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 157 of 450iReporting Source:RegulatorInitiated By:UTAH DIVISION OF SECURITESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL MONETARY PENALTYDate Initiated:11/05/2003Docket/Case Number:SD-03-0043URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):Allegations:RESEARCH ANALYSTS CONFLICTS OF INTERESTCurrent Status:FinalResolution Date:11/05/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDERED TO CEASE AND DESIST AND PAY $250,000.00 TO THE DIVISION'SSanctions Ordered:Monetary/Fine $250,000.00Cease and Desist/InjunctionConsent311©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSECURITIES INVESTOR EDUCATION AND TRAINING FUNDRegulator StatementFOR MORE INFORMATION, PLEASE VISIT THE DIVISION'S WEB SITE AT:HTTP://WWW.SECURITIES.STATE.UT.US/ACTIONSEVENTS.ASP?DOCKET+NUMBER=SD%2D03%2D0043iReporting Source:FirmInitiated By:STATE OF UTAH DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/05/2003Docket/Case Number:SD-03-0042 AND SD-03-0043Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 61-1-6(1)(G) OF THE UTAHUNIFORM SECURITIES ACT IN ISSUING RESEARCH REPORTS. APPLICANTALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED BY SECTION 61-1-6(1)(J) OFTHE UTAH UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:09/05/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE UTAH UNIFORM SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH UTAH UNIFORM SECURITIESACT IN CONNECTION WITH THE RESEARCH PRACTICES REFERENCED INTHE ORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THESanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent312©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSTATE OF UTAH DIVISION OF SECURITIES) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF UTAH DIVISION OFSECURITIES CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE UTAH UNIFORM SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE UTAH UNIFORMSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF UTAH DIVISION OF SECURITIES) INCLUDING $25,000,000AS A PENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS ANDOTHER MONIES, $25,000,000 TO BE USED FOR PROCUREMENT OFINDEPENDENT RESEARCH AND $5,000,000 TO BE USED FOR INVESTOREDUCATION.Disclosure 158 of 450iReporting Source:FirmAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 421B:10(I)(B)(7) OF THENEW HAMPSHIRE SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTIONCurrent Status:Final313©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:02/20/2004Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCH421B:10(I)(B)(10) OF THE NEW HAMPSHIRE SECURITIES ACT.Resolution Date:02/20/2004Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 421B:10(I)(B)(7) AND 421B:10(I)(B)(10) OF THE NEWHAMPSHIRE SECURITIES ACT. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTIONS 421B:10(I)(B)(7) AND B:10(I)(B)(10)OF THE NEW HAMPSHIRE SECURITIES ACT IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF NEW HAMPSHIRE)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NEW HAMPSHIRE BUREAU OFSECURITIES REGULATION CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionConsent314©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTIONS 421B:10(I)(B)(7) AND 421B:10(I)(B)(10)OF THE NEW HAMPSHIRE SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH SECTIONS 421B:10(I)(B)(7) AND 421B:10(I)(B)(10) OF THE NEW HAMPSHIRE SECURITIES ACT IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THE STATE OF NEWHAMPSHIRE) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 159 of 450iReporting Source:FirmInitiated By:CALIFORNIA DEPARTMENT OF CORPORATIONSPrincipal Sanction(s)/ReliefCease and DesistDate Initiated:12/15/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 25218 OF THECALIFORNIA CORPORATIONS CODE AND REGULATION SECTION 260.218.4PROMULGATED THEREUNDER IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES AS REQUIRED BY SECTION 25218 OF THECALIFORNIA CORPORATIONS CODE AND REGULATION SECTION 260.218.4PROMULGATED THEREUNDER IN ISSUING RESEARCH REPORTS.Current Status:Final315©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Other Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGResolution Date:12/15/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE CALIFORNIA CORPORATE SECURITIES LAW. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE CALIFORNIACORPORATE SECURITIES LAW IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $2,609,851 IS ALLOCATED TO THE STATE OF CALIFORNIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE CALIFORNIA DEPARTMENT OFCORPORATIONS CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE CALIFORNIA CORPORATE SECURITIES LAW. IN ADDITIONSanctions Ordered:Monetary/Fine $2,609,851.00Disgorgement/RestitutionCease and Desist/InjunctionConsent316©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE APPLICANT WAS ORDERED TO COMPLY WITH THE CALIFORNIACORPORATE SECURITIES LAW IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $2,609,851 IS ALLOCATED TO THE STATE OF CALIFORNIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 160 of 450iReporting Source:FirmInitiated By:NORTH CAROLINA DEPARTMENT OF THE SECRETARY OF STATE,SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:02/21/2004Docket/Case Number:03-013-IGPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 78A-39(A)(2)(G) OF THENORTH CAROLINA SECURITIES ACT AND RULES 18NCAC6.1414(A) AND 18NCAC 6.1414(B)(33) OF THE NORTH CAROLINA ADMINISTRATIVE CODE INISSUING RESEARCH REPORTS AND BY FAILING TO ESTABLISH ANDMAINTAIN ADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH.Current Status:FinalResolution Date:02/21/2004Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMSanctions Ordered:Monetary/Fine $620,209.00Disgorgement/RestitutionCease and Desist/InjunctionConsent317©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceVIOLATING SECTION78A-39(A)(2)(G) OF THE NORTH CAROLINA SECURITIESACT. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITHSECTION78A-39(A)(2)(G) OF THE NORTH CAROLINA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $620,209 IS ALLOCATED TO THESTATE OF NORTH CAROLINA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NORTH CAROLINA SECRETARY OFSTATE CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION78A-39(A)(2)(G) OF THE NORTH CAROLINA SECURITIESACT. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITHSECTION78A-39(A)(2)(G) OF THE NORTH CAROLINA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $620,209 IS ALLOCATED TO THESTATE OF NORTH CAROLINA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.i318©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 161 of 450Reporting Source:FirmInitiated By:STATE OF NEW MEXICO SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:02/23/2004Docket/Case Number:04-03-027-009Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE APPLICANT ACTED IN VIOLATION OF SECTION 58-13B-16.A(2)(H) OFTHE NEW MEXICO SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION58-13B-16.A(2)(H) AND (K) OF THE NEW MEXICO SECURITIES ACT AND RULE12.11.4.10 PROMULGATED THEREUNDER.Current Status:FinalResolution Date:02/23/2004Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 58-13B-16.A(H) AND (K) OF THE NEW MEXICOSECURITIES ACT AND RULE 12.11.4.10 PROMULGATED THEREUNDER. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH SECTIONS 58-13B-16.A(H) AND (K) OF THE NEW MEXICO SECURITIES ACT AND RULE12.11.4.10 PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $2,609,851 IS ALLOCATED TO THE STATE OF CALIFORNIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionConsent319©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NEW MEXICO SECURITIES DIVISIONCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 58-13B-16.A(H) AND (K) OF THE NEW MEXICOSECURITIES ACT AND RULE 12.11.4.10 PROMULGATED THEREUNDER. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH SECTIONS 58-13B-16.A(H) AND (K) OF THE NEW MEXICO SECURITIES ACT AND RULE12.11.4.10 PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $2,609,851 IS ALLOCATED TO THE STATE OF CALIFORNIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 162 of 450iReporting Source:FirmAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 32-2-204(A)(2)(G) OF THEWEST VIRGINIA UNIFORM SECURITIES LAW AND REGULATIONS IN ISSUINGRESEARCH REPORTS. THE APPLICANT ALSO FAILED TO ESTABLISH ANDMAINTAIN ADEQUATE SUPERVISORY PROCEDURES AS REQUIRED BYCurrent Status:Final320©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:WEST VIRGINIA SECURITIES DIVISION, COMMISSIONER OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:12/29/2003Docket/Case Number:E03-1351Principal Product Type:OtherOther Product Type(s):RESEARCHSECTION 32-2-204(A)(2)(J) OF THE WEST VIRGINIA UNIFORM SECURITIESLAW AND REGULATIONS.Resolution Date:12/29/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 32-2-204 OF THE WEST VIRGINIA UNIFORMSECURITIES LAW AND REGULATIONS. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTION 32-2-204 OF THE WEST VIRGINIAUNIFORM SECURITIES LAW AND REGULATIONS IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF WEST VIRGINIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE WEST VIRGINIA COMMISSIONER OFSECURITIES CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent321©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 32-2-204 OF THE WEST VIRGINIA UNIFORMSECURITIES LAW AND REGULATIONS. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTION 32-2-204 OF THE WEST VIRGINIAUNIFORM SECURITIES LAW AND REGULATIONS IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF WEST VIRGINIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 163 of 450iReporting Source:FirmInitiated By:STATE OF NEBRASKA, DEPARTMENT OF BANKING AND FINANCEPrincipal Sanction(s)/ReliefCease and DesistDate Initiated:12/17/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 8-1103(9)(A)(VII) OF THESECURITIES ACT OF NEBRASKA IN ISSUING RESEARCH REPORTS. THEAPPLICANT FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION8-1103(9)(A)(XI) OF THE SECURITIES ACT OF NEBRASKA.Current Status:Final322©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Other Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGResolution Date:12/17/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF NEBRASKA. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECURITIES ACT OFNEBRASKA IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF NEBRASKA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF NEBRASKA, DEPARTMENTOF BANKING AND FINANCE CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECURITIES ACT OF NEBRASKA. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THESanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent323©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSECURITIES ACT OF NEBRASKA IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF NEBRASKA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 164 of 450iReporting Source:FirmInitiated By:OHIO DEPARTMENT OF COMMERCE, DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:12/26/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF CHAPTER 1707 OF THE OHIO REVISEDCODE [SECURITIES ACT OF OHIO] AND THE REGULATIONSPROMULGATED THEREUNDER, AS THEY RELATE TO DISHONEST ORUNETHICAL CONDUCT AND FAILURE TO SUPERVISE IN CONNECTION WITHCERTAIN RESEARCH PRACTICES.Current Status:FinalResolution Date:12/26/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING CHAPTER 1707 OF THE OHIO REVISED CODE. IN ADDITION THESanctions Ordered:Monetary/Fine $874,773.00Disgorgement/RestitutionConsent324©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAPPLICANT WAS ORDERED TO COMPLY WITH THE CHAPTER 1707 OF THEOHIO REVISED CODE IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $874,773 IS ALLOCATEDTO THE STATE OF OHIO) INCLUDING $25,000,000 AS A PENALTY; $25,000,000AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000TO BE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE OHIO DEPARTMENT OF COMMERCE,DIVISION OF SECURITIES CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE CHAPTER 1707 OF THE OHIO REVISEDCODE. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THECHAPTER 1707 OF THE OHIO REVISED CODE IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $874,773 IS ALLOCATED TO THE STATE OF OHIO) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 165 of 450i325©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:STATE AUDITOR AND COMMISSIONER OF SECURITIES OF THE STATE OFMONTANAPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:11/21/2003Docket/Case Number:I 05-1-03-118Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 30-10-201(13)(G) OF THESECURITIES ACT OF MONTANA IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION30-10-201(13)(K) OF THE SECURITIES ACT OF MONTANA.Current Status:FinalResolution Date:11/21/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF MONTANA. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECURITIES ACT OFMONTANA IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF MONATANA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE AUDITOR AND COMMISSIONERSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent326©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOF SECURITIES OF THE STATE OF MONTANA CERTAIN CHARGES ARISINGFROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECURITIES ACT OF MONTANA. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THESECURITIES ACT OF MONTANA IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLCMUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF MONTANA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 166 of 450iReporting Source:RegulatorInitiated By:PA SECURITIES COMMISSIONCONTACT: G. PHILIP RUTLEDGE (717) 787-8059Date Initiated:12/30/2003Docket/Case Number:2003-04-47Allegations:THIS ACTION IS IN CONNECTION WITH THE GLOBAL ANALYST SETTLEMENTWHICH INCORPORATED THE FINAL JUDGMENT OF THE U.S. DISTRICTCOURT FOR THE SOUTHERN DISTRICT OF NEW YORK, CIVIL ACTION NO.03 CIV. 2943 (WHP) ENTERED OCTOBER 31, 2003.Current Status:Final327©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:RESPONDENT UBS FINANCIAL SERVICES, INC. F/K/A UBS PAINEWEBBER,INC. AND OTHER NAMED RESPONDENT PAID A $946,269.00ADMINISTRATIVE ASSESSMENT.URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):SECURITIESResolution Date:12/30/2003Resolution:Other Sanctions Ordered:Sanction Details:RESPONDENT UBS FINANCIAL SERVICES, INC. F/K/A UBS PAINEWEBBER,INC. AND OTHER NAMED RESPONDENT PAID A $946,269.00ADMINISTRATIVE ASSESSMENT.Sanctions Ordered:Monetary/Fine $946,269.00SettlediReporting Source:FirmInitiated By:PENNSYLVANIA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:DisgorgementOther Sanction(s)/ReliefSought:UNDERTAKINGDate Initiated:12/30/2003Docket/Case Number:2003-04-47Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF THE PENNSYLVANIA SECURITIES ACTOF 1972 AND THE REGULATIONS PROMULGATED THEREUNDER WITHRESPECT TO CERTAIN RESEARCH PRACTICES.Current Status:FinalResolution Date:12/30/2003Resolution:Consent328©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:THE APPLICANT WAS ORDERED TO COMPLY WITH THE PENNSYLVANIASECURITIES ACT OF 1972 IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $946,269 IS ALLOCATED TO THE COMMONWEALTH OFPENNSYLVANIA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE PENNSYLVANIA SECURITIESCOMMISSION CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT THE APPLICANT COMPLY WITH THEPENNSYLVANIA SECURITIES ACT OF 1972 IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $946,269 IS ALLOCATED TO THE COMMONWEALTH OFPENNSYLVANIA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Sanctions Ordered:Monetary/Fine $946,269.00Disgorgement/RestitutionCease and Desist/Injunction329©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 167 of 450iReporting Source:RegulatorInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CENSURE; FINE; AND DISGORGEMENT, PLUS PREJUDGMENT INTERESTDate Initiated:02/12/2004Docket/Case Number:3-11407Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:SEC ADMINISTRATIVE PROCEEDING RELEASE NOS. 33-8377 AND 34-49236,DATED FEBRUARY 12, 2004: THE SECURITIES AND EXCHANGECOMMISSION ("COMMISSION" OR "SEC") DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTION 8A OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT") ANDSECTIONS 15(B)(4) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934("EXCHANGE ACT") AGAINST UBS FINANCIAL SERVICES INC.("RESPONDENT").Current Status:FinalResolution Date:02/12/2004Resolution:Other Sanctions Ordered:Sanction Details:IT IS ORDERED: A. PURSUANT TO SECTION 15(B)(4) OF THE EXCHANGEDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $2,310,884.00Disgorgement/RestitutionCease and Desist/InjunctionOrder330©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceACT, THAT RESPONDENT IS CENSURED; B. PURSUANT TO SECTION 8A OFTHE SECURITIES ACT AND SECTION 21C OF THE EXCHANGE ACT, THATRESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2) OF THE SECURITIES ACT, AND RULE 10B-10 UNDER THEEXCHANGE ACT; C. WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER,RESPONDENT SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$2,310,884 TO THE UNITED STATES TREASURY; D. RESPONDENT SHALLPAY DISGORGEMENT AND PREJUDGMENT INTEREST; AND E. NOT LATERTHAN 6 MONTHS AFTER THE DATE OF THIS ORDER, UNLESS OTHERWISEEXTENDED BY THE COMMISSION FOR GOOD CAUSE SHOWN,RESPONDENT'S CHIEF EXECUTIVE OFFICER SHALL CERTIFY IN WRITINGTO THE COMMISSION THAT RESPONDENT HAS IMPLEMENTEDPROCEDURES, AND A SYSTEM FOR APPLYING SUCH PROCEDURES, THATCAN REASONABLY BE EXPECTED TO PREVENT AND DETECT FAILURES BYRESPONDENT TO PROVIDE APPROPRIATE BREAKPOINT DISCOUNTS FORWHICH CUSTOMERS ARE ELIGIBLE ON PURCHASES OF FRONT-END LOADMUTUAL FUNDS, BASED ON INFORMATION REASONABLY ASCERTAINABLEBY RESPONDENT.Regulator StatementRESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WITHOUTADMITTING OR DENYING THE FINDINGS, EXCEPT AS TO THE SEC'SJURISDICTION, AND CONSENTED TO THE ENTRY OF THIS ORDER. THE SECFINDS THAT: DURING 2001 AND 2002 (THE "RELEVANT PERIOD"),RESPONDENT SOLD SHARES ISSUED BY MUTUAL FUNDS WITHOUTPROVIDING CERTAIN CUSTOMERS WITH THE REDUCTIONS IN FRONT-ENDLOADS, OR SALES CHARGES, ALSO KNOWN AS "BREAKPOINT"DISCOUNTS, DESCRIBED IN THE PROSPECTUSES OF THE FUNDS.ACCORDING TO DATA SUBMITTED TO NASD BY RESPONDENT,RESPONDENT IS ESTIMATED TO HAVE FAILED TO GIVE CERTAINCUSTOMERS BREAKPOINT DISCOUNTS TOTALING APPROXIMATELY$4,621,768 DURING THE RELEVANT PERIOD. BY FAILING TO DISCLOSE TOCERTAIN CUSTOMERS THAT THEY WERE NOT RECEIVING THE BENEFIT OFAPPLICABLE BREAKPOINT DISCOUNTS, RESPONDENT WILLFULLYVIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT. FURTHER, BECAUSERESPONDENT DID NOT CHARGE THESE CUSTOMERS THE CORRECTSALES LOADS AS SET FORTH IN THE MUTUAL FUNDS' PROSPECTUSES,AND ALSO DID NOT DISCLOSE IN CONFIRMATIONS THE REMUNERATIONRESPONDENT RECEIVED FROM THE SALES LOADS CHARGED TO THESECUSTOMERS, RESPONDENT WILLFULLY VIOLATED RULE 10B-10 UNDERTHE EXCHANGE ACT.iReporting Source:FirmCurrent Status:Final331©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CENSURE, FINE AND DISGORGEMENT, PLUS PREJUDGEMENT INTERESTDate Initiated:02/12/2004Docket/Case Number:3-11407Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ON FEBRUARY 12, 2004, UBS FINANCIAL SERVICES, INC., ALONG WITH 6OTHER FIRMS, SETTLED WITH BOTH THE SEC AND NASD ACTIONSRELATING TO THE FIRM'S FAILURE TO UNIFORMLY PROVIDE BREAKPOINTDISCOUNTS TO CLIENTS DURING 2001 AND 2002. BREAKPOINTDISCOUNTS ARE VOLUME DISCOUNTS APPLICABLE TO FRONT-END SALESCHARGES ON CLASS A MUTUAL FUND SHARES. THE SEC AND NASD EACHBROUGHT CASES AGAINST A GROUP OF 7 FIRMS, AND THE NASDSEPARATELY BROUGHT ACTIONS AGAINST 8 OTHER FIRMS.Resolution Date:02/12/2004Resolution:Other Sanctions Ordered:Sanction Details:TO RESOLVE THE ACTIONS, ALL FIFTEEN FIRMS AGREED TO REVIEW ALLFRONT-END LOAD MUTUAL FUND TRADES IN EXCESS OF $2,500BETWEEEN JANUARY 1, 2001 AND NOVEMBER 3, 2003, TO PROVIDEWRITTEN NOTIFICATION OF THE BREAKPOINTS PROBLEM TO EACHCUSTOMER WHO PURCHASED CLASS A SHARES FROM JAUNARY 1, 1999TO NOVEMBER 3, 2002 TO ADVISE THESE CUSTOMERS THAT THEY MAY BEENTITLED TO A REFUND; TO PROVIDE REFUNDS WHERE APPROPRIATE;AND TO PAY A FINE EQUAL TO THE AMOUNT OF THE FIRM'S PROJECTEDOVERCHARGES. ALONG WITH OTHER FIRMS IN THE GROUP SETTLINGWITH BOTH THE SEC AND NASD, UBS FINANCIAL SERVICES, INC. WASFOUND TO HAVE VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF1933 AND RULE 10B-10 UNDER THE SECURITIES EXCHANGE ACT OF 1934.THE NASD CHARGED ALL FIFTEEN FIRMS WITH VIOLATIONS OF ITS JUSTAND EQUITABLE PRINCIPLES OF TRADE RULE. UBS FINANCIAL SERVICESWILL PAY A FINE OF $4,621,768, SPLIT EVENLY BETWEEN THE SEC ANDSanctions Ordered:CensureMonetary/Fine $2,310,884.00Cease and Desist/InjunctionOrder332©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceNASD.Disclosure 168 of 450iReporting Source:RegulatorInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/12/2004Docket/Case Number:CAF040007Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:NASD RULE 2110 - RESPONDENT MEMBER SOLD SHARES ISSUED BYMUTUAL FUNDS WITHOUT PROVIDING CERTAIN CUSTOMERS WITHBREAKPOINT DISCOUNTS DESCRIBED IN THE PROSPECTUSES OF THEFUNDS; FAILED TO GIVE ITS CUSTOMERS BREAKPOINT DISCOUNTS IN30.03% OF ELIGIBLE MUTUAL FUND TRANSACTIONS IN 2001 AND 2002 THATRESULTED IN MISSED BREAKPOINTS THAT WOULD HAVE REDUCEDCUSTOMERS' CHARGES BY AT LEAST $4.6 MILLION ON THEIR PURCHASESOF MUTUAL FUND SHARES WITH FRONT-END LOADS DURING THERELEVANT PERIOD.Current Status:FinalResolution Date:02/12/2004Resolution:Other Sanctions Ordered:UNDERTAKINGS.Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFDoes the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:CensureMonetary/Fine $2,310,884.00Acceptance, Waiver & Consent(AWC)333©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFINDINGS; THEREFORE, THE FIRM IS CENSURED, FINED $4,621,768, OFWHICH ONE HALF SHALL BE PAID TO NASD AND ONE HALF SHALL BE PAIDTO THE U.S. TREASURY PURSUANT TO RELATED SEC PROCEEDINGSBEING INSTITUTED AGAINST RESPONDENT ON THIS DATE, AND REQUIREDTO PROVIDE WRITTEN NOTIFICATION TO EACH CUSTOMER WHOPURCHASED FRONT-END LOAD MUTUAL FUNDS THROUGH THE FIRMFROM JANUARY 1, 1999 THROUGH NOVEMBER 3, 2003 THAT THE FIRMEXPERIENCED A PROBLEM DELIVERING BREAKPOINT DISCOUNTS ANDTHAT AS A RESULT, THE CUSTOMER MAY BE ENTITLED TO A REFUND;PERFORM A TRADE-BY-TRADE ANALYSIS OF ALL FRONT-END LOADMUTUAL FUND PURCHASES OF $2,500 OR MORE AND ALL OVERCHARGESIDENTIFIED REFUNDED BY MARCH 31, 2004; PROVIDE REFUNDS TO ALLCUSTOMERS WHO DID NOT RECEIVE ALL APPLICABLE BREAKPOINTDISCOUNTS AS DESCRIBED IN NTM 03-47; PROVIDE NASD A REPORT ONRESPONDENT'S REFUND PROGRAM BY 4/16/04; AND NOT LATER THAN SIXMONTHS AFTER THE DATE OF THIS ORDER, RESPONDENT'S CHIEFEXECUTIVE OFFICER SHALL CERTIFY IN WRITING TO NASD THATRESPONDENT HAS IMPLEMENTED PROCEDURES AND A SYSTEM FORAPPLYING SUCH PROCEDURES THAT CAN REASONABLY BE EXPECTED TOPREVENT AND DETECT FAILURES TO PROVIDE BREAKPOINT DISCOUNTSFOR WHICH CUSTOMERS ARE ELIGIBLE ON PURCHASES OF FRONT-ENDLOAD MUTUAL FUNDS.iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:02/12/2004Docket/Case Number:CAF040007Principal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ON FEBRUARY 12, 2004, UBS FINANCIAL SERVICES, INC., ALONG WITH 6OTHER FIRMS, SETTLED WITH BOTH THE SEC AND NASD ACTIONSRELATING TO THE FIRM'S FAILURE TO UNIFORMLY PROVIDE BREAKPOINTDISCOUNTS TO CLIENTS DURING 2001 AND 2002. BREAKPOINTDISCOUNTS ARE VOLUME DISCOUNTS APPLICABLE TO FRONT-END SALESCHARGES ON CLASS A MUTUAL FUND SHARES. THE SEC AND NASD EACHBROUGHT CASES AGAINST A GROUP OF 7 FIRMS, AND THE NASDSEPARATELY BROUGHT ACTIONS AGAINST 8 OTHER FIRMS.Current Status:Final334©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CENSURE AND UNDERTAKINGSResolution Date:02/12/2004Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:TO RESOLVE THE ACTIONS, ALL FIFTEEN FIRMS AGREED TO REVIEW ALLFRONT-END LOAD MUTUAL FUND TRADES IN EXCESS OF $2,500BETWEEEN JANUARY 1, 2001 AND NOVEMBER 3, 2003, TO PROVIDEWRITTEN NOTIFICATION OF THE BREAKPOINTS PROBLEM TO EACHCUSTOMER WHO PURCHASED CLASS A SHARES FROM JAUNARY 1, 1999TO NOVEMBER 3, 2002 TO ADVISE THESE CUSTOMERS THAT THEY MAY BEENTITLED TO A REFUND; TO PROVIDE REFUNDS WHERE APPROPRIATE;AND TO PAY A FINE EQUAL TO THE AMOUNT OF THE FIRM'S PROJECTEDOVERCHARGES. ALONG WITH OTHER FIRMS IN THE GROUP SETTLINGWITH BOTH THE SEC AND NASD, UBS FINANCIAL SERVICES, INC. WASFOUND TO HAVE VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF1933 AND RULE 10B-10 UNDER THE SECURITIES EXCHANGE ACT OF 1934.THE NASD CHARGED ALL FIFTEEN FIRMS WITH VIOLATIONS OF ITS JUSTAND EQUITABLE PRINCIPLES OF TRADE RULE. UBS FINANCIAL SERVICESWILL PAY A FINE OF $4,621,768, SPLIT EVENLY BETWEEN THE SEC ANDNASD.Sanctions Ordered:CensureMonetary/Fine $2,310,884.00Acceptance, Waiver & Consent(AWC)Disclosure 169 of 450iReporting Source:FirmInitiated By:COMMONWEALTH OF MASSACHUSETTSDate Initiated:11/24/2003Docket/Case Number:2002-67Principal Product Type:No ProductAllegations:ON NOVEMBER 24, 2003, THE FIRM, WITHOUT ADMITTING OR DENYINGTHE CHARGES, SETTLED AN ADMINISTRATIVE ACTION WITH THE STATE OFMASSACHUSETTS IN WHICH THE STATE ALLEGED THAT THE FIRMVIOLATED MASSACHUSETTS GENERAL LAW CHAPTER 110A SECTION 204BY FAILING TO SUPERVISE FORMER BROKER SCOTT MCCREADIE.Current Status:Final335©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:11/24/2003Resolution:Other Sanctions Ordered:Sanction Details:PURSUANT TO THE SETTLEMENT, THE FIRM WAS ORDERED, AMONGOTHER THINGS, TO PAY A FINE OF $200,000 TO THE STATE.Firm StatementTHE FIRM, WITHOUT ADMITTING OR DENYING THE CHARGES, SETTLED ANADMINISTRATIVE ACTION WITH THE STATE OF MASSACHUSETTS IN WHICHTHE STATE ALLEGED THAT THE FIRM VIOLATED MASSACHUSETTSGENERAL LAW CHAPTER 110A SECTION 204 BY FAILING TO SUPERVISEFORMER BROKER SCOTT MCCREADIE. THE FIRM WAS ORDERED TO PAY AFINE OF $200,000 TO THE STATE.Sanctions Ordered:Monetary/Fine $200,000.00OrderDisclosure 170 of 450iReporting Source:RegulatorInitiated By:VIRGINIA - DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:11/14/2003Docket/Case Number:SEC-2003-00021URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):CONTACT UNDERSIGNED FOR FURTHER INFORMATION.Allegations:COMMISSION RULES 21 VAC 5-20-260 B AND 21 VAC 5-20-280 B 12 WEREVIOLATED. PLEASE CONTACT THE UNDERSIGNED FOR FURTHERINFORMATION ABOUT THE CONCLUSIONS OF LAW.Current Status:Final336©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:11/14/2003Resolution:Other Sanctions Ordered:CONTACT UNDERSIGNED FOR INFORMATIONSanction Details:CONTACT UNDERSIGNED FOR INFORMATIONRegulator Statement$545,408.00 WAS RECEIVED AS PART OF THE SETTLEMENT AGREEMENTUBS SECURITIES, LLC ENTERED INTO WITH ALL FIFTY STATES, THEDISTRICT OF COLUMBIA AND THE COMMONWEALTH OF PUERTO RICO,THROUGH A COMMITTEE OF THE NORTH AMERICAN SECURITIESADMINISTRATORS ASSOCIATION ("NASAA"). CO-DEFENDANTS, WERELISTED ON THE SETTLEMENT ORDER, PER NEGOTIATIONS WITH THE FIRM "UBS" PAID A TOTAL OF $545,408. THIS AMOUNT WAS NOT RECEIVEDTWICE FROM THE TWO DEFENDANTS NAMED ON THE SETTLEMENTORDER. JURISDICTION REPORTING INCIDENT: VIRGINIA, STATECORPORATION COMMISSION, DIVISION OF SECURITIES & RETAILFRANCHISING. CONTACT KEVIN M. FURR AT 804-371-9081.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $545,408.00SettlediReporting Source:FirmInitiated By:COMMONWEALTH OF VIRGINIA, STATE CORPORATION COMMISSIONDate Initiated:11/14/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF VIRGINIA SECURITIES RULE 21 VAC 5-20-280(E)(12) IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BYSECURITIES RULE 21 VAC 5-20-260.Current Status:Final337©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGResolution Date:11/14/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECURITIES RULE 21 VAC 5-20-280(E)(12) AND RULE 21 VAC 5-20-260. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITHTHE VIRGINIA SECURITIES ACT AND THE REGULATIONS PROMULGATEDTHEREUNDER IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $545,408 IS ALLOCATEDTO THE COMMONWEALTH OF VIRGINIA) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COMMONWEALTH OF VIRGINIA,STATE CORPORATION COMMISSION CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDSanctions Ordered:Monetary/Fine $545,408.00Disgorgement/RestitutionCease and Desist/InjunctionConsent338©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDESIST FROM VIOLATING SECURITIES RULE 21 VAC 5-20-280(E)(12) ANDRULE 21 VAC 5-20-260. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE VIRGINIA SECURITIES ACT AND THE REGULATIONSPROMULGATED THEREUNDER IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $545,408 IS ALLOCATED TO THE COMMONWEALTH OF VIRGINIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 171 of 450iReporting Source:FirmInitiated By:SOUTH DAKOTA DIRECTOR OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST AND UNDERTAKINGDate Initiated:11/05/2003Docket/Case Number:CASE #651Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 47-31A-204(A)(2)(G) OF THESOUTH DAKOTA UNIFORM SECURITIES ACT IN ISSUING RESEARCHREPORTS. THE APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES AS REQUIRED UNDER SECTION47-31A-204(A)(2)(J) OF THE SOUTH DAKOTA UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:11/05/2003Resolution:Sanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent339©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SOUTH DAKOTA UNIFORM SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE SOUTH DAKOTAUNIFORM SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF SOUTH DAKOTA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE SOUTH DAKOTA DIRECTOR OFSECURITIES CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SOUTH DAKOTA UNIFORM SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE SOUTH DAKOTAUNIFORM SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF SOUTH DAKOTA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USED340©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFOR INVESTOR EDUCATION.Disclosure 172 of 450iReporting Source:FirmInitiated By:NEVADA OFFICE OF THE SECRETARY OF STATE, SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:11/12/2003Docket/Case Number:I03-188Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 90.420(1)(H) OF THE NEVADAUNIFORM SECURITIES ACT AND SECTION 90.327 OF THE NEVADAADMINISTRATIVE CODE IN ISSUING RESEARCH REPORTS. THE APPLICANTALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED OF SECTION 90.420(1)(K) OFTHE NEVADA UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:11/12/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 90.420(1)(H) AND 90.420(1)(K) OF THE NEVADAUNIFORM SECURITIES ACT AND SECTION 90.327 OF THE NEVADAADMINISTRATIVE CODE. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE SECTIONS 90.420(1)(H) AND 90.420(1)(K) OF THENEVADA UNIFORM SECURITIES ACT AND SECTION 90.327 OF THE NEVADAADMINISTRATIVE CODE IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent341©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF NEVADA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NEVADA SECRETARY OF STATECERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 90.420(1)(H) AND 90.420(1)(K) OF THE NEVADAUNIFORM SECURITIES ACT AND SECTION 90.327 OF THE NEVADAADMINISTRATIVE CODE. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 90.420(1)(H) AND 90.420(1)(K) OF THE NEVADAUNIFORM SECURITIES ACT AND SECTION 90.327 OF THE NEVADAADMINISTRATIVE CODE IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF NEVADA) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 173 of 450iReporting Source:FirmCurrent Status:Final342©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MINNESOTA DEPARTMENT OF COMMERCEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:10/13/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 80A.07, SUBDIVISION 1(7) OFTHE MINNESOTA UNIFORM SECURITIES ACT IN ISSUING RESEARCHREPORTS. APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES AS REQUIRED BY CHAPTER2875.0910, SUBPARAGRAPH 3 OF THE RULES PROMULGATED BY THEDEPARTMENT OF COMMERCE.Resolution Date:10/13/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING CHAPTER 80A OF THE MINNESOTA UNIFORM SECURITIES ACTAND CHAPTER 2875 OF THE RULES PROMULGATED THEREUNDER. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH CHAPTER 80AOF THE MINNESOTA UNIFORM SECURITIES ACT AND CHAPTER 2875 OFTHE RULES PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $379,051 IS ALLOCATED TO THE STATE OF MINNESOTA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE MINNESOTA DEPARTMENT OFSanctions Ordered:Monetary/Fine $379,051.00Disgorgement/RestitutionCease and Desist/InjunctionConsent343©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCOMMERCE CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING CHAPTER 80A OF THE MINNESOTA UNIFORM SECURITIES ACTAND CHAPTER 2875 OF THE RULES PROMULGATED THEREUNDER. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH CHAPTER 80AOF THE MINNESOTA UNIFORM SECURITIES ACT AND CHAPTER 2875 OFTHE RULES PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $379,051 IS ALLOCATED TO THE STATE OF MINNESOTA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 174 of 450iReporting Source:FirmInitiated By:MARYLAND SECURITIES COMMISSIONERDate Initiated:11/21/2003Allegations:APPLICANT ACTED IN VIOLATION OF SECTION 11-412(A)(7) OF THEMARYLAND SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES AS REQUIRED UNDER SECTION 11-412(A)(10)OF THE MARYLAND SECURITIES ACT.Current Status:Final344©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDocket/Case Number:2002-0887Principal Product Type:OtherOther Product Type(s):RESEARCHResolution Date:11/21/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE MARYLAND SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE MARYLAND SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $408,100 IS ALLOCATED TO THESTATE OF MARYLAND) INCLUDING $25,000,000 AS A PENALTY; $25,000,000AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000TO BE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE SECURITIES COMMISSIONER OFMARYLAND CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDSanctions Ordered:Monetary/Fine $408,100.00Disgorgement/RestitutionCease and Desist/InjunctionConsent345©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE MARYLAND SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE MARYLAND SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $408,100 IS ALLOCATED TO THESTATE OF MARYLAND) INCLUDING $25,000,000 AS A PENALTY; $25,000,000AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000TO BE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 175 of 450iReporting Source:FirmInitiated By:DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE AND SECURITESREGULATIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:DISGORGEMENT AND UNDERTAKINGDate Initiated:11/19/2003Docket/Case Number:SEC. CO 03-08Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 31-5602.07(A)(9) OF THE D.C.SECURITIES ACT OF 2000 IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION31-5602.07(A)(12).Current Status:FinalResolution Date:11/19/2003Resolution:Consent346©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 31-5602(A)(9) AND 31-5602(A)(12) OF THE D.C.SECURITIES ACT OF 2000. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE SECTIONS 31-5602(A)(9) AND 31-5602(A)(12) OF THED.C. SECURITIES ACT OF 2000 IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE DISTRICT OF COLUMBIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE DISTRICT OF COLUMBIADEPARTMENT OF INSURANCE AND SECURITIES REGULATION CERTAINCHARGES ARISING FROM AN INVESTIGATION OF RESEARCH ANALYSTCONFLICTS OF INTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITHCERTAIN OTHER BROKERAGE FIRMS, ARE PART OF A GLOBALSETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUS STATEREGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTIONS 31-5602(A)(9) AND 31-5602(A)(12) OF THE D.C.SECURITIES ACT OF 2000. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE SECTIONS 31-5602(A)(9) AND 31-5602(A)(12) OF THED.C. SECURITIES ACT OF 2000 IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/Injunction347©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE DISTRICT OF COLUMBIA)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 176 of 450iReporting Source:FirmInitiated By:WISCONSIN DEPARTMENT OF FINANCIAL INSTITUTIONS, DIVISION OFSECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT, UNDERTAKINGDate Initiated:10/09/2003Docket/Case Number:NO. S-03108(EX)Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 551.34(1)(G) OF THEWISCONSIN UNIFORM SECURITIES LAW IN ISSUING RESEARCH REPORTS.THE APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION551.34(1)(J) OF THE WISCONSIN UNIFORM SECURITIES LAW.Current Status:FinalResolution Date:10/09/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE WISCONSIN UNIFORM SECURITIES LAW. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE WISCONSIN UNIFORMSECURITIES LAW IN CONNECTION WITH THE RESEARCH PRACTICESSanctions Ordered:Monetary/Fine $413,277.00Disgorgement/RestitutionCease and Desist/InjunctionConsent348©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $413,277 IS ALLOCATEDTO THE STATE OF WISCONSIN) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE WISCONSIN DEPARTMENT OFFINANCIAL INSTITUTIONS, DIVISION OF SECURITIES CERTAIN CHARGESARISING FROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE WISCONSIN UNIFORM SECURITIES LAW. INADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THEWISCONSIN UNIFORM SECURITIES LAW IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $413,277 IS ALLOCATED TO THE STATE OF WISCONSIN) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 177 of 450iReporting Source:FirmCurrent Status:Final349©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MASSACHUSETTS SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT, UNDERTAKINGDate Initiated:10/08/2003Docket/Case Number:N/APrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION SECTION 204(A)(2)(G) OF THEMASSACHUSETTS UNIFORM SECURITIES ACT IN ISSUING RESEARCHREPORTS. THE APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH AS REQUIREDBY SECTION 204(A)(2)(J) OF THE MASSACHUSETTS UNIFORM SECURITIESACT.Resolution Date:10/08/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 204(A)(2)(G) AND (J) OF THE MASSACHUSETTSUNIFORM SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH SECTIONS 204(A)(2)(G) AND (J) OF THEMASSACHUSETTS UNIFORM SECURITIES ACT IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $489,205 IS ALLOCATED TO THE COMMONWEALTH OFMASSACHUSETTS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE MASSACHUSETTS SECURITIESDIVISION CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFSanctions Ordered:Monetary/Fine $489,205.00Disgorgement/RestitutionCease and Desist/InjunctionConsent350©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 204(A)(2)(G) AND (J) OF THE MASSACHUSETTSUNIFORM SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH SECTIONS 204(A)(2)(G) AND (J) OF THEMASSACHUSETTS UNIFORM SECURITIES ACT IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $489,205 IS ALLOCATED TO THE COMMONWEALTH OFMASSACHUSETTS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 178 of 450iReporting Source:FirmInitiated By:KANSAS SECURITIES COMMISSIONERDate Initiated:10/09/2003Docket/Case Number:NO. 2003E051Allegations:APPLICANT ACTED IN VIOLATION OF SECTION17-1254(M)(7) OF THEKANSAS SECURITIES ACT IN ISSUING RESEARCH REPORTS. THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES OF RESEARCH AS REQUIRED BY SECTION17-1254(M)(12) OF THE KANSAS SECURITIES ACT.Current Status:Final351©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT, UNDERTAKINGPrincipal Product Type:OtherOther Product Type(s):RESEARCHResolution Date:10/09/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 17-1254(M)(7) AND (12) OF THE KANSAS SECURITIESACT. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITHSECTIONS 17-1254(M)(7) AND (12) OF THE KANSAS SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THESTATE OF KANSAS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE KANSAS SECURITIES COMMISSIONERCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent352©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 17-1254(M)(7) AND (12) OF THE KANSAS SECURITIESACT. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITHSECTIONS 17-1254(M)(7) AND (12) OF THE KANSAS SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THESTATE OF KANSAS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 179 of 450iReporting Source:FirmInitiated By:INDIANA OFFICE OF THE SECRETARY OF STATE, SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT, UNDERTAKINGDate Initiated:10/08/2003Docket/Case Number:NO. 03-0069 COPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 23-2-1-11(A)(6) OF THEINDIANA SECURITIES ACT AND OF THE 710 INDIANA ADMINISTRATIVECODE 1-17-1(W) IN ISSUING RESEARCH REPORTS. THE APPLICANT ALSOFAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED UNDER SECTION 23-2-1-11(A)(4) OF THE INDIANA SECURITIES ACT AND OF THE 710 INDIANAADMINISTRATIVE CODE 1-17-1(V).Current Status:FinalResolution Date:10/08/2003Resolution:Consent353©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE INDIANA SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE INDIANA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $468,508 IS ALLOCATED TO THESTATE OF INDIANA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE INDIANA SECURITIES COMMISSIONERCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE INDIANA SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE INDIANA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $468,508 IS ALLOCATED TO THESTATE OF INDIANA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASSanctions Ordered:Monetary/Fine $468,508.00Disgorgement/RestitutionCease and Desist/Injunction354©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 180 of 450iReporting Source:FirmInitiated By:ALASKA DIVISION OF BANKING, SECURITIES AND CORPORATIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/29/2003Docket/Case Number:NO. 04-07 SPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 45.55.060(A)(7) OF THEALASKA SECURITIES ACT IN ISSUING RESEARCH REPORTS. APPLICANTALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED BY SECTION 45.55.060(B)(1)OF THE ALASKA SECURITIES ACT.Current Status:FinalResolution Date:09/29/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 45.55.060(A)(7) AND 45.55.060(B)(1) OF THE ALASKASECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 45.55.060(A)(7) AND 45.55.060(B)(1) OF THEALASKA SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent355©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF ALASKA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ALASKA DIVISION OF BANKING,SECURITIES AND CORPORATIONS CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTIONS 45.55.060(A)(7) AND 45.55.060(B)(1) OFTHE ALASKA SECURITIES ACT. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTIONS 45.55.060(A)(7) AND 45.55.060(B)(1)OF THE ALASKA SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF ALASKA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 181 of 450iReporting Source:FirmAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 48-2-112(A)(2)(G) OF THECurrent Status:Final356©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:COMMISSIONER OF COMMERCE AND INSURANCE OF THE STATE OFTENNESSEEPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/29/2003Docket/Case Number:FILE NO. 03-010Principal Product Type:OtherOther Product Type(s):RESEARCHTENNESSEE SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BYSECTION 48-2-112(A)(2)(J) OF THE TENNESSEE SECURITIES ACT.Resolution Date:09/29/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 48-2-112(A)(2)(G) AND 48-2-112(A)(2)(J) OF THETENNESSEE SECURITIES ACT. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTIONS 48-2-112(A)(2)(G) AND 48-2-112(A)(2)(J) OF THE TENNESSEE SECURITIES ACT IN CONNECTION WITHTHE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $438,366 IS ALLOCATED TO THE STATE OFTENNESSEE) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COMMISSIONER OF COMMERCE ANDINSURANCE OF THE STATE OF TENNESSEE CERTAIN CHARGES ARISINGFROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFSanctions Ordered:Monetary/Fine $438,366.00Disgorgement/RestitutionCease and Desist/InjunctionConsent357©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECTIONS 48-2-112(A)(2)(G) AND 48-2-112(A)(2)(J) OF THE TENNESSEE SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECTIONS 48-2-112(A)(2)(G) AND 48-2-112(A)(2)(J) OF THE TENNESSEE SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $438,366 IS ALLOCATED TO THESTATE OF TENNESSEE) INCLUDING $25,000,000 AS A PENALTY; $25,000,000AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000TO BE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 182 of 450iReporting Source:FirmInitiated By:STATE OF COLORADO SECURITIES COMMISSIONERDate Initiated:09/18/2003Docket/Case Number:ORDER NO. 04-L-11Allegations:APPLICANT ACTED IN VIOLATION OF SECTION 11-51-410(1)(G) OF THECOLORADO SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED UNDERSECTION 11-51-*-410(1)(I).Current Status:Final358©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:DISGORGEMENT, PROHIBITION AND UNDERTAKINGPrincipal Product Type:OtherOther Product Type(s):RESEARCHResolution Date:09/18/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT IS PROHIBITED FROM FUTUREVIOLATIONS OF THE COLORADO SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE COLORADOSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $331,417 IS ALLOCATEDTO THE STATE OF COLORADO) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COLORADO SECURITIESCOMMISSIONER CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFSanctions Ordered:Monetary/Fine $333,417.00Disgorgement/RestitutionConsent359©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAN ORDER PROVIDING THAT APPLICANT IS PROHIBITED FROM FUTUREVIOLATIONS OF THE COLORADO SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE COLORADOSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $331,417 IS ALLOCATEDTO THE STATE OF COLORADO) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 183 of 450iReporting Source:RegulatorInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/14/2003Docket/Case Number:CMS030238Principal Product Type:No ProductOther Product Type(s):Allegations:NASD CONDUCT RULE 2110 AND 3010 - RESPONDENT MEMBER'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOSHORT SALES TRANSACTIONS REPORTED TO ACT ON ITS BEHALF.Current Status:FinalResolution Date:10/14/2003Resolution:Acceptance, Waiver & Consent(AWC)360©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:UNDERTAKING - REVISE ITS WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO SHORT SALES TRANSACTIONS REPORTED TO ACT.Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTMEMBER CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THEFOLLOWING SANCTIONS: FINED $5,000.00.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $5,000.00iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Date Initiated:10/14/2003Docket/Case Number:CMS030238Principal Product Type:No ProductOther Product Type(s):Allegations:NASD CONDUCT RULE 2110 AND 3010 - RESPONDENT MEMBER'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOSHORT SALES TRANSACTIONS REPORTED TO AUTOMATEDCONFIRMATION TRANSACTION SERVICE ("ACT") ON ITS BEHALF.Current Status:FinalResolution Date:10/14/2003Resolution:Other Sanctions Ordered:UNDERTAKING - REVISE ITS WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO SHORT SALES TRANSACTIONS REPORTED TO ACT.Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTSanctions Ordered:Monetary/Fine $5,000.00Acceptance, Waiver & Consent(AWC)361©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceMEMBER CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THEFOLLOWING SANCTIONS: FINED $5,000.Firm StatementMEMBER'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOSHORT SALES TRANSACTIONS REPORTED TO ACT ON ITS BEHALF.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTMEMBER CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THEFOLLOWING SANCTIONS: FINED $5,000.Disclosure 184 of 450iReporting Source:FirmInitiated By:NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/08/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION SECTION 49:3-58(A)(2)(VII) OF THE NEWJERSEY UNIFORM SECURITIES LAW IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES IN RESEARCH AS REQUIRED BYSECTION 49:3-58(A)(2)(XI) OF THE NEW JERSEY UNIFORM SECURITIESLAW.Current Status:FinalResolution Date:09/08/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE NEW JERSEY UNIFORM SECURITIES LAW. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE NEW JERSEYSanctions Ordered:Monetary/Fine $648,335.00Disgorgement/RestitutionCease and Desist/InjunctionConsent362©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNIFORM SECURITIES LAW IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $648,335 IS ALLOCATED TO THE STATE OF NEW JERSEY)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE NEW JERSEY BUREAU OFSECURITIES CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE NEW JERSEY UNIFORM SECURITIES LAW. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE NEW JERSEYUNIFORM SECURITIES LAW IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC] MUST PAY A TOTAL OF $80,000,000 (OFWHICH $648,335 IS ALLOCATED TO THE STATE OF NEW JERSEY)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 185 of 450i363©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:PUERTO RICO COMMISSIONER OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/29/2003Docket/Case Number:MATTER NO. C03V-009Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 204(A)(G) OF THE PUERTORICO UNIFORM SECURITIES ACT AND SECTION 26.1 OFREGULATION 6078 PROMULGATED THEREUNDER IN ISSUING RESEARCHREPORTS. APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH AS REQUIREDUNDER SECTION 204(A)(J) OF THE PUERTO RICO UNIFORM SECURITIESACT AND SECTIONS 25.4.4 AND 28.2 OF REGULATION 6078 PROMULGATEDTHEREUNDER.Current Status:FinalResolution Date:09/29/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 204 OF THE PUERTO RICO UNIFORM SECURITIES ACTAND REGULATION 6078 PROMULGATED THEREUNDER. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH SECTION 204 OF THEPUERTO RICO UNIFORM SECURITIES ACT AND REGULATION 6078PROMULGATED THEREUNDER IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $293,457 IS ALLOCATED TO THE COMMONWEALTH OF PUERTOSanctions Ordered:Monetary/Fine $293,457.00Disgorgement/RestitutionCease and Desist/InjunctionConsent364©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRICO) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COMMISSIONER OF FINANCIALINSTITUTIONS OF PUERTO RICO CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECTION 204 OF THE PUERTO RICOUNIFORM SECURITIES ACT AND REGULATION 6078 PROMULGATEDTHEREUNDER. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLYWITH THE SECTION 204 OF THE PUERTO RICO UNIFORM SECURITIES ACTAND REGULATION 6078 PROMULGATED THEREUNDER IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $293,457 IS ALLOCATED TO THE COMMONWEALTHOF PUERTO RICO) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 186 of 450iReporting Source:RegulatorAllegations:RESPONDENT ENGAGED IN UNETHICAL AND DISHONEST PRACTICES INCONNECTION WITH THE OFFER AND SALE OF SECURITIES. RESPONDENTCurrent Status:Final365©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:OREGON DIVISION OF FINANCE AND CORPORATE SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESISTDate Initiated:07/24/2003Docket/Case Number:S-03-0032URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):COMMON STOCKALSO FAILED REASONABLY TO SUPERVISE THEIR EMPLOYEES. ALLALLEGATIONS RELATED TO PRACTICES OF THE RESEARCH ANDINVESTMENT BANKING SECTIONS OF THE RESPONDENT'S FIRM.Resolution Date:09/29/2003Resolution:Other Sanctions Ordered:Sanction Details:NO PORTION OF PENALTY SUSPENDEDRegulator StatementRESEARCH ANALYSTS AT THE FIRM WERE SUBJECTED TO PRESSURESFROM THE INVESTMENT BANKING SECTION OF THE FIRM TO RATE THESTOCKS FAVORABLY SO AS TO GAIN THE INVESTMENT BANKINGBUSINESS OF THE FIRMS ISSUING THE STOCKS.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?YesSanctions Ordered:Monetary/Fine $263,622.00Cease and Desist/InjunctionConsentiReporting Source:FirmAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 59.205(2) OF THE OREGONSECURITIES LAW IN ISSUING RESEARCH REPORTS. APPLICANT ALSOFAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYCurrent Status:Final366©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKING.Date Initiated:09/29/2003Docket/Case Number:S-03-0032Principal Product Type:OtherOther Product Type(s):RESEARCHPROCEDURES FOR RESEARCH AS REQUIRED BY SECTION 59.205(13) OFTHE OREGON SECURITIES LAW.Resolution Date:09/29/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING OREGON SECURITIES LAW. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH OREGON SECURITIES LAW IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $263,622 IS ALLOCATED TO THE STATE OFOREGON) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE OREGON DEPARTMENT OFCONSUMER AND BUSINESS SERVICES CERTAIN CHARGES ARISING FROMAN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST.THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASSanctions Ordered:Monetary/Fine $263,622.00Disgorgement/RestitutionCease and Desist/InjunctionConsent367©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING OREGON SECURITIES LAW. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH OREGON SECURITIES LAWIN CONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $263,622 IS ALLOCATED TO THESTATE OF OREGON) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 187 of 450iReporting Source:FirmInitiated By:WASHINGTON STATE SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGMENT & UNDERTAKING.Date Initiated:09/22/2003Docket/Case Number:S-03-087-03-CO01/ CASE NO. S-03-087Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 21.20.110(1)(G) OF THESECURITIES ACT OF WASHINGTON IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BYSECTION 21.20.110(1)(J) OF THE SECURITIES ACT OF WASHINGTON.Current Status:Final368©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:09/22/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF WASHINGTON. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECURITIES ACT OFWASHINGTON IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $454,149 IS ALLOCATEDTO THE STATE OF WASHINGTON) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE WASHINGTON STATE SECURITIESDIVISION CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF WASHINGTON. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECURITIES ACT OFWASHINGTON IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMSanctions Ordered:Monetary/Fine $454,149.00Disgorgement/RestitutionCease and Desist/InjunctionConsent369©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $454,149 IS ALLOCATEDTO THE STATE OF WASHINGTON) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 188 of 450iReporting Source:FirmInitiated By:VERMONT DEPARTMENT OF BANKING, INSURANCE, SECURITIES ANDHEALTH CAREPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, DISGORGEMENT & UNDERTAKING.Date Initiated:09/23/2003Docket/Case Number:03-064-SPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 4221A(A)(8) OF THEVERMONT SECURITIES ACT IN ISSUING RESEARCH REPORTS. APPLICANTALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED BY SECTION 4221A(A)(11) OFTHE VERMONT SECURITIES ACT.Current Status:FinalResolution Date:09/23/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 4221A(A)(8) AND 4221A(A)(11) OF THE VERMONTSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 4221A(A)(8) AND 4221A(A)(11) OF THE VERMONTSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent370©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF VERMONT) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE VERMONT DEPARTMENT OFBANKING, INSURANCE, SECURITIES AND HEALTH CARE CERTAINCHARGES ARISING FROM AN INVESTIGATION OF RESEARCH ANALYSTCONFLICTS OF INTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITHCERTAIN OTHER BROKERAGE FIRMS, ARE PART OF A GLOBALSETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUS STATEREGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 4221A(A)(8) AND 4221A(A)(11) OF THE VERMONTSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH SECTIONS 4221A(A)(8) AND 4221A(A)(11) OF THE VERMONTSECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF VERMONT) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 189 of 450iReporting Source:Firm371©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF RHODE ISLAND DEPARTMENT OF BUSINESSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, UNDERTAKING AND DISGORGEMENTDate Initiated:09/22/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION7-11-212(B)(8) OF THE RHODEISLAND UNIFORM SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BYSECTION 7-11-212(B)(11) OF THE RHODE ISLAND UNIFORM SECURITIESACT.Current Status:FinalResolution Date:09/22/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE RHODE ISLAND UNIFORM SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE RHODE ISLANDUNIFORM SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE STATE OF RHODE ISLAND)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE RHODE ISLAND DEPARTMENT OFSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent372©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceBUSINESS REGULATION CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE RHODE ISLAND UNIFORM SECURITIES ACTOF 1990 SECTION 7-11-101 ET SEQ. OF THE RHODE ISLAND GENERALLAWS, 1989, AS AMENDED. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH THE RHODE ISLAND UNIFORM SECURITIES ACT OF 1990SECTION 7-11-101 ET SEQ. OF THE RHODE ISLAND GENERAL LAWS, 1989,AS AMENDED IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF RHODE ISLAND) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 190 of 450iReporting Source:FirmInitiated By:MISSISSIPPI SECRETARY OF STATE, BUSINESS REGULATION ANDENFORCEMENT DIVISIONAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 75-71-321(A)(F) OF THEMISSISSIPPI SECURITIES ACT IN CONNECTION WITH ISSUING RESEARCHREPORTS. APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH AS REQUIREDUNDER SECTION 75-71-321(B)(A) OF THE MISSISSIPPI SECURITIES ACT.Current Status:Final373©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, UNDERTAKING & DISGORGEMENTDate Initiated:09/18/2003Docket/Case Number:NO. 02-11-06-SPrincipal Product Type:OtherOther Product Type(s):RESEARCHResolution Date:09/18/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE MISSISSIPPI SECURITIES ACT. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE MISSISSIPPISECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF MISSISSIPPI) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE SECRETARY OF STATE OFMISSISSIPPI CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS FINANCIALSERVICES INC. UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLIONAS DISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent374©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE MISSISSIPPI SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE MISSISSIPPISECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE STATE OF MISSISSIPPI) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 191 of 450iReporting Source:FirmInitiated By:STATE OF MICHIGAN OFFICE OF FINANCIAL AND INSURANCE SERVICESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, UNDERTAKING & DISGORGEMENTDate Initiated:09/11/2003Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 451.604(A)(1)(G) OF THEMICHIGAN UNIFORM SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED BY SECTION451.604(A)(2) OF THE MICHIGAN UNIFORM SECURITIES ACT.Current Status:FinalResolution Date:09/11/2003Resolution:Consent375©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 451.04(A)(1)(G) AND 451.604(A)(2) OF THE MICHIGANUNIFORM SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH SECTIONS 451.04(A)(1)(G) AND 451.604(A)(2) OF THEMICHIGAN UNIFORM SECURITIES ACT IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $765,768 IS ALLOCATED TO THE STATE OF MICHIGAN) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COMMISSIONER OF THE MICHIGANOFFICE OF FINANCIAL AND INSURANCE SERVICES CERTAIN CHARGESARISING FROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTIONS 451.04(A)(1)(G) AND 451.604(A)(2) OFTHE MICHIGAN UNIFORM SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH SECTIONS 451.04(A)(1)(G) AND 451.604(A)(2) OF THE MICHIGAN UNIFORM SECURITIES ACT IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.Sanctions Ordered:Monetary/Fine $765,768.00Disgorgement/RestitutionCease and Desist/Injunction376©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAPPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $765,768 IS ALLOCATED TO THE STATE OFMICHIGAN) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 192 of 450iReporting Source:FirmInitiated By:GEORGIA SECRETARY OF STATE COMMISSIONER OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE & DESIST, UNDERTAKING AND DISGORGEMENTDate Initiated:09/25/2003Docket/Case Number:CASE NO. EN-19520Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTIONS 10-5-4(A)(8) AND 10-5-12(A)(1) OF THE GEORGIA SECURITIES ACT OF 1973 ANDRULE 590-4-2-.14(1) PROMULGATED THEREUNDER IN ISSUING RESEARCHREPORTS. APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES AS REQUIRED BY SECTIONS 10-5-4(A)(11) AND 10-5-12(A)(1) OF THE GEORGIA SECURITIES ACT OF 1973AND RULE 590-4-.08(1) PROMULGATED THEREUNDER.Current Status:FinalResolution Date:09/25/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 10-5-4(A)(8) AND (11) AND 10-5-12(A)(1) OF THEGEORGIA SECURITIES ACT OF 1973 AND RULES 590-4-2-.08(1) AND 590-4-2-.14(1) PROMULGATED THEREUNDER. IN ADDITION THE APPLICANT WASSanctions Ordered:Monetary/Fine $630,775.00Disgorgement/RestitutionCease and Desist/InjunctionConsent377©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceORDERED TO COMPLY WITH THE GEORGIA SECURITIES ACT OF 1973 ANDTHE RULES PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $630,775 IS ALLOCATED TO THE STATE OF GEORGIA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE COMMISSIONER OF SECURITIES OFTHE STATE OF GEORGIA CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE GEORGIA SECURITIES ACT OF 1973 ANDTHE RULES PROMULGATED THEREUNDER. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE GEORGIA SECURITIES ACT OF 1973AND THE RULES PROMULGATED THEREUNDER IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $630,775 IS ALLOCATED TO THE STATE OF GEORGIA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.i378©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 193 of 450Reporting Source:RegulatorInitiated By:FLORIDAPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:09/19/2003Docket/Case Number:0044-S-6/03URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):RESEARCH.Allegations:THE OFFICE FINDS THE FIRM VIOLATED SECTION 517.161(1)(A), FLORIDASTATUTES, AND RULE 3E-600.013(1)(P) BY ENGAGING IN THE ACTS ANDPRACTICES THAT CREATED OR MAINTAINED INAPPROPRIATE INFLUENCEBY THE INVESTMENT BANKING DEPARTMENT OVER RESEARCH ANALYSTSAND FAILING TO MANAGE THESE CONFLICTS IN AN ADEQUATE ORAPPROPRIATE MANNER. FAILING TO ESTABLISH AND MAINTAINSUPERVISORY PROCEDURES TO DETECT AND PREVENT THE INVESTMENTBANKING INFLUENCES. ISSUING REPORTS THAT WERE AFFECTED BYCONFLICTS OF INTEREST THAT WERE IMPOSED ON ITS RESEARCHANALYSTS. MAKING PAYMENTS FOR RESERACH TO OTHER BROKERDEALERS NOT INVOLVED IN UNDERWRITING TRANSACTIONS. RECEIVINGPAYMENTS IN CONJUCTION WITH UNDERWRITING TRANSACTIONS FROMOUTSIDE ENTITIES FOR RESEARCH ISSUED WITHOUT DISCLOSINGRECEIPT OF THOSE PAYMENTS TO THE PUUBLIC.Current Status:FinalResolution Date:09/19/2003Resolution:Order379©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:NARegulator StatementTHE OFFICE FINDS THE FIRM VIOLATED SECTION 517.161(1)(A), FLORIDASTATUTES, AND RULE 3E-600.013(1)(P) BY ENGAGING IN THE ACTS ANDPRACTICES THAT CREATED OR MAINTAINED INAPPROPRIATE INFLUENCEBY THE INVESTMENT BANKING DEPARTMENT OVER RESEARCH ANALYSTSAND FAILING TO MANAGE THESE CONFLICTS IN AN ADEQUATE ORAPPROPRIATE MANNER. FAILING TO ESTABLISH AND MAINTAINSUPERVISORY PROCEDURES TO DETECT AND PREVENT THE INVESTMENTBANKING INFLUENCES. ISSUING REPORTS THAT WERE AFFECTED BYCONFLICTS OF INTEREST THAT WERE IMPOSED ON ITS RESEARCHANALYSTS. MAKING PAYMENTS FOR RESERACH TO OTHER BROKERDEALERS NOT INVOLVED IN UNDERWRITING TRANSACTIONS. RECEIVINGPAYMENTS IN CONJUCTION WITH UNDERWRITING TRANSACTIONS FROMOUTSIDE ENTITIES FOR RESEARCH ISSUED WITHOUT DISCLOSINGRECEIPT OF THOSE PAYMENTS TO THE PUUBLIC.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $1,231,461.00Cease and Desist/InjunctioniReporting Source:FirmInitiated By:FLORIDA OFFICE OF FINANCIAL REGISTRATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:09/19/2003Docket/Case Number:ORDER NO. 0044-S-6/03Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 517.161(1)(A) OF THESECURITIES AND INVESTOR PROTECTION ACT AND RULE 3E-600.013(1)(P)IN ISSUING RESEARCH REPORTS.Current Status:Final380©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CEASE & DESIST; DISGORGEMENT & UNDERTAKINGResolution Date:09/19/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 517.161(1)(A) OF THE FLORIDA SECURITIES ANDINVESTOR PROTECTION ACT AND RULE 3E-600.013(1)(P) OF THE FLORIDAADMINISTRATIVE CODE PROMULGATED THEREUNDER. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECTION 517.161(1)(A)OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT AND RULE3E-600.013(1)(P) OF THE FLORIDA ADMINISTRATIVE CODE PROMULGATEDTHEREUNDER IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $1,231,461 ISALLOCATED TO THE STATE OF FLORIDA) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF FL OFFICE OF FINANCIALREGULATION CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS -$25 MILLION– WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFSanctions Ordered:Monetary/Fine $1,231,461.00Disgorgement/RestitutionCease and Desist/InjunctionConsent381©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTION 517.161(1)(A) OF THE FLORIDA SECURITIES ANDINVESTOR PROTECTION ACT AND RULE 3E-600.013(1)(P) OF THE FLORIDAADMINISTRATIVE CODE PROMULGATED THEREUNDER. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECTION 517.161(1)(A)OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT AND RULE3E-600.013(1)(P) OF THE FLORIDA ADMINISTRATIVE CODE PROMULGATEDTHEREUNDER IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $1,231,461 ISALLOCATED TO THE STATE OF FLORIDA) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 194 of 450iReporting Source:FirmInitiated By:WYOMING SECRETARY OF STATE AND THE WYOMING ATTORNEYGENERALPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/09/2003Docket/Case Number:02-14Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 17-4-106(A)(II)(G) OF THEWYOMING SECURITIES ACT IN ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED UNDERSECTION 17-4-106(B)(II)(A) OF THE WYOMING SECURITIES ACT.Current Status:FinalResolution Date:09/09/2003Resolution:Consent382©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 17-4-106(A)(II)(G) AND 17-4-106(B)(II)(A) OF THEWYOMING SECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDEREDTO COMPLY WITH SECTIONS 17-4-106(A)(II)(G) AND 17-4-106(B)(II)(A) OFTHE WYOMING SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO STATE OF WYOMING GENERAL FUND)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE WYOMING SECRETARY OF STATE ANDTHE WYOMING ATTORNEY GENERAL CERTAIN CHARGES ARISING FROMAN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST.THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTIONS 17-4-106(A)(II)(G) AND 17-4-106(B)(II)(A)OF THE WYOMING SECURITIES ACT. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH SECTIONS 17-4-106(A)(II)(G) AND 17-4-106(B)(II)(A) OF THE WYOMING SECURITIES ACT IN CONNECTION WITH THERESEARCH PRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/Injunction383©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO STATE OF WYOMING GENERAL FUND)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 195 of 450iReporting Source:FirmInitiated By:HAWAII COMMISSIONER OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/10/2003Docket/Case Number:SEU2002-049Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 485-15(7) OF THE HAWAIIUNIFORM SECURITIES ACT IN ISSUING RESEARCH REPORTS. APPLICANTALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATE SUPERVISORYPROCEDURES FOR RESEARCH AS REQUIRED UNDER SECTION 485-15(10).Current Status:FinalResolution Date:09/10/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 485-15(7) AND 485-15(10) OF THE HAWAII UNIFORMSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE HAWAII UNIFORM SECURITIES ACT IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent384©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THE STATE OF HAWAII)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF HAWAII DEPARTMENT OFCOMMERCE AND CONSUMER AFFAIRS CERTAIN CHARGES ARISING FROMAN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST.THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING SECTIONS 485-15(7) AND 485-15(10) OF THEHAWAII UNIFORM SECURITIES ACT. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH THE HAWAII UNIFORM SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THESTATE OF HAWAII) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 196 of 450iReporting Source:FirmAllegations:APPLICANT VIOLATED SECTION 7316(A)(7) OF THE DELAWARE SECURITIESCurrent Status:Final385©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SECURITIES COMMISSIONER OF THE STATE OF DELAWAREPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/11/2003Docket/Case Number:C.A. NO. 03-6-2Principal Product Type:OtherOther Product Type(s):RESEARCHACT IN ISSUING RESEARCH REPORTS. APPLICANT ALSO FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES FORRESEARCH AS REQUIRED UNDER SECTION 7316(A)(10) OF THE DELAWARESECURITIES ACT.Resolution Date:09/11/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE DELAWARE SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE DELAWARE SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO THESECURITIES COMMISSIONER OF THE STATE OF DELAWARE) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE SECURITIES COMMISSIONER OF THESTATE OF DELAWARE CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVESanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent386©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE DELAWARE SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE DELAWARESECURITIES ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIESLLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATEDTO THE SECURITIES COMMISSIONER OF THE STATE OF DELAWARE)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 197 of 450iReporting Source:RegulatorInitiated By:NASDPrincipal Sanction(s)/ReliefSought:OtherDate Initiated:09/19/2003Docket/Case Number:CMS030220Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESAllegations:NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6955(A) - THERESPONDENT MEMBER ("FIRM") FAILED TO PROVIDE THE ROUTING FIRMNEW ORDER REPORTS SUBMITTED BY FIRM FOR WHOLESALE ORDERSRECEIVED ELECTRONICALLY FROM ANOTHER REPORTING MEMBER.Current Status:Final387©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:UNKNOWN TYPE OF SECURITIESResolution Date:09/19/2003Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTMEMBER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED$7,500.Sanctions Ordered:CensureMonetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Date Initiated:09/19/2003Docket/Case Number:CMS 030220Principal Product Type:No ProductOther Product Type(s):Allegations:NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6955(A) - THERESPONDENT MEMBER ("FIRM") FAILED TO PROVIDE THE ROUTING FIRMNEW ORDER REPORTS SUBMITTED BY FIRM FOR WHOLESALE ORDERSRECEIVED ELECTRONICALLY FROM ANOTHER REPORTING MEMBER.Current Status:FinalResolution Date:09/19/2003Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTSanctions Ordered:CensureMonetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)388©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceMEMBER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED$7,500.Firm StatementTHE NASD FOUND THAT UBS FINANCIAL SERVICES FAILED TO PROVIDETHE ROUTING FIRM NEW ORDER REPORTS SUBMITTED BY FIRM FORWHOLESALE ORDERS RECEIVED ELECTRONICALLY FROM ANOTHERREPORTING MEMBER.THE FIRM WAS CENSURED AND FINED $7,500.Disclosure 198 of 450iReporting Source:RegulatorInitiated By:TEXASDate Initiated:09/17/2003Allegations:THE SECURITIES COMMISSIONER FINDS THAT UBS PAINEWEBBER INC.AND UBS WARBURG LLC (COLLECTIVELY REFERRED TO AS THEFIRM)VIOLATED THE SECTION 14.A(3) OF THE TEXAS SECURITIES ACTRELATING TO INEQUITABLE PRACTICES IN THE SALE OF SECURITIES ANDSECTION 115.10 OF THE RULES & REGULATIONS OF THE TEXAS STATESECURITIES BOARD BY 1) ENGAGING IN ACTS & PRACTICES THATCREATED OR MAINTAINED INAPPROPRIATE INFLUENCE BY THEINVESTMENT BANKING DEPT OVER RESEARCH ANALYSTS, THEREFOREIMPOSING CONFLICTS OF INTEREST ON ITS RESEARCH ANALYSTS ANDFAILING TO MANAGE THESE CONFLICTS IN AN ADEQUATE ORAPPROPRIATE MANNER, 2) ISSUING RESEARCH REPORTS THAT WEREAFFECTED BY THE CONFLICTS OF INTEREST IMPOSED ON ITS RESEARCHANALYSTS AS DESCRIBED ABOVE, 3) MAKING PAYMENTS FOR RESEARCHTO OTHER BROKER-DEALERS NOT INVOLVED IN UNDERWRITINGTRANSACTIONS WHEN THE FIRM KNEW THAT THESE PAYMENTS WEREMADE, AT LEAST IN PART, FOR RESEARCH COVERAGE, AND BY FAILING TODISCLOSE OR CAUSE TO BE DISCLOSED IN OFFERING DOCUMENTS ORELSEWHERE THE FACT OF SUCH PAYMENTS AND 4) RECEIVING PAYMENTSIN CONJUNCTION WITH UNDERWRITING TRANSACTIONS FROM OUTSIDEENTITIES FOR RESEARCH ISSUED W/O DISCLOSING RECEIPT OF THOSEPAYMENTS TO THE PUBLIC AS REQUIRED BY SECTION 17(B) OF THESECURITIES ACT OF 1933, AS AMENDED AND THE FIRM VIOLATED SECTION115.10 OF THE BOARD RULES BY FAILING SUPERVISION AND CONTROL OFRESEARCH & INVESTMENT BANKING DEPTS REASONABLY DESIGNED TODETECT AND PREVENT THE FOREGOING INVESTMENT BANKINGINFLUENCES & MANAGE THE CONFLICTS OF INTEREST TO ASSURECOMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS.Current Status:Final389©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CEASE & DESIST FROM VIOLATING THE TEXAS SECURITIES ACT & COMPLYWITH THE UNDERTAKINGS ATTACHED TO THE ORDER AS WELL AS ANADMINISTRATIVE FINE.Docket/Case Number:SSB DKT NO 03-38;ORDER NO CDO/FIN-1535URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Resolution Date:09/17/2003Resolution:Other Sanctions Ordered:CEASE & DESIST FROM VIOLATING THE TEXAS SECURITIES ACT ANDCOMPLYING WITH THE UNDERTAKINGS ATTACHED TO THE ORDER.Sanction Details:$1,606,657 WAS PAID CONTEMPORANEOUSLY WITH THE DELIVERY OF THEORDER.Sanctions Ordered:Monetary/Fine $1,606,657.00OrderiReporting Source:FirmInitiated By:TEXAS STATE SECURITIES BOARDPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:09/17/2003Docket/Case Number:DOCKET NO. 03-038,ORDER NO. CDO/FIN-1535Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 14.A(3) OF THE TEXASSECURITIES ACT IN CONNECTION WITH ISSUING RESEARCH REPORTS.APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED UNDERSECTION 115.10 OF THE RULES AND REGULATIONS OF THE TEXAS STATESECURITIES BOARD.Current Status:Final390©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:09/17/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE TEXAS SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE TEXAS SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $1,606,657 IS ALLOCATED TO THESTATE OF TEXAS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE TEXAS STATE SECURITIES BOARDCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE TEXAS SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE TEXAS SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHSanctions Ordered:Monetary/Fine $1,606,657.00Disgorgement/RestitutionCease and Desist/InjunctionConsent391©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $1,606,657 IS ALLOCATED TO THESTATE OF TEXAS) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 199 of 450iReporting Source:FirmInitiated By:ARKANSAS SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKING.Date Initiated:08/14/2003Docket/Case Number:S-03-016-03-C007Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE FIRM ENGAGED IN ACTS AND PRACTICES IN VIOLATION OF ARKANSASSECURITIES ACT, SECTION 23-42-308(A)(2)(G) IN CONNECTION WITHISSUING RESEARCH REPORTS. THE FIRM ALSO FAILED TO ESTABLISHAND MAINTAIN ADEQUATE SUPERVISORY PROCEDURES FOR RESEARCHAS REQUIRED UNDER SECTION 23-42-308(A)(2)(J).Current Status:FinalResolution Date:08/14/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 23-42-308(A)(2)(G) AND (A)(2)(J) OF ARKANSASSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE SECTIONS 23-42-308(A)(2)(G) AND (A)(2)(J) OFARKANSAS SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent392©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $250,000 IS ALLOCATED TO THE ARKANSAS SECURITIESDEPARTMENT) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ARKANSAS SECURITIESDEPARTMENT CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTIONS 23-42-308(A)(2)(G) AND (A)(2)(J) OF ARKANSASSECURITIES ACT. IN ADDITION THE APPLICANT WAS ORDERED TOCOMPLY WITH THE SECTIONS 23-42-308(A)(2)(G) AND (A)(2)(J) OFARKANSAS SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND UBSSECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH $250,000 ISALLOCATED TO ARKANSAS SECURITIES DEPARTMENT) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 200 of 450iReporting Source:Regulator393©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MAINE OFFICE OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Date Initiated:05/30/2002Docket/Case Number:03-109URL for Regulatory Action:Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):Allegations:THE FIRM ENGAGED IN UNETHICAL AND DISHONEST CONDUCT BY FAILINGTO ENSURE THAT ANALYSTS WHO ISSUED RESEARCH WERE ADEQUATELYINSULATED FROM PRESSURES AND INFLUENCES OF COVEREDCOMPANIES AND INVESTMENT BANKING. THE FIRM ALSO FAILED TOREASONABLY SUPERVISE ITS EMPLOYEES IN CONNECTION WITH THEISSUANCE OF RESEARCH.Current Status:FinalResolution Date:08/25/2003Resolution:Other Sanctions Ordered:Sanction Details:PENALTY OF $250,000 WAS PAID ON 8/25/2003.Regulator StatementTHE FIRM WAS ORDERED TO CEASE AND DESIST FROM VIOLATING THERMSA IN CONNECTION WITH CERTAIN CONFLICTS OF INTEREST TO WHICHITS RESEARCH ANALYSTS WERE SUBJECT AND TO IMPLEMENT CERTAINCHANGES WITH RESPECT TO ITS RESEARCH AND BANKING PRACTICES.THE CONSENT ORDER WAS EXECUTED AS PART OF A GLOBALSETTLEMENT OF COORDINATED INVESTIGATIONS ENTERED INTO BYFEDERAL AND STATE REGULATORS, AND SEVERAL LARGE BROKER-DEALERS WHO ENGAGED IN THE RESEARCH PRACTICES AT ISSUE.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoSanctions Ordered:Monetary/Fine $250,000.00Cease and Desist/InjunctionOrder394©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:STATE OF MAINE DEPARTMENT OF PROFESSIONAL AND FINANCIALREGULATIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:08/25/2003Docket/Case Number:03-109Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF THE REVISED MAINE SECURITIES ACT,32 M.R.S.A. SECTION 10313(1)(G) IN CONNECTION WITH ISSUINGRESEARCH REPORTS. APPLICANT ALSO FAILED TO ESTABLISH ANDMAINTAIN ADEQUATE SUPERVISORY PROCEDURES AS REQUIRED UNDER32M.R.S.A. SECTION 10313(1)(J).Current Status:FinalResolution Date:08/25/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTIONS 10313(1)(G) AND 10313(1)(J) OF THE REVISEDMAINE SECURITIES ACT, 32 M.R.S.A. SECTIONS 10101 – 10713. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE SECTIONS10313(1)(G) AND 10313(1)(J) OF THE REVISED MAINE SECURITIES ACT, 32M.R.S.A. SECTIONS 10101 – 10713 IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS SERVICES LLC MUST PAY A TOTAL OF $80,000,000 (OFSanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent395©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWHICH $250,000 IS ALLOCATED TO STATE OF MAINE OFFICE OFSECURITIES) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE STATE OF MAINE DEPARTMENT OFPROFESSIONAL AND FINANCIAL REGULATION CERTAIN CHARGES ARISINGFROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SERVICES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECTIONS 10313(1)(G) AND 10313(1)(J) OFTHE REVISED MAINE SECURITIES ACT, 32 M.R.S.A. SECTIONS 10101 –10713. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THESECTIONS 10313(1)(G) AND 10313(1)(J) OF THE REVISED MAINESECURITIES ACT, 32 M.R.S.A. SECTIONS 10101 – 10713 IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SERVICES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $250,000 IS ALLOCATED TO STATE OF MAINEOFFICE OF SECURITIES) INCLUDING $25,000,000 AS A PENALTY;$25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHER MONIES,$25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 201 of 450iReporting Source:FirmAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 30-1413(7) OF THE IDAHOCurrent Status:Final396©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:DEPARTMENT OF FINANCE OF THE STATE OF IDAHOPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:08/22/2003Docket/Case Number:2003-7-19Principal Product Type:OtherOther Product Type(s):RESEARCHSECURITIES ACT IN CONNECTION WITH ISSUING RESEARCH REPORTS.THEAPPLICANT ALSO FAILED TO ESTABLISH AND MAINTAIN ADEQUATESUPERVISORY PROCEDURES FOR RESEARCH AS REQUIRED UNDERSECTION12.01.08.119 OF THE IDAHO ADMINISTRATIVE PROCEDURES ACT.Resolution Date:08/22/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTION 30-1413(7) OF THE IDAHO SECURITIES ACT ANDSECTION 12.01.08.119 OF THE IDAHO ADMINISTRATIVE PROCEDURES ACT.IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THESECTION 30-1413(7) OF THE IDAHO SECURITIES ACT AND SECTION12.01.08.119 OF THE IDAHO ADMINISTRATIVE PROCEDURES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SERVICES LLC. MUST PAYA TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO IDAHO)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATIONFirm StatementAPPLICANT HAS SETTLED WITH THE DEPARTMENT OF FINANCE OF THESanctions Ordered:Monetary/Fine $250,000.00Disgorgement/RestitutionCease and Desist/InjunctionConsent397©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSTATE OF IDAHO CERTAIN CHARGES ARISING FROM AN INVESTIGATIONOF RESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT,AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PARTOF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THEVARIOUS STATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PARTOF THE SETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SERVICESLLC HAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTION 30-1413(7) OF THE IDAHO SECURITIES ACT ANDSECTION 12.01.08.119 OF THE IDAHO ADMINISTRATIVE PROCEDURES ACT.IN ADDITION THE APPLICANT WAS ORDERED TO COMPLY WITH THESECTION 30-1413(7) OF THE IDAHO SECURITIES ACT AND SECTION12.01.08.119 OF THE IDAHO ADMINISTRATIVE PROCEDURES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SERVICES LLC MUST PAYA TOTAL OF $80,000,000 (OF WHICH $250,000 IS ALLOCATED TO IDAHO)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 202 of 450iReporting Source:FirmAllegations:APPLICANT ACTED IN VIOLATION OF SECTION 292.330(13)(A)7 OF THESECURITIES ACT OF KENTUCKY IN CONNECTION WITH ISSUINGRESEARCHREPORTS. APPLICANT ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH AS REQUIREDUNDERSECTION 292.330(13)(A)9A OF THE SECURITIES ACT OF KENTUCKY.Current Status:Final398©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:KENTUCKY DEPARTMENT OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKINGDate Initiated:08/21/2003Docket/Case Number:Principal Product Type:OtherOther Product Type(s):RESEARCHResolution Date:08/21/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING SECTIONS 292.330(13)(A)7 AND 292.330(13)(A)9A OF THESECURITIES ACT OF KENTUCKY. IN ADDITION THE APPLICANT WASORDERED TO COMPLY WITH THE SECTIONS 292.330(13)(A)7 AND 292.330(13)(A)9A OF THE SECURITIES ACT OF KENTUCKY IN CONNECTIONWITH THE RESEARCH PRACTICES REFERENCED IN THE ORDER AND WITHCERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIES ANDPROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $311,423 IS ALLOCATED TO THE KENTUCKYDEPARTMENT OF FINANCIAL INSTITUTIONS) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE KENTUCKY DEPARTMENT OFFINANCIAL INSTITUTIONS CERTAIN CHARGES ARISING FROM ANINVESTIGATION OF RESEARCH ANALYST CONFLICTS OF INTEREST. THISSETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHER BROKERAGEFIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMS HAVEREACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC, NASD,AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SERVICES LLC HAVE AGREED TO PAY $25 MILLION ASSanctions Ordered:Monetary/Fine $311,423.00Disgorgement/RestitutionCease and Desist/InjunctionConsent399©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAWCONTAINED IN THE CONSENT ORDER, THE APPLICANT CONSENTED TOTHE ENTRY OF AN ORDER PROVIDING THAT APPLICANT WILL CEASE ANDDESIST FROM VIOLATING THE SECTIONS 292.330(13)(A)7 AND 292.330(13)(A)9A OF THE SECURITIES ACT OF KENTUCKY. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECTIONS 292.330(13)(A)7 AND 292.330(13)(A)9A OF THE SECURITIES ACT OF KENTUCKYIN CONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SERVICES LLC MUST PAYA TOTAL OF $80,000,000 (OF WHICH $311,423 IS ALLOCATED TO KENTUCKYDEPARTMENT OF FINANCIAL INSTITUTIONS) INCLUDING $25,000,000 AS APENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS AND OTHERMONIES, $25,000,000 TO BE USED FOR PROCUREMENT OF INDEPENDENTRESEARCH AND $5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 203 of 450iReporting Source:FirmInitiated By:ATTORNEY GENERAL OF THE STATE OF NEW YORK BUREAU OFINVESTMENT PROTECTIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Date Initiated:08/21/2003Docket/Case Number:Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ACTED IN VIOLATION OF THE MARTIN ACT (ARTICLE 23-A OFTHE GENERAL BUSINESS LAW) IN CONNECTION WITH ISSUING RESEARCHREPORTS.Current Status:Final400©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKING.Resolution Date:08/21/2003Resolution:Other Sanctions Ordered:Sanction Details:ASSURANCE OF DISCONTINUANCE PROVIDING THAT APPLICANT WILLCEASE AND DESIST FROM ENGAGING IN ACTS IN VIOLATION OF THEMARTIN ACT IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ASSURANCE OF DISCONTINUANCE AND WILLCOMPLY WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCED POLICIESAND PROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICESINCLUDING THAT APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC WILLNOT MAKE ALLOCATIONS OF "HOT" IPOS TO AN ACCOUNT OF ANEXECUTIVE OFFICER OR DIRECTOR OF A PUBLIC COMPANY. APPLICANTAND UBS SECURITIES LLC MUST PAY A TOTAL OF $80,000,000 (OF WHICH$1,462,158 IS ALLOCATED TO NEW YORK STATE) INCLUDING $25,000,000 ASA PENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS ANDOTHER MONIES, $25,000,000 TO BE USED FOR PROCUREMENT OFINDEPENDENT RESEARCH AND $5,000,000 TO BE USED FOR INVESTOREDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ATTORNEY GENERAL OF THE STATEOF NEW YORK BUREAU OF INVESTMENT PROTECTION CERTAIN CHARGESARISING FROM AN INVESTIGATION OF RESEARCH ANALYST CONFLICTS OFINTEREST. THIS SETTLEMENT, AND SETTLEMENTS WITH CERTAIN OTHERBROKERAGE FIRMS, ARE PART OF A GLOBAL SETTLEMENT CERTAIN FIRMSHAVE REACHED WITH THE VARIOUS STATE REGULATORS AND THE SEC,NASD, AND NYSE. AS PART OF THE SETTLEMENT, THE APPLICANT AND ITSAFFILIATE UBS SECURITIES LLC HAVE AGREED TO PAY $25 MILLION ASDISGORGEMENT AND AN ADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OF THESE PAYMENTS - $25 MILLION – WILL BE PAID INCONNECTION WITH RELATED PROCEEDINGS BY THE SEC, NASD ANDNYSE AND WILL BE PLACED INTO A DISTRIBUTION FUND FOR THE BENEFITOF CERTAIN CUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVERELATED PROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTINGOR DENYING THE FINDINGS OR LEGAL CONCLUSIONS CONTAINED IN THEASSURANCE OF DISCONTINUANCE, THE APPLICANT ENTERED INTO THEASSURANCE OF DISCONTINUANCE PROVIDING THAT APPLICANT WILLCEASE AND DESIST FROM VIOLATING THE MARTIN ACT IN CONNECTIONSanctions Ordered:Monetary/Fine $1,462,158.00Disgorgement/RestitutionCease and Desist/InjunctionOther401©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWITH THE RESEARCH PRACTICES REFERENCED IN THE ASSURANCE OFDISCONTINUANCE AND WILL COMPLY WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES INCLUDING THAT APPLICANT AND UBSSECURITIES LLC WILL NOT MAKE ALLOCATIONS OF "HOT" IPOS TO ANYACCOUNT OF ANY EXECUTIVE OFFICER OR DIRECTOR OF A PUBLICCOMPANY. APPLICANT AND UBS SECURITIES LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $1,462,158 IS ALLOCATED TO NEW YORK STATE)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 204 of 450iReporting Source:FirmInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT AND UNDERTAKING.Date Initiated:08/21/2003Docket/Case Number:CO-2003-018Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:THE FIRM ENGAGED IN ACTS AND PRACTICES IN CONNECTION WITHISSUING RESEARCH REPORTS IN VIOLATION OF SECTION 8-6-3(J)(7) OFTHE ALABAMA SECURITIES ACT AND RULE 830-X-2-.06(2) PROMULGATEDTHEREUNDER. THE FIRM ALSO FAILED TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY PROCEDURES FOR RESEARCH AS REQUIREDBY RULE 830-X-3-.13(1) & (3).Current Status:FinalResolution Date:08/21/2003Resolution:Sanctions Ordered:Monetary/Fine $342,654.00Disgorgement/RestitutionCease and Desist/InjunctionConsent402©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTIONS 8-6-3(J)(7) OF THE ALABAMA SECURITIES ACTAND RULES 830-X-3-.13(1)&(3) AND 830-X-2-.06(2) PROMULGATEDTHEREUNDER. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLYWITH THE SECTIONS 8-6-3(J)(7) OF THE ALABAMA SECURITIES ACT ANDRULES 830-X-3-.13(1)&(3) AND 830-X-2-.06(2) PROMULGATED THEREUNDERIN CONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS SECURITIES LLC MUSTPAY A TOTAL OF $80,000,000 (OF WHICH $342,654 IS ALLOCATED TOALABAMA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ALABAMA SECURITIES COMMISSIONCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS SECURITIES LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECTIONS 8-6-3(J)(7) OF THE ALABAMA SECURITIES ACTAND RULES 830-X-3-.13(1)&(3) AND 830-X-2-.06(2) PROMULGATEDTHEREUNDER. IN ADDITION THE APPLICANT WAS ORDERED TO COMPLYWITH THE SECTIONS 8-6-3(J)(7) OF THE ALABAMA SECURITIES ACT ANDRULES 830-X-3-.13(1)&(3) AND 830-X-2-.06(2) PROMULGATED THEREUNDERIN CONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND UBS SECURITIES LLC MUST PAY A TOTAL OF403©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$80,000,000 (OF WHICH $342,654 IS ALLOCATED TO ALABAMA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 205 of 450iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:ALSO AGREED TO THE PAYMENT OF A CIVIL PENALTY.Date Initiated:08/20/2003Docket/Case Number:3-11230Principal Product Type:No ProductOther Product Type(s):Allegations:PAINEWEBBER ("UBSPW", AND CURRENTLY KNOWN AS UBS FINANCIALSERVICES INC) SUBMITTED AN OFFER OF SETTLEMENT TO THE U.S.SECURITIES AND EXCHANGE COMMISSION ("SEC") IN CONNECTION WITHITS INVESTIGATION INTO THE CONDUCT OF ENRIQUE E. PERUSQUIA, AFORMER REGISTERED REPRESENTATIVE OF UBSPW.Current Status:FinalResolution Date:08/20/2003Resolution:Other Sanctions Ordered:Sanction Details:THE ORDER REQUIRED UBS PAINEWEBBER TO PAY A CIVIL PENALTY.Firm StatementPAINEWEBBER ("UBSPW", AND CURRENTLY KNOWN AS UBS FINANCIALSERVICES INC. ) SUBMITTED AN OFFER OF SETTLEMENT TO THE U.S.SECURITIES AND EXCHANGE COMMISSION ("SEC") IN CONNECTION WITHITS INVESTIGATION INTO THE CONDUCT OF ENRIQUE E. PERUSQUIA, AFORMER REGISTERED REPRESENTATIVE OF UBSPW. IN THE OFFER OFSETTLEMENT, WHICH WAS ACCEPTED BY THE SEC ON AUGUST 20, 2003,UBSPW, WITHOUT ADMITTING OR DENYING THE FINDINGS, CONSENTEDSanctions Ordered:CensureMonetary/Fine $500,000.00Settled404©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTO THE ENTRY OF AN ADMINISTRATIVE ORDER INSTITUTING ANDSETTLING PROCEEDINGS ("ORDER") THAT IT FAILED TO REASONABLYSUPERVISE ENRIQUE E. PERUSQUIA. THE ORDER CENSURED UBSPW ANDREQUIRED IT TO PAY A CIVIL PENALTY OF $500,000.Disclosure 206 of 450iReporting Source:RegulatorInitiated By:NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENTDate Initiated:04/23/2003Docket/Case Number:HPD#: 03-98Principal Product Type:OtherOther Product Type(s):Allegations:**4/23/03**STIPULATION AND CONSENT TO PENALTY FILED BY NYSEDIVISION OF ENFORCEMENT AND PENDING.CONSENTED TO FINDINGS:A.FINDINGS BY THE HEARING PANEL THAT THE FIRM:ENGAGED INCONDUCT INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OFTRADE IN THAT IT RECOMMENDED AND SOLD CALLABLE CDS, WHICHWERE UNSUITABLE FOR CERTAIN CUSTOMERS IN VIEW OF THECUSTOMERS’ AGES, INVESTMENT OBJECTIVES, FINANCIALRESOURCES AND CONCENTRATION LEVELS IN THEIRACCOUNTS.VIOLATED EXCHANGE RULE 342(A) AND (B) IN THAT THE FIRMFAILED TO ESTABLISH AND MAINTAIN APPROPRIATE PROCEDURES FORSUPERVISION AND CONTROL OF THE MARKETING AND SALES OFCALLABLE CDS, BY:(I)FAILING TO PROVIDE ADEQUATE TRAINING TO ALLREGISTERED REPRESENTATIVES WITH RESPECT TO CALLABLE CDS;(II) FAILING TO ENSURE THAT MARKETING AND SALES WERE DIRECTEDTO PROSPECTIVE CUSTOMERS FOR WHICH THE PRODUCT WASSUITABLE; AND (III) FAILING TO ENSURE THAT THERE WAS TIMELY ANDADEQUATE DISCLOSURE OF THE POTENTIAL RISKS.VIOLATED EXCHANGERULE 405(1) BY FAILING TO USE DUE DILIGENCE TO LEARN ESSENTIALFACTS REGARDING CERTAIN CUSTOMERS.VIOLATED EXCHANGE RULE 401 IN THAT THE FIRM FAILED TO ADHERE TOTHE PRINCIPLES OF GOOD BUSINESS PRACTICE IN THAT IT FAILED TOCOMMUNICATE ESSENTIAL FACTS AND MAKE ADEQUATE DISCLOSURESTO CUSTOMERS IN TRADE CONFIRMATIONS AND ACCOUNT STATEMENTSRELATING TO CALLABLE CDS. B. THE IMPOSITION BY THE EXCHANGEOF THE PENALTY OF A CENSURE AND A FINE OF $175,000.Current Status:Final405©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:07/11/2003Resolution:Other Sanctions Ordered:Sanction Details:**6/4/03**DECISION 03-98 ISSUED BY NYSE HEARING PANELDECISION:RECOMMENDED AND SOLD CALLABLE CDS WHICH WEREUNSUITABLE FOR CERTAIN CUSTOMERS, VIOLATED EXCHANGE RULE342(A) AND (B) IN THAT THE FIRM FAILED TO ESTABLISH AND MAINTAINAPPROPRIATE PROCEDURES FOR SUPERVISION AND CONTROL OF THEMARKETING AND A SALES OF CALLABLE CDS IN CERTAIN SPECIFIEDRESPECTS, VIOLATED EXCHANGE RULE 405(1) BY FAILING TO USE DUEDILIGENCE TO LEARN ESSENTIAL FACTS REGARDING CERTAINCUSTOMERS, VIOLATED EXCHANGE RULE 401 IN THAT THE FIRM FAILEDTO ADHERE TO THE PRINCIPLES OF GOOD BUSINESS PRACTICE IN THATIT FAILED TO COMMUNICATE ESSENTIAL FACTS AND MAKE ADEQUATEDISCLOSURES TO CUSTOMERS IN TRADE CONFIRMATIONS AND ACCOUNTSTATEMENTS RELATING TO CALLABLE CDSPENALTY IMPOSED OF A CENSURE AND $175,000.Regulator Statement**7/11/03**THE DECISION IS NOW FINAL AND EFFECTIVEIMMEDIATELY.CONTACT:EVELYN PENA 212-656-5211Sanctions Ordered:CensureMonetary/Fine $175,000.00DecisioniReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGEDate Initiated:04/23/2003Docket/Case Number:HPD#03-98Allegations:ON 05/14/2003 THE APPLICANT REPORTED THAT THE NYSE ALLEGED THATTHE FIRM VIOLATED CERTAIN NYSE RULES IN CONNECTION WITH THESALE AND MARKETING OF CALLABLE CD'S BY NOT EXERCISING DUEDILIGENCE TO LEARN CERTAIN ESSENTIAL FACTS ABOUT CERTAINCUSTOMERS AND BY NOT MAKING CERTAIN ADEQUATE DISCLOSURESRELATING TO CALLABLE CD'S. THE CONDUCT ENDED IN 2000Current Status:Final406©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Principal Product Type:OtherOther Product Type(s):Resolution Date:06/29/2003Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM CONSENTED TO A CENSURE AND $175,000.00. THE DECISIONBECAME FINAL 25 CALENDAR DAYS AFTER NOTICE OF THE HEARING ONJUNE 4, 2003.Sanctions Ordered:Monetary/Fine $175,000.00ConsentDisclosure 207 of 450iReporting Source:FirmInitiated By:ARIZONA CORPORATION COMMISSIONPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST; DISGORGEMENT; UNDERTAKINGDate Initiated:04/28/2003Docket/Case Number:DOCKET NO. S-03498A-03-0000Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT COMMITTED DISHONEST AND UNETHICAL PRACTICES IN THESECURITIES BUSINESS UNDER ARS 44-1961(A)(13) WITHIN MEANING OFAAC R14-4-130.Current Status:FinalResolution Date:04/28/2003Resolution:Sanctions Ordered:Monetary/Fine $395,321.00Order407©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF ARIZONA. IN ADDITION THEAPPLICANT WAS ORDER TO COMPLY WITH THE SECURITIES ACT OFARIZONA WITH THE RESEARCH PRACTICES REFERENCED IN THE ORDERAND WITH CERTAIN UNDERTAKINGS TO ADOPT ENCHANGED POLICIESAND PROCEDURES REASONABLY DESIGNED TO ADDRESS POTENTIALCONFLICTS OF INTEREST ARISING FROM RESEARCH PRACTICES.APPLICANT AND ITS AFFILIATE UBS WARBURG LLC MUST PAY A TOTAL OF$80,000,000 (OF WHICH $395,321 IS ALLOCATED TO ARIZONA) INCLUDING$25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ARIZONA SECURITIES COMMISSIONCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS WARBURG LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE SECURITIES ACT OF ARIZONA. IN ADDITION THEAPPLICANT WAS ORDERED TO COMPLY WITH THE SECURITIES ACT OFARIZONA IN CONNECTION WITH THE RESEARCH PRACTICESREFERENCED IN THE ORDER AND WITH CERTAIN UNDERTAKINGS TOADOPT ENHANCED POLICIES AND PROCEDURES REASONABLY DESIGNEDTO ADDRESS POTENTIAL CONFLICTS OF INTEREST ARISING FROMRESEARCH PRACTICES. APPLICANT AND ITS AFFILIATE UBS WARBURGLLC. MUST PAY A TOTAL OF $80,000,000 (OF WHICH $395.321 IS ALLOCATEDTO ARIZONA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disgorgement/Restitution408©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 208 of 450iReporting Source:FirmInitiated By:STATE OF OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST, DISGORGEMENT, UNDERTAKING.Date Initiated:04/28/2003Docket/Case Number:ODS FILE NO. 03-088Principal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT VIOLATED THE OKLAHOMA SECURITIES ACT AND/ OR THERULES OF THE OKLAHOMA SECURITIES DEPARTMENT BY ENGAGING INDISHONEST AND UNETHICAL PRACTICES AND FAILING TO MAINTAINADEQUATE SUPERVISORY PROCEDURES.Current Status:FinalResolution Date:04/28/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE OKLAHOMA SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE OKLAHOMA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS WARBURG LLC MUST PAYA TOTAL OF $80,000,000 (OF WHICH $265,877 IS ALLOCATED TOOKLAHOMA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Sanctions Ordered:Monetary/Fine $265,877.00Disgorgement/RestitutionCease and Desist/InjunctionOrder409©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm StatementAPPLICANT HAS SETTLED WITH THE OKLAHOMA DEPARTMENT OFSECURITIES CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS WARBURG LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE OKLAHOMA SECURITIES ACT. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE OKLAHOMA SECURITIES ACT INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS WARBURG LLC. MUST PAYA TOTAL OF $80,000,000 (OF WHICH $265,877 IS ALLOCATED TOOKLAHOMA) INCLUDING $25,000,000 AS A PENALTY; $25,000,000 ASDISGORGEMENT OF COMMISSIONS AND OTHER MONIES, $25,000,000 TOBE USED FOR PROCUREMENT OF INDEPENDENT RESEARCH AND$5,000,000 TO BE USED FOR INVESTOR EDUCATION.Disclosure 209 of 450iReporting Source:FirmInitiated By:STATE OF ILLINOIS, SECRETARY OF STATE, SECURITIES DEPARTMENTDate Initiated:04/28/2003Docket/Case Number:FILE NUMBER 0200674Principal Product Type:OtherAllegations:VIOLATIONS OF SECTIONS 8.E.(1)(B) AND 8.12.A. OF ILLINOIS SECURITIESLAWS OF 1953 AND FAILURE TO MAINTAIN ADEQUATE SUPERVISORYPROCEDURES IN VIOLATION OF SECTION 8.E.1.(E)(IV)OF THE ACT.Current Status:Final410©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST; DISGORGEMENT; UNDERTAKINGOther Product Type(s):RESEARCHResolution Date:04/28/2003Resolution:Other Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE ILLINOIS SECURITIES LAW. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE ILLINOIS SECURITIES LAW INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS WARBURG LLC MUST PAYA TOTAL OF $80,000,000 (OF WHICH $956,921.00 IS ALLOCATED TO ILLINOIS)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE ILLINOIS SECURITIES DEPARTMENTCERTAIN CHARGES ARISING FROM AN INVESTIGATION OF RESEARCHANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS WARBURG LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMSanctions Ordered:Monetary/Fine $956,921.00Disgorgement/RestitutionCease and Desist/InjunctionOrder411©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceVIOLATING THE ILLINOIS SECURITIES LAW. IN ADDITION THE APPLICANTWAS ORDERED TO COMPLY WITH THE ILLINOIS SECURITIES LAW INCONNECTION WITH THE RESEARCH PRACTICES REFERENCED IN THEORDER AND WITH CERTAIN UNDERTAKINGS TO ADOPT ENHANCEDPOLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESSPOTENTIAL CONFLICTS OF INTEREST ARISING FROM RESEARCHPRACTICES. APPLICANT AND ITS AFFILIATE UBS WARBURG LLC. MUST PAYA TOTAL OF $80,000,000 (OF WHICH $956.921.00 IS ALLOCATED TO ILLINOIS)INCLUDING $25,000,000 AS A PENALTY; $25,000,000 AS DISGORGEMENT OFCOMMISSIONS AND OTHER MONIES, $25,000,000 TO BE USED FORPROCUREMENT OF INDEPENDENT RESEARCH AND $5,000,000 TO BE USEDFOR INVESTOR EDUCATION.Disclosure 210 of 450iReporting Source:RegulatorInitiated By:CONNECTICUTPrincipal Sanction(s)/ReliefCivil and Administrative Penalt(ies) /Fine(s)Date Initiated:04/28/2003Docket/Case Number:CO-2003-6590-SURL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:CONSENT ORDER DATED APRIL 28, 2003 ALLEGED THAT RESPONDENTSUBS WARBURG LLC (CRD 7654) AND UBS PAINEWEBBER INC. (CRD8174)HAD 1) ENGAGED IN DISHONEST OR UNETHICAL PRACTICES INVIOLATION OF SECTION 36B-4(B) OF THE CONNECTICUT UNIFORMSECURITIES ACT BY ENABLING THEIR INVESTMENT BANKINGDEPARTMENTS TO EXERT IMPROPER INFLUENCE OVER FIRM RESEARCHANALYSTS, THUS CREATING AN INHERENT CONFLICT OF INTEREST;ISSUING RESEARCH REPORTS THAT WERE AFFECTED BY SUCHCONFLICT OF INTEREST; MAKING PAYMENTS FOR RESEARCH TO OTHERBROKER-DEALERS WHO WERE NOT INVOLVED IN UNDERWRITINGTRANSACTIONS; AND RECEIVING PAYMENTS IN CONNECTIONWITH UNDERWRITING TRANSACTIONS FROM OUTSIDE ENTITIES FORRESEARCH ISSUED WITHOUT MAKING PUBLIC DISCLOSURE OF THOSEPAYMENTS AS REQUIRED BY SECTION 17(B) OF THE SECURITIES ACT OF1933; AND 2) FAILED TO ESTABLISH, ENFORCE AND MAINTAIN ADEQUATESUPERVISORY CONTROLS TO PREVENT AND DETECT THE ALLEGEDLYVIOLATIVE CONDUCT.Current Status:Final412©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Other Sanction(s)/ReliefSought:Resolution Date:04/28/2003Resolution:Other Sanctions Ordered:THE CONSENT ORDER DIRECTED RESPONDENTS UBS PAINEWEBBER INC.AND UBS WARBURG LLC TO CEASE AND DESIST FROM REGULATORYVIOLATIONS, AND MANDATED THAT THEY COLLECTIVELY PAY $262,402 TOTHE DEPARTMENT. OF THAT AMOUNT, $150,000 CONSTITUTED A FINE AND$112,402 REPRESENTED REIMBURSEMENTFOR THE AGENCY'S LEGAL AND INVESTIGATIVE COSTS.Sanction Details:SEE ABOVE.Regulator StatementSEE ABOVE.Sanctions Ordered:Monetary/Fine $150,000.00Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:CONNECTICUT COMMISSIONER OF BANKINGPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:CEASE AND DESIST; DISGORGEMENT; AND UNDERTAKINGDate Initiated:04/28/2003Docket/Case Number:CO-2003-6590-SPrincipal Product Type:OtherOther Product Type(s):RESEARCHAllegations:APPLICANT ENGAGED IN DISHONEST AND UNETHICAL PRACTICES INCONNECTION WITH THE OFFER AND SALE OF A SECURITY IN VIOLATIONOF SECTION 36B-4(B) OF THE CONNECTICUT UNIFORM SECURITIES ACTAND FAILED TO MAINTAIN ADEQUATE SUPERVISORY PROCEDURES INVIOLATION OF SECTION 36B-31-6F(B) OF THE REGULATIONS.Current Status:FinalResolution Date:04/28/2003Resolution:Order413©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE CONNECTICUT UNIFORM SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE CONNECTICUTUNIFORM SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS WARBURG LLC MUST PAY A TOTAL OF $80,000,000 (OFWHICH $262,402 IS ALLOCATED TO CONNECTICUT )INCLUDING $25,000,000AS A PENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS ANDOTHER MONIES, $25,000,000 TO BE USED FOR PROCUREMENT OFINDEPENDENT RESEARCH AND $5,000,000 TO BE USED FOR INVESTOREDUCATION.Firm StatementAPPLICANT HAS SETTLED WITH THE CONNECTICUT COMMISSIONER OFBANKING CERTAIN CHARGES ARISING FROM AN INVESTIGATION OFRESEARCH ANALYST CONFLICTS OF INTEREST. THIS SETTLEMENT, ANDSETTLEMENTS WITH CERTAIN OTHER BROKERAGE FIRMS, ARE PART OF AGLOBAL SETTLEMENT CERTAIN FIRMS HAVE REACHED WITH THE VARIOUSSTATE REGULATORS AND THE SEC, NASD, AND NYSE. AS PART OF THESETTLEMENT, THE APPLICANT AND ITS AFFILIATE UBS WARBURG LLCHAVE AGREED TO PAY $25 MILLION AS DISGORGEMENT AND ANADDITIONAL $25 MILLION IN PENALTIES. ONE-HALF OF THE TOTAL OFTHESE PAYMENTS - $25 MILLION – WILL BE PAID IN CONNECTION WITHRELATED PROCEEDINGS BY THE SEC, NASD AND NYSE AND WILL BEPLACED INTO A DISTRIBUTION FUND FOR THE BENEFIT OF CERTAINCUSTOMERS. THE REMAINDER WILL BE PAID TO RESOLVE RELATEDPROCEEDINGS BY STATE REGULATORS. WITHOUT ADMITTING ORDENYING THE FINDINGS OF FACT AND CONCLUSIONS OF LAW CONTAINEDIN THE CONSENT ORDER, THE APPLICANT CONSENTED TO THE ENTRY OFAN ORDER PROVIDING THAT APPLICANT WILL CEASE AND DESIST FROMVIOLATING THE CONNECTICUT UNIFORM SECURITIES ACT. IN ADDITIONTHE APPLICANT WAS ORDERED TO COMPLY WITH THE CONNECTICUTUNIFORM SECURITIES ACT IN CONNECTION WITH THE RESEARCHPRACTICES REFERENCED IN THE ORDER AND WITH CERTAINUNDERTAKINGS TO ADOPT ENHANCED POLICIES AND PROCEDURESREASONABLY DESIGNED TO ADDRESS POTENTIAL CONFLICTS OFINTEREST ARISING FROM RESEARCH PRACTICES. APPLICANT AND ITSAFFILIATE UBS WARBURG LLC. MUST PAY A TOTAL OF $80,000,000 (OFSanctions Ordered:Monetary/Fine $262,402.00Disgorgement/RestitutionCease and Desist/Injunction414©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWHICH $262,402 IS ALLOCATED TO CONNECTICUT ) INCLUDING $25,000,000AS A PENALTY; $25,000,000 AS DISGORGEMENT OF COMMISSIONS ANDOTHER MONIES, $25,000,000 TO BE USED FOR PROCUREMENT OFINDEPENDENT RESEARCH AND $5,000,000 TO BE USED FOR INVESTOREDUCATION.Disclosure 211 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/21/2003Docket/Case Number:CMS030092Principal Product Type:No ProductOther Product Type(s):Allegations:NASD MARKETPLACE RULE 6955(A) - RESPONDENT MEMBER UBSPAINEWEBBER INC. DURING THE REVIEW PERIOD FAILED TO SUBMITREQUIRED INFORMATION TO OATS ON 27 BUSINESS DAYS.Current Status:FinalResolution Date:04/21/2003Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTUBS PAINEWEBBER, INC. CONSENTED TO THE FINDING OF THEALLEGATIONS AND TO THE FOLLOWING SANCTIONS: $4,000 FINE.Sanctions Ordered:Monetary/Fine $4,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:NASD MARKETPLACE RULE 6955 (A)- RESPONDENT MEMBER DURINGJANUARY 2, 2001 THROUGH FEBRUARY 8, 2001 FAILED TO SUBMITREEQUIRED INFORMATION ON OATS ON 27 BUSINESS DAYS.Current Status:Final415©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:04/21/2003Docket/Case Number:CMS030092Principal Product Type:No ProductOther Product Type(s):Resolution Date:04/21/2003Resolution:Other Sanctions Ordered:MATTER RESOLVED THROUGH ACCEPTANCE, WAIVER & CONSENT.Sanction Details:FIRM FINED $4000.Firm StatementRESPONDENT MEMBER FAILED TO SUBMIT REQUIRED INFORMATION TOOATS ON 27 BUSINESS DAYS. MEMBER AGREED TO PAY A $4000 FINE.Sanctions Ordered:Monetary/Fine $4,000.00Acceptance, Waiver & Consent(AWC)Disclosure 212 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:03/28/2003Allegations:NASD CONDUCT RULE 2110, AND NASD MARKETPLACE RULES 6620(A) AND6620(A)(3) - RESPONDENT MEMBER ("FIRM") FAILED, WITHIN 90 SECONDSAFTER EXECUTION, TO TRANSMIT THROUGH ACT LAST SALE REPORTS OFTRANSACTIONS IN OTC EQUITY SECURITIES. THE FIRM ALSO FAILED TODESIGNATE THE LAST SALE REPORTS AS LATE IN ACT DURING THEREVIEW PERIOD. IN ADDITION, THE FIRM FAILED TO DESIGNATE AS ".T"THROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITYSECURITIES EXECUTED OUTSIDE NORMAL MARKET HOURS DURING THEREVIEW PERIOD. FURTHERMORE, THE FIRM INCORRECTLY DESIGNATEDAS ".SLD" THROUGH ACT LAST SALE REPORTS OF TRANSACTIONS IN OTCEQUITY SECURITIES REPORTED TO ACT WITHIN 90 SECONDS OFEXECUTION DURING THE REVIEW PERIOD.Current Status:Final416©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:CMS030080Principal Product Type:Equity - OTCOther Product Type(s):Resolution Date:03/28/2003Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OFFINDINGS; THEREFORE, THE FIRM IS FINED $5,000.Sanctions Ordered:Monetary/Fine $5,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:THE FIRM WAS ISSUED A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT (AWC#CMS030080) AND FINED $5000.00Date Initiated:01/27/2003Docket/Case Number:CMS030080Principal Product Type:Equity - OTCOther Product Type(s):Allegations:IN REVIEW #MRD200130199 THE DEPARTMENT OF MARKET REGULATIONREVIEWED TRANSACTIONS REPORTED TO THE AUTOMATEDCONFIRMATION TRANSACTION SERVICE ("ACT") DURING THE PERIOD OFJANUARY 2, 2001 THROUGH MARCH 31, 2001. THE NASD FINDS THAT THEFIRM VIOLATED NASD CONDUCT RULE 2110 AND MARKETPLACE RULE6620(A) REGARDING FAILURE TO TRANSMIT THROUGH ACT 339 LAST SALEREPORTS OF TRANSACTIONS IN OTC EQUITY SECURITIES WITHIN 90SECONDS AFTER EXECUTION.Current Status:Final417©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:03/27/2003Resolution:Other Sanctions Ordered:Sanction Details:A FINE OF $5000.00 WAS IMPOSED. PAYMENT WAS ISSUED ON 04/01/2003.Firm StatementTHE DEPARTMENT OF MARKET REGULATION FOUND THAT THE FIRMVIOLATED NASD MARKET PLACE RULE 6620(A) AND NASD CONDUCT RULE2110. THE FIRM EXECUTED A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT ("AWC") AND PAID A FINE OF $5000.00Sanctions Ordered:Monetary/Fine $5,000.00Acceptance, Waiver & Consent(AWC)Disclosure 213 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/28/2003Docket/Case Number:CMS030079Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESAllegations:NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6130(B) -RESPONDENT MEMBER ("FIRM") FAILED TO ACCEPT OR DECLINE IN ACTTRANSACTIONS IN ELIGIBLE SECURITIES WITHIN TWENTY MINUTES AFTEREXECUTION.Current Status:FinalResolution Date:03/28/2003Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFSanctions Ordered:Monetary/Fine $5,000.00Acceptance, Waiver & Consent(AWC)418©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFINDINGS; THEREFORE, THE FIRM IS FINED $5,000.iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:ACCEPTANCE WAIVER AND CONSENT.Date Initiated:01/27/2003Docket/Case Number:CMS030079Principal Product Type:Equity - OTCOther Product Type(s):Allegations:IN REVIEW #MRD200234808, THE DEPARTMENT OF MARKET REGULATIONREVIEWED TRANSACTIONS REPORTED FOR THE PERIOD OF JANUARY 2,2002 THROUGH MARCH 31, 2002. THE NASD FINDS THAT THE FIRMVIOLATED MARKETPLACE RULE 6130(B)AND NASD CONDUCT RULE 2110 INTHAT THEY FAILED TO ACCEPT OR DECLINE IN ACT 159 TRANSACTIONS INELIGIBLE SECURITIES WITHIN 20 MINUTES AFTER EXECUTION.Current Status:FinalResolution Date:03/27/2003Resolution:Other Sanctions Ordered:Sanction Details:A FINE OF $5000.00 WAS IMPOSED. PAYMENT WAS ISSUED ON APRIL 1,2003.Firm StatementTHE DEPARMENT OF MARKET REGULATION FOUND THAT THE FIRMVIOLATED MARKETPLACE RULE 6130(B) AND NASD CONDUCT RULE 2110.THE FIRM EXECUTED A LETTER OF ACCPETANCE, WAIVER AND CONSENT("AWC") AND PAID A FINE OF $5000.00Sanctions Ordered:Monetary/Fine $5,000.00Acceptance, Waiver & Consent(AWC)Disclosure 214 of 450iReporting Source:RegulatorCurrent Status:Final419©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERSPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/05/2001Docket/Case Number:CMS010162Principal Product Type:Equity - OTCOther Product Type(s):Allegations:NASD RULES 2110, 3010, 6240(A) AND 6240(B) - WITHOUT ADMITTING ORDENYING THE ALLEGATIONS, THE FIRM CONSENTED TO THE ENTRY OFFINDINGS THAT IT INCORRECTLY DESIGNED AS LATE TO FIXED INCOMEPRICING SYSTEM (FIPS) TRANSACTIONS IN FIPS SECURITIES AND FAILEDTO REPORT THE CORRECT TIME OF EXECUTION TO FIPS FOR EACHTRANSACTION. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREPORT TO FIPS THE CORRECT BOND IDENTIFICATION SYMBOL IN ONETRANSACTION IN A FIPS SECURITY, DOUBLE REPORTED A TRANSACTIONIN A FIPS SECURITY, AND FAILED TO REPORT TO FIPS THE CORRECT UNITPRICE IN TRANSACTIONS IN FIPS SECURITIES AND HIGH YIELDCORPORATE DEBT SECURITIES. THE FINDINGS ALSO STATED THAT THEFIRM FAILED TO REPORT TO FIPS THE CORRECT TIME OF EXECUTION INTRANSACTIONS IN HIGH YIELD CORPORATE DEBT SECURITIES ANDFAILED TO CANCEL IN FIPS TRANSACTIONS IN A HIGH YIELD CORPORATEDEBT SECURITY. IN ADDITION, THE NASD DETERMINED THAT THE FIRM DIDNOT HAVE A SUPERVISORY SYSTEM THAT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE RULES CONCERNING THE REPORTING OF TRANSACTIONS IN HIGHYIELD CORPORATE DEBT SECURITIES TO THE NASD.Resolution Date:11/05/2001Resolution:Other Sanctions Ordered:Sanction Details:REVISE ITS WRITTEN SUPERVISORY PROCEDURES RELATING TOTRANSACTION REPORTING.Regulator Statement04/17/02AC FINES & COST PAID IN FULL $12,500.00 12/11/01 INVOICE # 01-MS- 675Sanctions Ordered:CensureMonetary/Fine $12,500.00Acceptance, Waiver & Consent(AWC)420©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:01/26/1999Docket/Case Number:AWC #CMS010162Principal Product Type:Equity - OTCOther Product Type(s):Allegations:DURING THE PERIOD FROM 3/6/98 THROUGH 7/31/98, THIRTY SIXTRANSACTIONS WERE MISREPORTED BY THE FIRM TO FIPS.Current Status:FinalResolution Date:11/05/2001Resolution:Other Sanctions Ordered:Sanction Details:$12,500 FINE TO BE PAID BY 12/11/01.Firm StatementWITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE ENTRY OF FINDINGS THAT THE FIRM VIOLATED NASDMARKETPLACE RULE 6240(A) AND 6240(B) AND NASD CONDUCT RULES2110 AND 3010. ON 11/5/01, THE NASDR'S OFFICE OF DISCIPLINARYAFFAIRS AND THE NAC ACCEPTED THE FIRM'S AWC REGARDING THEVIOLATIONS. THE FIRM WAS CENSURED AND FINED $12,500.Sanctions Ordered:Monetary/Fine $12,500.00Acceptance, Waiver & Consent(AWC)Disclosure 215 of 450iReporting Source:RegulatorAllegations:08-01-01, NASD RULES 2110, IM-2110-1 - RESPONDENT MEMBER SOLDSECURITIES OF PUBLIC OFFERINGS THAT TRADED AT A PREMIUM IN THEIMMEDIATE SECONDARY MARKET ("HOT ISSUES") AND ALTHOUGH IT DIDNOT SELL SECURITIES IN THE HOT ISSUES TO ANY RESTRICTED PERSONSCurrent Status:Final421©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/25/2001Docket/Case Number:C10010096Principal Product Type:OtherOther Product Type(s):SECURITIES OF PUBLIC OFFERINGSOR ENTITIES, IT FAILED TO OBTAIN THE PROPER DOCUMENTATIONAND/OR FAILED TO FOLLOW THE REQUIRED PROCEDURES FOROBTAINING CERTAIN DOCUMENTS WITH RESPECT TO CERTAIN ACCOUNTSAS SET FORTH IN IM-2110-1.Resolution Date:07/25/2001Resolution:Other Sanctions Ordered:Sanction Details:CENSURED AND FINED $7,500Regulator Statement.Sanctions Ordered:CensureMonetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:NASDRDate Initiated:07/24/2001Docket/Case Number:C10010096Principal Product Type:Equity Listed (Common & Preferred Stock)Allegations:IN JUNE 1999 THE FIRM SOLD SECURITIES IN TWO HOT ISSUE OFFERINGS.ALTHOUGH NO SALES WERE MADE TO RESTRICTED PERSONS, THE FIRMFAILED TO OBTAIN PROPER DOCUMENTATION AND/OR FAILED TO FOLLOWREQUIRED PROCEDURES FOR OBTAINING CERTAIN DOCUMENTS WITHRESPECT TO CERTAIN ACCOUNTS.Current Status:Final422©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:07/24/2001Resolution:Other Sanctions Ordered:Sanction Details:$7,500.00 FINE TO BE PAID BY 08/24/2001.Firm StatementWITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE ENTRY OF FINDINGS THAT THE FIRM VIOLATED IM-2110-1 AND NASD CONDUCT RULE 2110. ON 07/24/2001, NASDR'S OFFICEOF DISCIPLINARY AFFAIRS AND THE NAC ACCEPTED THE FIRM'S AWCREGARDING THE VIOLATIONS. THE FIRM WAS CENSURED AND FINED$7,500.00Sanctions Ordered:Monetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)Disclosure 216 of 450iReporting Source:FirmInitiated By:STATE OF ARKANSASPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Date Initiated:01/01/1981Docket/Case Number:81-29-5Principal Product Type:Futures - CommodityOther Product Type(s):Allegations:UNAUTHORIZED TRANSFER OF FUNDS FROM MONEY MARKET TOCOMMODITY ACCOUNT.Current Status:FinalResolution Date:06/30/1981Resolution:Order423©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:ON JUNE 30, 1981, MR. SUTTON'S REGISTRATION IN ARKANSAS WASSUSPENDED RETROACTIVELY FOR THE PERIOD JANUARY 23, 1981THROUGH JUNE 12, 1981.Firm StatementTHE ORDER RESULTED FROM MONEY TRANSFERS BETWEEN A CLIENT'SMONEY MARKET ACCOUNT AND COMMODITIES ACCOUNT IN ORDER TOMEET MARGIN REQUIREMENTS IN THE COMMODITIES ACCOUNT. THECLIENT WAS INFORMED OF ALL TRANSFERS BOTH BY PHONE AND MAIL.Sanctions Ordered:SuspensionDisclosure 217 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/29/1991Docket/Case Number:C05910051Principal Product Type:OptionsOther Product Type(s):Allegations:VIOLATIONS OF ARTICLE III, SECTIONS 1, 2, 15, 18, 19 AND 27 OF THERULES OF FAIR PRACTICECurrent Status:FinalResolution Date:04/24/1992Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM IS CENSURED AND FINED $75,000. ***$75,000.00 PAID ON 6/12/92INVOICE #92-05-432***Regulator Statement[TOP] COMPLAINT NO. C05910051 FILED 04/29/1991 BY DISTRICT NO. 5AGAINST RESPONDENTS PAINEWEBBER INCORPORATED (THE FIRM),JOHN A. DAY, JERRY W. PAYNE, DAVID L. ARNOLD AND WILLIAM D. EASTSanctions Ordered:CensureMonetary/Fine $75,000.00Consent424©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceALLEGING VIOLATIONS OF ARTICLE III, SECTIONS 1, 2, 15, 18, 19 AND 27 OFTHE RULES OF FAIR PRACTICE IN THAT DAY EXERCISED DISCRETIONARYPOWER IN THE TRUST ACCOUNTS OF A PUBLIC CUSTOMER WITHOUTPRIOR WRITTEN AUTHORIZATION BY THE TRUSTEES OF THE ACCOUNTSAND PRIOR WRITTEN ACCEPTANCE OF THE ACCOUNTS ASDISCRETIONARY BY HIS MEMBER FIRM; EXECUTED SIX UNAUTHORIZEDOPTIONS TRANSACTIONS IN THE TRUST ACCOUNTS; RECOMMENDED ANDENGAGED IN OPTIONS PURCHASE AND SALE TRANSACTIONS IN THESAME TRUST ACCOUNTS WITHOUT HAVING REASONABLE GROUNDS FORBELIEVING THAT THESE RECOMMENDATIONS AND RESULTANTTRANSACTIONS WERE SUITABLE BASED ON THE CUSTOMER'S FINANCIALSITUATION, OBJECTIVES AND NEEDS; DAY, ASSISTED BY ARNOLD ANDEAST, ENGAGED IN A SCHEME TO DEFRAUD THE SAME PUBLICCUSTOMER ACCOUNTS IN THAT HE EXECUTED BLOCK PURCHASES OFOPTIONS THAT WERE FINANCED BY PERSONAL LOANS FROM TWO PUBLICCUSTOMERS AND ALLOCATED PROFITABLE TRANSACTIONS TO THEIRPERSONAL ACCOUNTS WHILE ALLOCATING THE UNPROFITABLETRANSACTIONS TO THE ACCOUNTS OF THE CUSTOMER, ALL WITHOUTDISCLOSING THIS ACTIVITY TO THE FIRM; DAY, ARNOLD AND PAYNE FAILEDTO RESPOND TO NASD REQUESTS OR INFORMATION MADE PURSUANT TOARTICLE IV, SECTION 5 OF THE RULES OF FAIR PRACTICE; THE FIRM,THROUGH PAYNE FAILED TO ESTABLISH, MAINTAIN AND/OR ENFORCEWRITTEN SUPERVISORY PROCEDURES; AND, FAILED TO SUPERVISEREASONABLY AND PROPERLY DAY, ARNOLD AND EAST. AMENDEDCOMPLAINT FILED 02/21/1992, WHEREIN THE ALLEGATIONS IN THEFOURTH CAUSE WERE CHANGED TO DELETE ARTICLE III, SECTIONS 18AND 19 OF THE RULES OF FAIR PRACTICE. DECISION RENDERED04/24/1992, WHERE IN THE OFFER OF SETTLEMENT SUBMITTED BY THERESPONDENTS WAS ACCEPTED; THEREFORE, THE FIRM IS CENSUREDAND FINED $75,000. ***$75,000.00 PAID ON 6/12/92 INVOICE #92-05-432***iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Date Initiated:04/29/1991Allegations:VIOLATIONS OF ARTICLE III, SECTIONS 1, 2, 15, 18 AND 27 OF THE RULESOF FAIR PRACTICE, IN THAT THE FIRM, THROUGH A BRANCH OFFICEMANAGER, FAILED TO ESTABLISH, MAINTAIN AND/OR ENFORCE WRITTENSUPERVISORY PROCEDURES. THE ITEM WAS APPEALED AND AMENDEDIN THE THE ALLEGATIONS IN THE FOURTH CAUSE WERE CHANGED TODELETE ARTICLE III, SECTIONS 18 AND 19 OF THE RULES OF FAIRPRACTICE.Current Status:Final425©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:FINE OF $75000.00Docket/Case Number:C05910051Principal Product Type:OptionsOther Product Type(s):Resolution Date:04/24/1992Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $75,000.00ConsentDisclosure 218 of 450iReporting Source:RegulatorAllegations:THE SEC'S ORDERS ALLEGE AS FOLLOWS: FROM 1990 THROUGH 1994,EACH OF THE TEN BROKERAGE FIRMS CHARGED ISSUERS OF MUNICIPALREFUNDING BONDS EXCESSIVE, UNDISCLOSED MARKUPS ON TREASURYSECURITIES. THE FIRMS ALSO CERTIFIED THAT THE PRICES THEYCHARGED DID NOT EXCEED THE SECURITIES' FAIR MARKET VALUEUNDER THE FEDERAL TAX LAWS, EVEN THOUGH THEY KNEW OR SHOULDHAVE KNOWN THAT THEY WERE CHARGING PRICES ABOVE FAIR MARKETVALUE. THE FALSE REPRESENTATIONS BY THE FIRMS ABOUT THE FAIRMARKET VALUE OF THE SECURITIES WERE CRITICAL TO ESTABLISHINGTHE TAX-EXEMPT STATUS OF THE ASSOCIATED MUNICIPAL REFUNDINGBONDS. THAT TAX-EXEMPT STATUS WAS THE BONDS' ESSENTIALINVESTMENT FEATURE. IN SOME CASES, A BROKERAGE FIRM'SOVERCHARGING DIVERTED MONEY FROM THE U.S. TREASURY TO THEFIRM. IN THE REMAINING CASES, OVERCHARGING BY THE BROKERAGEFIRM TOOK MONEY AWAY FROM THE MUNICIPALITY BY REDUCING,DOLLAR FOR DOLLAR, THE SAVINGS THAT THE MUNICIPALITY RECEIVEDFROM THE REFUNDING. THEREFORE, EACH OF THE FIRMS VIOLATED THEFEDERAL SECURITIES LAWS BY SELLING SECURITIES TO MUNICIPALITIESAT INFLATED PRICES AND JEOPARDIZING THE TAX-EXEMPT STATUS OFCurrent Status:Final426©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:(1) CENSURE AND (2) DISGORGEMENTDate Initiated:04/06/2000Docket/Case Number:RELS. 33-7823; 34-42630; FILE #3-10175Principal Product Type:OtherOther Product Type(s):MUNICIPAL BONDS - "YIELD BURNING"THE MUNICIPALITIES' REFUNDING BONDS.Resolution Date:04/06/2000Resolution:Other Sanctions Ordered:Sanction Details:(1) A CENSURE; (2) A CEASE AND DESIST ORDER PROHIBITING FROMFUTURE VIOLATIONS OF THE SECTIONS 17(A)(2) AND 17(A)(3) OF THESECURITIES ACT OF 1933; AND (3) DISGORGEMENT OF $26.2 MILLION($21.6 MILLION TO THE TREASURY AND $4.6 MILLION TO MUNICIPALISSUERS).Regulator Statement+04/09/2000+ SEC NEWS DIGEST, ISSUE NO. 2000-65, DATED 04/06/2000,ENFORCEMENT PROCEEDINGS DISCLOSES: THE SEC TODAY BROUGHTAND SETTLED CIVIL ADMINISTRATIVE FRAUD CHARGES AGAINST TENWALL STREET AND REGIONAL BROKERAGE FIRMS FOR OVERCHARGINGMUNICIPALITIES FOR GOVERNMENT SECURITIES IN A PRACTICECOMMONLY KNOWN AS "YIELD BURNING." THE SETTLEMENTSANNOUNCED TODAY ARE PART OF A GLOBAL RESOLUTION OF ALL YIELDBURNING CLAIMS WITH A TOTAL OF SEVENTEEN BROKERAGE FIRMS BYTHE SEC, NASD REGULATION, INC., THE U.S. ATTORNEY FOR THESOUTHERN DISTRICT OF NEW YORK, AND THE DEPARTMENT OF THETREASURY. THIS GLOBAL RESOLUTION REQUIRES THE FIRMS TO PAY ATOTAL OF MORE THAN $139 MILLION. INCLUDING THE ACTIONSANNOUNCED TODAY, MORE THAN $172 MILLION WILL HAVE BEEN PAID BY21 FIRMS TO RESOLVE CHARGES OF YIELD BURNING AND RELATEDCLAIMS. YIELD BURNING INVOLVES OVERCHARGES BY BROKERAGEFIRMS ON TREASURY SECURITIES PURCHASED WITH PROCEEDS FROMTHE SALE OF MUNICIPAL BONDS. YIELD BURNING BY BROKERAGE FIRMSSanctions Ordered:CensureDisgorgement/RestitutionCease and Desist/InjunctionConsent427©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceJEOPARDIZED THE TAX-EXEMPT STATUS OF INTEREST PAID TO HOLDERSOF THOSE BONDS. WITHOUT ADMITTING OR DENYING THE FINDINGS,EACH FIRM INCLUDING PAINEWEBBER INCORPORATED CONSENTED TO ACENSURE, A CEASE AND DESIST ORDER PROHIBITING FUTUREVIOLATIONS, AND AGREED TO DISGORGE THE ILL-GOTTEN GAINS ITRECEIVED FROM THE OVERCHARGING. (RELS. 33-7823; 34-42630; FILE NO.3-10175)iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISISONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/06/2000Docket/Case Number:95 CIV. 1963Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:ON APRIL 6, 2000, THE SEC BROUGHT AND SETTLED CIVILADMINISTRATIVE CHARGES AGAINST TEN BROKERAGE FIRMS, INCLUDINGPAINEWEBBER, RESOLVING ITS INVESTIGATION OF THE PRICING OFGOVERNMENT SECURITIES BY BROKER-DEALERS IN MUNICIPAL BONDADVANCED REFUNDING TRANSACTIONS DURING THE PERIOD 1990THROUGH 1994. CONSISTENT WITH THE SEC ORDERS INVOLVING THEOTHER BROKER-DEALERS IN THE SETTLEMENT, THE PAINEWEBBERORDER CONTAINS FINDINGS THAT THE FIRM VIOLATED SECURITIES ACTSECTIONS 17(A)(2) AND 17(A)(3) BY EFFECTING DEFEASANCE ESCROWTRANSACTIONS WITH MUNICIPALITIES AT PRICES DEEMED ?NOTREASONABLY RELATED TO THE CURRENT WHOLESALE MARKET PRICESFOR THE SECURITIES UNDER THE PARTICULAR FACTS ANDCIRCUMSTANCES?.? PAINEWEBBER NEITHER ADMITTED NOR DENIED THEFINDINGS IN THE ORDER.Current Status:FinalResolution Date:04/06/2000Resolution:Sanctions Ordered:Monetary/Fine $26,179,383.95Order428©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PURSUANT TO THE TERMS OF THE ORDER, PAINEWEBBER IS REQUIREDTO PAY $21,571,057.72 TO THE UNITED STATES TREASURY UNDER ANAGREEMENT SIMULTANEOUSLY ENTERED INTO AMONG PAINEWEBBER,THE INTERNAL REVENUE SERVICE AND THE UNITED STATES ATTORNEYFOR THE SOUTHERN DISTRICT OF NEW YORK, AND ALSO MUST MAKECERTAIN PAYMENTS TOTALING $4,608,326.23 TO CERTAIN SPECIFIEDMUNICIPAL ISSUERS.Firm StatementTHE SEC SETTLEMENTS ARE PART OF A GLOBAL RESOLUTION INVOLVING17 BROKERAGE FIRMS AND THE SEC, NASD REGULATION, INC., THEUNITED STATES ATTORNEY FOR THE SOUTHERN DISTRICT OF NEW YORKAND THE INTERNAL REVENUE SERVICE. THE GLOBAL RESOLUTIONREQUIRES THE FIRMS TO PAY A TOTAL OF MORE THAN $135 MILLION.Disclosure 219 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/11/2000Docket/Case Number:CMS000013Principal Product Type:Equity - OTCOther Product Type(s):Allegations:NASD RULE 11AC1-1(C)(1)- THE FIRM ACTED IN THE CAPACITY OF AN OTCMARKET MAKER AND ACCOUNTED FOR MORE THAN ONE PERCENT OFTHE AGGREGATE TRADING VOLUME DURING THE THE THIRD QUARTER OF1997 IN THE SECURITY. THE FIRM FAILED TO PUBLICLY DISSEMINATE ITSBEST BIDS, BEST OFFERS, AND QUOTATION SIZE.Current Status:FinalResolution Date:02/11/2000Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $3,500.00Acceptance, Waiver & Consent(AWC)429©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:FINED $3,500.iReporting Source:FirmInitiated By:NASD REGULATION INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/28/1999Docket/Case Number:MRDTM95-112Principal Product Type:No ProductOther Product Type(s):Allegations:PAINEWEBBER IS ALLEGED TO HAVE VIOLATED SEC RULE 11AC1-1(C)(1) BYACCOUNTING FOR MORE THAN 1% OF THE AGGREGATE TRADINGVOLUME IN 50 EXCHANGE-LISTED SECURITIES IN THE CAPACITY OF ANOTC MARKET MAKER DURING THE THIRD QUARTER OF 1997, FOR WHICHTHE FIRM DID NOT REGISTER AS A MARKET MAKER WITHIN TEN DAYS OFTHE END OF THE QUARTER. FOR INDEPENDENT REASONS, THE FIRMCLOSED ITS 19C-3 DESK IN JANUARY 1998 AND THUS CEASED TRADINGTHESE SECURITIES AS AN OTC MARKET MAKER. NO DAMAGES AREALLEGED.Current Status:FinalResolution Date:02/11/2000Resolution:Other Sanctions Ordered:Sanction Details:ON FEBRUARY 11, 2000, THE NASD ACCEPTED THE FIRM'S OFFER TOSETTLE THIS MATTER BY PAYMENT OF A FINE OF $3500.00.Sanctions Ordered:Monetary/Fine $3,500.00SettledDisclosure 220 of 450iReporting Source:RegulatorAllegations:NASD RULE 4613(E)AND SEC RULE 11AC1-4 - RESPONDENT MEMBER, ACurrent Status:Final430©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/24/2000Docket/Case Number:CMS990171Principal Product Type:Equity - OTCOther Product Type(s):MARKET MAKER IN SECURITIES, WITHOUT MAKING REASONABLEEFFORTS TO AVOID A LOCKED MARKET BY EXECUTING TRANSACTIONSWITH ALL MARKET MAKERS WHOSE QUOTATIONS WOULD BE LOCKED,ENTERED A BID OR ASK QUOTATION IN THE NASDAQ STOCK MARKETWHICH CAUSED A LOCKED MARKET CONDITION TO OCCUR IN EACHINSTANCE; FAILED TO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS INNASDAQ SECURITIES IN ITS PUBLIC QUOTATION, WHEN EACH SUCHORDER WAS AT A PRICE THAT WOULD HAVE IMPROVED THE FIRM'S BID OROFFER IN EACH SUCH SECURITY, OR WHEN EACH SUCH ORDER WASPRICED EQUAL TO THE FIRM'S BID OR OFFER AND THE NATIONAL BESTBID OR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHARGE IN RELATION TO THESIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY.Resolution Date:01/24/2000Resolution:Other Sanctions Ordered:Sanction Details:CENSURED AND FINED $8,000.Sanctions Ordered:CensureMonetary/Fine $8,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:PAINEWEBBER IS ALLEGED TO HAVE VIOLATED TWO RULES: (1) IN 15INSTANCES DURING 1997, THE FIRM IS ALLEGED TO HAVE VIOLATED NASDMARKETPLACE RULE 4613(E) BY ENTERING A QUOTATION ON THE NASDQSTOCK MARKET, INC. WHICH CAUSED A LOCKED OR CROSSED MARKETCurrent Status:Final431©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERSPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/28/1999Docket/Case Number:CMS990171AWCPrincipal Product Type:No ProductOther Product Type(s):CONDITION WITHOUT MAKING REASONABLE EFFORTS TO AVOID THISCONDITION; AND (2) IN JULY 1998, THE FIRM IS ALLEGED TO HAVE FAILEDTO DISPLAY 9 CUSTOMER LIMIT ORDERS THAT WOULD HAVE EITHERIMPROVED PAINEWEBBER'S POSTED QUOTATION OR INCREASED THESIZE OF ITS QUOTATION, IN VIOLATION OF SEC RULE 11AC1-4. NODAMAGES ARE ALLEGED. THE FIRM HAS NEITHER ADMITTED NOR DENIEDTHE VIOLATIONS IN CONNECTION WITH THE SETTLEMENT OF THISMATTER WITH THE NASD. HOWEVER, THE FIRM HAS BEEN WORKING TOIDENTIFY AND CORRECT SYSTEMIC IDIOSYNCRASIES THAT MAY HAVECAUSED OR CONTRIBUTED TO THE ALLEGED INSTANCES, AND HAS ALSOREMINDED ITS TRADERS OF THE IMPORTANCE OF FOLLOWING PROPERPROCEDURES AND PROTOCOLS IN THESE AREAS.Resolution Date:01/24/2000Resolution:Other Sanctions Ordered:Sanction Details:BY LETTER DATED JANUARY 24, 2000, THE NASD NOTIFIED PAINEWEBBERTHAT IT HAS ACCEPTED THE FIRM'S PROPOSED AWC (LETTER OFACCEPTANCE, WAIVER AND CONSENT). PURSUANT TO THIS AWC, THEFIRM HAS AGREED, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,TO A CENSURE AND TO PAY A FINE OF $3000.00 FOR THE LOCKED ANDCROSSED MARKET VIOLATIONS AND $5000.00 FOR THE LIMIT ORDERDISPLAY VIOLATIONS.Sanctions Ordered:CensureMonetary/Fine $8,000.00Acceptance, Waiver & Consent(AWC)Disclosure 221 of 450iReporting Source:FirmCurrent Status:Final432©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1985Docket/Case Number:#83-0136Principal Product Type:OptionsOther Product Type(s):Allegations:CHARGES THAT THE FIRM IMPROPERLY PURCHASED CALL OPTIONS ONSHARES OF GENERAL MOTORS PRIOR TO THE ISSUANCE OF AFAVORABLE RESEARCH RECOMMENDATION.Resolution Date:06/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1985, PAINEWEBBER, INCORPORATED WAS CENSUREDAND FINED $30,000 JOINTLY BY THE NEW YORK STOCK EXCHANGEAND THE CHICAGO BOARD OF OPTIONS EXCHANGE, PURSUANT TO ANOFFER OF SETTLEMENT, IN CONNECTION WITH CHARGES THAT THE FIRMIMPROPERLY PURCHASED COMMON STOCK AND CALL OPTIONS ON THESHARES OF GENERAL MOTORS PRIOR TO THE ISSUANCE OF AFAVORABLE RESEARCH RECOMMENDATION.Sanctions Ordered:CensureMonetary/Fine $30,000.00Decision & Order of Offer of SettlementDisclosure 222 of 450iReporting Source:FirmInitiated By:THE NEW YORK STOCK EXCHANGEDate Initiated:06/01/1985Docket/Case Number:D-NYSE-85-49Allegations:CHARGES THAT THE FIRM IMPROPERLY PURCHASED COMMON STOCK ONSHARES OF GENERAL MOTORS PRIOR TO THE ISSUANCE OF AFAVORABLE RESEARCH RECOMMENDATION.Current Status:Final433©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):Resolution Date:06/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1985, PAINEWEBBER, INCORPORATED WAS CENSUREDAND FINED $30,000 JOINTLY BY THE NEW YORK STOCK EXCHANGEAND THE CHICAGO BOARD OF OPTIONS EXCHANGE, PURSUANT TO ANOFFER OF SETTLEMENT, IN CONNECTION WITH CHARGES THAT THE FIRMIMPROPERLY PURCHASED COMMON STOCK AND CALL OPTIONS ON THESHARES OF GENERAL MOTORS PRIOR TO THE ISSUANCE OF AFAVORABLE RESEARCH RECOMMENDATION.Sanctions Ordered:CensureMonetary/Fine $30,000.00Decision & Order of Offer of SettlementDisclosure 223 of 450iReporting Source:FirmInitiated By:THE CHICAGO MERCANTILE EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1973Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF RULE 403(C).Current Status:FinalResolution:Decision434©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:08/01/1973Other Sanctions Ordered:Sanction Details:IN AUGUST, 1973, PAINE, WEBBER, JACKSON & CURTIS INCOR-PORATED WAS FINED $1,000.00 BY THE CHICAGO MERCANTILEEXCHANGE FOR A VIOLATION OF RULE 403(C).Sanctions Ordered:Monetary/Fine $1,000.00Disclosure 224 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGE INCPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1982Docket/Case Number:82-0103Principal Product Type:OptionsOther Product Type(s):Allegations:VIOLATION OF CBOE EXCHANGE RULES 4.1, 4.2, AND 15.1.Current Status:FinalResolution Date:12/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1982, THE BUSINESS CONDUCT COMMITTEE OFTHE CHICAGO BOARD OF OPTIONS EXCHANGE INC IMPOSED AFINE OF $5,000 AS AGAINST PAINE, WEBBER, JACKSON & CURTIS, INC. FORA VIOLATION OF CBOE EXCHANGE RULES 4.1, 4.2, AND 15.1.Sanctions Ordered:Monetary/Fine $5,000.00DecisionDisclosure 225 of 450iReporting Source:FirmCurrent Status:Final435©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:AMERICAN STOCK EXCHANGE, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:PURPORTED VIOLATION OF EXCHANGE RULE 906(A).Resolution Date:06/01/1981Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1981, PAINE, WEBBER, JACKSON & CURTIS, INC.STIPULATED TO A FINE OF $1,000.00 IMPOSED BY THEAMERICAN STOCK EXCHANGE INC., FOR A PURPORTED VIOLATIONOF EXCHANGE RULE 906(A).Sanctions Ordered:Monetary/Fine $1,000.00Stipulation and ConsentDisclosure 226 of 450iReporting Source:FirmInitiated By:AMERICAN STOCK EXCHANGE, INC.Principal Sanction(s)/ReliefSought:Date Initiated:06/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:PURPORTED VIOLATIONS OF ASE RULES 921 (A) AND (B), 923 (A) (1), 923 (B)(1), 421 (A) AND 924 (A) AND ARTICLE V, SECTION 4(H) OF THE EXCHANGECONSTITUTION.Current Status:Final436©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:06/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1982, PAINE, WEBBER, JACKSON & CURTIS, INC.STIPULATED AND CONSENTED TO A CENSURE, FINE OF $15,000.00 ANDCERTAIN REPORTING REQUIREMENTS TO THE AMERICAN STOCKEXCHANGE, INC. IMPOSED BY THAT EXCHANGE FOR PURPORTEDVIOLATION OF ASE RULES 921 (A) AND (B), 923 (A) (1), 923 (B) (1), 421 (A)AND 924 (A) AND ARTICLE V, SECTION 4(H) OF THE EXCHANGECONSTITUTION.Sanctions Ordered:CensureMonetary/Fine $15,000.00Stipulation and ConsentDisclosure 227 of 450iReporting Source:FirmInitiated By:PHILADELPHIA STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1985Docket/Case Number:85-3Principal Product Type:No ProductOther Product Type(s):Allegations:POSITION LIMIT VIOLATIONS IN THE FIRM'S ACCOUNTS ON FOURSEPARATE DAYS IN DECEMBER 1984Current Status:FinalResolution Date:04/01/1985Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $500.00Decision & Order of Offer of Settlement437©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:IN APRIL 1985, PAINE WEBBER WAS FINED $500 BY THE PHILADELPHIASTOCK EXCHANGE FOR POSITION LIMIT VIOLATIONS IN THE FIRM'SACCOUNTS ON FOUR SEPARATE DAYS IN DECEMBER 1984. THE DECISIONRESULTED FROM AN OFFER OF SETTLEMENT SUBMITTED BY PAINEWEBBER AND ACCEPTED BY THE EXCHANGE.Disclosure 228 of 450iReporting Source:FirmInitiated By:THE MEMBER SERVICES COMMITTEE OF THE CHICAGO BOARD OF TRADEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1986Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO NOTIFY THE EXCHANGE IN A TIMELY MANNER OF THETERMINATION OF CERTAIN REGISTERED COMMODITY REPRESENTATIVESCurrent Status:FinalResolution Date:03/01/1986Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH 1986, THE MEMBER SERVICES COMMITTEE OF THE CHICAGOBOARD OF TRADE FINED PAINEWEBBER $2,500 AFTER DETERMINING THATTHE FIRM VIOLATED EXCHANGE REGULATION 480.08, IN THAT THE FIRMFAILED TO NOTIFY THE EXCHANGE IN A TIMELY MANNER OF THETERMINATION OF CERTAIN REGISTERED COMMODITY REPRESENTATIVES.Sanctions Ordered:Monetary/Fine $2,500.00DecisionDisclosure 229 of 450iReporting Source:FirmAllegations:PAINEWEBBER ENGAGED IN CONDUCT INCONSISTENT WITH JUST ANDCurrent Status:Final438©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:AMERICAN STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/01/1989Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):EQUITABLE PRINCIPLES OF TRADE IN VIOLATION OF ARTICLE 5, SECTION(H) OF THE EXCHANGE'S CONSTITUTION REGARDING TRADESOCCURRING IN JANUARY, 1986.Resolution Date:04/09/1990Resolution:Other Sanctions Ordered:Sanction Details:IN OCTOBER OF 1989, PAINEWEBBER INCORPORATED ("PAINEWEBBER")CONSENTED TO A CENSURE AND A $5,000.00 FINE WITH THE AMERICANSTOCK EXCHANGE ("EXCHANGE") TO SETTLE A CHARGE THATPAINEWEBBER ENGAGED IN CONDUCT INCONSISTENT WITH JUST ANDEQUITABLE PRINCIPLES OF TRADE IN VIOLATION OF ARTICLE 5, SECTION(H) OF THE EXCHANGE'S CONSTITUTION REGARDING TRADESOCCURRING INJANUARY, 1986. A DISCIPLINARY PANEL OF THE EXCHANGE ACCEPTEDTHE STIPULATION OF FACTS AND CONSENT TO PENALTY IN THIS MATTERON APRIL 9, 1990.Sanctions Ordered:CensureMonetary/Fine $5,000.00Stipulation and ConsentDisclosure 230 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGE, INC.Date Initiated:09/01/1976Allegations:ALLOWING AN EMPLOYEE TO APPEAR ON THE CBOE FLOOR WITHOUTPROPER IDENTIFICATION.Current Status:Final439©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:UNKNOWNPrincipal Product Type:OptionsOther Product Type(s):Resolution Date:09/01/1976Resolution:Other Sanctions Ordered:Sanction Details:IN SEPTEMBER, 1976, THE CHICAGO BOARD OF OPTIONS EXCHANGE, INC.IMPOSED A FINE OF $100.00 UPON PAINE, WEBBER, JACKSON & CURTISFOR ALLOWING AN EMPLOYEE TO APPEAR ON THE CBOE FLOORWITHOUT PROPER IDENTIFICATION.Sanctions Ordered:Monetary/Fine $100.00DecisionDisclosure 231 of 450iReporting Source:FirmInitiated By:A DISTRICT BUSINESS CONDUCT COMMITTEE OF THE NASD, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTION 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICE.Current Status:FinalResolution Date:12/01/1982Resolution:Decision440©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN DECEMBER, 1981, A DISTRICT BUSINESS CONDUCT COMMITTEEOF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.IMPOSED A PENALTY OF A CENSURE AND $5,000.00 FINE JOINTLY ANDSEVERALLY AGAINST PAINE, WEBBER, JACKSON & CURTIS INC AND TWOOF ITS EX-BRANCH MANAGERS FOR A VIOLATION OF SECTION 27 OF THEASSOCIATION'S RULES OF FAIR PRACTICE.Sanctions Ordered:CensureMonetary/Fine $5,000.00Disclosure 232 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1992Docket/Case Number:UNKNOWNPrincipal Product Type:OptionsOther Product Type(s):Allegations:POSITION LIMIT VIOLATIONSCurrent Status:FinalResolution Date:01/01/1992Resolution:Other Sanctions Ordered:Sanction Details:IN JANUARY 1992, PAINEWEBBER INCORPORATED AGREED TO A $10,000.00FINE ISSUED BY THE CHICAGO BOARD OF OPTIONS EXCHANGE FORPOSITION LIMIT VIOLATIONS.Sanctions Ordered:Monetary/Fine $10,000.00OrderDisclosure 233 of 450iReporting Source:Firm441©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE DISTRICT BUSINESS CONDUCT COMMITTEE OF THE NASD, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTION 1, ARTICLE III OF THE ASSOCIATION'S RULES OFFAIR PRACTICE.Current Status:FinalResolution Date:09/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN SEPTEMBER, 1982, THE DISTRICT BUSINESS CONDUCTCOMMITTEE OF THE NATIONAL ASSOCIATION OF SECURITIESDEALERS, INC. IMPOSED A PENALTY OF A CENSURE AND A$5,000.00 FINE AS AGAINST PAINE, WEBBER, JACKSON &CURTIS, INC FOR VIOLATION OF SECTION 1, ARTICLE III OFTHE ASSOCIATION'S RULES OF FAIR PRACTICE.Sanctions Ordered:CensureMonetary/Fine $5,000.00DecisionDisclosure 234 of 450iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE, INCDate Initiated:03/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductAllegations:ALLEGED POSITION LIMIT VIOLATIONS.Current Status:Final442©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:03/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1991, PAINEWEBBER INCORPORATED AGREED TO A $1,000.00FINE ISSUED BY THE NEW YORK STOCK EXCHANGE, INC. FOR POSITIONLIMIT VIOLATIONS.Sanctions Ordered:Monetary/Fine $1,000.00OtherDisclosure 235 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF TRADE.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:Futures - CommodityOther Product Type(s):Allegations:THE ALLEGATIONS CONCERNED A FAILURE BY PAINEWEBBER TOPROPERLY TIME-STAMP FLOOR ORDER TICKETS AND FLOOR ORDERS;AND THAT PAINEWEBBER FAILED TO PROVIDE CERTAIN FLOOR ORDERTICKETS AND DISCRETIONARY ORDER TICKETS AND THEREBY FAILED TOKEEP ACCURATE AND COMPLETE BOOKS AND RECORDS.Current Status:FinalResolution Date:10/01/1988Resolution:Sanctions Ordered:Monetary/Fine $500.00Decision443©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN OCTOBER, 1988 PAINEWEBBER WAS FINED $500.00 BY THE CHICAGOBOARD OF TRADE. THE ALLEGATIONS CONCERNED A FAILURE BYPAINEWEBBER TO PROPERLY TIME-STAMP FLOOR ORDER TICKETS ANDFLOOR ORDERS; AND THAT PAINEWEBBER FAILED TO PROVIDE CERTAINFLOOR ORDER TICKETS AND DISCRETIONARY ORDER TICKETS ANDTHEREBY FAILED TO KEEP ACCURATE AND COMPLETE BOOKS ANDRECORDS.Disclosure 236 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1972Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO REPORT VOLUME ON NASDAQ.Current Status:FinalAppealed To and Date AppealFiled:EXACT DATE UNKNOWNResolution Date:07/01/1972Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1972, PAINE, WEBBER, JACKSON & CURTIS INCORPORATED WASFINED $100.00 BY NASD FOR FAILURE TO REPORT VOLUME ON NASDAQ.Sanctions Ordered:Monetary/Fine $100.00DecisionDisclosure 237 of 450iReporting Source:Firm444©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE COFFEE, SUGAR AND COCOA EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1985Docket/Case Number:UNKNOWNPrincipal Product Type:Futures - CommodityOther Product Type(s):Allegations:ALLEGED VIOLATIONS OF CLEARING RULE 703 AND COFFEE "C" RULE 8.05(5).Current Status:FinalResolution Date:05/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN MAY, 1985, THE COFFEE, SUGAR AND COCOA EXCHANGE FINEDPAINEWEBER INC. $2,500.00 FOR ALLEGED VIOLATIONS OF CLEARINGRULE 703 AND COFFEE "C" RULE 8.05 (5).Sanctions Ordered:Monetary/Fine $2,500.00DecisionDisclosure 238 of 450iReporting Source:FirmInitiated By:AMERICAN STOCK EXCHANGEDate Initiated:11/01/1988Docket/Case Number:DECISION 86-D-11Allegations:ALLEGATIONS THAT THE ACTIVITIES OF TWO RESPONDENT BROKERSWERE IN VIOLATION OF EXCHANGE RULES CONCERNING:UNAUTHORIZED OPTIONS TRADE OF POSITIONS, UNAUTHORIZED STOCKTRANSACTIONS, FAILURE TO PROPERLY MAINTAIN ACCOUNT RECORDS,IMPROPER ACCOUNT NUMBER CHANGES, FAILURE TO DETECT ACCOUNTNUMBER CHANGES AND FAILURE TO GIVE REGISTERED OPTIONSPRINCIPAL APPROVAL TO ACCOUNTS PRIOR TO OPTIONS TRADING.Current Status:Final445©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:OptionsOther Product Type(s):Resolution Date:11/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1988 PAINEWEBBER WAS FINED $10,000.00 BY THEAMERICAN STOCK EXCHANGE AND INSTRUCTED TO DEVELOPPROCEDURES ENHANCE AND ENFORCE ITS SURVEILLANCEPROCEDURES TO PREVENT A REOCCURRENCE. THE DECISION WASREACHED BY THE DISCIPLINARY PANEL OF THE AMERICAN STOCKEXCHANGE AND CONCERNED ALLEGATIONS THAT THE ACTIVITIES OFTWO RESPONDENT BROKERS WERE IN VIOLATION OF EXCHANGE RULESCONCERNING: UNAUTHORIZED OPTIONS TRADE OF POSITIONS,UNAUTHORIZED STOCK TRANSACTIONS, FAILURE TO PROPER MAINTAINACCOUNT RECORDS, IMPROPER ACCOUNT NUMBER CHANGES, FAILURETO DETECT ACCOUNT NUMBER CHANGES AND FAILURE TO GIVEREGISTERED OPTIONS PRINCIPAL APPROVAL TO ACCOUNTS PRIOR TOOPTIONS TRADING.Sanctions Ordered:Monetary/Fine $10,000.00DecisionDisclosure 239 of 450iReporting Source:FirmInitiated By:THE PHILADELPHIA STOCK EXCHANGEDate Initiated:12/01/1985Docket/Case Number:85-11Principal Product Type:OptionsOther Product Type(s):Allegations:ALLEGATIONS THAT THE FIRM PERMITTED A SINGLE CLIENT TO EXCEEDPOSITION LIMITS IN AN OPTIONS TRANSACTIONS.Current Status:Final446©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:12/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1985, THE PHILADELPHIA STOCK EXCHANGE ACCEPTED ANOFFER MADE BY PAINEWEBER WITHOUT ADMITTING OR DENYING THEALLEGATIONS, TO PAY $1,000 TO SETTLE A CHARGE THAT THE FIRMPERMITTED A SINGLE CLIENT TO EXCEED POSITION LIMITS IN AN OPTIONSTRANSACTIONS.Sanctions Ordered:Monetary/Fine $1,000.00Decision & Order of Offer of SettlementDisclosure 240 of 450iReporting Source:FirmInitiated By:THE COMMISSIONER OF SECURITIES, STATE OF GEORGIA,Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1983Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:PAINEWEBBER PERMITTED SIX (6) SALESMEN IN THE ATLANTA OFFICE TOCONDUCT SECURITIES TRANSACTIONS WITH GEORGIA RESIDENTS,WHILE UNREGISTERED IN THE STATE OF GEORGIA, IN VIOLATION OFSECTION 3 OF THE GEORGIA SECURITIES ACT OF 1973.Current Status:FinalResolution Date:05/01/1983Resolution:Sanctions Ordered:Monetary/Fine $2,000.00Consent447©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN MAY, 1983, PAINE, WEBBER, JACKSON & CURTIS, INC. WASTHE SUBJECT OF A CONSENT ORDER BY THE COMMISSIONER OFSECURITIES, STATE OF GEORGIA, IN WHICH THE FIRM AGREED TO ASUSPENSION FROM THE ACCEPTANCE OF ANY NEW GEORGIA RESIDENTACCOUNTS FOR THE PERIOD OF FIVE (5) DAYS AND A FINE IN THEAMOUNT OF $2,000.00. THE ORDER FINDS THAT PAINEWEBBERPERMITTED SIX (6) SALESMEN IN THE ATLANTA OFFICE TO CONDUCTSECURITIES TRANSACTIONS WITH GEORGIA RESIDENTS, WHILEUNREGISTERED IN THE STATE OF GEORGIA, IN VIOLATION OF SECTION 3OF THE GEORGIA SECURITIES ACT OF 1973.SuspensionDisclosure 241 of 450iReporting Source:FirmInitiated By:THE PACIFIC STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:A PURPORTED VIOLATION OF ARTICLE XI SECTION 2(B) OF THATEXCHANGE.Current Status:FinalResolution Date:06/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1982, PAINE, WEBBER, JACKSON & CURTIS, INC.STIPULATED AND CONSENTED TO A CENSURE AND FINE OF$2,500.00 IMPOSED ON IT BY THE PACIFIC STOCK EXCHANGE,Sanctions Ordered:CensureMonetary/Fine $2,500.00Stipulation and Consent448©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceINC. FOR A PURPORTED VIOLATION OF ARTICLE XI SECTION2(B) OF THAT EXCHANGE.Disclosure 242 of 450iReporting Source:FirmInitiated By:THE CHICAGO MERCANTILE EXCHANGE ("CME")Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1991Docket/Case Number:91-335-FPPrincipal Product Type:Futures - FinancialOther Product Type(s):Allegations:ALLEGED THAT PAINEWEBBER ACCEPTED CONTEMPORANEOUS BUY ANDSELL ORDERS FOR THE SAME CUSTOMER ACCOUNT IN S & P 500 STOCKPRICE INDEX FUTURES ON TRADE DATES OCTOBER 3, OCTOBER 30, ANDDECEMBER 5, 1990, IN VIOLATION OF EXCHANGE RULE 433.B(UNCOMMERICAL CONDUCT).Current Status:FinalResolution Date:06/28/1991Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THENOTICE OF CHARGE, PAINEWEBBER SUBMITTED AN OFFER OFSETTLEMENT. THE SETTLEMENT WAS ACCEPTED BY THE FLOORPRACTICES COMMITTEE, FINANCIAL DIVISION OF THE CME ("COMMITTEE")ON JUNE 28, 1991, AND IN CONNECTION THEREWITH, THE COMMITTEEIMPOSED A $7,500.00 FINE ON PAINEWEBBER.Firm StatementIN MAY, 1991, THE CHICAGO MERCANTILE EXCHANGE ("CME") PROBABLECAUSE COMMITTEE ISSUED A NOTICE OF CHARGE (91-335-FP) AGAINSTPAINEWEBBER INCORPORATED ("PAINEWEBBER") WHICH ALLEGED THATPAINEWEBBER ACCEPTED CONTEMPORANEOUS BUY AND SELL ORDERSFOR THE SAME CUSTOMER ACCOUNT IN S & P 500 STOCK PRICE INDEXFUTURES ON TRADE DATES OCTOBER 3, OCTOBER 30, AND DECEMBER 5,Sanctions Ordered:Monetary/Fine $7,500.00Settled449©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance1990, IN VIOLATION OF EXCHANGE RULE 433.B (UNCOMMERICALCONDUCT).WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THENOTICE OF CHARGE, PAINEWEBBER SUBMITTED AN OFFER OFSETTLEMENT. THE SETTLEMENT WAS ACCEPTED BY THE FLOORPRACTICES COMMITTEE, FINANCIAL DIVISION OF THE CME ("COMMITTEE")ON JUNE 28, 1991, AND IN CONNECTION THEREWITH, THE COMMITTEEIMPOSED A $7,500.00 FINE ON PAINEWEBBER.Disclosure 243 of 450iReporting Source:FirmInitiated By:OFFICE OF COMMISSIONER OF FINANCIAL INSTITUTIONS OF PUERTORICOPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/13/1996Docket/Case Number:96-DL-V-02Principal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO SUPERVISE REASONABILY THREE INVESTMENT EXECUTIVESFORMERLY EMPLOYED BY THE FIRM.Current Status:FinalResolution Date:03/15/1996Resolution:Other Sanctions Ordered:Sanction Details:CONSENT AGREEMENT AND UNDERTAKING; WITHOUT ADMITTING ORDENYING THE ALLEGATIONS, THE FIRM AGREED TO PREPARE REPORTSCONCERNING CUSTOMER COMPLAINTS, TO REIMBURSETHE CFI FOR THE COSTS OF INVESTIGATION AND TO CONTRIBUTE$99,000 TO PUBLIC TRAINING AND EDUCATION FUNDS.Sanctions Ordered:Monetary/Fine $99,000.00Consenti450©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 244 of 450Reporting Source:FirmInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1985Docket/Case Number:84-0033Principal Product Type:OptionsOther Product Type(s):Allegations:ALLEGATIONS THAT THE FIRM'S OPTION TRADER, ON A SINGLE OCCASIONIN JUNE 1983, TRADED OPTIONS WHILE IN POSSESSION OF INFORMATIONTHAT A LARGE BLOCK TRANSACTION WAS IMMINENT, AND THAT SUCH ACONDUCT VIOLATED EXCHANGE RULE 4.1.Current Status:FinalResolution Date:07/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1985, PAINE, WEBBER, JACKSON & CURTIS, INC. WASCENSURED AND FINED $6,000.00 BY THE CHICAGO BOARD OFOPTIONS EXCHANGE PURSUANT TO AN OFFER OF SETTLEMENT, INCONNECTION WITH ALLEGATIONS THAT THE FIRM'S OPTION TRADER, ON ASINGLE OCCASION IN JUNE 1983, TRADED OPTIONS WHILE INPOSSESSION OF INFORMATION THAT A LARGE BLOCK TRANSACTION WASIMMINENT, AND THAT SUCH A CONDUCT VIOLATED EXCHANGE RULE 4.1.Sanctions Ordered:CensureMonetary/Fine $6,000.00Decision & Order of Offer of SettlementDisclosure 245 of 450iReporting Source:FirmAllegations:ALLEGED THAT PAINEWEBBER FAILED TO REPORT TO THE NYSE AND ITSDESIGNATED AGENT, THE CENTRAL REGISTRATION DEPOSITORY, THETERMINATION OF ONE OF ITS REGISTERED REPRESENTATIVES WITHINCurrent Status:Final451©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGE, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):THIRTY (30) DAYS OF TERMINATION.Resolution Date:02/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN FEBRUARY, 1991, PAINEWEBBER INCORPORATED AGREED TO A$1,000.00 FINE ISSUED BY THE NEW YORK STOCK EXCHANGE, INC.("NYSE") FOR AN ALLEGED VIOLATION OF NYSE RULE 345.17. THE NYSEALLEGED THAT PAINEWEBBER FAILED TO REPORT TO THE NYSE AND ITSDESIGNATED AGENT, THE CENTRAL REGISTRATION DEPOSITORY, THETERMINATION OF ONE OF ITS REGISTERED REPRESENTATIVES WITHINTHIRTY (30) DAYS OF TERMINATION.Sanctions Ordered:Monetary/Fine $1,000.00OtherDisclosure 246 of 450iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., DISTRICT 12.Date Initiated:11/01/1988Allegations:A REVIEW OF MUNICIPAL UNDERWRITING UNDERTAKEN BY PAINEWEBBERREVEALED THAT IN TWO INSTANCES THE FIRM FAILED TO PAY THEUNDERWRITING ASSESSMENT WITHIN 30 DAYS FOLLOWING THESETTLEMENT WITH THE ISSUER. FURTHER, A REVIEW OF SIX MUNICIPALUNDERWRITINGS REVEALED THAT IN FOUR INSTANCES THE FIRM FAILEDTO EFFECT FINAL SETTLEMENT WITH THE SYNDICATE WITHIN 60 DAYSFOLLOWING THE DATE SECURITIES WERE DELIVERED TO THE SYNDICATEMEMBERS.Current Status:Final452©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:MY-6059Principal Product Type:Debt - MunicipalOther Product Type(s):Resolution Date:11/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1988 PAINEWEBBER SUBMITTED A LETTER OFACCEPTANCE WAIVER AND CONSENT TO THE NATIONAL ASSOCIATION OFSECURITIES DEALERS, INC., DISTRICT 12. PAINEWEBBER WAS CENSUREDAND FINED $2,000.00. A REVIEW OF MUNICIPAL UNDERWRITINGUNDERTAKEN BY PAINEWEBBER REVEALED THAT IN TWO INSTANCES THEFIRM FAILED TO PAY THE UNDERWRITING ASSESSMENT WITHIN 30 DAYSFOLLOWING THESETTLEMENT WITH THE ISSUER. FURTHER, A REVIEW OF SIX MUNICIPALUNDERWRITINGS REVEALED THAT IN FOUR INSTANCES THE FIRM FAILEDTO EFFECT FINAL SETTLEMENT WITH THE SYNDICATE WITHIN 60 DAYSFOLLOWING THE DATE SECURITIES WERE DELIVERED TO THE SYNDICATEMEMBERS.Sanctions Ordered:CensureMonetary/Fine $2,000.00Acceptance, Waiver & Consent(AWC)Disclosure 247 of 450iReporting Source:FirmInitiated By:DISTRICT BUSINESS CONDUCT COMMITTEE OF THE NASDDate Initiated:06/01/1979Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductAllegations:VIOLATION OF ARTICLE III, SECTION 1 OF THE ASSOCIATION'S RULES OFFAIR PRACTICE.Current Status:Final453©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:07/01/1979Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1979, A DISTRICT BUSINESS CONDUCT COMMITTEEOF THE NASD CENSURED AND FINED $500.00 AN OFFICER OF PAINE,WEBER,JACKSON & CURTIS, INC. FOR A VIOLATION OF ARTICLE III,SECTION 1 OF THE ASSOCIATION'S RULES OF FAIR PRACTICE.Sanctions Ordered:CensureMonetary/Fine $500.00DecisionDisclosure 248 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATIONS OF CBOE RULE 4.11.Current Status:FinalResolution Date:03/01/1981Resolution:Other Sanctions Ordered:ADMONISHMENTSanctions Ordered:Monetary/Fine $15,000.00Consent454©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:IN MARCH, 1981, PAINE, WEBBER,JACKSON & CURTIS, INC.CONSENTED TO THE IMPOSITION OF AN ADMONISHMENT AND A $15,000FINE BY THE CHICAGO BOARD OF OPTIONS EXCHANGE FOR VIOLATIONSOF CBOE RULE 4.11.Disclosure 249 of 450iReporting Source:FirmInitiated By:THE DISTRICT BUSINESS CONDUCT COMMITTEE OF THE NASD, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FOR VIOLATION OF SECTION 1, ARTICLE III OF THE ASSOCIATION'S RULESOF FAIR PRACTICECurrent Status:FinalResolution Date:10/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN OCTOBER, 1982, THE DISTRICT BUSINESS CONDUCTCOMMITTEE OF THE NATIONAL ASSOCIATION OF SECURITIESDEALERS, INC. IMPOSED A PENALTY OF A CENSURE AND A$5,000.00 FINE AS AGAINST PAINE, WEBBER, JACKSON & CURTIS, INC. FORVIOLATION OF SECTION 1, ARTICLE III OF THE ASSOCIATION'S RULES OFFAIR PRACTICE.Sanctions Ordered:CensureMonetary/Fine $5,000.00DecisionDisclosure 250 of 450iReporting Source:FirmCurrent Status:Final455©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE FLOOR GOVERNORS COMMITTEE OF THE CHICAGO BOARD OFTRADEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1984Docket/Case Number:Principal Product Type:Futures - CommodityOther Product Type(s):Allegations:VIOLATION OF CBT REGULATION 322.02 FOR FAILURE TO PROPERLYRECORD THE CORRECT HALF-HOUR BRACKET CHARACTER FOR TRADESEXECUTED ON THE EXCHANGE FLOOR.Resolution Date:08/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST, 1984, THE FLOOR GOVERNORS COMMITTEE OF THECHICAGO BOARD OF TRADE FINED PAINE, WEBBER, JACKSON &CURTIS $200.00 FOR VIOLATION OF CBT REGULATION 322.02FOR FAILURE TO PROPERLY RECORD THE CORRECT HALF-HOURBRACKET CHARACTER FOR TRADES EXECUTED ON THE EXCHANGEFLOOR.Sanctions Ordered:Monetary/Fine $200.00DecisionDisclosure 251 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF TRADEDate Initiated:10/01/1988Allegations:THE ALLEGATIONS CONCERNED A FAILURE BY PAINEWEBBER TOPROPERLY TIME-STAMP FLOOR ORDER TICKETS AND FLOOR ORDERS;AND THAT PAINEWEBBER FAILED TO PROVIDE CERTAIN FLOOR ORDERTICKETS AND DISCRETIONARY ORDER TICKETS AND THEREBY FAILED TOKEEP ACCURATE AND COMPLETE BOOKS AND RECORDS.Current Status:Final456©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:UNKNOWNPrincipal Product Type:Futures - CommodityOther Product Type(s):Resolution Date:10/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN OCTOBER, 1988, PAINEWEBBER INCORPORATED WAS FINED$500.00 BY THE CHICAGO BOARD OF TRADE. THE ALLEGATIONSCONCERNED A FAILURE BY PAINEWEBBER TO PROPERLY TIME-STAMPFLOOR ORDER TICKETS AND FLOOR ORDERS; AND THAT PAINEWEBBERFAILED TO PROVIDE CERTAIN FLOOR ORDER TICKETS ANDDISCRETIONARY ORDER TICKETS AND THEREBY FAILED TO KEEPACCURATE AND COMPLETE BOOKS AND RECORDS.Sanctions Ordered:Monetary/Fine $500.00DecisionDisclosure 252 of 450iReporting Source:FirmInitiated By:THE CHICAGO MERCANTILE EXCHANGE (CME)Date Initiated:06/01/1991Docket/Case Number:90-FPC-3010Allegations:IN JUNE 1990, THE CHICAGO MERCANTILE EXCHANGE (CME) PROBABLECAUSE COMMITTEE ISSUED A NOTICE OF CHARGE (90-FPC-3010) AGAINSTPAINEWEBBER INCORPORATED ("PAINEWEBBER") AND ITS EMPLOYEESJOSEPH SAVINO ("SAVINO") AND STEVEN BAUER ("BAUER") WHICHALLEGED THAT THE RESPONDENTS VIOLATED CME RULE 433.B(UNCOMMERCIAL CONDUCT) IN THAT TO RESOLVE AN ERROR, ONSEPTEMBER 27, 1989, SAVINO AND BAUER INITIATED A 5-CONTRACT SPZTRADE BETWEEN A PAINEWEBBER HOUSE ACCOUNT AND ANOTHERMEMBER'CCOUNT WHICH WAS NOT EXECUTED IN THE PIT BY OPENOUTCRY.Current Status:Final457©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:No ProductOther Product Type(s):Resolution Date:10/08/1990Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THENOTICE OF CHARGE, PAINEWEBBER, SAVINO AND BAUERSUBMITTED AN OFFER OF SETTLEMENT. THE SETTLEMENT WASACCEPTED BY THE FLOOR PRACTICES COMMITTEE, FINANCIAL DIVISIONOF THE CME ("COMMITTEE") ON OCTOBER 8, 1990, AND IN CONNECTIONTHEREWITH THE COMMITTEE IMPOSED A $1,000.00 FINE ON EACH OF THERESPONDENTS.Sanctions Ordered:Monetary/Fine $1,000.00SettledDisclosure 253 of 450iReporting Source:FirmInitiated By:THE NASD INC., DISTRICT BUSINESS CONDUCT COMMITTEE FOR DIST. #6Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT PAINEWEBBER DID NOT TIMELY AMEND THE U-5TERMINATION NOTICE FOR ONE OF ITS REGISTERED REPRESENTATIVESTO DISCLOSE A PENDING INVESTIGATION.Current Status:FinalResolution:Acceptance, Waiver & Consent(AWC)458©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:08/01/1991Other Sanctions Ordered:Sanction Details:IN AUGUST, 1991, PAINEWEBBER INCORPORATED ("PAINEWEBBER")AGREED TO ENTER INTO A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT ("AWC") WITH THE NATIONAL ASSOCIATION OF SECURITIESDEALERS, INC., DISTRICT BUSINESS CONDUCT COMMITTEE FOR DISTRICTNO. 6WHEREBY PAINEWEBBER WAS CENSURED AND FINED $5,000.00. WITHOUTADMITTING OR DENYING THE FACTS AS OUTLINED IN THE AWC, IT WASDETERMINED THAT PAINEWEBBER DID NOT TIMELY AMEND THE U-5TERMINATION NOTICE FOR ONE OF ITS REGISTERED REPRESENTATIVESTO DISCLOSE A PENDING INVESTIGATION.Sanctions Ordered:CensureMonetary/Fine $5,000.00Disclosure 254 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF TRADEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/15/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:THE CHICAGO BOARD OF TRADE ("CBOT") FLOOR GOVERRNORSCOMMITTEE ISSUED TWO (2) SEPARATE "CHARGE LETTERS", ONE TO ACURRENT PAINEWEBBER EMPLOYEE, TERRANCE SHANAHAN AND ONE TOPAINEWEBBER INCORPORATED, IN WHICH THE CBOT DETERMINED THATTHERE WAS A REASONABLE BASIS FOR TAKING DISCIPLINARY ACTIONAGAINST BOTH THE EMPLOYEE AND PAINEWEBBER FOR VARIOUSALLEGED VIOLATIONS OF THE FOLLOWING CBOT RULES: REGULATION350.05(F),545.00, 545.01, 504.00, 301.05 AND APPENDIX 3B- AND REGULATIONS.Current Status:Final459©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:05/21/1992Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THECHARGE LETTERS, PAINEWEBBER AND SHANAHAN SUBMITTED ANDOFFER OF SETTLEMENT TO THE FLOOR GOVERNORS COMMITTEE OF THECBOT. THE SETTLEMENT WAS ACCEPTED BY THE FLOOR GOVERNORSCOMMITTEE ON MAY 21,1992 AND IN CONNECTION THEREWITH, THECOMMITTEE IMPOSED A FINE UPON PAINEWEBBER IN THE AMOUNT OF$15,000.00 AND A FINE UPON SHANAHAN OF $5,000.00.Sanctions Ordered:Monetary/Fine $15,000.00SettledDisclosure 255 of 450iReporting Source:FirmInitiated By:THE CHICAGO MERCANTILE EXCHANGE ("CME")Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1991Docket/Case Number:91-379-BCPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT PAINEWEBBER ACCEPTED ORDERS FROM ONE OF ITSCUSTOMERS, AT VARIOUS TIMES DURING 1987, WITHOUT OBTAINING ANDRECORDING PRIOR TO THEIR EXECUTION THE SPECIFIC ACCOUNTS FORWHICH THE ORDERS WERE PLACED IN VIOLATION OF EXCHANGE RUEL536 (RECORDS FOR ORDERS AND PERSONAL TRANSACTIONS).Current Status:FinalResolution Date:10/29/1991Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THESanctions Ordered:Monetary/Fine $35,000.00Settled460©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceNOTICE OF CHARGE, PAINEWEBBER SUBMITTED AN OFFER OFSETTLEMENT TO THE CME BUSINESS CONDUCT COMMITTEE, FINANCIALDIVISION, ON SEPTEMBER 4, 1991. ON OCTOBERR 29, 1991, THE BUSINESSCONDUCT COMMITTEE, FINANCIAL DIVISION, ACCEPTED AN OFFER OFSETTLEMENT, SUBMITTEDBY PAINEWEBBER AND IN CONNECTION THEREWITH THE COMMITTEEIMPOSED A $35,000.00 FINE ON PAINWEBBER.Disclosure 256 of 450iReporting Source:FirmInitiated By:COMMODITY EXCHNAGE, SUPERVISORY COMMITTEEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1989Docket/Case Number:UNKNOWNPrincipal Product Type:Commodity Option(s)Other Product Type(s):Allegations:COMMITTEE ON BUSINESS CONDUCT ALLEGED THAT PAINEWEBBER HADVIOLATED COMEX RULES 4.97 AND 3.13(A)(III); AND PATRICK SWEENY HADVIOLATED COMEX RULES 4.21, 4.22, 4.24(E), 4.27, 4.31, 4.34 4.81, AND 4.97.Current Status:FinalResolution Date:02/01/1989Resolution:Other Sanctions Ordered:Sanction Details:SWEENY AND PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENT,WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, AND INCONNECTION WITH THE SETTLEMENT, SWEENY IS TO BE FINED $20,000,PAINEWEBBER FINED $10,000, AND BOTH ARE ORDERED TO CEASE &DESIST FROM FUTURE VIOLATIONS. FURTHER DIRECTING THAT SWEENYNOT REAPPLY FOR MEMBERSHIP ON THE EXCHANGE FOR A PERIOD OF180 DAYSSanctions Ordered:Monetary/Fine $10,000.00Cease and Desist/InjunctionSettled461©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 257 of 450iReporting Source:FirmInitiated By:STATE OF CONNECTICUT, DEPARTMENT OF BANKING, SECURITIES ANDBUSIPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:THIS MATTER AROSE AS THE RESULT OF AN INVESTIGATION CONDUCTEDBY THE DIVISION INTO PAINEWEBBER'S INVESTMENT ADVISORY ACTIVITYIN CONNECTICUT; FURTHER THE DIVISION CONDUCTED A SEPARATEINVESTIGATION INTO THE ACTIVITIES OF ONE OF PAINEWEBBER'SREGISTERED REPRESENTATIVES IN REFERENCE TO THE SUITABILITY OFVARIOUS SECURITIES WHICH THAT INDIVIDUAL RECOMMENDED TOCERTAIN OF HIS/HER CLIENTS WHO WERE CONNECTICUT RESIDENTS.THE INVESTIGATION REVEALED THAT PAINEWEBBER MAY HAVE VIOLATEDSECTION 36-474(C) OF THE CONNECTICUT UNIFORM SECURITIES ACT(THE "ACT") BY FAILING TO PROPERLY REGISTER BROKER/DEALERREPRESENTATIVES AS INVESTMENT ADVISER AGENTS PURSUANT TO THEREQUIREMENTS OF THE ACT; THE INVESTIGATION FURTHER REVEALEDTHAT PAINEWEBBERMAY HAVE VIOLATED SECTION 36-472 OF THE ACT BASED UPON THEACTIVITIES OF ITS REGISTERED REPRESENTATIVE WHO WAS ALLEGED TOHAVE MADE UNSUITABLE RECOMMENDATIONS TO HIS/HER CLIENTS WHOWERE CONNECTICUT RESIDENTS.Current Status:FinalResolution Date:09/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN SEPTEMBER, 1991, PAINEWEBBER INCORPORATED ("PAINEWEBBER")Sanctions Ordered:Monetary/Fine $75,000.00Stipulation and Consent462©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceENTERED INTO A STIPULATION AND AGREEMENT WITH THE STATE OFCONNECTICUT, DEPARTMENT OF BANKING, SECURITIES AND BUSINESSINVESTMENTS DIVISION ("DIVISION"), WHEREBY PAINEWEBBER, WITHOUTADMITTING OR DENYING VARIOUS ALLEGED VIOLATIONS, CONSENTED TOTHE IMPOSITION OF A PENALTY IN THE AMOUNT OF $50,000.00 BY THEDIVISION; IN ADDITION, PAINEWEBBER AGREED TO REIMBURSE THEDIVISION THE SUM OF $25,000.00 FOR COSTS OF THE INVESTIGATION BYTHE DIVISION; FINALLY, PAINEWEBBER AGREED TO COMPLY WITHCERTAIN UNDERTAKINGS SET-FORTH IN THE STIPULATION ANDAGREEMENT.Firm StatementBASED UPON THE STIPULATION AND AGREEMENT, THE COMMISSIONEROF BANKING FOR THE DEPARTMENT OF BANKING ENTERED AN ORDERWITHDRAWING THE NOTICE OF INTENT TO FINE AND NOTICE OF INTENTTO SUSPEND REGISTRATION AS A BROKER-DELAER AND INVESTMENTADVISER WITHOUT PREJUDICE ON SEPTEMBER 30, 1991, WHICH NOTICESRESULTED FROM THE INVESTIGATION DESCRIBED HEREIN.PLEASE DISREGARD REMOVAL REQUEST.Disclosure 258 of 450iReporting Source:FirmInitiated By:THE COMMISSIONER OF INSURANCE, STATE OF TENNESSEEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATED T.C.A. 48-16-109 (B).Current Status:FinalResolution Date:12/01/1981Resolution:Other Sanctions Ordered:Sanctions Ordered:SuspensionConsent463©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:IN DECEMBER, 1981, PAINE, WEBBER, JACKSON & CURTIS, INC.CONSENTED TO AN ORDER OF THE COMMISSIONER OF INSURANCE,STATE OF TENNESSEE, PROHIBITING THE SOLICITATION OF NEWBUSINESS FOR FIVE BUSINES DAYS IN ONE OF ITS BRANCH OFFICES. THECOMMISSINER OF INSURANCE HAD ALLEGED THAT FOUR OFPAINEWEBBER, JACKSON & CURTIS' EMPLOYEES HAD VIOLATED T.C.A. 48-16-109 (B).Disclosure 259 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1972Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATIONS OF THE NASD RULES OF FAIR PRACTICE.Current Status:FinalResolution Date:04/01/1972Resolution:Other Sanctions Ordered:Sanction Details:IN APRIL, 1972, THE NASD CENSURED AND FINED PAINE,WEBBER, JACKSON & CURTIS INCORPORATED $250.00. ALSO ABRANCH MANAGER AND A FORMER EMPLOYEE WERE BOTH CENSUREDAND FINED $250.00 FOR VIOLATIONS OF THE NASD RULES OF FAIRPRACTICE.Sanctions Ordered:Monetary/Fine $250.00DecisionDisclosure 260 of 450iReporting Source:FirmCurrent Status:Final464©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:THIS MATTER AROSE AS THE RESULT OF A ROUTINE EXAMINATION OFONE OF PAINEWEBBER'S BRANCHES LOCATED IN OKLAHOMA. THEEXAMINATION REVEALED THAT THREE (3) PAINEWEBBER BROKER/DEALERREPRESENTATIVES MAY HAVE ENGAGED IN RENDERING FEE BASEDINVESTMENT ADVISORY SERVICES WITHOUT BEING REGISTERED ASINVESTMENT ADVISOR REPRESENTATIVES, IN APPARENT VIOLATION OFSECTION 201(C) OF THE ACT; FURTHER, THE EXAMINATION REVEALEDTHAT PAINEWEBBER MAY HAVE MADE CLIENT REFERRALS TOINVESTMENT ADVISERS WHO MAY NOT HAVEBEEN REGISTERED WITH THE STATE IN VIOLATION OF SECTION 201(C) OFTHE ACT.Resolution Date:09/01/1991Resolution:Firm StatementIN SEPTEMBER, 1991, PAINEWEBBER INCORPORATED("PAINEWEBBER")ENTERED INTO AN AGREEMENT WITH THE STATE OF OKLAHOMADEPARTMENT OF SECURITIES, WHEREBY PAINEWEBBER, WITHOUTADMITTING OR DENYING VARIOUS ALLEGED VIOLATIONS, CONSENTED TOTHE FOLLOWING CONDITIONS: (A) PAINEWEBBER AGREED TO COMPLYWITH ALL PROVISIONS OF THE OKLAHOMA SECURITIES ACT ("ACT") ANDTHE RULES PROMULGATED PURSUANT THERETO IN CONNECTION WITHANY ACTIVITIES CONDUCTED IN OR FOR THE STATE OF OKLAHOMA; (B)PAINEWEBBER AGREED TO REGISTER ANY AGENTS CONDUCTINGINVESTMENT ADVISORY SERVICES WITHIN THESTATE OF OKLAHOMA AS INVESTMENT ADVISER REPRESENTATIVES; ANDFINALLY, (C) PAINEWEBBER AGREED TO REFRAIN FROM REFERRING ITSOKLAHOMA CUSTOMERS TO INVESTMENT ADVISERS NOT APPROPRIATELYREGISTERED UNDER THE ACT. NO FURTHER SANCTIONS WERE IMPOSED.PLEASE DISREGARD REMOVAL REQUEST.Consenti465©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 261 of 450Reporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO OBTAIN THE PRIOR APPROVAL OF THE NASD TO RE-ENTERQUOTATION ON NASD.Current Status:FinalResolution Date:03/01/1981Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1981, PAINE, WEBBER, JACKSON & CURTIS, INC.CONSENTED TO A $100.00 FINE IMPOSED BY THE NASD FOR FAILURE TOOBTAIN THE PRIOR APPROVAL OF THE NASD TO RE-ENTER QUOTATIONON NASD.Sanctions Ordered:Monetary/Fine $100.00ConsentDisclosure 262 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF TRADEDate Initiated:06/29/1995Docket/Case Number:94-RRR-427Allegations:THE CBOT ALLEGED THAT PAINEWEBBER FAILED TO TIMELY STAMP ANDCOLLECT TRADING DOCUMENTS AND FAILED TO SUBMIT ACCURATETRADE INFORMATION IN VIOLATION OF CBOT REGULATIONS 332.02,332.05AND 332.08Current Status:Final466©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Futures - FinancialOther Product Type(s):Resolution Date:07/13/1995Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER FINED $250.00Sanctions Ordered:Monetary/Fine $250.00DecisionDisclosure 263 of 450iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE, INCPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1980Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SEC REGULATIONS 24017A-13 AND 24015C3-3 (H) AND NEWYORK STOCK EXCHANGE RULES 440, 440.10 (2) AND 342.(A).Current Status:FinalResolution Date:12/01/1980Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $300.00Consent467©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:IN DECEMBER, 1980, PAINE, WEBBER, JACKSON & CURTIS, INC.CONSENTED TO THE IMPOSITION OF A CENSURE AND A FINE OF$300.00 BY THE NEW YORK STOCK EXCHANGE FOR VIOLATIONOF SEC REGULATIONS 24017A-13 AND 24015C3-3 (H) AND NEW YORKSTOCK EXCHANGE RULES 440, 440.10 (2) AND 342.(A).Disclosure 264 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1980Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO REPORT VOLUME ON NASDAQ.Current Status:FinalResolution Date:07/01/1980Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1980, PAINE, WEBBER, JACKSON & CURTIS, INCCONSENTED TO A $50.00 FINE IMPOSED BY THE NASD FORFAILURE TO REPORT VOLUME ON NASDAQ.Sanctions Ordered:Monetary/Fine $50.00ConsentDisclosure 265 of 450iReporting Source:FirmAllegations:AIDING AND ABETTING VIOLATIONS OF WILLIAMS ACT DISCLOSUREPROVISIONS BY CONDUCTING AN "ACTIVE AND WIDESPREAD"SOLICITATION OF SHARES IN THE TARGET COMPANY THAT WASCurrent Status:Final468©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1982Docket/Case Number:3-6074Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):INDISPENSABLE TO THE EVENTUAL BLOCK PURCHASE OF OVER 1.2MILLION TARGET SHARES, AT PREMIUM PRICES, IN A SINGLE DAY OFTRADINGResolution Date:12/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1982, THE SECURITIES AND EXCHANGE COMMISSIONCENSURED PAINE, WEBBER, JACKSON & CURTIS, INC. FOR AIDING ANDABETTING VIOLATIONS OF WILLIAMS ACT DISCLOSURE PROVISIONS BYCONDUCTING AN "ACTIVE AND WIDESPREAD" SOLICITATION OF SHARESIN THE TARGET COMPANY THAT WAS INDISPENSABLE TO THE EVENTUALBLOCK PURCHASE OF OVER 1.2 MILLION TARGET SHARES, AT PREMIUMPRICES, IN A SINGLE DAY OF TRADING.Sanctions Ordered:CensureDecisionDisclosure 266 of 450iReporting Source:FirmInitiated By:NATIONAL FUTURES ASSOCIATIONDate Initiated:03/01/1987Docket/Case Number:86-2(E)Allegations:ALLEGED VIOLATIONS OF NFA AND CFTC RULES, IN THAT PAINEWEBBERCARRIED ACCOUNTS IN THE NAMES OF ENTITIES WHICH WERE, IN FACT,UNREGISTERED COMMODITY POOL OPERATORS AND COMMODITYTRADING ADVISORS ACTING FOR POOL INVESTORS.Current Status:Final469©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Futures - CommodityOther Product Type(s):Resolution Date:03/01/1987Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1987, THE NATIONAL FUTURES ASSOCIATION ACCEPTED ANOFFER OF SETTLEMENT FROM PAINEWEBBER, INC. IN CONNECTION WITHALLEGED VIOLATIONS OF NFA AND CFTC RULES, IN THAT PAINEWEBBERCARRIED ACCOUNTS IN THE NAMES OF ENTITIES WHICH WERE, IN FACT,UNREGISTERED COMMODITY POOL OPERATORS AND COMMODITYTRADING ADVISORS ACTING FOR POOL INVESTORS. THE SETTLEMENTREQUIRED A PAYMENT BY PAINEWEBBER OF A $15,000.00 FINE AND ANUNDERTAKING THAT THE FIRM SHALL REFRAIN FROM FURTHERVIOLATIONS OF NFA REQUIREMENTS.Sanctions Ordered:Monetary/Fine $15,000.00Decision & Order of Offer of SettlementDisclosure 267 of 450iReporting Source:FirmInitiated By:STATE OF HAWAII, DEPARTMENT OF REGULATORY AGENCIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1984Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO RENEW ON A TIMELY BASIS THE REGISTRATION OF TWOACCOUNT EXECUTIVES OPERATING WITHIN THE STATE OF HAWAII.Current Status:Final470©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:07/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1984, PAINEWEBBER INCORPORATED CONSENTED TO AFINE $3,000 BY THE STATE OF HAWAII, DEPARTMENT OF REGULATORYAGENCIES FOR FAILING TO RENEW ON A TIMELY BASIS THEREGISTRATION OF TWO ACCOUNT EXECUTIVES OPERATING WITHIN THESTATE OF HAWAII.Sanctions Ordered:Monetary/Fine $3,000.00ConsentDisclosure 268 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF OPTIONS EXCHANGE, INCPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1982Docket/Case Number:UNKNOWNPrincipal Product Type:OptionsOther Product Type(s):Allegations:A VIOLATION OF RULES 4.1, 4.2, AND 15.1 OF THAT EXCHANGE.Current Status:FinalResolution Date:07/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1982, PAINE, WEBBER, JACKSON & CURTIS, INC.STIPULATED AND CONSENTED TO A FINE OF $5,000.00 BY THECHICAGO BOARD OF OPTIONS EXCHANGE, INC. FOR A VIOLATION OFRULES 4.1, 4.2, AND 15.1 OF THAT EXCHANGE.Sanctions Ordered:Monetary/Fine $5,000.00Stipulation and ConsentDisclosure 269 of 450i471©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. DIST. NO. 5Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ALLEGATIONS THAT TWO RESPONDENT EMPLOYEES FAILED TOPROPERLY DISCLOSE A BREAKPOINT SITUATION TO A MUTUAL FUNDSCUSTOMER.Current Status:FinalResolution Date:08/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST, 1988 PAINEWEBBER PAID A JOINT AND SEVERAL FINE OF$1,000.00 ALONG WITH TWO RESPONDENT EMPLOYEES TO THE NATIONALASSOCIATION OF SECURITIES DEALERS, INC. DISTRICT NO. 5PAINEWEBBER SUBMITTED A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT TO THE DISTRICT BUSINESS CONDUCT COMMITTEECONCERNING ALLEGATIONS THAT ITS EMPLOYEES FAILED TO PROPERLYDISCLOSE A BREAKPOINT SITUATION TO A MUTUAL FUNDS CUSTOMER.Sanctions Ordered:Monetary/Fine $1,000.00Acceptance, Waiver & Consent(AWC)Disclosure 270 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF TRADEDate Initiated:12/01/1988Allegations:VIOLATION OF REG. 2442.01. I.E., FAILURE TO DELIVER U.S. T-NOTES ON ATIMELY BASIS.Current Status:Final472©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:88-MSI-11Principal Product Type:Debt - GovernmentOther Product Type(s):Resolution Date:12/01/1988Resolution:Other Sanctions Ordered:Sanction Details:ON DECEMBER, 1988 PAINEWEBBER INCORPORATED WAS FINED$25,000.00 BY THE CHICAGO BOARD OF TRADE FOR VIOLATION OF REG.2442.01. I.E., FAILURE TO DELIVER U.S. T-NOTES ON A TIMELY BASIS.Sanctions Ordered:Monetary/Fine $25,000.00DecisionDisclosure 271 of 450iReporting Source:FirmInitiated By:NATIONAL FUTURES ASSOCIATION EASTERN REGIONAL BUSINESSCONDUCT CDate Initiated:06/01/1991Docket/Case Number:91-BCC-015Principal Product Type:Futures - CommodityAllegations:ALLEGED THAT PAINEWEBBER HAD VIOLATED NFA BY-LAW 1101 BYTRANSACTING BUSINESS WITH NON-MEMBERS OF THE NFA WHO WEREREQUIRED TO BE REGISTERED WITH THE COMMODITY FUTURES TRADINGCOMMISSION ("CFTC"); FURTHER, THAT PAINEWEBBER HAD FAILED TOOBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST ANDEQUITABLE PRINCIPLES OF TRADE, IN VIOLATION OF NFACOMPLIANCE RULE 2-4, IN THAT PAINEWEBBER ALLEGEDLY KNEW OR INTHE EXERCISE OF REASONABLE DILIGENCE SHOULD HAVE KNOWN THATIT WAS TRANSACTING CUSTOMER BUSINESS WITH UNREGISTEREDPERSONS WHO WERE REQUIRED TO BE REGISTERED BUT WHO WERENOT SO REGISTERED.Current Status:Final473©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:09/26/1991Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THECOMPLAINT, PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENT. THESETTLEMENT WAS ACCEPTED BY THE COMMITTEE ON SEPTEMBER 26,1991, AND IN CONNECTION THEREWITH, THE COMMITTEE IMPOSED A$25,000.00 FINE ON PAINEWEBBER.Firm StatementIN JUNE, 1991, THE NATIONAL FUTURES ASSOCIATION ("NFA:) EASTERNREGIONAL BUSINESS CONDUCT COMMITTEE ("COMMITTEE") ISSUED ACOMPLAINT (91-BCC-015) AGAINST PAINEWEBBER INCORPORATED("PAINEWEBBER") WHICH ALLEGED THAT PAINEWEBBER HAD VIOLATEDNFA BY-LAW 1101 BY TRANSACTING BUSINESS WITH NON-MEMBERS OFTHE NFA WHO WERE REQUIRED TO BE REGISTERED WITH THECOMMODITY FUTURES TRADING COMMISSION ("CFTC"); FURTHER, THATPAINEWEBBER HAD FAILED TO OBSERVE HIGH STANDARDS OFCOMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE,IN VIOLATION OF NFA COMPLIANCE RULE 2-4, IN THAT PAINEWEBBERALLEGEDLY KNEW OR IN THE EXERCISE OF REASONABLE DILIGENCESHOULD HAVE KNOWN THAT IT WAS TRANSACTING CUSTOMER BUSINESSWITH UNREGISTERED PERSONS WHOWERE REQUIRED TO BE REGISTERED BUT WHO WERE NOT SOREGISTERED.Sanctions Ordered:Monetary/Fine $25,000.00SettledDisclosure 272 of 450iReporting Source:FirmInitiated By:STATE OF NEW JERSEYDate Initiated:07/01/1976Docket/Case Number:UNKNOWNAllegations:FAILURE TO PROPERLY REGISTER AN EMPLOYEE IN THE STATE.Current Status:Final474©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:No ProductOther Product Type(s):Resolution Date:07/01/1976Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1976, PAINE, WEBBER, JACKSON & CURTIS INCORPORATED WASFINED $100.00 BY THE STATE OF NEW JERSEY FOR FAILURE TO PROPERLYREGISTER AN EMPLOYEE IN THAT STATE.Sanctions Ordered:Monetary/Fine $100.00DecisionDisclosure 273 of 450iReporting Source:FirmInitiated By:THE MASSACHUSETTS SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $132,335.00Date Initiated:04/01/1996Docket/Case Number:E96-052Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final475©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:04/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $132,335.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH MASSACHUSETTS PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $132,335.00Cease and Desist/InjunctionConsentDisclosure 274 of 450iReporting Source:FirmInitiated By:WYOMING SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1996Docket/Case Number:96-01Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVSIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:Final476©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHUT ADMITTING OR DENYING THE FINDINGSTHEREIN TO THE ENTRY OR ORDER TO CEASE & FROM FURTHERVIOLATIONS, AND TO PAY $34,181.00.Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENTS AS PART TO THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES P.R.AND D.C. THIS FILLING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH WYOMING PURSUANT TO THAT AGREEMENT.Sanctions Ordered:Monetary/Fine $34,181.00Cease and Desist/InjunctionConsentDisclosure 275 of 450iReporting Source:FirmInitiated By:STATE OF NEW YORK, BUREAU OF INVESTOR PROTECTION & SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $382,092.00Date Initiated:06/01/1996Docket/Case Number:96-403247Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final477©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:06/20/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $382,096.00Firm StatementON 1/18/96, PMI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENT WITHNEW YORK PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $382,096.00Cease and Desist/InjunctionConsentDisclosure 276 of 450iReporting Source:FirmInitiated By:NEBRASKA DEPARTMENT OF BANKING & FINANCEPrincipal Sanction(s)/ReliefSought:Date Initiated:04/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:Final478©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER TO CEASE & DESIST FROM FURTHERVIOLATIONS, AND TO PAY $106,260.00Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILLING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH NEBRASKA PURSUANT TO THAT AGREEMENT.Sanctions Ordered:Monetary/Fine $106,260.00Cease and Desist/InjunctionConsentDisclosure 277 of 450iReporting Source:FirmInitiated By:THE NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1984Docket/Case Number:N-SE-156Principal Product Type:No ProductOther Product Type(s):Allegations:VIOLATIONS OF THE EXCESS SPREAD RULES UNDER SCHEDULE D OF THEASSOCIATION'S BY-LAWS DURING THE PERIOD OCTOBER THROUGHDECEMBER 1983.Current Status:Final479©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:02/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN FEBRUARY 1984, PAINE WEBBER JACKSON & CURTIS WAS FINED $250BY THE TRADING COMMITTEE OF THE NATIONAL ASSOCIATION OFSECURITIES DEALERS, INC., PURSUANT TO THE ASSOCIATION'S SUMMARYCOMPLAINT PROCEDURE, FOR VIOLATIONS OF THE EXCESS SPREADRULES UNDER SCHEDULE D OF THE ASSOCIATION'S BY-LAWS DURINGTHE PERIOD OCTOBER THROUGH DECEMBER 1983.Sanctions Ordered:Monetary/Fine $250.00DecisionDisclosure 278 of 450iReporting Source:FirmInitiated By:STATE OF NEW JERSEYPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1979Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF N.J.S.A. 49:3-56.Current Status:FinalResolution Date:07/01/1979Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1979, PAINE, WEBBER, JACKSON & CURTIS INC. CONSENTED TOAN ORDER OF THE STATE OF NEW JERSEY AND WAS ASSESSED AMONETARY PENALTY OF $13,450.00 FOR AN ALLEGED VIOLATION OFN.J.S.A. 49:3-56.Sanctions Ordered:Monetary/Fine $13,450.00Consenti480©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 279 of 450Reporting Source:FirmInitiated By:THE STATE OF GEORGIAPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $61,373.00Date Initiated:05/01/1996Docket/Case Number:50-95-0009Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:FinalResolution Date:05/14/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $61,373.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH GEORGIA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $61,373.00Cease and Desist/InjunctionConsenti481©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 280 of 450Reporting Source:FirmInitiated By:THE STATE OF KENTUCKY, DEPARTMENT OF FINANCIAL INSTITUTIONSPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $31,445.00Date Initiated:10/01/1996Docket/Case Number:C96018Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AMD FAILEDTO REASONABLE SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:FinalResolution Date:10/23/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $31,445.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH KENTUCKY PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $31,445.00Cease and Desist/InjunctionConsenti482©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 281 of 450Reporting Source:FirmInitiated By:THE MARYLAND SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $115,945.00Date Initiated:11/01/1996Docket/Case Number:S-96-015Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAINREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:FinalResolution Date:11/19/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $115,945.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURUSANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THE FILING REFLECTS THE SETTLEMENT AGREEMENT REACHEDWITH MARYLAND PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $115,945.00Cease and Desist/InjunctionConsenti483©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 282 of 450Reporting Source:FirmInitiated By:THE NEW JERSEY BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE OF $149,842.00Date Initiated:05/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTS.Current Status:FinalResolution Date:05/09/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $149,842.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH NEW JERSEY PURSAUNT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $149,842.00Cease and Desist/InjunctionConsenti484©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 283 of 450Reporting Source:FirmInitiated By:THE BOARD OF GOVERNORS OF THE NASD, INC.,Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1983Docket/Case Number:SEA301Principal Product Type:No ProductOther Product Type(s):Allegations:FREE-RIDING AND WITHHOLDING VIOLATIONSCurrent Status:FinalResolution Date:08/01/1983Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST 1983, THE BOARD OF GOVERNORS OF THE NATIONALASSOCIATION OF SECURITIES DEALERS, INC., AFFIRMED THE DECISIONOF ITS SEATTLE DISTRICT BUSINESS CONDUCT COMM. TO CENSUREPAINEWEBBER JACKSON & CURTIS, INC., AND TO FINE THE FIRM $5000 INCONNECTION WITH THE ASSOCIATION'S FREE-RIDING AND WITHHOLDINGVIOLATIONSSanctions Ordered:CensureMonetary/Fine $5,000.00DecisionDisclosure 284 of 450iReporting Source:FirmInitiated By:THE MAINE SECURITIES DIVISIONAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final485©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $52,247.00Date Initiated:04/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $52,247.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARY DIRECTINVESTMENTS. AS PART OF THAT PROCESS, PWI ALSO CONCLUDED ANAGREEMENT IN PRINCIPLE WITH THE MULTI STATE SPECIAL COMMITTEEPURSUANT TO WHICH IT WAS CONTEMPLATED THAT SETTLEMENTAGREEMENT WOULD BE REACHED WITH ALL STATES, P.R. AND D.C. THISFILING REFLECTS THE SETTLEMENT AGREEMENT WITH MAINE PURSUANTTO THAT AGREEMENTSanctions Ordered:Monetary/Fine $52,247.00Cease and Desist/InjunctionConsentDisclosure 285 of 450iReporting Source:FirmInitiated By:STATE OF MICHIGAN CORPORATION SECURITIES & LAND DEVEOPMENTAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASBONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final486©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceBUREAPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $131,031.00Date Initiated:05/01/1997Docket/Case Number:BD6612Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:05/29/1997Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $131,031.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH MICHIGAN PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $131,031.00Cease and Desist/InjunctionConsentDisclosure 286 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SAEL OF THESE INTERESTSCurrent Status:Final487©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE STATE OF NEVADA, SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $59,697.00Date Initiated:05/01/1996Docket/Case Number:196-62Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:05/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $59,697.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES P.R.AND D.C. THIS FILING REFLECTS THE STATEMENT AGREEMENT REACHEDWITH NEVADA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $59,697.00Cease and Desist/InjunctionConsentDisclosure 287 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CEERTAIN ANTI-FRAUD RECORDKEEPINGPROVISIONS OF APPLICALBLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final488©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE SOUTH CAROLINA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $54,482.00Date Initiated:05/01/1996Docket/Case Number:96023Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:05/06/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $54,482.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATEDTHATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT REACHED WITHSOUTH CAROLINA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $54,482.00Cease and Desist/InjunctionConsentDisclosure 288 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final489©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE OKLAHOMA DEPARTMENT OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $34,912.00Date Initiated:04/01/1996Docket/Case Number:96-110Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:04/25/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $34,912.00Firm StatementIN 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH OKLAHOMA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $34,912.00Cease and Desist/InjunctionConsentDisclosure 289 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF TRADEDate Initiated:10/01/1984Allegations:VIOLATION OF REGULATION 545.01 AND 545.02 CONCERNING THE TIMELYFILING OF ACCURATE INFORMATION AND REPORTS WITH THE EXCHANGE.Current Status:Final490©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:10/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN OCTOBER 1984, THE BUSINESS CONDUCT COMMITTEE OF THECHICAGO BOARD OF TRADE IMPOSED A FINE OF $1,000 UPONPAINEWEBBER FOR VIOLATION OF REGULATION 545.01 AND 545.02CONCERNING THE TIMELY FILING OF ACCURATE INFORMATION ANDREPORTS WITH THE EXCHANGE.Sanctions Ordered:Monetary/Fine $1,000.00DecisionDisclosure 290 of 450iReporting Source:FirmInitiated By:THE COMMODITY EXCHANGE, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:Futures - CommodityOther Product Type(s):Allegations:A PURPORTED VIOLATION OF COMMODITY EXCHANGE INC. EMERGENCYRULE.Current Status:FinalResolution:Consent491©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:04/01/1981Other Sanctions Ordered:Sanction Details:IN APRIL, 1981, PAINE WEBBER, JACKSON & CURTIS, INC. CONSENTED TOA FINE OF $25,000 IMPOSED BY THE COMMODITY EXCHANGE, INC. APURPORTED VIOLATION OF COMMODITY EXCHANGE INC. EMERGENCYRULE.Sanctions Ordered:Monetary/Fine $25,000.00Disclosure 291 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO OBTAIN THE PRIOR APPROVAL OF THE NASD TO RE-ENTER AQUOTATION OF NASDAQ.Current Status:FinalResolution Date:05/01/1981Resolution:Other Sanctions Ordered:Sanction Details:IN MAY, 1981, PAINE, WEBBER, JACKSON & CURTIS, INC. CONSENTED TO A$200.00 FINE IMPOSED BY THE NASD FOR FAILURE TO OBTAIN THE PRIORAPPROVAL OF THE NASD TO RE-ENTER A QUOTATION OF NASDAQ.Sanctions Ordered:Monetary/Fine $200.00ConsentDisclosure 292 of 450iReporting Source:Firm492©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:PHILADELPHIA-BOSTON AND WASHINGTON STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1971Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO OBTAIN THEIR PRIOR APPROVAL FOR AN OFF-FLOOR TRADEON A SECURITY LISTED ON THAT EXCHANGE.Current Status:FinalResolution Date:08/01/1971Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST,1971, PAINE, WEBBER, JACKSON & CURTIS WAS FINED BY THEPHILADELPHIA-BOSTON AND WASHINGTON STOCK EXCHANGE FORFAILURE TO OBTAIN THEIR PRIOR APPROVAL FOR AN OFF-FLOOR TRADEON A SECURITY LISTED ON THAT EXCHANGE.Sanctions Ordered:Monetary/FineDecisionDisclosure 293 of 450iReporting Source:FirmInitiated By:AMERICAN STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Date Initiated:06/01/1983Docket/Case Number:83-S-17Principal Product Type:No ProductOther Product Type(s):Allegations:VIOLATIONS OF EXCHANGE RULE 904Current Status:Final493©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:06/01/1983Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE 1983, PAINE WEBBER JACKSON & CURTIS, INC., WAS FINED $2500BY THE AMERICAN STOCK EXCHANGE PURSUANT TO A STIPULATION ANDCONSENT TO PENALTY SUBMITTED BY THE FIRM IN RESPONSE TOCHARGES OF VIOLATIONS OF EXCHANGE RULE 904.Sanctions Ordered:Monetary/Fine $2,500.00Stipulation and ConsentDisclosure 294 of 450iReporting Source:FirmInitiated By:STATE OF NEW JERSEYPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1978Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO PROPELY REGISTER EMPLOYEES IN THE STATE.Current Status:FinalResolution Date:12/01/1978Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1978, THE STATE OF NEW JERSEY FINED PAINE,WEBBER, JACKSON & CURTIS, INC. $400.00 FOR FAILURE TOPROPERLY REGISTER EMPLOYEES IN THAT STATE.Sanctions Ordered:Monetary/Fine $400.00Decisioni494©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 295 of 450Reporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1984Docket/Case Number:CA-853Principal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO SUPERVISE THE ACTIVITIES OF A RESPONDENT BROKER INCONNECTION WITH A SPECIFIC CUSTOMER ACCOUNTCurrent Status:FinalResolution Date:01/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN JANUARY 1984, PAINE WEBBER JACKSON & CURTIS AND BLYTHEEASTMAN DILLON AND CO., INC., WERE EACH CENSURED ANDRESPECTIVELY FINED $750 AND $2500 FOR ALLEGEDLY FAILING TOSUPERVISE THE ACTIVITIES OF A RESPONDENT BROKER IN CONNECTIONWITH A SPECIFIC CUSTOMER ACCOUNT. THE DECISION RESULTED FROMAN OFFER OF SETTLEMENT SUBMITTED BY PAINE WEBBER AND BLYTHEAND ACCEPTED BY THE ASSOCIATION.Sanctions Ordered:CensureMonetary/Fine $750.00SettledDisclosure 296 of 450iReporting Source:FirmInitiated By:THE PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIAAllegations:FAILURE TO PROPERLY REGISTER AN EMPLOYEE IN THE DISTRICT OFCOLUMBIACurrent Status:Final495©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1991Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:12/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER OF 1991, THE PUBLIC SERVICE COMMISSION OF THEDISTRICT OF COLUMBIA FINED PAINEWEBBER INCORPORATED $1,500.00FOR FAILURE TO PROPERLY REGISTER AN EMPLOYEE IN THATJURISDICTION.Sanctions Ordered:Monetary/Fine $1,500.00DecisionDisclosure 297 of 450iReporting Source:FirmInitiated By:WEST VIRGINIA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Date Initiated:04/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:Final496©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:04/26/1999Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN TO THE ENTRY OF ORDER TO CEASE & DESIST FROM FURTHERVIOLATIONS, AND TO PAY $28,407.00.Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENTS. AS PART OF THAT PROCESS PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES P.R.AND D.C. THIS FILLING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH WEST VIRGINIA PURSUANT TO THAT AGREEMENT.Sanctions Ordered:Monetary/Fine $28,407.00Cease and Desist/InjunctionConsentDisclosure 298 of 450iReporting Source:FirmInitiated By:THE PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIAPrincipal Sanction(s)/ReliefSought:Cease and DesistDate Initiated:05/01/1996Docket/Case Number:949-BPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAINREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final497©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:FINE OF $37,720.00Resolution Date:05/02/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $37,720.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENT WITHTHE SEC AND CLASS ACTION PLAINTIFFS RESOLVING ISSUES RELATED TOTHE FIRMS PAST SALE OF PUBLIC PROPRIETARY DIRECT INVESTMENT. ASPART OF THAT PROCESS, PWI ALSO CONCLUDED AN AGREEMENT INPRINCIPLE WITH THE MULTI STATE SPECIAL COMMITTEE PURSUANT TOWHICH IT WAS CONTEMPLATED THAT SETTLEMENT AGREEMENT WOULDBE REACHED WITH ALL STATES, P.R. AND D.C. THIS FILING REFLECTS THESETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH THE DISTRICT OF COLUMBIA PURSANT TO THATAGREEMENTSanctions Ordered:Monetary/Fine $37,720.00Cease and Desist/InjunctionConsentDisclosure 299 of 450iReporting Source:FirmInitiated By:THE INDIANA SECURITIES DIVISIONDate Initiated:04/01/1996Docket/Case Number:96-0025CPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLE SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final498©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $47,032.00Resolution Date:04/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $47,032.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENT WITHINDIANA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $47,032.00Cease and Desist/InjunctionConsentDisclosure 300 of 450iReporting Source:FirmInitiated By:GOVERNMENT OF PUERTO RICO COMMISSIONER OF FINANCIALINSTITUTIONSDate Initiated:10/01/1996Docket/Case Number:96-DL-V-03Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final499©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $25,613.00Resolution Date:10/02/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $25,613.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOVLINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTI STATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEEMNT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH PUERTO RICO PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $25,613.00Cease and Desist/InjunctionConsentDisclosure 301 of 450iReporting Source:FirmInitiated By:CHICAGO BOARD OF TRADE FLOOR GOVERNORS COMMITTEEPrincipal Sanction(s)/ReliefSought:Date Initiated:05/01/1984Docket/Case Number:83-INV-196Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED RULE VIOLATIONS REGARDING THE FAILURE TO ESTABLISH ANDMAINTAIN PROCEDURES FOR SECURING FLOOR ORDER FORMS USED ONTHE EXCHANGE FLOORCurrent Status:Final500©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:05/01/1984Resolution:Other Sanctions Ordered:REPRIMANDSanction Details:IN MAY 1984, PAINE WEBBER JACKSON & CURTIS RECEIVED A SEVEREREPRIMAND FROM THE CHICAGO BOARD OF TRADE FLOOR GOVERNORSCOMMITTEE, PURSUANT TO AN OFFER OF SETTLEMENT FOR ALLEGEDRULE VIOLATIONS REGARDING THE FAILURE TO ESTABLISH AND MAINTAINPROCEDURES FOR SECURING FLOOR ORDER FORMS USED ON THEEXCHANGE FLOOR.Sanctions Ordered:SettledDisclosure 302 of 450iReporting Source:FirmInitiated By:WASHINGTON SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1996Docket/Case Number:96-01-0002Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:FinalResolution Date:04/26/1996Resolution:Sanctions Ordered:Monetary/Fine $92,663.00Consent501©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER TO CEASE & DESIT FROM FURTHERVIOLATIONS, AND TO PAY $92,663.00Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENTS WOULD BE REACHED WITH ALL STATES, P.R. D.C. THISFILLING REFLECTS THE SETTLEMENT AGREEMENT REACHED WITHWASHINGTON PURSUANT TO THAT AGREEMENT.Cease and Desist/InjunctionDisclosure 303 of 450iReporting Source:FirmInitiated By:THE DELAWARE DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $29,525.00Date Initiated:04/01/1996Docket/Case Number:96-03-01Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTIAN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STAT LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLE SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:FinalResolution Date:04/25/1996Resolution:Sanctions Ordered:Monetary/Fine $29,525.00Cease and Desist/InjunctionConsent502©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $29,525.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS PWI ALSO CONDLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT REACHED WITHDELAWARE PURSUANT TO THAT AGREEMENTDisclosure 304 of 450iReporting Source:FirmInitiated By:THE NEW HAMPSHIRE BUREAU OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $39,768.00Date Initiated:04/01/1996Docket/Case Number:INV96-001Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:FinalResolution Date:04/26/1996Resolution:Sanctions Ordered:Monetary/Fine $39,768.00Cease and Desist/InjunctionConsent503©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $39,768.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.C.AND D.C. THIS FILIG REFLECTS THE SETTLEMENT AGREEMENT REACHEDWITH NEW HAMPSHIRE PURSUANT TO THAT AGREEMENTDisclosure 305 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1982Docket/Case Number:C-234Principal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTION 1 AND 27 OF ARTICLE II OF THE ASSOCIATION'SRULES OF FAIR PRACTICECurrent Status:FinalResolution Date:12/01/1982Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER 1982, PAINE, WEBBER, JACKSON & CURTIS, INCORPORATEDSTIPULATED AND CONSENTED TO THE IMPOSITION OF A CENSURE BY THENASD FOR A VIOLATION OF SECTION 1 AND 27 OF ARTICLE II OF THESanctions Ordered:CensureConsent504©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceASSOCIATION'S RULES OF FAIR PRACTICE.Disclosure 306 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1971Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO PROPERLY SUPERVISE THE ACTIVITIES OF A FORMERSTOCKBROKER AND BRANCH OFFICE CASHIER.Current Status:FinalResolution Date:03/01/1971Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1971, PAINE, WEBBER, JACKSON & CURTIS INCORPORATEDWAS CENSURED BY THE NASD IN THAT IT FAILED TO PROPERLYSUPERVISE THE ACTIVITIES OF A FORMER STOCKBROKER AND BRANCHOFFICE CASHIER. IN CONJUNCTION WITH THE SAME ACTION, THEOPERATIONS MANAGER OF THE BRANCH OFFICE WAS ALSO CENSURED.Sanctions Ordered:CensureDecisionDisclosure 307 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESECurrent Status:Final505©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF COLORADO, DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $106,818.00Date Initiated:06/01/1996Docket/Case Number:96-6-23Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):INTERESTResolution Date:06/18/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $106,818.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING RELFECTS THE SETTLEMENT AGREEMENTREACHED WITH COLORADO PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $106,818.00Cease and Desist/InjunctionConsentDisclosure 308 of 450iReporting Source:FirmInitiated By:STATE OF FLORIDADate Initiated:11/01/1979Allegations:PERMITTING AN UNREGISTERED PERSON TO TRANSACT BUSINESS INSECURITIES WITHIN THE STATE.Current Status:Final506©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:11/01/1979Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1979, PAINE, WEBBER, JACKSON & CURTIS, INC.WAS CENSURED BY THE STATE OF FLORIDA FOR PERMITTING ANUNREGISTERED PERSON TO TRANSACT BUSINESS IN SECURITIESWITHIN THAT STATE.Sanctions Ordered:CensureDecisionDisclosure 309 of 450iReporting Source:FirmInitiated By:THE NORTH DAKOTA SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $29,338.00Date Initiated:04/01/1996Docket/Case Number:96-301Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final507©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FIND THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $29,338.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THTSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATE, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH NORTH DAKOTA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $29,338.00Cease and Desist/InjunctionConsentDisclosure 310 of 450iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1983Docket/Case Number:N-V-431Principal Product Type:No ProductOther Product Type(s):Allegations:FOR REPEATED FAILURES TO REPORT NASDQ VOLUME ONAPPROXIMATELY 17 OCCASIONS BETWEEN MARCH 1983 AND MAY 1983.Current Status:FinalResolution Date:12/01/1983Resolution:Decision508©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN DECEMBER 1983, PAINE WEBBER JACKSON & CURTIS WAS FINED $2500BY THE TRADING COMMITTEE OF THE NATIONAL ASSOCIATION OFSECURITIES DEALERS, INC., FOR REPEATED FAILURES TO REPORTNASDQ VOLUME ON APPROXIMATELY 17 OCCASIONS BETWEEN MARCH1983 AND MAY 1983.Sanctions Ordered:Monetary/Fine $2,500.00Disclosure 311 of 450iReporting Source:FirmInitiated By:THE HAWAII DEPARTMENT OF COMMERCE & CONSUMER AFFAIRSPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $61,932.00Date Initiated:04/01/1996Docket/Case Number:SEU-96-005Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:FinalResolution Date:04/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $61,932.00Sanctions Ordered:Monetary/Fine $61,932.00Cease and Desist/InjunctionConsent509©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFirm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WA SCONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT REACHED WITHHAWAII PURSUANT TO THAT AGREEMENTDisclosure 312 of 450iReporting Source:FirmInitiated By:COMMISSIONER OF SECURITIES, STATE OF GEORGIAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTION 3 OF THE GEORGIA SECURITIES ACT OF 1973.Current Status:FinalResolution Date:09/01/1981Resolution:Other Sanctions Ordered:REPRIMANDSanction Details:IN SEPTEMBER, 1981, PAINE, WEBBER, JACKSON & CURTIS, INC.STIPULATED TO A REPRIMAND ENTERED BY THE COMMISSIONER OFSECURITIES, STATE OF GEORGIA, FOR A PURPORTED VIOLATION OFSECTION 3 OF THE GEORGIA SECURITIES ACT OF 1973.Sanctions Ordered:Stipulation and ConsentDisclosure 313 of 450iReporting Source:Firm510©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:TENNESSEE COMMISSIONER OF COMMERCE AND INSURANCEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/01/1984Docket/Case Number:#83-MISC.-15Principal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO REGISTER BROKERS IN A SINGLE OUT-OF-STATE BRANCHOFFICE, WHO EFFECTED TRADES WITH RESIDENTS OF THE STATE OFTENNESSEE.Current Status:FinalResolution Date:07/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN JULY, 1984, PAINE, WEBBER, JACKSON & CURTIS, INC.CONSENTED TO AN ORDER OF THE TENNESSEE COMMISSIONER OFCOMMERCE AND INSURANCE WHICH MADE FINDING OF FACTCONCERNING THE FIRM'S FAILURE TO REGISTER BROKERS IN A SINGLEOUT-OF-STATE BRANCH OFFICE, WHO EFFECTED TRADES WITHRESIDENTS OF THE STATE OF TENNESSEE. PAINE, WEBBER, JACKSON &CURTIS, INC. WAS CENSURED AND FINED $55,000 AND ORDERED TOCEASE AND DESIST FROM FURTHER VIOLATIONS.Sanctions Ordered:CensureMonetary/Fine $55,000.00Cease and Desist/InjunctionConsentDisclosure 314 of 450iReporting Source:FirmAllegations:ALLEGED THE PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISION OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESCurrent Status:Final511©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE STATE OF LOUISIANNA COMMISSION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $50,385.00Date Initiated:12/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):AND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSResolution Date:12/16/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $50,385.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PROPRIETARY DIRECTINVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONDUCTED ANAGREEMENT IN PRINCIPLE WITH THE MULTI STATE SPECIAL COMMITTEEPURSUANT TO WHICH IT WAS CONTEMPLATED THAT SETTLEMENTAGREEMENT WOULD BE REACHED WITH ALL STATES, P.R. AND D.C. THISFILING REFLECTS THE SETTLEMENT AGREEMENT REACHED WITHLOUISIANA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $50,385.00Cease and Desist/InjunctionConsentDisclosure 315 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESECurrent Status:Final512©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE MISSISSIPPI SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $34,367.00Date Initiated:04/01/1996Docket/Case Number:96-02-20Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):INTERESTSResolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $34,367.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST OF PUBLIC PROPRIETARY DIRECTINVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDED ANAGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH MISSISSIPPI PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $34,367.00Cease and Desist/InjunctionConsentDisclosure 316 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESECurrent Status:Final513©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE STATE OF IDAHO, DEPARTMENT OF FINANCEPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $31,000.00Date Initiated:05/01/1996Docket/Case Number:1996-7-61Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):INTERESTSResolution Date:05/24/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $31,000.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH IDAHO PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $31,000.00Cease and Desist/InjunctionConsentDisclosure 317 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESECurrent Status:Final514©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE IOWA SECURITIES BUREAUPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $142,206.00Date Initiated:04/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):INTERESTSResolution Date:04/25/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $142,206.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATE, P.R.AND D.C. THIS FILING REFLECTS THE STATEMENT AGREEMENT REACHEDWITH IOWA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $142,206.00Cease and Desist/InjunctionConsentDisclosure 318 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRUAD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final515©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE NORTH CAROLINA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $59,138.00Date Initiated:04/01/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:04/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $59,138.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENT WITHNORTH CAROLINA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $59,138.00Cease and Desist/InjunctionConsentDisclosure 319 of 450iReporting Source:FirmInitiated By:NASDDate Initiated:12/01/1980Docket/Case Number:UNKNOWNAllegations:FAILURE TO REPORT VOLUME ON NASDAQCurrent Status:Final516©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/01/1980Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1980, PAINE, WEBBER, JACKSON & CURTIS INC.CONSENTED TO A $100.00 FINE IMPOSED BY THE NASD FOR FAILURE TOREPORT VOLUME ON NASDAQ.Sanctions Ordered:Monetary/Fine $100.00ConsentDisclosure 320 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO ADEQUATELY SUPERVISE THE ACTIVITIES OF A FORMERBRANCH MANAGER.Current Status:FinalResolution Date:12/01/1981Resolution:Sanctions Ordered:Monetary/Fine $2,000.00Consent517©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN DECEMBER 1981, PAINE, WEBBER, JACKSON & CURTIS INCORPORATEDCONSENTED TO A FINE OF $2,000 IMPOSED BY THE NASD FOR FAILING TOADEQUATELY SUPERVISE THE ACTIVITIES OF A FORMER BRANCHMANAGER.Disclosure 321 of 450iReporting Source:FirmInitiated By:THE MARKET SURVEILLANCE COMMITTEE OF THE NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/07/1986Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATED VARIOUSLY ARTICLE III SECTIONS 1 AND 27 OF THE NASD'SRULES OF FAIR PRACTICE AND PART IX, SECTION 2 OF SCHEDULE D OFTHE NASD'S BY-LAWS.Current Status:FinalResolution Date:02/07/1986Resolution:Other Sanctions Ordered:Sanction Details:ON FEBRUARY 7, 1986, THE MARKET SURVEILLANCE COMMITTEE OF THENASD FOUND THAT PAINEWEBBER INC. AND TWO OF ITS EMPLOYEESVIOLATED VARIOUSLY ARTICLE III SECTIONS 1 AND 27 OF THE NASD'SRULES OF FAIR PRACTICE AND PART IX, SECTION 2 OF SCHEDULE D OFTHE NASD'S BY-LAWS, CENSURED AND FINED PAINEWEBBER $50,000, ANDREQUIRED THE ADOPTION OF CERTAIN PROCEDURES. PAINEWEBBERAND THE EMPLOYEES HAVE FILED AN APPLICATION FOR REVIEW ANDAPPEAL OF THE DECISION BY THE NASD'S BOARD OF GOVERNORS. ALLPENALTIES HAVE BEEN STAYED PENDING COMPLETION OF THE BOARD'SSanctions Ordered:CensureMonetary/Fine $50,000.00Decision518©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceREVIEW.Disclosure 322 of 450iReporting Source:FirmInitiated By:THE STATE OF NEW MEXICO, SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $35,671.00Date Initiated:06/01/1996Docket/Case Number:96-96-019-064Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:FinalResolution Date:06/07/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $35,671.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECS THE SETTLEMENT AGREEMENT REACHEDWITH NEW MEXICO PURSUANT TO THE AGREEMENTSanctions Ordered:Monetary/Fine $35,671.00Cease and Desist/InjunctionConsent519©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 323 of 450iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:03/01/1976Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO EXERCISE REASONABLE SUPERVISION OVER AN EMPLOYEECurrent Status:FinalResolution Date:03/01/1976Resolution:Other Sanctions Ordered:Sanction Details:THE SECURITIES AND EXCHANGE COMMISSION CENSURED PAINE,WEBBER, JACKSON & CURTIS, INC. FOR FAILURE TO EXERCISEREASONABLE SUPERVISION OVER AN EMPLOYEE. IN CONJUNCTION WITHTHIS CENSURE, THE EMPLOYEE WAS CENSURED AND SUSPENDED FOR60 DAYS FOR A VIOLATION OF THE ANTI-FRAUD AND ANTI-MANIPULATIVEPROVISIONS OF THE EXCHANGE ACT.Sanctions Ordered:CensureDecisionDisclosure 324 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final520©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE MONTANA SECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $41,817.00Date Initiated:05/01/1996Docket/Case Number:03-08-96-06Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:05/14/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOU ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $41,817.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT REACHED WITHMONTANA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $41,817.00Cease and Desist/InjunctionConsentDisclosure 325 of 450iReporting Source:FirmInitiated By:THE BUREAU OF INSURANCE OF THE COMMONWEALTH OF VIRGINIADate Initiated:03/01/1986Allegations:VIOLATION OF VIRGINIA CODE 38.1-52.1, 38.1-52.2, 38.1-327.11A, 38.1-327.33A AND 38.1-182.33.Current Status:Final521©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:860310098Principal Product Type:Annuity(ies) - FixedOther Product Type(s):Resolution Date:03/01/1986Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1986, THE BUREAU OF INSURANCE OF THE COMMONWEALTHOF VIRGINIA CENSURED PWJC INSURANCE SALES, INC. FOR VIOLATINGVIRGINIA CODE 38.1-52.1, 38.1-52.2, 38.1-327.11A, 38.1-327.33A AND 38.1-182.33 IN CONNECTION WITH THE MARKETING OF SINGLE PREMIUMDEFERRED ANNUITIES OF NATIONAL INVESTORS LIFE INSURANCECOMPANY SETTLED AND TENDERED TO THE COMMONWEALTH OFVIRIGINA THE SUM OF $100,000.00Sanctions Ordered:CensureMonetary/Fine $100,000.00DecisionDisclosure 326 of 450iReporting Source:FirmInitiated By:ARKANASAS SECURITIES DEPARTMENTDate Initiated:04/01/1996Docket/Case Number:96-24-SPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-1992 ANDFAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OF THESEINTERESTS.Current Status:Final522©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:04/25/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER TO CEASE & DESIST FROM FURTHERVIOLATIONS, AND TO PAY 444,052.00Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTS WITHTHE SEC AND CLASS ACTION PLAINTIFFS RESOLVING ISSUES RELATED TOTHE FIRM'S PAST SALE OF PUBLIC PROPRIETARY DIRECT INVESTMENTS.AS PART OF THAT PROCESS, PWI ALSO CONCLUDED AN AGREEMENT INPRINCIPLE WITH THE MULTISTATE SPECIAL COMMITTEE PURSUANT TOWHICH IT WAS CONTEMPLATED THAT SETTLEMENT AGREEMENTS WOULDBE REACHED WITH ALL STATES, P.R. AND D.C. THIS FILING REFLECTS THESETTLEMENT AGREEMENT REACHED WITH ARKANSAS PURSUANT TOTHAT AGREEMENT.Sanctions Ordered:Monetary/Fine $444,052.00Cease and Desist/InjunctionConsentDisclosure 327 of 450iReporting Source:FirmInitiated By:THE STATE OF TENNESSEE SECURITIES DIVISIONDate Initiated:08/01/1996Docket/Case Number:96-0009Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final523©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $78,136.00Resolution Date:08/16/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND PAY $78,136.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENT WITHTENNESSEE PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $78,136.00Cease and Desist/InjunctionConsentDisclosure 328 of 450iReporting Source:FirmInitiated By:THE NATIONAL ASSOCIATION OF SECURITIES DEALERS.Principal Sanction(s)/ReliefSought:Date Initiated:01/01/1971Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERSFREE RIDING AND WITHHOLDING RULES.Current Status:Final524©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:01/01/1971Resolution:Other Sanctions Ordered:Sanction Details:IN JANUARY, 1971, PAINE, WEBBER, JACKSON & CURTIS INCORPORATEDWAS CENSURED AND FINED IN THE AMOUNT OF $200.00 BY THE NATIONALASSOCIATION OF SECURITIES DEALERS. THIS CENSURE AND FINE WEREIMPOSED UPON PAINE, WEBBER, JACKSON & CURTIS, INC. FOR VIOLATIONOF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS FREERIDING AND WITHHOLDING RULES.Sanctions Ordered:CensureMonetary/Fine $200.00DecisionDisclosure 329 of 450iReporting Source:FirmInitiated By:THE CHICAGO BOARD OF OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1979Docket/Case Number:UNKNOWNPrincipal Product Type:OptionsOther Product Type(s):Allegations:VIOLATION OF THE EXCHANGE'S POSITION LIMITS.Current Status:FinalResolution Date:04/01/1979Resolution:Other Sanctions Ordered:Sanction Details:IN APRIL, 1979, THE CHICAGO BOARD OF OPTIONS EXCHANGEADMONISHED AND FINED PAINE, WEBBER, JACKSON & CURTIS, INC.Sanctions Ordered:Monetary/Fine $500.00Other525©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$500.00 FOR A VIOLATION OF THAT EXCHANGE'S POSITION LIMITS.Disclosure 330 of 450iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:01/01/1969Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO EXERCISE PROPER SUPERVISION IN PREVENTINGMISCONDUCTS OF A FORMER BROKER WHO WAS A STOCKBROKER IN ABRANCH OFFICE DURING 1962-1963.Current Status:FinalResolution Date:01/01/1969Resolution:Other Sanctions Ordered:Sanction Details:THE SECURITIES AND EXCHANGE COMMISSION CENSURED PAINE,WEBBER, JACKSON & CURTIS INCORPORATED, TOGETHER WITH AFORMER MANAGER OF A BRANCH OFFICE, FOR FAILURE TO EXERCISEPROPER SUPERVISION IN PREVENTING MISCONDUCTS OFA FORMER BROKER WHO WAS A STOCKBROKER IN THAT BRANCH OFFICEDURING 1962-1963.Sanctions Ordered:CensureDecisionDisclosure 331 of 450iReporting Source:FirmAllegations:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $29,897.00Current Status:Final526©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE ALASKA DIVISION OF BANKING, SECURITIES AND CORPORATIONSPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $29,897.00Date Initiated:04/01/1996Docket/Case Number:96-09SPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:04/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $29,897.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFF RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLICPRIOPRIETY DIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH ALASKA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $29,897.00Cease and Desist/InjunctionConsentDisclosure 332 of 450iReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESECurrent Status:Final527©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE ARIZONA DIVISION OF BANKING, SECURITIES AND CORPORATIONSPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $129,168.00Date Initiated:05/01/1996Docket/Case Number:DOCKET #S-3124-I, DECISION #59639Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):INTERESTResolution Date:05/20/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $129,168.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONDLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WA SCONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH ARIZONA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $129,168.00Cease and Desist/InjunctionConsentDisclosure 333 of 450iReporting Source:FirmAllegations:SEC ALLEGED THAT PAINEWEBBER FAILED REASONABLY TO SUPERVISERESPRESENTATIVES EMPLOYED AT OFFICES IN BIRMINGHAM, AL,BEVERLY HILLS,CA NORTHBOOK & OAKBROOK, IL & HOUSTON, TX. FROM11/86- 6/88, SUCH REGISTERED REPRESENTATIVES ENGAGED IN SALESPRACTICE ABUSES. FROM 8/89- 10/90, A REPRESENTATIVE AT THECurrent Status:Final528©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:UNDERTAKINGDate Initiated:02/01/1993Docket/Case Number:FILE NUMBER 3-7979Principal Product Type:No ProductOther Product Type(s):NORTHBROOK OFFICE ENGAGED IN VIOLATIONS OF FEDERAL SECURITIESREGISTRATION PROVISIONS.Resolution Date:02/18/1993Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER CONSENTED WITHOUT ADMITTING OR DENYING THEALLEGATIONS. PAINEWEBBER WAS CENSURED AND SUBJECT TOSEVERAL UNDERTAKINGS, INCLUDING A PROHIBITION AGAINST OPENINGNEW ACCOUNTS FOR 30 DAYS AT FOUR OF THE OFFICES AND HIRING OFAN INDEPENDENT CONSULTANT TO REVIEW SALES PRACTICEPROCEDURES.Sanctions Ordered:CensureConsentDisclosure 334 of 450iReporting Source:FirmInitiated By:STATE OF GEORGIADate Initiated:11/01/1985Docket/Case Number:EX-BU-84-15Principal Product Type:InsuranceOther Product Type(s):Allegations:VIOLATED GEORGIA INSURANCE CODECurrent Status:Final529©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:11/01/1985Resolution:Other Sanctions Ordered:Sanction Details:CEASE AND DESIST ORDER AND $4,200 PENALTY.Sanctions Ordered:Monetary/Fine $4,200.00Cease and Desist/InjunctionDecisionDisclosure 335 of 450iReporting Source:FirmInitiated By:DEPARTMENT OF BANKING OF THE STATE OF CONNECTICUTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLOWING TWO INDIVIDUALS TO CONDUCT BUSINESS IN CONNECTICUTWITHOUT BEING DULY REGISTERED IN THE STATE.Current Status:FinalResolution Date:09/30/1991Resolution:Other Sanctions Ordered:Sanction Details:FINE OF $25,000 AND A STIPULATION AGREEMENT TO ENFORCEPROCEDURE TO DETECT AND PREVENT ACTIVITIES.Firm Statement"PAINEWEBBER WAS ADVISED ON DECEMBER 29, 1997 BY THESanctions Ordered:Monetary/Fine $25,000.00Stipulation and Consent530©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCONNECTICUT DEPARTMENT OF BANKING, THAT THE FIRM HAS BEENRELEASED FROM ALL OBLIGATIONS UNDER, AND NEED NO LONGERCOMPLY WITH ANY OF THE ON GOING PROVISIONS CONTAINED IN THESTIPULATION AND AGREEMENT, DATED SEPTEMBER 30, 1991."Disclosure 336 of 450iReporting Source:FirmInitiated By:COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1996Docket/Case Number:SEC960030Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:FinalResolution Date:05/13/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER FROM FURTHER VIOLATIONS, AND TOPAY $136,432.00Firm StatementON 1/18/96 PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSanctions Ordered:Monetary/Fine $136,432.00Consent531©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES, P.R.AND D.C THIS FILLIG REFLECTS THE SETTLEMENT AGREEMENT REACHEDWITH VIRGINIA PURSUANT TO THAT AGREEMENT.Disclosure 337 of 450iReporting Source:FirmInitiated By:STATE OF UTAH, DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1996Docket/Case Number:UDS FILE #950873Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVE & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:FinalResolution Date:06/06/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER TO CEASE & DESIST FROM FURTHERVIOLATIONS, AND TO PAY $53,697.00 (SEE ITEM 10 BELOW)Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSanctions Ordered:Monetary/Fine $53,697.00Cease and Desist/InjunctionConsent532©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILLING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH UTAH PURSUANT TO THAT AGREEMENT.Disclosure 338 of 450iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1981Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTION 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICE.Current Status:FinalResolution Date:12/01/1981Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER 1981, A DISTRICT BUSINESS CONDUCT COMMITTEE OF THENASD IMPOSED A PENALTY OF A CENSURE AND $5,000 FINE JOINTLY ANDSEVERALLY AGAINST PAINE, WEBBER, JACKSON & CURTISINCORPORATED AND TWO OF ITS EX-BRANCH MANAGERS FOR AVIOLATION OF SECTION 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICE.Sanctions Ordered:CensureMonetary/Fine $5,000.00DecisionDisclosure 339 of 450iReporting Source:FirmAllegations:THE FIRM DID NOT ENFORCE PROPER FLOOR PROCEDURES.Current Status:Final533©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CHICAGO BOARD OF TRADEPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:$5000 FINEDate Initiated:12/01/1990Docket/Case Number:N/APrincipal Product Type:No ProductOther Product Type(s):Resolution Date:12/01/1990Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER OF 1990, PAINEWEBBER INCORPORATED ENTERED INTO ACONSENT ORDER WITH THE CHICAGO BOARD OF TRADE CONCERNINGALLEGATIONS THAT THE FIRM DID NOT ENFORCE PROPER FLOORPROCEDURES. WITHOUT ADMITTING OR DENYING ANY LIABILITY, THEFIRM AGREED TO PAY A $5,000 FINE.Sanctions Ordered:Monetary/Fine $5,000.00ConsentDisclosure 340 of 450iReporting Source:FirmInitiated By:COMMONWEALTH OF VIRGINIA DIVISION OF SECURITIESDate Initiated:09/01/1991Docket/Case Number:UNKNOWNAllegations:THIS MATTER AROSE AS THE RESULT OF AN INVESTIGATION CONDUCTEDBY THE DIVISION INTO PAINEWEBBER'S AND MHAM'S INVESTMENTADVISORY ACTIVITY IN VIRGINIA. THE INVESTIGATION REVEALED THATMHAM'S REGISTRATION AS AN INVESTMENT ADVISER HAD EXPIRED ONDECEMBER 31, 1990; AND, FURTHER, THAT BOTH PAINEWEBBER ANDMHAM MAY HAVE VIOLATED SECTION 13.1-504 OF THE VIRGINIA CODE, BYFAILING TO PROPERLY REGISTER BROKER/DEALER REPRESENTATIVES ASINVESTMENT ADVISER REPRESENTATIVES PURSUANT TO THEREQUIREMENTS OF THE STATUTE.Current Status:Final534©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:No ProductOther Product Type(s):Resolution Date:09/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN SEPTEMBER, 1991, PAINEWEBBER INCORPORATED ("PAINEWEBBER")AND MITCHELL HUTCHINS ASSET MANAGEMENT INC. ("MHAM") (A WHOLLY-OWNED SUBSIDIARY OF PAINEWEBBER INCORPORATED) ENTERED INTOAN ORDER ACCEPTING OFFER OF SETTLEMENT WITH THECOMMONWEALTH OF VIRGINIA, STATE CORPORATION COMMISSION,DIVISION OF SECURITIES AND RETAIL FRANCHISING ("DIVISION")WHEREBY PAINEWEBBER ANDMHAM, WITHOUT ADMITTING OR DENYING VARIOUS ALLEGED VIOLATIONS,CONSENTED TO THE IMPOSITION OF A PENALTY IN THE AMOUNT OF$300,000.00 BY THE DIVISION; IN ADDITION, PAINEWEBBER AND MHAMAGREED TO REIMBURSE THE DIVISION THE SUM OF $15,000.00 FORCOSTS OF THE INVESTIGATION CONDUCTED BY THE DIVISION; FINALLY,PAINEWEBBER AND MHAM AGREED TO COMPLY WITH CERTAINUNDERTAKINGS SET FORTH IN THE ORDER.Firm StatementPLEASE DISREGARD REMOVAL REQUEST.Sanctions Ordered:Monetary/Fine $315,000.00Decision & Order of Offer of SettlementDisclosure 341 of 450iReporting Source:FirmInitiated By:THE COMEX COMMITTEE ON BUSINESS CONDUCTDate Initiated:03/10/1989Docket/Case Number:UNKNOWNAllegations:ALLEGED PAINEWEBBER VIOLATED COMEX RULES 4.88 (CURRENTLY 4.97),FAILURE TO MAINTAIN AND PRODUCE TRADING RECORDS; AND 3.13(A)(III),FAILURE TO ADEQUATELY SUPERVISE MEMBERS WHO CONFERREDMEMBERSHIP PRIVILEGES ON THE FIRM.Current Status:Final535©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Futures - CommodityOther Product Type(s):Resolution Date:03/10/1989Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS CONTAINED IN THECOMPLAINT, PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENT.PURSUANT TO RULE 8.41 OF COMEX, THE SUPERVISORY COMMITTEEACCEPTED SUCH OFFER OF SETTLEMENT, AND IN CONNECTIONTHEREWITH, DETERMINED TO IMPOSE A SANCTION PROVIDING FOR AFINE IN THE AMOUNT OF $10,000, AND AN ORDER TO CEASE AND DESIST .THAT DECISION IS FINAL AS OF MARCH 10, 1989. PURSUANT TO SECTION8C OF THE COMMODITY EXCHANGE ACT AND PART 9 OF THE CFTC WITHINTHIRTY DAYS OF THE DATE NOTICE REGARDINGTHE ABOVE-MENTIONED EXCHANGE ACTION WAS APPROVED.Sanctions Ordered:Monetary/Fine $10,000.00Cease and Desist/InjunctionSettledDisclosure 342 of 450iReporting Source:FirmInitiated By:COMMODITIES EXCHANGE COMMISSION, INC (COMEX)Date Initiated:10/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:Futures - CommodityOther Product Type(s):Allegations:ALLEGATIONS INVOLVED RESPONDENT BROKERS OF PAINEWEBBER,IN THAT PAINEWEBBER FAILED TO ADEQUATELY SUPERVISE THETRADING ACTIVITY OF ITS FLOOR BROKERS AND ALLOWED THEMTO ENGAGE IN RISKLESS TRANSACTIONS AND PREARRANGED TRADING.Current Status:Final536©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:10/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN OCTOBER, 1988, PAINEWEBBER WAS FINED $15,000.00 BY THECOMMODITIES EXCHANGE COMMISSION, INC (COMEX) THE FINE WASPURSUANT TO AN OFFER SUBMITTED BY PAINEWEBBER TO THECOMMODITIES EXCHANGE WHICH WAS ACCEPTED. THE ACTIVITIES OFINVOLVED RESPONDENT BROKERS OF PAINEWEBBER, IN THATPAINEWEBBER FAILED TO ADEQUATELY SUPERVISE THE TRADINGACTIVITY OF ITS FLOOR BROKERS AND ALLOWED THEM TO ENGAGE INRISKLESS TRANSACTIONS AND PREARRANGED TRADING.Sanctions Ordered:Monetary/Fine $15,000.00Decision & Order of Offer of SettlementDisclosure 343 of 450iReporting Source:FirmInitiated By:BOARD OF GOVERNORS OF THE COMEX CLEARING ASSOCIATION, INCPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1985Docket/Case Number:UNKNOWNPrincipal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):Allegations:ALLEGED VIOLATION OF THE ASSOCIATION'S RULE 2 REQUIRINGIMMEDIATE NOTIFICATION TO THE ASSOCIATION UPON THE TRANSFER OFPAINE, WEBBER, JACKSON & CURTIS' SHARES OF COMEX CLEARINGASSOCIATION, INC. STOCK FROM ONE PARTY TO ANOTHER.Current Status:FinalResolution:Decision & Order of Offer of Settlement537©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:03/01/1985Other Sanctions Ordered:Sanction Details:IN MARCH, 1985, THE BOARD OF GOVERNORS OF THE COMEXCLEARING ASSOCIATION, INC. ACCEPTED AN OFFER OF SETTLEMENT INTHE AMOUNT OF $1,000.00 FOR PAINE, WEBBER, JACKSON & CURTIS,INC.'S ALLEGED VIOLATION OF THE ASSOCIATION'S RULE 2 REQUIRINGIMMEDIATE NOTIFICATION TO THE ASSOCIATION UPON THE TRANSFER OFPAINE, WEBBER, JACKSON & CURTIS' SHARES OF COMEX CLEARINGASSOCIATION, INC. STOCK FROM ONE PARTYTO ANOTHER.Sanctions Ordered:Monetary/Fine $1,000.00Disclosure 344 of 450iReporting Source:RegulatorInitiated By:FLORIDA DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/10/1982Docket/Case Number:1440-S-1/91URL for Regulatory Action:Principal Product Type:OtherOther Product Type(s):UNKNOWN CRD DATA CONVERSIONAllegations:NOT PROVIDEDCurrent Status:FinalResolution Date:08/25/1992Resolution:Other Sanctions Ordered:Sanction Details:ON AUGUST 25, 1992, THE FLORIDA DEPARTMENT OFBANKING AND FINANCE ENTERED INTO A STIPULATION AND CONSENTAGREEMENT AND FINAL ORDER WITH RESPONDENTS THOMAS JERRYTHEUS,Sanctions Ordered:Consent538©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCHARLES COLEMAN STIPANOVICH AND PAINEWEBBER, INC.RESPONDENTSAGREE TO REIMBURSE TWO SEPARATE CLIENTS A TOTAL OF $12,623.94FOR VIOLATIONS COMMITTED BY MORTON L. ANNIS, JR. AND TO PAY ASUM OF $5,000 TO THE DEPARTMENT'S ANTI-FRAUD TRUST FUND TOCOVER THE ADMINISTRATIVE AND INVESTIGATIVE COSTS INCURRED BYTHE DEPARTMENT IN THIS MATTER.Regulator StatementNOT PROVIDEDiReporting Source:FirmInitiated By:STATE OF FLORIDAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/10/1992Docket/Case Number:1440-S-1/91Principal Product Type:No ProductOther Product Type(s):Allegations:IN FEBRUARY 1992, THE STATE OF FLORIDA ISSUED AN AMENDEDADMINISTRATIVE COMPLAINT WHERE AS PAINEWEBBER INC. WAS NAMEDAS RESPONDENT RESONSIBLE FOR THE SUPERVISION OF MORTON L.ANNIS, THE INVESTMENT EXECUTIVE WHO IS ALLEGED TO HAVERECORDED INACURATE INFORMATION ON TWO CLIENTS AND NEWACCOUNT FORMS MAKING UNSUITABLE RECOMMENDATIONS IN BOTHACCOUNTS.Current Status:FinalResolution Date:08/25/1992Resolution:Other Sanctions Ordered:Sanction Details:ON OR ABOUT JUY 29, 1992, PAINEWEBBER INC. ENTERED INTO ASTIPULATON AND FINAL ORDER IN WHICH PAINEWEBBERR INC AGREEDTO REIMBURSE THE TWO CLIENTS FOR LOSSES TOTALING $12,623.94 ANDPAID ADMINISTRATIVE COSTS TO THE STATE OF FLORIDA. NO FINDINGSSanctions Ordered:Monetary/Fine $17,623.94Stipulation and Consent539©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWERE MADE AGAINST PAINEWEBBER INCORPORATED.Disclosure 345 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/21/1998Docket/Case Number:CMS980096 AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/21/1998Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementLETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. CMS980096 AWC.ON OCTOBER 21, 1998, PAINEWEBBER INCORPORATED (PWJC) WASNOTIFIED THAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT(AWC) THAT IT SUBMITTED WAS ACCEPTED BY NASD REGULATION, INC.'SDEPARTMENT OF ENFORCEMENT AND THE NATIONAL ADJUDICATORYCOUNCIL. THE AWC ALLEGES THAT THE FOLLOWING ACTIVITYOCCURRED:PWJC FAILED TO DISPLAY IMMEDIATELY THREE CUSTOMER LIMIT ORDERSWHEN THE ORDERS WERE AT A PRICE THAT WOULD HAVE IMPROVEDPWJC'SBID OR OFFER IN EACH SECURITY RELATED TO THOSE ORDERS, ORSanctions Ordered:CensureMonetary/Fine $4,500.00Acceptance, Waiver & Consent(AWC)540©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWHENTHE FULL SIZE OF THE ORDERS WERE PRICED EQUAL TO PWJC'S BID OROFFER AND THE NATIONAL BEST BID OR OFFER AND THE ORDERSREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH PWJC's BID OR OFFER IN EACH SECURITY.THIS CONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OFSEC RULE 11AC1-4.PWJC FAILED TO PROVIDE, IN CONNECTION WITH 24 TRANSACTIONSWHERE PWJC ACTED AS PRINCIPAL, WRITTEN NOTIFICATION TO ITSCUSTOMERS THAT THE PRICE DISCLOSED ON EACH CONFIRMATION WASTHEREPORTED TRADE PRICE OF THE TRANSACTION. THIS CONDUCTCONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF SEC RULE10B-10.ON JULY 8, 1997, PWJC FAILED TO USE REASONABLE DILIGENCE TOASCERTAIN THE BEST INTER-DEALER MARKET FOR THREETRANSACTIONSSO THAT THE RESULTANT PRICE TO THE CUSTOMER WAS AS FAVORABLEASPOSSIBLE UNDER PREVAILING MARKET CONDITIONS. THIS CONSTITUTESSEPARATE AND DISTINCT VIOLATIONS OF NASD CONDUCT RULES 2110AND2320.PWJC WAS CENSURED AND FINED $4,500.04-13-99, $4,500 PAID ON 12/02/98, INVOICE #98-MS-933iReporting Source:FirmInitiated By:NASD REGULATION, INC.Principal Sanction(s)/ReliefDate Initiated:08/01/1998Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:CERTAIN NASD RULE VIOLATIONS ALLEGED TO HAVE OCCURRED IN JULY1997.Current Status:Final541©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Other Sanction(s)/ReliefSought:Resolution Date:10/23/1998Resolution:Other Sanctions Ordered:Sanction Details:ON OCTOBER 27, 1998, PAINWEBBER RECEIVEDNOTIFICATION THAT THE NASDR ACCEPTED THE FIRM'S OFFER OFSETTLEMENT OF CERTAIN NASD RULE VIOLATIONS ALLEGED TO HAVEOCCURRED IN JULY 1997. UNDER THE TERMS OF THIS SETTLEMNT,PAINEWEBBER NEITHER ADMITTED NOR DENIED LIABILITY AND AGREEDTO PAY A FINE OF $4,500.Firm StatementON OCTOBER 27, 1998, PAINWEBBER RECEIVED NOTIFICATION THAT THENASDR ACCEPTED THE FIRM'S OFFER OF SETTLEMENT OF CERTAIN NASDRULE VIOLATIONS ALLEGED TO HAVE OCCURRED IN JULY 1997. UNDERTHE TERMS OF THIS SETTLEMNT, PAINEWEBBER NEITHER ADMITTED NORDENIED LIABILITY AND AGREED TO PAY A FINE OF $4,500. NASDR FOUNDTHAT THE FIRM: (I) FAILED TO DISPLAY IMMEDIATELY 3 CUSTOMER LIMITORDERS THAT WOULD HAVEIMPROVED THE FIRM'S QUOTED PRICE; (II) FAILED TO ASCERTAIN THEBEST INTERDEALER MARKET IN EXECUTING THREE CUSTOMER ORDERS;AND (III) FAILED TO ADVISE ITS CUSTOMERS THAT THE PRICES SET FORTHIN THEIR TRADE CONFIRMATIONS WAS THE SAME AS THE TRANSACTIONPRICE REPORTED TO THE NASD.Sanctions Ordered:Monetary/Fine $4,500.00SettledDisclosure 346 of 450iReporting Source:RegulatorAllegations:COMPLAINT NO. CLE-325 FILED MAY 20, 1988 BY DISTRICT NO. 9AGAINST RESPONDENTS PAINEWEBBER, INCORPORATED, JOSEPHSHAGRIN,JR. AND JEFFREY THOMAS HEAL ALLEGING VIOLATIONS OF ARTICLE III,SECTIONS 1, 2 AND 27(A) OF THE RULES OF FAIR PRACTICE IN THATRESPONDENT HEAL MADE UNSUITABLE RECOMMENDATIONS TOCUSTOMERSFOR THE PURCHASE OF SECURITIES; MOVED CUSTOMER FUNDS FROM AFUND SEEKING "TO PROVIDE HIGH CURRENT INCOME CONSISTENT WITHTHE PRESERVATION OF CAPITAL AND LIQUIDITY" TO A FUND WITHCurrent Status:Final542©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:05/20/1988Docket/Case Number:CLE-325Principal Product Type:OtherOther Product Type(s):OBJECTIVES SEEKING "TO PROVIDE THE HIGHEST LEVEL OF CURRENTINCOME AVAILABLE WITHOUT UNDUE RISK" AND SIMULTANEOUSLY HEALGENERATED ADDITIONAL SALES CHARGES ON BEHALF OF HIMSELF ANDRESPONDENT MEMBER; AND, RESPONDENTS MEMBER AND SHAGRINFAILEDTO ENFORCE THE WRITTEN PROCEDURES OF THE MEMBER SO AS TOSUPERVISE PROPERLY THE ACTIVITIES OF RESPONDENT HEAL.Resolution Date:03/27/1990Resolution:Other Sanctions Ordered:Sanction Details:DECISION RENDERED MARCH 27, 1990, WHEREIN THE OFFER OFSETTLEMENT SUBMITTED BY RESPONDENTS WAS ACCEPTED;THEREFORE,THEY ARE CENSURED AND EACH FINED $1,500.00.Sanctions Ordered:CensureMonetary/Fine $1,500.00Decision & Order of Offer of SettlementiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:05/20/1988Docket/Case Number:CLE-325Allegations:ALLEGED THAT THE FIRM FAILED TO ENFORCE WRITTEN PROCEDURESOF THE MEMBER RELATING TO THE SUPERVISION OF A REGISTEREDREPRESENTATIVE.Current Status:Final543©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINEPrincipal Product Type:Mutual Fund(s)Other Product Type(s):Resolution Date:03/27/1990Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $1,500.00Decision & Order of Offer of SettlementDisclosure 347 of 450iReporting Source:RegulatorInitiated By:COMMODITY FUTURES TRADE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/08/1986Docket/Case Number:R80-735-80-540Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/08/1986Resolution:Regulator Statement1/8/87 - COPY OF CFTC 'OPINION AND ORDER' - CFTC DOCKET NO.R80-735-80-540; THOMAS MUNNELL V. PAINE WEBBER JACKSON ANDCURTIS, ET AL., DISCLOSES: RESPONDENT PAINE WEBBER JACKSON ANDCURTIS, INC. APPEALS FROM THE ADMINISTRATIVE LAW JUDGE'S AWARDOrder544©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOF $22,330 TO COMPLAINANT. THE JUDGE CONCLUDED THATRESPONDENTROREX HAD MISREPRESENTED THE RISK INVOLVED IN TREASURY BILLFUTURES TRANSACTIONS HE WAS RECOMMENDING AND THAT PAINEWEBBERAND RESPONDENT FORD WERE LIABLE PURSUANT TO SECTION 2(a)(1)(A)OF THE COMMODITY EXCHANGE ACT. PAINE WEBBER ARGUES THATFALSESTATEMENTS MADE BY ROREX ARE NOT ACTIONABLE UNDER THE ACTANDCONTEND THAT EVEN IF LIABILITY IS ESTABLISHED, THE AMOUNT OFDAMAGES AWARDED IS ERRONEOUS. THE COMMISSION AGREES WITHRESPONDENT THAT THE JUDGE ERRED IN AWARDING COMPOUNDEDINTEREST; AND ACCORDINGLY VACATE THE AWARD OF COMPOUNDEDINTEREST AND AWARD SIMPLE INTEREST AT THE RATE SPECIFIED IN THEINITIAL DECISION. THIS DECISION IS SO ORDERED OCTOBER 8, 1986 -JEAN A. WEBB, SECRETARY OF THE COMMISSION, COMMODITY FUTURESTRADING COMMISSION.iReporting Source:FirmInitiated By:COMNMODITY FUTURES TRADING COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:$22,500.00 FINEDate Initiated:02/01/1986Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO MAINTAIN CERTAIN 1979 AND 1980 BLYTH EASTMAN DILLONAND CO., INC RECORDS.Current Status:FinalResolution Date:02/01/1986Resolution:Sanctions Ordered:Monetary/Fine $22,500.00Cease and Desist/InjunctionDecision545©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PAINEWEBBER INCORPORATED WAS FINED $22,500.00 BY THECOMMODITY FUTURES TRADING COMMISSION ("CFTC") AND ORDERED TOCEASE AND DESIST FROM VIOLATIONS RELATING TO ITS FAILURE TOMAINTAIN CERTAIN 1979 AND 1980 BLYTH EASTMAN DILLON AND CO., INCRECORDS. PAINEWEBBER INC. ALSO UNDERTOOK TO MAINTAIN A SYSTEMSIMILAR TO ITS CURRENT SYSTEM DESIGNATING EXCHANGE FORPHYSICAL TRANSACTIONS ON ITS RECORDS.Disclosure 348 of 450iReporting Source:RegulatorInitiated By:COMMODITY FUTURES TRADE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/23/1985Docket/Case Number:R80-735-80-540Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:09/23/1985Resolution:Regulator Statement9/23/85, CFTC DOCKET NO. R80-735-80-540, THOMAS C. MUNNELL,COMPLAINANT V. PAINE WEBBER, JACKSON AND CURTIS, INC., BARRYROREX AND FREDERICK C. FORD, III, RESPONDENTS. THIS IS AREPARATIONS PROCEEDING INSTITUTED PURSUANT TO A COMPLAINT BYTHOMAS C. MUNNELL FOR ALLEGED VIOLATIONS OF THE COMMODITYEXCHANGE ACT ("CEACT"), AS AMENDED, 7 U.S.C. 1 et seq.COMPLAINANT SEEKS DAMAGES TOTALING $23,330.00 PLUS INTERESTANDCOSTS. COMPLAINANT ALLEGES THAT RESPONDENT ROREXMISREPRESENTEDSEVERAL MATERIAL FACTS TO INDUCE HIM TO ESTABLISH THECOMMODITYOrder546©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFUTURES CONTRACT TRADING ACCOUNT; THAT ROREX FAILED TOUNDERSTAND OR ADEQUATELY INVESTIGATE THE RISK IN TRADINGCOMMODITY FUTURES AND GLOSSED OVER HIS REPRESENTATIONS OFRISK;THAT ROREX STATED THAT THE INVESTMENT WAS WITHOUT SUBSTANTIALRISK AND THAT A 32 PERCENT RETURN WAS TO BE EXPECTED.COMPLAINANT TESTIFIED THAT RESPONDENT ROREX INFORMED HIMTHATTHE 32 PERCENT WAS A CONSERVATIVE PREDICTION AND THAT NO MORETHAN $6,000 OF THE $25,000 INVESTMENT WOULD BE AT RISK.COMPLAINANT ALSO STATED THAT HE WAS NOT INFORMED AT THESTRATEGYPRESENTATION THAT HE COULD LOSE THE ENTIRE AMOUNT OR THATTHEREMIGHT BE DIFFICULTY LIQUIDATING POSITIONS. RESPONDENT ROREXTESTIFIED THAT HE INFORMED COMPLAINANT THAT HE COULD LOSE HISENTIRE INVESTMENT AND COULD BE CALLED UPOM TO DEPOSITADDITIONALMARGIN FUNDS. ROREX ACKNOWLEDGED THAT HE TOLD COMPLAINANTHECOULD EXPECT A RETURN OF OVER 30 PERCENT ON HIS INVESTMENT.;ANDSTATED HE DID NOT BELIEVE HE INFORMED COMPLAINANT THAT IT MIGHTBE DIFFICULT OR IMPOSSIBLE TO LIQUIDATE HIS POSITIONS UNDERCERTAIN MARKET CONDITIONS. THE COMMISSION ORDERED THATRESPONDENTS PAINE WEBBER JACKSON & CURTIS, INC., BARRY ROREXANDFREDERICK C. FORD, III, SHALL PAY $23,330.00 TO COMPLAINANT,THOMAS C. MUNNELL PLUS ANNUAL COMPOUND INTEREST FROM JUNE20,1978 AND COSTS OF $25.00 FOR THE FILING FEE IN THIS CASE.iReporting Source:FirmInitiated By:COMMODITY FUTURES TRADE COMMISSIONDate Initiated:09/23/1985Docket/Case Number:R80-735-80-540Allegations:ALLEGED VIOLATIONS OF THE COMMODITY EXCHANGE ACT IN THAT THEFIRM WAS NAMED IN A CLIENT INITIATED REPARATIONS PROCEEDING ASTHE SUPERVISOR OF A REGISTERED REPRESENTATIVE.Current Status:Final547©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ORDER AND FINE.Principal Product Type:Commodity Option(s)Other Product Type(s):Resolution Date:09/23/1985Resolution:Other Sanctions Ordered:THE RESPONDENTS WERE ORDERED TO PAY $23,330.00. HOWEVER, DUETO THE AGE OF THE ITEM, THE FIRM CANNOT DETERMINE WHAT PORTIONWAS ASSESED AGAINST IT.Sanction Details:CLIENT WAS ALSO AWARDED ANNUAL COMPOUND INTEREST AND FILINGFEES.Sanctions Ordered:OrderDisclosure 349 of 450iReporting Source:RegulatorInitiated By:U.S. COMMODITY FUTURES TRADE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/31/1991Docket/Case Number:Principal Product Type:Futures - CommodityOther Product Type(s):Allegations:THE COMMODITY FUTURES TRADING COMMISSION DISCLOSES: THECOMPLAINANT ALLEGES THAT RESPONDENTS PLACED CERTAIN TRADESIN HIS ACCOUNT WITHOUT AUTHORITY, RESULTING IN LOSSES TO HIM OF$44,741.01, AND COMMITTED OTHER VIOLATIONS, INCLUDING FAILURE TOSUPERVISE, AND FUNCTIONING WITHOUT REGISTRATION IN A BROKERCAPACITY.Current Status:FinalResolution:Order548©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:07/31/1991Other Sanctions Ordered:ORDER TO PAY REPARATIONS, PLUS INTEREST; AND $200.00 FILING FEE.Sanction Details:ON JULY 31, 1991, ORDER WAS ENTERED BY ADMINISTRATIVE LAW JUDGE,ARTHUR L. SHIPE DISCLOSING: IT IS HEREBY ORDERED THAT THERESPONDENT PAINE WEBBER, INC., PAY REPARATIONS TOCOMPLAINANTS IN THE AMOUNT OF $44,741.40, PLUS INTEREST FROMOCTOBER 17, 1989, TO DATE OF PAYMENT, AT THE ANNUAL RATE OF 6.39PRECENT, COMPOUNDED ANNUALLY, PLUS $200.00 THE AMOUNT OF THEFILING FEE. LIABILITY IS JOINT AND SEVERAL.Sanctions Ordered:iReporting Source:FirmInitiated By:COMMODITY FUTURES TRADE COMMISSIONPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ORDERDate Initiated:07/31/1991Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNKNOWN.Allegations:ALLEGATIONS RELATE TO THE FIRM'S BEING NAMED IN A CLIENT INITIATEDCLAIM AS THE SUPERVISOR OF A REGISTERD REPRESENTATIVE.Current Status:FinalResolution Date:07/31/1991Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM, THE AMOUNT OF THE CLAIM PAID BY THEFIRM IS UNKNOWN.Sanction Details:SACTIONS WERE ORDERED WITH INTEREST AT AT AN ANNUAL RATE OF6.39 PERCENT, COMPOUNDED ANNUALLY.Sanctions Ordered:Monetary/Fine $0.00Orderi549©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 350 of 450Reporting Source:RegulatorInitiated By:Maryland Division of SecuritiesPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/30/1992Docket/Case Number:S-92-102/S-95-063URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Unregistered investment advisory activitiesCurrent Status:FinalResolution Date:09/12/1997Resolution:Other Sanctions Ordered:Sanction Details:On 12/3/93, the Securities Commissioner issued anOrder against PaineWebber, ordering Respondent to pay a fine of$10,000 and to take specific actions to enhance Respondent'scompliance with Maryland's investment adviser laws.Regulator StatementFor additional information contact Julie L.Tewey, AAG, (410) 576-7037.Sanctions Ordered:Monetary/Fine $10,000.00ConsentiReporting Source:FirmInitiated By:MARYLAND DIVISION OF SECURITIESDate Initiated:12/30/1992Allegations:ALLOWED ITS EMPLOYEES TO ACT AS UNREGISTRED INVESTMENTADVISOR REPRESENTATIVES BY HOLDING OUT AS INVESTMENTADVISORS IN MARYLAND WITHOUT PROPER REGISTRATION WITH THEDIVISIONCurrent Status:Final550©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:S-92-102Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/03/1993Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER WAS ORDERED TO PAY $10,000 AND TO TAKE SPECIFICACTIONS TO ENHANCE RESPONDENT'S COMPLIANCE WITH MARYLAND'SINVESTMENT ADVISOR LAWS (INCLUDING ITS REQUIREMENT THATINDIVIDUALS WHO ARE HOLDING OUT AS INVESTMENT ADVISORS BY THEUSE OF THAT OR ANY SIMILAR TERM BE REGISTERED AS INVESTMENTADVISORS)Sanctions Ordered:Monetary/Fine $10,000.00OrderDisclosure 351 of 450iReporting Source:RegulatorInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/17/1996Docket/Case Number:Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution:Consent551©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:01/17/1996Other Sanctions Ordered:Sanction Details:Regulator Statement1-21-96-SEC NEWS DIGEST ISSUE NO. 96-8, DATED JANUARY 18, 1996,ENFORCEMENT PROCEEDINGS DISCLOSES; PAINEWEBBER FUNDSSETTLEMENTS FOR VICTIMS OF DIRECT INVESTMENT; THE COMMISSION TODAY ISSUED AN ADMINISTRATIVE ORDER FINDINGTHAT PAINEWEBBER INCORPORATED (PAINEWEBBER) DEFRAUDEDPURCHASERS OF DIRECT INVESTMENTS. THE COMMISSION ALSOANNOUNCEDTHAT A NEW YORK CITY FEDERAL DISTRICT COURT ENTERED AN ORDERPROVIDING FOR APPOITMENT OF A CLAIMS ADMINISTRATOR AND ACOURT-ADMINISTERED CLAIMS FUND. PAINEWEBBER CONSENTED TOBOTHWITHOUT ADMITTING OR DENYING THE COMMISSION'S ALLEGATIONS ANDFINDINGS. THE COMMISSION ORDER FINDS THAT BETWEEN 1986 AND 1992PAINEWEBBER DISSEMINATED MISLEADING INFORMATION INCONNECTIONWITH THE SALE OF FOUR FAMILIES OF DIRECT INVESTMENTS. THE SALESMATERIAL OVERSTATED THE BENEFITS AND UNDERSTATED THE RISKS OFTHE INVESTMENTS SUITABLE FOR VIRTUALLY ALL CONSERVATIVEINVESTORS. THE ORDER ALSO FINDS THAT PAINEWEBBER FAILEDREASONABLY TO SUPERVISE CERTAIN EMPLOYEES WHO ENGAGED INFRAUDULENT SALES PRACTICES. THE ORER IMPOSES A CENSURE, ACEASEAND DESIST ORDER, A $5 MILLION CIVIL PENALTY, AND VARIOUSREMEDIAL SANCTIONS. PAINEWEBBER MUST COMPLY WITH ITSREPRESENTATION THAT IT HAS PAID AND ITS OBLIGATION TO PAY ATOTAL OF $292.5 MILLION TO INVESTORS. OF THIS AMOUNT, $40MILLION WILL BE DEPOSITED INTO A COURT-ADMINISTERED CLAIMS FUNDTO COMPENSATE ELIGIBLE PURCHASERS OF DIRECT INVESTMENTS. [SECV. PAINEWEBBER INCORPORATED, USDC, SDNY, 96 CV. 0331, SHS]LR-14787; REL NOS. 33-7257; 34-36724+6/20/96 SEC DOCKET VOL. 61 NO. 2, DATED FEBRUARY 13, 1996,PAGE 179, DISCLOSES; THE ORDER INSTITUTING PUBLICADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS, IMPOSING REMEDIALSANCTIONS, AND ISSUING CEASE AND DESIST ORDER WAS ISSUED BYTHESEC ON JANUARY 17, 1996. REL. 7257 (SECURITIES ACT OF 1933),REL. 36724 (SECURITIES EXCHANGE ACT OF 1934)Sanctions Ordered:Disgorgement/RestitutionCease and Desist/Injunction552©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:CEASE & DESIST ORDER$5M CIVIL PENALTYVARIOUS REMEDIAL SANCTIONSDate Initiated:01/01/1996Docket/Case Number:FILE #3-8928; RELEASE #36724Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:SEC ALLEGED THAT PWI VIOLATED THE ANTIFRAUD & RECORDKEEPINGPROVISIONS OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITHTHE OFFER & SALE OF CERTAIN LIMITED PARTNERSHIP INTERESTSBETWEEN 1986-1992 AND FAILED REASONABLY TO SUPERVISE CERTAINREG. REPS & OTHER EMPLOYEES INVOLVED IN THE SALE OF THESEINTERESTS.Current Status:FinalResolution Date:01/17/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED, WITHOUT ADMITTING OR DENYING THE FINDINGSTHERIN, TO THE ENTRY OF ORDER WHICH IMPOSED A CENSURE, A CEASE& DESIST ORDER, A $5M CIVIL PENALTY AND VARIOUS REMEDIALSANCTIONS, PWI MUST COMPLY WITH ITS REPRESENTATION THAT IT HASPAID & WILL PAY A TOTAL OF $292.5M TO INVESTORS,INCLUDING APAYMENT OF $40M FOR CLAIMS FUND.Sanctions Ordered:CensureMonetary/Fine $5,000,000.00Cease and Desist/InjunctionSettledDisclosure 352 of 450iReporting Source:RegulatorCurrent Status:Final553©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/11/1999Docket/Case Number:Principal Product Type:No ProductOther Product Type(s):Allegations:RESPONDENTS HAD ENGAGED PRIMARILY IN ONE OR MORE OF THESEVIOLATIONS ARISING FROM MARKET MAKING ACTIVITIES IN THE NASDAQSTOCK MARKET: THE COORDINATION OF QUOTATIONS ANDTRANSACTIONS BY TRADERS MAKING MARKETS IN NASDAQ STOCKS INVIOLATION OF ANTIFRAUD AND FICTITIOUS QUOTATION RULES, THEINTENTIONAL DELAY OF TRADE REPORTS, OTHER MANIPULATIVEACTIVITY.Resolution Date:01/11/1999Resolution:Other Sanctions Ordered:Sanction Details:THIS ORDER, PAY A CIVIL PENALTY IN THE AMOUNT OF $6,300,000, SHALLWITHIN 105 BUSINESS DAYS PAY DISGORGEMENT OF ILLICIT PROFITS INTHE AMOUNT OF $381,685; SHALL WITHIN 90 DAYS OF THE DATE OF THEENTRY OF THIS ORDER, PROVIDE TO THE INDEPENDENT CONSULTANTAPPOINTED BY SEC IN CONNECTION WITH THESE PROCEEDINGS A DESCRIPTION OF ITS POLICIES, PROCEDURES ANDPRACTICES RELATING TO PREVENTION OR DETECTION OF THE TYPES OFIMPROPER CONDUCT DESCRIBED IN THE ORDER. (34-40919; FILE NO. 3-9803)Regulator Statement[TOP] 02/11/99 SEC NEWS DIGEST, ISSUE NO. 99-6, DATED 1/11/99,ENFORCEMENT PROCEEDINGS DISCLOSED; SEC V. PAINEWEBBER INC,ET AL, PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 AND, AS TO ONE FIRM, PURSUANT TO SECTION 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940. ALL OF THERESPONDENTS CONSENTED, WITHOUT ADMITTING OR DENYING SEC?SFINDINGS, TO THE ENTRY OF ORDERS WHICH IMPOSE CIVIL MONETARYPENALTIES WHICH TOTALLED $26,302,500, DISGORGEMENT OFSanctions Ordered:Disgorgement/RestitutionCease and Desist/InjunctionOrder554©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceWRONGFUL GAINS TOTALLING $791,525, SUSPENSIONS OR BARS, CEASEAND DESIST ORDERS AND OTHER SANCTIONS. RELS. 34-40900 THROUGH 34-40930,INCLUSIVE; IA-1781; FILTHE ORDERS FOUND THAT THE RESPONDENTSHAD ENGAGED PRIMARILY IN ONE OR MORE OF THESE VIOLATIONSARISING FROM MARKET MAKING ACTIVITIES IN THE NASDAQ STOCKMARKET: THE COORDINATION OF QUOTATIONS AND TRANSACTIONS BYTRADERS MAKING MARKETS IN NASDAQ STOCKS IN VIOLATION OFANTIFRAUD AND FICTITIOUS QUOTATION RULES, THE INTENTIONALDELAY OF TRADE REPORTS, OTHER MANIPULATIVE ACTIVITY.(E NO. 3-9803); (PRESS REL. 99-2) 02-12-99, SEC PROCEEDING FILE NO. 3-9803 DATED 1/11/99 DISCLOSES:PAINEWEBBER SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATION OF, AND COMMITTING OR CAUSING ANYFUTURE VIOLATION OF SECTIONS 10(B), 15(C)(1) A AND (2), AND 17(A) OFTHE EXCHANGE ACT AND RULES 10B-5, 15C1-2, 15C2-7, AND 17A-3THEREUNDER; SHALL WITHIN 105 BUSINESS DAY OF THE ENTRY OF THISORDER, PAY A CIVIL PENALTY IN THE AMOUNT OF $6,300,000, SHALLWITHIN 105 BUSINESS DAYS PAY DISGORGEMENT OF ILLICIT PROFITS INTHE AMOUNT OF $381,685; SHALL WITHIN 90 DAYS OF THE DATE OF THEENTRY OF THIS ORDER, PROVIDE TO THE INDEPENDENT CONSULTANTAPPOINTED BY SEC IN CONNECTION WITH THESE PROCEEDINGS A DESCRIPTION OF ITS POLICIES, PROCEDURES ANDPRACTICES RELATING TO PREVENTION OR DETECTION OF THE TYPES OFIMPROPER CONDUCT DESCRIBED IN THE ORDER. (34-40919; FILE NO. 3-9803)iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefDisgorgementDate Initiated:01/11/1999Docket/Case Number:RLSE NO. 34-40900 AND RLSE NO. 34-40919Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):Allegations:IN AN ACTION BROUGHT AGAINST ALMOST ALL OF THE MAJOR NASDAQMARKET MAKERS, THE SEC FOUND THAT IN 1994 MARKET MAKERS,INCLUDING PAINEWEBBER, VIOLATED PROVISIONS OF THE FEDERALSECURITIES LAWS IN CONNECTION WITH THEIR MARKET MAKINGACTIVITIES IN NASDAQ SECURITIESCurrent Status:Final555©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSought:Other Sanction(s)/ReliefSought:CIVIL PENALTY OF $6,300,000CEASE AND DESIST ORDERResolution Date:01/11/1999Resolution:Other Sanctions Ordered:SUBMIT TO CERTAIN OF ITS POLICIES TO AN INDEPENDENT CONSULTANT.Sanction Details:WITHOUT ADMITTING OR DENYING THE FINDINGS, PAINEWEBBER AGREEDTO PAY A CIVIL PENALTY OF $6,300,000 AND DISGORGEMENT OF $381,685TO SETTLE THE MATTER. IN ADDITION, IT AGREED TO A CEASE ANDDESIST ORDER AND TO SUBMIT TO CERTAIN OF ITS POLICIES TO ANINDEPENDENT CONSULTANT.Sanctions Ordered:Monetary/Fine $6,300,000.00Disgorgement/RestitutionCease and Desist/InjunctionSettledDisclosure 353 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/04/1999Docket/Case Number:C05990005Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:02/04/1999Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $50,000.00Acceptance, Waiver & Consent(AWC)556©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:Regulator Statement02/08/99GK: ON FEBRUARY 4, 1999, DISTRICT NO. 5 NOTIFIEDRESPONDENT PAINEWEBBER INCORPORATED THAT THE LETTER OF AWCNO.C05990005 WAS ACCEPTED; THEREFORE, THE FIRM IS CENSURED, FINED$50,000, AND REQUIRED WITHIN 90 DAYS OF THE DATE OF THIS AWC'SACCEPTANCE TO CONDUCT A REVIEW OF ITS SUPERVISORYPROCEDURESREGARDING REGISTRATION OF PERSONNEL. THEREAFTER, UPONCOMPLETION OF THE REVIEW, THE FIRM WILL IMPLEMENT SUCHCHANGESTO ITS SUPERVISORY PROCEDURES NECESSARY TO ENSURE THAT ALLPERSONS ACTIVELY ENGAGED IN THE FIRM'S INVESTMENT BANKING ORSECURITIES BUSINESS, OR IN THE MANAGEMENT THEREOF, AREPROPERLYREGISTERED WITH THE NASD. THE FIRM IS REQUIRED TO PREPARE ANDSUBMIT TO THE DISTRICT NO. 5 STAFF A WRITTEN REPORT DETAILINGITS REVIEW PROCEDURES AND REVISED SUPERVISORY PROCEDURES NOLATER THAN 90 DAYS FROM THE DATE OF ACCEPTANCE OF THIS AWC -(NASD RULES 2110, 3010 AND MEMBERSHIP AND REGISTRATION RULES1021(a) AND 1031(a) - RESPONDENT MEMBER FAILED TO ENSURE THATCERTAIN PERSONS WHO WERE ACTIVELY ENGAGED IN THE FIRM'SINVESTMENT BANKING OR SECURITIES BUSINESS, OR IN THEMANAGEMENTTHEREOF, WERE PROPERLY REGISTERED AS GENERAL SECURITIESREPRESENTATIVES OR GENERAL SECURITIES PRINCIPALS WITH THENASD;AND, FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTENSUPERVISORY PROCEDURES THAT WOULD ENSURE THE PROPERREGISTRATION OF PERSONS EITHER ACTIVELY ENGAGED IN THE FIRM'SINVESTMENT BANKING OR SECURITIES BUSINESS, OR IN THEMANAGEMENTTHEREOF).iReporting Source:FirmInitiated By:NASD REGULATION INC.Allegations:NASDR ALLEGED THAT PAINEWEBBER FAILED TO ENSURE THAT CERTAINPERSONS WERE PROPERLY REGISTERED AS GENERAL SECURITIESREPRESENTATIVES OR GENERAL SECURITIES PRINCIPALS WITH THEASSOCIATION.Current Status:Final557©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/04/1999Docket/Case Number:CO5990005Principal Product Type:No ProductOther Product Type(s):Resolution Date:02/04/1999Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER AGREED TO A CENSURE, A $50,000 FINE AND INTERNALREVIEW OF ITS SUPERVISORY PROCUDURES RELATING TO THEREGISTRATION OF PERSONNEL.Firm StatementALTHOUGH THE SUBJECT MATTER OF THIS ACTION INVOLVED THEREGISTRATION STATUS OF ONLY SEVEN OF PAINEWEBBER'S MORE THAN10,000 REGISTERED EMPLOYEES, SUBSEQUENTLY PAINEWEBBER'SREGISTRATION DEPARTMENT HAS IMPLEMENTED A SERIES OF CHANGES(INCLUDING STAFFING CHANGES, IMPROVED INTERACTION WITHBUSINESS UNITS, SYSTEMS CHANGES AND ENHANCED REVIEW OF PRE-EXISTING DOCUMENTATION TO STRENGTHEN IT REGISTRATIONSFUNCTIONS.Sanctions Ordered:CensureMonetary/Fine $50,000.00ConsentDisclosure 354 of 450iReporting Source:RegulatorAllegations:**8/19/1998** STIPULATION AND CONSENT TOPENALTY FILED BY NYSE DIVISION OF ENFORCEMENT AND PENDING.CONSENTED TO FINDINGS: WITHOUT ADMITTING OR DENYING GUILT: A.PAINEWEBBER CONSENTS TO 1. FINDINGS BY THE HEARING PANEL THATIT: (1) VIOLATED EXCHANGE RULE 345.17 BY FAILING TO FILE,AND/OR FAILING TO PROMPTLY FILE, FORMS U-5 AND AMENDMENTS TOFORMS U-5 WITH EXCHANGE; (2) VIOLATED EXCHANGE RULE 351(a) BYFAILING TO REPORT, AND/OR FAILING TO PROMPTLY REPORTREPORTABLECurrent Status:Final558©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NYSE DIVISION OF ENFORCEMENT. NYSE DIVISIONOF ENFORCEMENT.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/19/1998Docket/Case Number:HPD 98-112Principal Product Type:Other Product Type(s):MATTERS TO THE EXCHANGE; AND (3) VIOLATED EXCHANGE RULE 351(d)BY FAILING TO REPORT, AND/OR FAILING TO PROMPTLY REPORT,INFORMATION REGARDING CUSTOMER COMPLAINTS TO THE EXCHANGE;ANDB. THE IMPOSITION BY THE EXCHANGE OF THE PENALTY OF A CENSURE,A FINE OF $125,000 AND A REQUIREMENT THAT THE FIRM COMPLY WITHTHE FOLLOWING UNDERTAKING: (1) THE FIRM WILL CAUSE ITS GENERALCOUNSEL TO PERFORM A REVIEW TO IDENTIFY THE SYSTEMS ANDPROCEDURES THE FIRM HAS IN PLACE OR HAS ADOPTED WHICH AREREASONABLY DESIGNED TO ENSURE COMPLIANCE WITH APPLICABLEEXCHANGE RULES AND FEDERAL SECURITIES LAWS AND PREVENTRECURRENCE OF THE FOREGOING VIOLATIONS, TO EVALUATE WHETHERFURTHER IMPROVEMENTS TO SUCH SYSTEMS AND PROCEDURES AREAPPROPRIATE, TO MAKE ANY APPROPRIATE RECOMMENDATIONS AND TOPREPARE A REPORT. (2) THE REPORT SHALL BE SUBMITTED TO ANDREVIEWED BY THE FIRM'S BOARD OF DIRECTORS, AND THE FIRM SHALLADOPT AND IMPLEMENT ANY RECOMMENDATIONS RESULTING FROM THEGENERAL COUNSEL'S REVIEW THAT THE FIRM'S BOARD OF DIRECTORSDEEMS APPROPRIATE. THE FIRM SHALL SUBMIT TO THE EXCHANGE ACOPYOF THE REPORT, A LIST OF THE RECOMMENDATIONS THAT THE FIRM'SBOARD OF DIRECTORS HAS DEEMED APPROPRIATE, AND A WRITTENREPRESENTATION TO THE EXCHANGE THAT ALL SUCHRECOMMENDATIONSHAVE BEEN ADO0PTED AND IMPLEMENTED, WITHIN THREE MONTHS FROMTHE DATE THE HEARING PANELL DECISION IN THIS MATTER BECOMESFINAL.Resolution Date:12/04/1998Resolution:Sanctions Ordered:CensureStipulation and Consent559©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:**10/14/1998**DECISION: VIOLATED RULE 345.17CONCERNING THE FILINGS ON FORMS U-5 AND AMENDMENTS; VIOLATEDRULE 351(a) BY FAILING TO REPORT OR FAILING TO PROMPTLY REPORTMATTERS TO THE EXCHANGE; AND VIOLATED RULE 351(d) CONCERNINGTHE REPORTING OF CUSTOMER COMPLIANTS TO THE EXCHANGE. THEHEARING PANEL IMPOSED THE STIPULATED SANCTION OF A CENSUREANDA $125,000 FINE AND A REQUIREMENT THAT THE FIRM COMPLY WITH THEFOLLOWING UNDERTAKING: (1) THE FIRM WILL CAUSE ITS GENERALCOUNSEL TO PERFORM A REVIEW TO IDENTIFY THE SYSTEMS ANDPROCEDURES THE FIRM HAS IN PLACE OR HAS ADOPTED WHICH AREREASONABLY DESIGNED TO ENSURE COMPLIANCE WITH APPLICABLEEXCHANGE RULES AND FEDERAL SECURITIES LAWS AND PREVENTRECURRENCE OF THE FOREGOING VIOLATIONS, TO EVALUATE WHETHERFURTHER IMPROVEMENTS TO SUCH SYSTEMS AND PROCEDURES AREAPPROPRIATE, TO MAKE ANY APPROPRIATE RECOMMENDATIONS, AND TOPREPARE A REPORT. (2) THE REPORT SHALL BE SUBMITTED TO ANDREVIEWED BY THE FIRM'S BOARD OF DIRECTORS, AND THE FIRM SHALLADOPT AMD IMPLEMENT ANY RECOMMENDATIONS RESULTING FROM THEGENERAL COUNSEL'S REVIEW THAT THE FIRM'S BOARD OF DIRECTORSDEEMS APPROPRIATE. THE FIRM SHALL SUBMIT TO THE EXCHANGE ACOPYOF THE REPORT, A LIST OF THE RECOMMENDATIONS THAT THE FIRM'SBOARD OF DIRECTORS HAS DEEMED APPROPRIATE, AND A WRITTENREPRESENTATION TO THE EXCHANGE THAT ALL SUCHRECOMMENDATIONSHAVE BEEN ADOPTED AND IMPLEMENTED, WITHIN THREE MONTHS FROMTHEDATE THE HEARING PANEL DECISION IN THIS MATTER BECOMES FINAL.Regulator StatementCONTACT: PEGGY GERMINO 212 656-8450. U-6 ELECTRONICALLY ENTERED BY NYSE6; TRANS #400004-31398**10/14/1998**UNLESS A REVIEW BY THE NYSE BOARD OF DIRECTORS ISREQUESTED, THIS DECISION WILL BECOME FINAL 25 CALENDAR DAYSAFTER NOTICE OF THE HEARING PANEL'S DETERMINATION HAS BEENSERVED UPON THE RESONDENT. CONTACT: PEGGY GERMINO 212 656-8450. U-6 ELECTRONICALLY ENTERED BY NYSE6; TRANS #400002-34198**12/4/1998**THE DECISION IS NOW FINAL AND IS EFFECTIVEIMMEDIATELY. CONTACT: PEGGY GERMINO 212 656-8450.Monetary/Fine $125,000.00i560©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/14/1998Docket/Case Number:EXCHANGE HEARING PANEL DECISION 98-112Principal Product Type:No ProductOther Product Type(s):Allegations:WITHOUT ADMITTING OR DENYING, THE FIRM AGREED TO ANADMINISTRATIVE ORDER IMPOSING A CENSURE AND FINE OF $125,000.00FOR CERTAIN ALLEGED LATE OR ERRONEOUS FILINGS OFFORMS U-4, U-5 AND RE-3Current Status:FinalResolution Date:11/23/1998Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING, THE FIRM AGREED TO ANADMINISTRATIVE ORDER IMPOSING A CENSURE AND FINE OF $125,000.00FOR CERTAIN ALLEGED LATE OR ERRONEOUS FILINGS OF FORMS U-4, U-5AND RE-3Firm StatementON NOVEMBER 23, 1998, THE NEW YORK STOCK EXCHANGE MADE FINAL ADECISION TO CENSURE AND FINE THE FIRM FORHAVING FILING MISTAKES THAT WERE LATE OR CONTAINED AN ERROR.MOST OF THE ERRORS RELATED TO CLERICAL DATA-ENTRY MISTAKES.THE NEW YORK STOCK EXCHANGE DID NOT LOSE ANY JURISDICTION AS ARESULT OF THE FILINGS AT ISSUE.Sanctions Ordered:CensureMonetary/Fine $125,000.00OrderDisclosure 355 of 450iReporting Source:RegulatorCurrent Status:Final561©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/07/1998Docket/Case Number:98-0005Principal Product Type:Other Product Type(s):Allegations:SEE SUMMARYResolution Date:08/07/1998Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER INCORPORATED, AN EXCHANGE MEMBERORGANIZATION, WAS FINED $3,565 FOR THE CONDUCT DESCRIBEDBELOW.Regulator StatementPAINEWEBBER INCORPORATED, AN EXCHANGE MEMBERORGANIZATION, WAS FINED $3,565 FOR THE FOLLOWING CONDUCT. ONFEBRUARY 18, 1997, PAINEWEBBER SUBMITTED AN ADVICE TO THEEXCHANGE INDICATING ITS INTENT TO EXERCISE 95 OEX FEB 695 CALLOPTION CONTRACTS AND 8 OEX FEB 705 CALL OPTION CONTRACTS ONBEHALF OF ITS PROPRIETARY ACCOUNT. SUBSEQUENTLY, PAINEWEBBERFAILED TO EXERCISE ANY OF THE CONTRACTS IT ADVISED, WITHOUTSUBMITTING AN "ADVICE CANCEL" TO THE EXCHANGE. ON MAY 15,1997, AT 3:42:22 P.M. (CT), AFTER THE 3:20 P.M. CUTOFF TIME,PAINEWEBBER SUBMITTED AN ADVICE TO THE EXCHANGE VIA C/MACS *INDICATING THE INTENT TO EXERCISE 10 OEX MAY 800 CALL OPTIONCONTRACTS ON BEHALF OF ITS CUSTOMER ACCOUNT. (CBOE RULE 11.1.)* CLEARING MANAGEMENT AND CONTROL SYSTEMSanctions Ordered:Monetary/Fine $3,565.00DecisioniReporting Source:FirmAllegations:ON 2/18/97, PWI DID NOT EXERCISE CERTAIN OEX CALL OPTIONS AFTERSUBMITTING "ADVICE" FORMS TO THE CBOE INDICATING THE INTENT TOCurrent Status:Final562©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CHICAGO BOARD OF OPTIONS EXCHANGE (CBOE)Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/27/1998Docket/Case Number:98-005Principal Product Type:OptionsOther Product Type(s):EXERCISE THEM. ON MAY 5, 1997, PWI SUBMITTED AN "ADVICE" FORMAFTER THE 3:20 PM CUT OFF TIME, THE CBOE FOUND THESE INSTANCESTO VIOLATE CBOE RULE 1101Resolution Date:08/06/1998Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, PAINEWEBBERAGREED TO PAY A FINE OF $3,565.00Firm StatementON 2/18/97, PWI DID NOT EXCERCISE OEX CALL OPTIONS AFTERSUBMITTING "ADVICE" FORMS TO THE COBE INDICATING THE INTENT TOEXERCISE THEM. ON MAY 5, 1997, PWI SUBMITTED AN "ADVICE" FORMAFTER THE 3:20 PM CUT OFF TIME, THE CBOE FOUND THESE INSTANCESTO VIOLATE CBOE RULE 1101Sanctions Ordered:Monetary/Fine $3,565.00OtherDisclosure 356 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:11/24/1997Docket/Case Number:CMS970056 AWCPrincipal Product Type:Allegations:Current Status:Final563©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:11/24/1997Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementLETTER OF ACCEPTANCE, WAIVER AND CONSENT NO CMS970056 AWC.ON NOVEMBER 24, 1997, PAINEWEBBER INCORPORATED (PWJC) WASNOTIFIED THAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT(AWC) IT SUBMITTED WAS ACCEPTED BY THE NASD REGULATION INC.'SDEPARTMENT OF ENFORCEMENT AND THE NATIONAL BUSINESSCONDUCTCOMMITTEE. THE AWC ALLEGES THAT THE FOLLOWING VIOLATIONSOCCURRED:PWJC FAILED TO CONTEMPORANEOUSLY EXECUTE ONE AND PARTIALLYEXECUTE TWO CUSTOMER LIMIT ORDERS. THIS CONSTITUTES AVIOLATION OF NASD CONDUCT RULE 2110 AND IM-2110-2. PWJC FAILED TO SHOW EXECUTION TIME ON THE MEMORANDA OFTHREE BROKERAGE ORDERS. THIS CONSTITUTES SEPARATE ANDDISTINCTVIOLATIONS OF SEC RULE 17a-3(a) AND NASD CONDUCT RULE 3110.PWJC WAS FINED $2,000.******* $2,000 PAID ON 12/16/97, INVOICE NO. 98-MS-36 ****Sanctions Ordered:Monetary/Fine $2,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmAllegations:THE FIRM CONSENTED TO A $1,000 FINE FOR ALLEGED VIOLATIONS OFTHE LIMIT ORDER HANDLING RULES (NASD CONDUCT RULE 2110), AND TOA $1,000 FINE FOR FAILING TO TIME STAMP THREE (3) ORDER TICKETS INALLEGED VIOLATIONS OF SECURITIES EXCHANGE ACT RULE 17A-3)A)(6)Current Status:Final564©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASD REGULATION, INCPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/21/1997Docket/Case Number:CMS970056AWCPrincipal Product Type:OtherOther Product Type(s):AND NASD CONDUCT RULE 3110"Resolution Date:11/21/1997Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM CONSENTED TO A $1,000 FINE FOR ALLEGEDVIOLATIONS OF THE LIMIT ORDER HANDLING RULES (NASD CONDUCTRULE 2110), AND TO A $1,000 FINE FOR FAILING TO TIME STAMP THREE (3)ORDER TICKETS IN ALLEGED VIOLATION OF SECURITIES EXCHANGE ACTRULE 17A-3(A)(6) AND NASD CONDUCT RULE 3110".Sanctions Ordered:Monetary/Fine $2,000.00ConsentDisclosure 357 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Date Initiated:12/15/1997Docket/Case Number:C10970181Principal Product Type:Other Product Type(s):Allegations:Current Status:Final565©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:12/15/1997Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON DECEMBER 15, 1997, DISTRICT NO. 10 NOTIFIED RESPONDENTPAINEWEBBER INCORPORATED THAT THE LETTER OF ACCEPTANCE,WAIVERAND CONSENT NO. C10970181 WAS ACCEPTED; THEREFORE, THE FIRM ISCENSURED AND FINED $25,000 - (MSRB RULE G-36 - RESPONDENTMEMBER SERVED AS SOLE OR MANAGING UNDERWRITER IN PRIMARYOFFERINGS OF MUNCIPAL SECURITIES AND FAILED TO TIMELY SUBMITOFFICIAL STATEMENTS AND/OR OTHER DOCUMENTS TO THE MSRB ASREQUIRED; AND FAILED TO MAINTAIN RECORDS AS REQUIRED BY MSRBRULE G-8(a)(xv).**** $25,000 PAID ON 1/26/98, INVOICE NO. 98-10-23 ****Sanctions Ordered:CensureMonetary/Fine $25,000.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:NASDR REGULATION, INCPrincipal Sanction(s)/ReliefSought:Date Initiated:12/15/1997Docket/Case Number:C10970181Principal Product Type:Debt - MunicipalOther Product Type(s):Allegations:BETWEEN SEPTEMBER 1995 AND SEPTEMBER 1996, PAINEWEBERINCORPORATED ALLEGEDLY FAILED ON NUMEROUS OCCASIONS TOSUBMIT OFFICIAL STATEMENTS AND/OR OTHER DOCUMENTS TO THEMSRB WITHIN THE TIME LIMITS PRESCRIBED UNDER MSRB RULE G-36 ANDALLEGEDLY FAILED TO MAINTAIN CERTAIN REQUIRED BY MSRB RULE G-8(A)(XV)"Current Status:Final566©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:12/15/1997Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, PAINEWEBBERINCORPORATED CONSENTED IMPOSITION OF A CENSURE AND A $25,000FINE FOR THE ALLEGED VIOLATIONS DESCRIBED ABOVE.Firm StatementBEFORE THESE PROCEEDINGS WERE INSTITUTED, PAINEWEBBER HADALREADY TAKEN STEPS TO IMPLEMENT NEW POLICIES AND PROCEDURESDESIGNED TO IMPROVE THE FIRM'S COMPLIANCE WITH THESE FILINGAND RECORDKEEPING REQUIREMENTS.Sanctions Ordered:CensureMonetary/Fine $25,000.00ConsentDisclosure 358 of 450iReporting Source:RegulatorInitiated By:SDPrincipal Sanction(s)/ReliefSought:Date Initiated:06/11/1996Docket/Case Number:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:THAT PAINEWEBBER ENTERED INTO A CONSENT ORDERWITH THE DIVISION IN ORDER TO RESOLVE ALLEGATIONS THATPAINEWEBBER VIOLATED CERTAIN ANTI-FRAUD PROVISIONS INCONNECTION WITH THE MARKETING AND SALE OF FOUR DIRECTINVESTMENT PROGRAMS, GEODYNE OIL AND GAS, PAINEWEBBERINSUREDMORTGAGE PARTNERS, PAINEWEBBER INDEPENDENT LIVING MORTGAGEPARTNERS AND PEGASUS AIRCRAFT PARTNERS.Current Status:Final567©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:06/11/1996Resolution:Other Sanctions Ordered:Sanction Details:THAT PAINEWEBBER WAS FINED $30,456. THE FINE WASPAID.Regulator StatementNot ProvidedSanctions Ordered:Monetary/Fine $30,456.00ConsentiReporting Source:FirmInitiated By:THE STATE OF SOUTH DAKOTA, DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $30,456.00Date Initiated:06/11/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:FinalResolution Date:06/18/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,Sanctions Ordered:Monetary/Fine $30,456.00Cease and Desist/InjunctionConsent568©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $30,456.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH SOUTH DAKOTA PURSUANT TO THAT AGREEMENTDisclosure 359 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/10/1997Docket/Case Number:CMS950077(A) AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:06/10/1997Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementLETTER OF ACCEPTANCE, WAIVER & CONSENT NO. CMS950077(A) AWC.ON JUNE 10, 1997, PAINEWEBBER INCORPORATED (PWJC) WAS NOTIFIEDTHAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) ITSUBMITTED WAS ACCEPTED BY THE MARKET REGULATION AND THESanctions Ordered:Monetary/Fine $1,000.00Acceptance, Waiver & Consent(AWC)569©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceNATIONAL BUSINESS CONDUCT COMMITTEES. THE AWC ALLEGES THATPWJCVIOLATED SEC RULE 10b-6A WHEN PWJC, A PASSIVE MARKET MAKER INTHE COMMON STOCK OF ARCH COMMUNICATIONS ("APGR"), ENTERED ABIDWHICH WAS ABOVE THE HIGHEST INDEPENDENT MARKET MAKER BID FORTHE SECURITY.PWJC WAS FINED $1,000.**$1,000.00 PAID ON 8/4/97, INVOICE #97-MS-537**iReporting Source:FirmInitiated By:NASD REGULATION INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/31/1995Docket/Case Number:CMS950077 (A)Principal Product Type:Equity - OTCOther Product Type(s):Allegations:NASD REGULATION ALLEGED THAT PAINEWEBBER VIOLATED THE PASSIVEMARKET-MAKING RULE BY ENTERING A BID IN ARCH COMMUNICATIONTHAT WAS THE HIGHEST INDEPENDENT BID.Current Status:FinalResolution Date:07/29/1997Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER SIGNED THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENT AND AGREED TO PAY A FINE OF $1000.00 TO THE NASD.Sanctions Ordered:Monetary/Fine $1,000.00Acceptance, Waiver & Consent(AWC)Disclosure 360 of 450iReporting Source:Regulator570©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:MASSACHUSETTS SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/20/1990Docket/Case Number:E-89-199URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Not ProvidedCurrent Status:FinalResolution Date:03/20/1990Resolution:Other Sanctions Ordered:Sanction Details:ON MARCH 20, 1990, THE MASSACHUSETTS SECURITIESDIVISION ENTERED AN ORDER INSTITUTING PROCEEDINGS, MAKINGFINDINGS AND IMPOSING SANCTIONS RELATIVE TO PAINEWEBBER, INC.AND JOSEPH BONURA. THE ORDER FOUND THAT PAINEWEBBER FAILEDREASONABLY TO SUPERVISE MR. BONURA AND THAT BONURA HAD MADEAWILLFUL MISREPRESENTATION TO A PROSPECTIVE CUSTOMER.PAINEWEBBER WAS ORDERED TO ADOPT NEW SUPERVISORYPROCEDURES, TOSPECIALLY SUPERVISE BONURA FOR ONE YEAR, AND TO PAY A FINE OF$1000. BONURA WAS REPRIMANDED, FINED $500, AND ORDERED TOCOMPLY WITH THE MASSACHUSETTS UNIFORM SECURITIES ACT ANDREGULATIONS AND TO CERTIFY THAT HE HAS RECEIVED ENHANCEDTRAINING FROM PAINEWEBBER.Regulator StatementCONTACT: GEORGE MALLEY 617-727-3548Sanctions Ordered:Monetary/Fine $1,000.00OrderiReporting Source:FirmCurrent Status:Final571©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:COMMONWEALTH OF MASSACHUSETTS, SECURITIES DIV.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/20/1990Docket/Case Number:E-89-199Principal Product Type:No ProductOther Product Type(s):Allegations:THE ORDER ALLEGED THAT PAINEWEBBER FAILED TO REASONABLYSUPERVISE REGISTERED RESPRESENTATIVE, JOSEPH BONURA;FURTHER THAT MR. BONURA HAD MADE A MISREPRESENTATION TO APROSPECTIVE CLIENT.Resolution Date:03/20/1990Resolution:Other Sanctions Ordered:Sanction Details:THE MASSACHUSETTS SECURITIES DIVISION ENTERED AN ORDERINSTITUTION PROCEEDING, MAKING FINDINGS, AND IMPOSINGSANCTIONS RELATIVE TO PAINEWEBBER AND REGISTEREDREPRESENTATIVE, JOSEPH BONURA. THE ORDER FOUND THATPAINEWEBBER FAILED TO REASONABLY SUPERVISE MR. BONURA ANDTHAT MR. BONURA HAD MADE A WILLFUL MISREPRESENTATION TO APROSPECTIVE CUSTOMER. PAINEWEBBER WAS ORDERED TO ADOPTCERTAIN NEW SUPERVISORYPROCEDURES, TO SPECIALLY SUPERVISE MR. BONURA FOR ONE YEAR,AND TO PAY A FINE OF $1,000. MR BONURA WAS ALSO SANCTIONED. MR.BONURA TERMINATED EMPLOYMENT WITH PAINEWEBBER ON AUGUST13,1990Sanctions Ordered:Monetary/Fine $1,000.00OrderDisclosure 361 of 450iReporting Source:RegulatorInitiated By:STATE OF MICHIGAN; CORPORATION ANDAllegations:Not ProvidedCurrent Status:Final572©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSECURITIES BUREAU. DLB/LEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/14/1994Docket/Case Number:BD 4001URL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:12/14/1994Resolution:Other Sanctions Ordered:Sanction Details:A CONSENT ORDER TO CENSURE, TO IMPOSE A CIVILPENALTY OF $1,000 AND TO DISMISS THE ORDER TO SHOW CAUSE WASISSUED BY THE BUREAU. IN THE ORDER, PAINEWEBBER AGREED TOCONTINUE DEVELOPMENT OF AN AUTOMATED ORDER ENTRY SYSTEMTHATWOULD BLOCK TRANSACTIONS IN THE STATES WHERE THE AGENT IS NOTREGISTERED IN THE CLIENTS STATE OF RESIDENCE AND WILL ALSOWITHHOLD COMMISSIONS GENERATED FOR THESE TRANSACTIONS. THEBROKER-DEALER ADMITTED THE FACTS, BUT NEITHER ADMITTED NORDENIED THE FACTS CONSTITUTED VIOLATIONS OF THE ACT.Regulator StatementSEE ABOVE CONTACT: DEBORAH BROWN (517) 334-6215Sanctions Ordered:CensureMonetary/Fine $1,000.00ConsentiReporting Source:FirmInitiated By:STATE OF MICHIGAN DEPT OF COMMERCE, CORPORATIONS ANDSECURITIES.Allegations:ALLEGED THAT THE FIRM EMPLOYED AN UNREGISTERED AGENT INMICHIGAN AND FAILED TO REASONABLE SUPERVISE THE AGENT SO AS TOPREVENT HIM FROM TRANSACTING BUSINESS IN MICHIGAN WHILEUNREGISTERED.Current Status:Final573©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/14/1994Docket/Case Number:BD 4001Principal Product Type:No ProductOther Product Type(s):Resolution Date:12/14/1994Resolution:Other Sanctions Ordered:Sanction Details:PAINE WEBBER WAS CENSURED AND PAID $1,000 IN ADMINISTRATIVECOSTS.Firm StatementPAINEWEBBER CONSENTED WITHOUT ADMITTING OR DENYING THEALLEGATIONS PAINEWEBBER AGREED TO CONTINUE DEVELOPMENT OFTHE AUTOMATED ORDER ENTRY SYSTEM, TO BLOCK TRANSACTIONS INSTATES WHERE THE AGENT IS NOT REGISTERED IN THE CLIENTS STATEOF RESIDENCE OR TO STATES THAT THE SYSTEMS CANNOT VERIFY THEAGENTS REGISTRATION, AND UNTIL THE AUTOMATED ORDER ENTRYSYSTEM IS FULLY OPERATIONAL TO WITHHOLD FROM AGENTS AND THEIRBRANCH MANAGERS COMMISSIONS GENERATED FROM TRANSACTIONSWITH CLIENTS LIVING IN MICHIGAN IF THE AGENT IS NOT REGISTERED INMICHIGAN. IN ADDITION, PAINEWEBBER AGREED TO PROVIDE BY JULY 31.1995. A WRITTEN REPORT TO THE MICHIGAN DEPARTMENT OFCOMMERCE, CORPORATIONS AND SECURITIES BUREAU ON THE STATUSOF THE AUTOMATED ODER ENTRY SYSTEM.Sanctions Ordered:CensureMonetary/Fine $1,000.00ConsentDisclosure 362 of 450iReporting Source:RegulatorInitiated By:INDIANA SECURITIES DIVISIONAllegations:MISREPESENTATIONS, UNSUITABILITY ANDUNAUTHORIZED TRADING BY PAUL E. BRADY, III CRD# 1548539Current Status:Final574©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/18/1992Docket/Case Number:92-0074 CAURL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:05/18/1992Resolution:Other Sanctions Ordered:Sanction Details:CONSENT AGREEMENT BETWEEN PAINEWEBBER, PAUL BRADYAND THE INDIANA SECURITIES DIVISIONRegulator StatementAN INDIANA RESIDENT COMPLAINED TO THE DIVISIONABOUT THE HANDLING OF HIS ACCOUNT. THE RESIDENT ALLEGEDMISREPRESENTATIONS, UNSUITABILITY AND UNAUTHORIZED TRADING BYPAINEWEBBER ACCOUNT EXECUTIVE PAUL EUGENE BRADY, III. PURSUANTTO A CONSENT AGREEMENT ENTERED ON MAY 18, 1992, THE COMPLAINTWAS RESOLVED. WITHOUT ADMITTING VIOLATIONS OR LIABILITY,PAINEWEBBER AGREED TO REFUND TO COMPLAINANT THE AMOUNT OF$11,425.51 AND MR. BRADY AGREED TO A FINE/CIVIL PENALTY IN THEAMOUNT OF $3,900.00.Sanctions Ordered:Disgorgement/RestitutionConsentiReporting Source:FirmInitiated By:STATE OF INDIANA, SECURITIES DIVISIONDate Initiated:04/01/1992Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductAllegations:A CUSTOMER COMPLAINT HAD ORIGINALLY SPURRED AN INVESTIGATIONBY THE DEPARTMENT INTO VIOLATIONS BY PAINEWEBBER AND ONE OFITS REGISTERED REPRESENTATIVES, PAUL E. BRADY III.Current Status:Final575©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:04/01/1992Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,CONSENTED TO MAKE RESTITUTION TO A CLIENT OFPAINEWEBBER/BRADY IN THE AMOUNT OF $11,428.51. IN ADDITION, BRADYWITHOUT ADMITTING OR DENYING THE VARIOUS ALLEGED VIOLATIONS,CONSENTED TO THE IMPOSITION OF A PENALTY IN THE AMOUNT OF $3,900BY THE DIVISION.Sanctions Ordered:Monetary/Fine $15,328.51Disgorgement/RestitutionConsentDisclosure 363 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/29/1977Docket/Case Number:CA-694Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:08/01/1979Resolution:Sanctions Ordered:CensureDecision576©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT #CA-694 FILED 12-29-77DISTRICT 2N10-31-78: CENSURED; FINED $500ASSESSED COSTS OF $522.10 J & S12-15-78: TO BE FINAL11-9-78: APPEALED TO THE B/G11-14-78: B/G REVIEW7-2-79: B/G DECISION RENDERED; CENSURED; FINED $500;ASSESSED COSTS OF $522.10 J & S8-1-79: TO BE FINAL8-1-79: FINALMonetary/Fine $500.00iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:12/19/1977Docket/Case Number:CA-694Principal Product Type:No ProductOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Allegations:DUE TO THE AGE OF THE ITEM, THE ALLEGATIONS ARE UNAVAILABLE.Current Status:FinalResolution Date:08/01/1979Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISSanctions Ordered:CensureMonetary/Fine $500.00Decision577©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNAVAILABLE.Disclosure 364 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/13/1972Docket/Case Number:C-150Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:04/13/1972Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT C-150 FILED 4-13-72 AGAINST COLUMBUS OHIO OFFICE FINEPAID 4-26-72Sanctions Ordered:Monetary/FineDecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:04/13/1972Docket/Case Number:C-150Principal Product Type:OtherAllegations:DUE TO THE AGE OF THE ITEM, THE EXACT DETAILS ARE UNAVAILABLE.Current Status:Final578©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTION ISUNAVAILABLE.Other Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Resolution Date:04/13/1972Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM, THE AMOUNT OF THE MONETARY FINE ISUNAVAILABLE.Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTIN DETAIL ISUNAVAILABLE.Sanctions Ordered:Monetary/Fine $0.00DecisionDisclosure 365 of 450iReporting Source:RegulatorInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/16/1996Docket/Case Number:96-0047Principal Product Type:Other Product Type(s):Allegations:see summaryCurrent Status:FinalResolution Date:05/12/1997Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $50,000.00Order579©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:PaineWebber was censured and fined $50,000. TheRespondent is also hereby ordered to: a) within 60 days of theissuance of the Decision Accepting the Offer of Settlement inthis matter ("Decision"), submit to the Exchange's Departmentof Compliance acceptable written procedures concerning i) theentry and execution of proprietary account orders ofPaineWebber's broker-dealer correspondents, and ii) thesubmission of trade information to the Exchange covering theorders described in i) above; and b) within 6 months followingthe issuance of the Decision, PaineWebber shall retain aqualified outside consultant (i.e., other than PaineWebberpersonnel) to conduct a review of: i) the procedures describedin Paragraph 3a above, including the effectiveness of therelevant computer system procedures; and ii) PaineWebber'sproceudres for correspondent accounts concerning the detectionof free riding, and the imposition an denforcement of 90 dayrestrictions (the"Reveiw") The findings of the Review shall besubmitted to the Compliance Committee of PaineWeber's Board ofDirectors ("Committee") within 30 days of the completion of theReview, and submission thereof shall be confirmed to theExchange's Department of Compliance. Further, if the Reviewrecommends any revisions or additions to PaineWebber'sprocedures, PaineWebber shall furnish such recommendations tothe Exchange's Department of Compliance.Regulator StatementFrom approximately January 1992 through June1996, PaineWebber, through its wholly owned subsidiary,Correspondent Services Corporation (CSC"); 1) accpeted numerousorders for the accounts of certain of its correspondentbroker-dealers and allowed, primarily because of a computersystem flaw, these broker-dealer orders to be entered andexecuted on the Exchange through RAES or the Book; 2) failed todesigante, primarily because of a computer system flaw,numerous broker-dealer orders including the orders referred toParagraph 1 above with the required broker-dealer "b"designations; 3) filed incorrect account origin codeinformation with the Exchange for the orders referred to inParagraph 2 above, by allowing these orders to be entered witha "c" designation, indicating that the orders were customerorders, when these orders were for the accounts ofbroker-dealers and should have been entered with the requiredbroker-dealer "b" designation; 4) failed to establish andimplement reasonable procedures to review and monitor the entryand execution of broker-dealer orders, and as a result, failedto prevent the conduct describedin each of Paragraphs 1 through3 above from occurring. Since that time, PaineWebber has taken580©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidancesteps to correct the computer system flaw at issue so thatbroker-dealer orders entered by correspondent firms will beproperly designated "b" orders and processed in a manner whichshould enable PaineWebber to better monitor the issues raisedin this matter, and PaineWebber also issued additionalinstructions to all its correspondent firms concerning theproper procedures for entering broker-dealer orders; and 5)failed on numerous occasions to either impose or enfore 90 dayrestrictions in the ash account carried by CSC for the personaltrading account of a certain associated person of LadenburgThalman & Co., Inc. an Exchange member organization,("Associated Person"), thereby allowing Associated Person to*See FAQ #1*iReporting Source:FirmInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/16/1996Docket/Case Number:96-0047Principal Product Type:No ProductOther Product Type(s):Allegations:COMPUTER ENTRY ERROR CAUSED CERTAIN ORDERS FORCORRESPONDENTS TO BE IMPROPERLY DESIGNATED AS CUSTOMERORDERS, ALLOWING THEM TO BE EXECUTED THE RETAIL AUTOMATEDEXECUTION SYSTEM ("RAES"). FAILED TO PREVENT ONE CLIENT FROM"FREE-RIDING")Current Status:FinalResolution Date:05/12/1997Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER, WITHOUT ADMITTING OR DENYING THEALLEGED VIOLATIONS, CONSENTED TO A FINE OF $50,000, A CENSURE,Sanctions Ordered:CensureMonetary/Fine $50,000.00Settled581©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAND TO PERFORM THE UNDERTAKINGS SET FORTH IN THE QUESTIONBELOW.Firm StatementPWI AGREED: A) TO SUBMIT TO THE CBOE WITHIN 60 DAYS WRITTENPROCEDURES CONCERNING THE ENTRY AND EXECUTION OF ALLBROKER-DEALER ACCOUNT ORDERS, AND THE SUBMISSION TO THE CBOEOF TRADE INFORMATION COVERING SUCH ORDERS; AND B) TO RETAIN ACONSULTANT TO REVIEW THESE PROCEDURES FOR THE DETECTION OFFREE RIDING, AND PROCEDURES FOR THE ENFORCEMENT OF 90-DAYRESTRICTIONS. THIS REVIEW SHALL BE SUBMITTED TO THE CBOE WITHIN6 MONTHS.Disclosure 366 of 450iReporting Source:RegulatorInitiated By:MN DEPT OF COMMERCEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/21/1996Docket/Case Number:SE9600281URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:MATERIAL MISREPRESENTATIONS AND OMISSIONS OFMATERIAL FACT IN THE MARKETING OF 4 DIRECT INVESTMENTPROGRAMS;UNSUITABLE SALES; FAILURE TO KEEP ADEQUATE BOOKS AND RECORDS;FAILURE TO SUPERVISE AGENTSCurrent Status:FinalResolution Date:08/21/1996Resolution:Other Sanctions Ordered:Sanction Details:CONSENT TO FINE OF $74,597Regulator StatementCONSENTED TO FINE BASED UPON ABOVE ALLEGATIONS.Sanctions Ordered:Monetary/Fine $74,597.00Consent582©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCONTACT: TERESA FISCHER (612) 296-2296iReporting Source:FirmInitiated By:THE STATE OF MINNESOTAPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $74,597.00Date Initiated:08/21/1996Docket/Case Number:SE9600281Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:FinalResolution Date:08/21/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHUR VIOLATIONSAND TO PAY $74,597.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THE PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WIL ALL STATES, P.R. ANDD.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENT REACHEDWITH MINNESOTA PURSUANT TO THA AGREEMENTSanctions Ordered:Monetary/Fine $74,597.00Cease and Desist/InjunctionConsent583©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 367 of 450iReporting Source:RegulatorInitiated By:MISSOURI SECRETARY OF STATE/SECURITIESDIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/23/1996Docket/Case Number:AO-96-07URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:PAINEWEBBER VIOLATED FEDERAL ANTIFRAUDPROVISIONS IN THE SALE OF FOUR DIRECT INVESTMENTS, SOLD THESEDIRECT INVESTMENTS TO INVESTORS FOR WHOM SUCH INVESTMENTSWEREUNSUITABLE, AND FAILED TO SUPERVISE CERTAIN SALES AGENTS.Current Status:FinalResolution Date:07/23/1996Resolution:Other Sanctions Ordered:Sanction Details:STIPULATED CONSENT ORDER.Regulator StatementCONTACT: MARY HOSMER, (573)751-4704Sanctions Ordered:Stipulation and ConsentiReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESCurrent Status:Final584©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE STATE OF MISSOURIPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $71,058.00Date Initiated:07/23/1996Docket/Case Number:AO-96-07Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):AND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSResolution Date:07/23/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $71,058.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES,P.C.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH MISSOURI PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $71,058.00Cease and Desist/InjunctionConsentDisclosure 368 of 450iReporting Source:RegulatorInitiated By:Oregon SecuritiesDate Initiated:04/24/1996Allegations:Current Status:Final585©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:O-96-0002URL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:04/24/1996Resolution:Other Sanctions Ordered:Sanction Details:Sanctions Ordered:Monetary/Fine $20,000.00Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:THE STATE OF OREGONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $225,087.00Date Initiated:04/24/1996Docket/Case Number:0-96-0002Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final586©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:04/24/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROMFURTHER VIOLATIONS AND TO PAY $225,087.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH OREGON PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $225,087.00Cease and Desist/InjunctionConsentDisclosure 369 of 450iReporting Source:RegulatorInitiated By:FLORIDA DIVISION OF SECURITIES AND INVESTORPROTECTIONDate Initiated:06/14/1996Docket/Case Number:2339-S-6/96URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:THE FLORIDA DEPARTMENT OF BANKING AND FINANCEALLEGES THAT THE RESPONDENT PAINEWEBBER INCORPORATEDVIOLATEDCERTAIN PROVISIONS OF THE STATES ANTI-FRAUD SECURITIES LAWS INCONNECTION WITH THE MARKETING AND SALE OF FOUR DIRECTINVESTMENT PROGRAMS. THE VIOLATIONS INCLUDE, BUT ARE NOTLIMITED TO, MISSTATEMENT AND OMMISSIONS OF MATERIAL FACTS,FAILURE TO SUPERVISE, UNSUITABILITY, AND FAILURE TO KEEPADEQUATE BOOKS AND RECORDS.Current Status:Final587©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:06/14/1996Resolution:Other Sanctions Ordered:Sanction Details:ON JUNE 14, 1996, THE FLORIDA DEPARTMENT OFBANKING AND FINANCE ISSUED A CONSENT ORDER REGARDING THERESPONDENT PAINEWEBBER INCORPORATED. THE RESPONDENTPAINEWEBBERAGREED TO THE TERMS OF THE CONSENT ORDER WITHOUT ADMITTINGORDENYING THE ALLEGED VIOLATIONS. THE TERMS OF THE CONSENTORDERREQUIRE PAINEWEBBER TO CEASE AND DESIST FROM FUTUREVIOLATIONSOF THE FLORIDA SECURITIES ACT AND TO PAY AN ADMINISTRATIVE FINEIN THE AMOUNT OF $435,922 TO THE STATE OF FLORIDA'S SECURITIESANTI-FRAUD TRUST FUND.Regulator StatementCONTACT: PLEASE CONTACT: BILL REILLY (904)488-9805Sanctions Ordered:Monetary/Fine $435,922.00Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:THE STATE OF FLORIDADate Initiated:06/14/1996Docket/Case Number:2339-S-6/96Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLY SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OHTER EMPLOYEES IN THE SALES OF THESE INTERESTCurrent Status:Final588©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $225,087.00Other Product Type(s):Resolution Date:06/24/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $225,087.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH THE FLORIDA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $225,087.00Cease and Desist/InjunctionConsentDisclosure 370 of 450iReporting Source:RegulatorInitiated By:WISCONSIN DEPARTMENT OF FINANCIALINSTITUTIONS DIVI*See FAQ #1*Date Initiated:07/24/1996Docket/Case Number:S-96012(LX)URL for Regulatory Action:Principal Product Type:Allegations:MAKING MISSTATEMENTS AND OMISSIONS OFMATERIAL FACTS, MAKING UNSUITABLE RECOMMENDATIONS, FAILING TOKEEP ADEQUATE BOOKS AND RECORDS, AND FAILING TO REASONABLYSUPERVISE ITS AGENTS AND EMPLOYEES.Current Status:Final589©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:07/24/1996Resolution:Other Sanctions Ordered:Sanction Details:CONSENT ORDER OF CENSURE AND ASSESSMENT ($48,895)Regulator StatementSEE ALLEGATIONS CONTACT: SUE KITTEL MOORE, (608)266-9886Sanctions Ordered:CensureMonetary/Fine $48,895.00ConsentiReporting Source:FirmInitiated By:STATE OF WISCONSIN, DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1996Docket/Case Number:S-96012(LX)Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLE SUPERVISE CERTAINREGISTERED REPRESENTATIVES & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:FinalResolution Date:08/02/1996Resolution:Consent590©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF A CONSENT ORDER OF CENSURE ANDASSESSMENT AND WAS REQUIRED TO PAY $48,895.00 (SEE ITEM 10BELOW).Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENTS WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH WISCONSIN PURSUANT TO THAT AGREEMENT.Sanctions Ordered:CensureMonetary/Fine $48,895.00Disclosure 371 of 450iReporting Source:RegulatorInitiated By:NYSE DIVISION OF ENFORCEMENTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/20/1996Docket/Case Number:HPD#96-77Principal Product Type:Other Product Type(s):Allegations:Not ProvidedCurrent Status:FinalResolution Date:09/20/1996Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $30,000.00Stipulation and Consent591©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:Not ProvidedRegulator Statement**9/20/96** THE DECISION IS NOW FINAL ANDEFFECTIVE IMMEDIATELY. CONTACT: PEGGY L. GERMINO (212) 656-8450iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/20/1996Docket/Case Number:96-77Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED RULE 346 (F) BY HAVING BEEN ASSOCIATEDWITH PERSONS WHO WERE KNOWN, OR IN THE EXERCISE OFREASONABLE CARE SHOULD HAVE BEEN KNOWN, TO BE SUBJECT TOSTATUTORY DISQUALIFICATION, WITHOUT OBTAINING THE PERMISSIONOF THE EXCHANGE; AND VIOLATION OF EXCHANGE RULE 351(A)(9) BYFAILING TO PROMPTLY REPORT TO THE EXCHANGE THAT IT WASASSOCIATED WITH PERSONS WHO WERE STATUTORILY DISQUALIFIEDCurrent Status:FinalResolution Date:09/20/1996Resolution:Other Sanctions Ordered:Sanction Details:THE NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENT FILED ASTIPULATION AND CONSENT, WHEREBY PWI CONSENTED, WITHOUTADMITTING OR DENYING THE FINDINGS THEREIN, TO THE ENTRY ACENSURE AND A FINE IN THE AMOUNT OF $30,000.00. THIS MATTERINVOLVED THE HIRING OF FOUR NON-REGISTERED EMPLOYEESBETWEEN 1992 AND 1995.Sanctions Ordered:CensureMonetary/Fine $30,000.00Stipulation and Consenti592©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 372 of 450Reporting Source:RegulatorInitiated By:CAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/22/1996Docket/Case Number:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Not ProvidedCurrent Status:FinalResolution Date:07/22/1996Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER CONSENTED TO THE ENTRY OF A CONSENTORDER TO CEASE AND DESIST FROM FUTURE VIOLATIONS OF THESECURITIES LAW, PAY $658,118.00 IN CIVIL PENALTIES AND COSTS,MAKE CERTAIN REPORTS AND BE CENSURED.Regulator StatementCENSURED; DESIST AND REFRAIN ORDER ISSUED;PENALTIES ORDERED CONTACT: PHYLLIS SMITH (213) 736-2288Sanctions Ordered:CensureCease and Desist/InjunctionConsentiReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-1992 AND FAILED TO REASONABLY SUPERVISE CERTAINREGISTERED REPRESENTATIVES & OTHER EMPLOYEES IN THE SALE OFTHESE INTERESTS.Current Status:Final593©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF CALIFORNIA, DEPARTMENT OF CORPORATIONSPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1996Docket/Case Number:917-5205Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:08/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDINGSTHEREIN, TO THE ENTRY OF ORDER TO CEASE & DESIST FROM FURTHERVIOLATIONS, A CENSURE AND TO PAY $658,118.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRM'S PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENTS. AS PART OF THAT PROCESS, PWI ALSOCONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEEMENTS WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH CALIFORNIA PURSUANT TO THAT AGREEMENT.Sanctions Ordered:CensureMonetary/Fine $658,118.00Cease and Desist/InjunctionConsentDisclosure 373 of 450iReporting Source:RegulatorAllegations:OFFER AND SALE OF LIMITED PARTNERSHIPSECURITIES BY MEANS OF MISREPRESENTATION AND OMISSIONS. SALEOFLIMITED PARTNERSHIP SECURITIES BY MEANS OF MISREPRESENTATIONAND OMISSION.Current Status:Final594©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:*ILLINOIS SECURITIES DEPARTMENT ILLINOISSECURITIES DEPARTMENTPrincipal Sanction(s)/ReliefSought:RevocationOther Sanction(s)/ReliefSought:Date Initiated:06/26/1996Docket/Case Number:9600025URL for Regulatory Action:Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:06/26/1996Resolution:Other Sanctions Ordered:CONSENT ORDER OF COMPLIANCESanction Details:RESPONDENT PAINE WEBBER INC., OFFERED MISREPRESENTATION OROMISSIONS OF MATERIAL IN THE OFFER AND SALE OF SECURITIESRegulator StatementNOTICE OF HEARING ISSUED JUNE 26, 1996. HEARINGSET SEPTEMBER 18, 1996. NOTICE WAS ISSUED TO DETERMINE WHETHERAN ORDER SHOULD BE ISSUED AGAINST THE RESPONDENT BASED UPONTHESALE OF LIMITED PARTNERSHIPS IN VIOLATION OF THE ILLINOISSECURITIES LAW CONSENT ORDER OF COMPLIANCE ISSUED JUNE 26,1996. THE ORDER ADOPTS THE REMEDIAL SANCTIONS PREVIOUSLYCONTACT: 217-785-4947 U-6 ELECTRONICALLY ENTERED BY IL; TRANS #400016-22296CONTACT: 217-785-4947Sanctions Ordered:Monetary/Fine $124,512.00ConsentiReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN 1986-92 AND FAILEDTO REASONABLE SUPERVISE CERTAIN REGISTERED REPRESENTATIVESAND OTHER EMPLOYEES IN THE SALE OF THESE INTERESTSCurrent Status:Final595©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE STATE OF ILLINOISPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF 124,512.00Date Initiated:06/26/1996Docket/Case Number:9600025Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:06/26/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $124,512.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH ILLINOIS PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $124,512.00Cease and Desist/InjunctionConsentDisclosure 374 of 450iReporting Source:RegulatorAllegations:Ohio has issued a Cease and Desist Order perConsent Agreement against PaineWebber, Inc. of New York, NewYork for unfair business practices, in violation of OhioRevised Code section 1707.19 and Ohio Administrative Code Rule1301:6-3-19(A)(5); 1301:6-3-19(A)(6); 1301:6-3-19(B)(9); and1301:6-3-15(F).Current Status:Final596©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:Ohio Division of SecuritiesPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/06/1996Docket/Case Number:96-078URL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:06/06/1996Resolution:Other Sanctions Ordered:Sanction Details:Respondents were ordered to Cease and Desist anyfurther violations of the Ohio Securities Act.Regulator StatementOn June 6, 1996, the Ohio Division of Securitiesissued a Cease and Desist Order per Consent Agreement againstPaineWebber, Inc. of New York, New York for unfair businesspractices, in violation of the Ohio Securities Act. CONTACT:ENFORCEMENT SECTION, 614-466-6140Sanctions Ordered:Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:THE STATE OF OHIO, DIVISION OF SECURITIESDate Initiated:06/01/1996Docket/Case Number:96-078Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD &RECORDINGKEEPING PROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final597©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $183,367.00Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:06/13/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $183,367.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECS THE SETTLEMENT REACHED WITH OHIOPURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $183,367.00Cease and Desist/InjunctionConsentDisclosure 375 of 450iReporting Source:RegulatorAllegations:FIRM ALLEGEDLY VIOLATED THE ANTIFRAUDPROVISIONS OF THE CONNECTICUT UNIFORM SECURITIES ACT INDISSMINATING MISLEADING MARKETING MATERIALS RELATING TOINVESTMENTS IN PAINEWEBBER/GEODYNE OIL AND GAS PROGRAMS,PAINEWEBBER INSURED MORTGAGE PARTNERS, PAINEWEBBERINDEPENDENTLIVING MORTGAGE PARTNERS AND PEGASUS AIRCRAFT PARTNERS. THEDEPT. ALSO CLAIMED THAT THE FIRM SOLD UNSUITABLE INVESTMENTS;FAILED TO KEEP ADEQUATE BOOKS AND RECORDS IN CONNECTION WITHCERTAIN SECONDARY MARKET TRANSACTIONS; AND FAILED TOREASONABLYCurrent Status:Final598©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CONNECTICUT DEPT. OF BANKINGPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/13/1996Docket/Case Number:96-2851-COURL for Regulatory Action:Principal Product Type:Other Product Type(s):SUPERVISE ITS AGENTS.Resolution Date:06/13/1996Resolution:Other Sanctions Ordered:Sanction Details:CONSENT ORDER ENTERED 6/13/96 FINING THE FIRM$96,202; ORDERING IT TO CEASE AND DESIST FROM REGULATORYVIOLATIONS; AND REQUIRING THAT IT MAINTAIN SUPERVISORY ANDCOMPLIANCE PROCEDURES DESIGNED TO PREVENT FUTUREREGULATORYVIOLATIONS.Regulator StatementCONTACT: ERIC WILDER, 860-240-8232.Sanctions Ordered:Monetary/Fine $96,202.00Cease and Desist/InjunctionConsentiReporting Source:FirmInitiated By:STATE OF CONNECTICUT SECURITIES & BUSINESS INVESTMENTSDIVISIONAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICALBE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTS.Current Status:Final599©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $96,202.00Date Initiated:06/01/1996Docket/Case Number:96-2851-COPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Resolution Date:06/18/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DISIST FROM FURTHER VIOLATIONSAND TO PAY $96,202.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION RESOLVING ISSUESRELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARY DIRECTINVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDED ANAGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIAL COMMITTEEPURSUANT TO WHICH IT WAS CONTEMPLATED THAT SETTLEMENTAGREEMENT WOULD BE REACHED WITH ALL STATES, P.R. AND D.C. THISFILING REFLECTS THE SETTLEMENT AGREEMENT REACHED WITHCONNECTICUT PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $96,202.00Cease and Desist/InjunctionConsentDisclosure 376 of 450iReporting Source:RegulatorAllegations:PaineWebber violated Section 501 of the RhodeIsland Uniform Securities Act of 1990 ("RIUSA") in connectionwith the marketing and sale of four direct investment programs- PaineWebber/Geodyne oil and gas programs, PaineWebber InsuredMortgage Partners, PaineWebber Independent Living MortgagePartners, and Pegasus Aircraft Partners. In this regard,certain material misstatements and omissions of material factwere contained in certain marketing materials that were used byCurrent Status:Final600©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:RHODE ISLAND DEPARTMENT OF BUSINESSREGULATION; DIV*See FAQ #1*Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/07/1996Docket/Case Number:96-031URL for Regulatory Action:Principal Product Type:Other Product Type(s):some sales agents in the sale of these four programs relatingto, among other things, the risks and rewards and rate ofreturn of such investments. PaineWebber violated Section 501 ofRIUSA when it sold direct investments, including but notlimited to those above, to certain investors for whom suchinvestment was not suitable in light of their individualfinancial status and investment goals. PaineWebber violatedSection 209(d) when it failed to keep adequate books andrecords as required by RIUSA in connection with certainpurchases or sales of direct investments on the secondarymarket. PaineWebber failed to reasonably supervise certainsales agents and other employees who prepared, offered and solddirect investments, which provides a basis for the revocation,suspensi, or limitation of its broker-dealer registrationpursuant to Section 212(a)(11) of RIUSA.Resolution Date:06/07/1996Resolution:Other Sanctions Ordered:Sanction Details:Consent Order entered against PaineWebber;PaineWebber shall pay a civil penalty of $34,181 to the RISecurities Division; PaineWebber shall, in connection with thesale of direct investments, maintain supervisory and complianceprocedures reasonably designed to prevent future violations ofRIUSA; the Order represents the complete and final resolutionof, and discharge with respect to, all claims, demands, actionsand causes of action by the Director against PaineWebber andSanctions Ordered:Monetary/Fine $34,181.00Consent601©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidanceits predecessors, subsidiaries and affiliates for violationsarising as a result of or in connection with any actions oromissions by PaineWebber and/or any of its associated oraffiliated persons or entities involving the offer or sale ofthe direct investment securities listed in Exhibit A and is inlieu of further civil or administrative proceedings. Nothing inthis Order shall in any way affect the authority of theDirector to institute any action against any ther party,including any individual employee (past or present) ofPaineWebber, its predecessors, subsidiaries or affiliates. ThisOrder does not include any releases as to any co-sponsors ofPaineWebber in connection with the direct investment securitieswhich are the subject of this Order. This Order does not limitor create any purchaser's private remedies against PaineWebberor others for the direct investment securities, orPaineWebber's defenses thereto. Except as explicitly providedin this Order, nothing herein is intended to or shall beconstrued to have created, compromised, settled or adjudicatedany claims, causes of action, or rights of any personwhomsoever, other than as between the Director and PaineWebberin accordance with this Order. Any violations of the relatedSEC Consent Order shall be deemed violations of this Order.This Order constitutes and includes a waiver based on a findingof good cause by the Director of any and all limitations anddisqualifications that may ensu*See FAQ #1*Regulator StatementCONTACT: MARIA PICCIRILLI, 401-277-3048.iReporting Source:FirmInitiated By:THE STATE OF RHODE ISLAND, DIVISION OF SECURITIESDate Initiated:06/01/1996Docket/Case Number:96-031Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final602©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $34,181.00Other Product Type(s):Resolution Date:06/07/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THEFINDS THEREIN, TO THE ENTRY ORDER TO CEASE & DESIST FROMFURTHER VIOLATIONS AND TO PAY $34,181.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLICPROPRIETARY DIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTI STATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH RHODE ISLAND PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $34,181.00Cease and Desist/InjunctionConsentDisclosure 377 of 450iReporting Source:RegulatorInitiated By:PENNSYLVANIA SECURITIES COMMISSIONDate Initiated:05/09/1996Docket/Case Number:9601-03LCURL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:VIOLATIONS OF SECTIONS 304(a), 305(a)(vii)AND 401 OF THE PENNSYLVANIA SECURITIES ACT.Current Status:Final603©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:05/09/1996Resolution:Other Sanctions Ordered:Sanction Details:FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDERISSUED TO PAINEWEBBER, INCORPORATED IN WHICH THEY HAVE BEENORDERED TO CEASE AND DESIST FROM FUTURE VIOLATIONS OF THEPENNSYLVANIA SECURITIES ACT, PAY AN ADMINISTRATIVE ASSESSMENTAND INVESTIGATION COSTS, THEY AGREED TO APPOINT AN INDEPENDENTCONSULTANT TO REVIEW ITS SALES PRACTICES, ESTABLISHPROCEDURESAND SYSTEMS TO ENHANCE COMPLIANCE WITH LAWS, ESTABLISH A $40MILLION CLAIMS ADMINISTRATION PROCESS AND RESOLVE ADDITIONALINVESTOR CLAIMS IN THE AMOUNT TO $292.5 MILLION.Regulator StatementPAINEWEBBER INCORPORATED'S VIOLATIONS OF THEPENNSYLVANIA SECURITIES ACT CONCERNED OMISSIONS ANDMISREPRESENTATIONS MADE TO CUSTOMERS IN SALES OF CERTAINLIMITED PARTNERSHIP INTERESTS DURING 1986 - 1992. CONTACT:TERRY A. LUPIA (717) 783-5177Sanctions Ordered:Cease and Desist/InjunctionOrderiReporting Source:FirmInitiated By:THE PENNSYLVANIA SECURITIES COMMISSIONDate Initiated:05/09/1996Docket/Case Number:9601-03LCPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLY SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSCurrent Status:Final604©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $94,526.00Other Product Type(s):Resolution Date:05/13/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $94,526.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWIALSO CONCLUDED AN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATEDTHATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH PENNSYLVANIA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $94,526.00Cease and Desist/InjunctionConsentDisclosure 378 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Allegations:VIOLATIONS OF RULE 11AC1-1(C) OF THE SECURITIES EXCHANGE ACT OF1934 (SEC RULE), PART V, SECTION 2(B) OF SCHEDULE D TO NASD'S BY-LAWS AND ARTICLE III, SECTIONS 1 AND 6 OF NASD'S RULES OF FAIRPRACTICE (RFP) IN THAT RESPONDENT MEMBER FAILED TO EXECUTE ATRANSACTION, A NORMAL UNIT OF TRADING AT THE QUOTATIONS AND UPTO THE QUOTATION SIZE IT CAUSED TO BE DISPLAYED ON THE NASDAQSYSTEM (SELECTNET BACKING AWAY) AS NOTED IN CAUSES ONE, TWOAND THREE OF THE COMPLAINT. AN AMENDED COMPLAINT WAS FILED ONAPRIL 30, 1996 TO INCLUDE ANOTHER VIOLATION OF THE ABOVE-MENTIONED RULES BY RESPONDENT MEMBER, AS NOTED IN CAUSEFOUR OF THE COMPLAINT.Current Status:Final605©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/15/1995Docket/Case Number:CMS950016 AND CMS950051Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESResolution Date:05/01/1997Resolution:Other Sanctions Ordered:Sanction Details:THE MARKET REGULATION COMMITTEE ISSUED A DECISION AND ORDEROF ACCEPTANCE OF MEMBER FIRM'S OFFER OF SETTLMENT INCMS950016 AND CMS950051 ON MAY 1, 1997. IT WAS THE DECISION OFTHE COMMITTEE THAT THE OFFER OF SETTLEMENT BE ACCEPTED ANDTHAT FINDINGS BE MADE AS FOLLOWS THAT RESPONDENT MEMBERINCORPORATED VIOLLATED RULE 11AC1-1(C) OF THE SECURITIESEXCHANGE ACT OF 1934, MARKETPLACE RULE 4613(B) AND CONDUCTRULES 2110 AND 3320. BASED ON THE ACCEPTANCE OF THE OFFER OFSETTLEMENT, RESPONDENT MEMBER IS FINED $1,000.Sanctions Ordered:Monetary/Fine $1,000.00Decision & Order of Offer of SettlementiReporting Source:FirmInitiated By:NASDDate Initiated:11/15/1995Docket/Case Number:CMS950016 AND CMS950051Principal Product Type:No ProductAllegations:NASD ALLEGES THAT PAINEWEBBER FAILED TO EXECUTE FOURTRANSACTIONS IN VIOLATION OF RULE 11AC1-1(C) OF THE SECURITIESEXCHANGE ACT OF 1934, MARKETPLACE RULE 4613 (B)(FORMERLY PART V, SECTION 2 (B) OF SCHEDULE D TO THE NASD'SBY-LAWS) AND CONDUCTED RULES 2110 AND 3320 (FORMERLY ARTICLEIII, SECTION 1 AND 6 OF THE NASD'S RULES OF FAIR PRACTICE)Current Status:Final606©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:05/01/1997Resolution:Other Sanctions Ordered:Sanction Details:PWI WITHOUT ADMITTING OR DENYING OR ALLEGATIONS OF THECOMPLAINT, CONSENTED TO A FINE OF $1000. THE NASD NOTED THATTHE SITUATION DID NOT INVOLVE MANIPULATIVE OR DECEPTIVE INTENTAND THAT PWI HAD SIGNIFICANTLY IMPROVED ITS PERFORMANCE IN THISAREA AND HAD IMPLEMENTED CORRECTIVE MEASURES TO PREVENT THERECURRENCE OF SUCH EVENTS.Sanctions Ordered:Monetary/Fine $1,000.00SettledDisclosure 379 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/24/1995Docket/Case Number:CMS950081Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/31/1995Resolution:Sanctions Ordered:Monetary/Fine $2,500.00Consent607©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT NO. CMS950081 AWCFILEDAGAINST PAINEWEBBER INCORPORATED (PWJC) ON JULY 24, 1995ALLEGING VIOLATIONS OF SECTION c)2(E) OF THE RULES OF PRACTICEAND PROCEDURE FOR SOES AND ARTICLE III, SECTION 1 OF THEASSOCIATION'S RULES OF FAIR PRACTICE IN THAT ON 16 OCCASIONSPWJC ENTERED ORDERS ON AN AGENCY BASIS INTO SOES FORSECURITIESFOR WHICH PWJC WAS A REGISTERED MARKET MAKER. THE AWC WASACCEPTED BY THE NATIONAL BUSINESS CONDUCT COMMITTEE ONOCTOBER31, 1995. PWJC WAS FINED $2,500. THE AWC BECAME FINAL ONOCTOBER 31, 1995.******************************************************************$2,500.00 PAID ON 11/21/95, INVOICE #95-MS-727******iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/24/1995Docket/Case Number:CMS950081 AWCPrincipal Product Type:No ProductOther Product Type(s):Allegations:THE NASD ALLEGED THAT PAINEWEBBER ENTERED ORDERS ON ANAGENCY BASIS INTO SOES FOR SECURITIES FOR WHICH PAINEWEBBERWAS A REGISTERED MARKET IN VIOLATION OF SECTION C(2)E OF THERULES OF PRACTICE AND PROCEDURES FOR SOES AND ARTICLE III,SECTION 1 OF THE NASD'S RULES OF FAIR PRACTICE.Current Status:FinalResolution Date:10/31/1995Resolution:Consent608©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:PAINEWEBBER CONSENTED, WITHOUT ADMITTING OR DENYING THEALLEGATIONS TO PAY A FINE $2,500.Sanctions Ordered:Monetary/Fine $2,500.00Disclosure 380 of 450iReporting Source:RegulatorInitiated By:VERMONT SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/27/1995Docket/Case Number:94-078-SURL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:MAKING UNSUITABLE RECOMMENDATIONS INCONNECTION WITH LIMITED PARTNERSHIP TRASNACTIONS IN VIOLATIONOF 9 V.S.A. SECTION 4221a(a)8 OF THE VERMONT SECURITIES ACT ANDREGULATION S-91-1, RULE 3.05 PROMULGATED THEREUNDER ANDFAILINGTO REASONABLY SUPERVISE IN VIOLATION OF 9 V.S.A. SECTION4221a(a)(11) OF THE VERMONT SECURITIES ACT.Current Status:FinalResolution Date:09/27/1995Resolution:Other Sanctions Ordered:Sanction Details:RESPONDENT ENTERED INTO A CONSENT ORDER WHEREINIT NEITHER ADMITTED NOR DENIED THE DIVISION'S ALLEGATIONS. THEFOLLOWING ACKNOWLEDGMENTS, AGREEMENTS AND UNDERTAKINGSWERE SETFORTH IN THE CONSENT ORDER. A) RESPONDENT HAD ENTERED INTOSETTLEMENTS WITH CLIENTS THAT HAD ASSERTED LEGAL CLAIMS INSanctions Ordered:Monetary/Fine $100,000.00Consent609©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCONNECTION WITH LIMITED PARTNERSHIP INVESTMENTS PURCHASEDTHROUGH FORMER SALES REPRESENTATIVES DELP (CRD# 842724) ANDGIARD (CRD# 1122419). IN CONNECTION WITH THOSE SETTLEMENTS,RESPONDENT PAID OR AGREED TO PAY TO THESE CLIENTS ANAGGREGATEAMOUNT EXCEEDING $807,000.00. RESPONDENT AGREED TO MAKEVOLUNTARY OFFERS OF PAYMENTS IN ADDTION TO THEAFOREMENTIONEDPAYMENTS, TO ADDITIONAL CUSTOMERS WHO MAY HAVE BEEN SOLDUNSUITABLE LIMITED PARTNERSHIP INVESTMENTS. THESE VOLUNTARYOFFERS OF PAYMENTS EXCEED $126,000. B) RESPONDENT AGREED TOADHERE TO A GOOD FAITH STANDARD IN ADRESSING AND RESOLVINGBOTHCURRENT AND FUTURE COMPLAINTS REGARDING THE SALES OF LIMITEDPARTNERSHIPS TO VERMONT RESIDENTS. C) RESPONDENT AGREED TOPAYA $100,000.00 ADMINISTRATIVE FINE. D) RESPONDENT AGREED TO PAYAN ADDITIONAL $10,000.00 IN COSTS, $15,000.00 HAVING BEEN PAIDBY ORDER ISSUED BY THE DIVISION ON 11/1/94. D) RESPONDENTAGREED TO CERTAIN ADDITIONAL UNDERTAKINGS MORE FULLYDESCRIBEDIN THE CONSENT ORDER.Regulator StatementTHE DIVISION INVESTIGATED THE ACTIVITIES OFRESPONDENT IN CONNECTION WITH THE OFFER AND SALE OF LIMITEDPARTNERSHIP INVESTMENT INTERESTS BY ITS VERMONT BASED SALESREPRESENTATIVES FROM 1984 THROUGH 1990. THE DIVISION ALSOINVESTIGATED THE ACTIVITIES OF RESPONDENT IN CONNECTION WITHTHE SUPERVISION OF ITS FORMER SALES REPRESENTATIVES, HARRY L.DELP, JR. AND HIS SPOUSE, MARILYNN L. GIARD IN CONNECTION WITHTHEIR OFFER AND SALE OF LIMITED PARTNERTSHIPS OFF BY ANDTHROUGH RESPONDENT AND THEIR OFFER AND SALE OF OUTSIDEINVESTMENT INTERESTS IN THE CHAMPLAIN VILLAS PARTNERSHIP. THEDIVISION ALLEGED THAT RESPONDENT MADE UNSUITABLERECOMMENDATIONS TO ITS S CLIENTS BY AND THROUGH SALES MADEBYDELP AND GIARD AND THAT IT FAILED TO REASONABLY SUPERVISE DLEPAND GIARD IN CONNECTION WITH THESE UNSUITABLE SALES AND THECHAMPLAIN VILLAS SALES. THE DIVISION ALLEGED THAT CLIENTS WEREPER SE UNSUITABLE FOR LIMITED PARTNERSHIP INVESTMENTS AND THATCERTAIN CLIENTS MAY HAVE BEEN UNSUITABLE AND THAT CERTAINCLIENTS WERE EXCESSIVELY INVESTED IN LIMITED PARTNERSHIPINVESTMENTS. THE DIVISION FURTHER ALLEGED THAT RESPONDENT, INLIGHT OF THE INFORMATION AVAILABLE TO RESPONDENT AND THE DATESWHEN THAT INFORMATION BECAME AVAILABLE, THAT RESPONDENTFAILED610©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTO TAKE REASONABLE STEPS TO INVESTIGATE THE EXTENT OF DELP'SAND GIARD'S INVOLVEMENT IN THE CHAMPLAIN VILLAS PARTNERSHIP ANDTHE EXTENT OF THEIR CUSTOMER'S INVOLVEMENT AS INVESTORS. THEDIVISION ALLEGED THAT RESPONDENT INAPPROPRIATELY GRANTEDDELPAPPROVAL TO PARTICPATE IN THE CHAMPLAIN VILLAS PARTNERSHIP. THECHAMPLAIN VILLAS PARTNERTSHIP WAS NOT SPONSORED ORAUTHORIZEDBY RESPONDENT. CONTACT: ENFORCEMENT ATTORNEY 802-828-3420.iReporting Source:FirmInitiated By:STATE OF VERMONT, DEPARTMENT OF BANKING,INSURANCE &SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/27/1995Docket/Case Number:94-078-SPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ON SEPTEMBER 27, 1995, THE VERMOTN DEPART. OF BANKING,INSURANCE & SECURITIES ENTERED AN ORDER ALLEGING THAT,BETWEEN 1984 & 1988, PAINE WEBBER INCORPORATED DID NOTREASONABLE SUPERVISE TWO FORMER INVESTMENT EXECUTIVES WITHRESPECT TO CERTAIN OUTSIDE ACTITITIES AND LIMITED PARTNERSHIPINVESTMENT RECOMMENDATIONS.Current Status:FinalResolution Date:09/27/1995Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, PAINEWEBBERAGREED AMONG OTHER THINGS, TO PAY AN ADMINISTRATIVE FINE OF$100,000.Sanctions Ordered:Monetary/Fine $100,000.00Consent611©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 381 of 450iReporting Source:RegulatorInitiated By:KANSAS SECURITIES COMMISSIONERPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/19/1996Docket/Case Number:96E079/96-3188URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:ENGAGED IN MISREPRESENTATIONS AND OMISSIONSOF MATERIAL FACTS, MADE UNSUITABLE RECOMMENDATIONS, FAILED TOKEEP ADEQUATE BOOKS AND RECORDS, AND FAILED TO REASONABLYSUPERVISE ITS AGENTS IN CONNECTION WITH THE SALE OF LIMITEDPARTNERSHIP PROGRAMS.Current Status:FinalResolution Date:04/19/1996Resolution:Other Sanctions Ordered:Sanction Details:ENTERED INTO A CONSENT ORDER WHEREBY IT WILLCEASE VIOLATING PROVISIONS OF THE KANSAS SECURITIES ACT AND PAYA $54,110 FINE.Regulator StatementCONTACT: ALAN J. FORD - 913/296-6874Sanctions Ordered:Monetary/Fine $54,110.00Cease and Desist/InjunctionConsentiReporting Source:FirmAllegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD & RECORDKEEPINGPROVISIONS OF APPLICABLE STATE LAWS IN THE OFFER AND SALE OFCurrent Status:Final612©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE KANSAS SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $54,110.00Date Initiated:04/19/1996Docket/Case Number:UNKNOWNPrincipal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):CERTAIN DIRECT INVESTMENT PROGRAMS BETWEEN1986-92 AND FAILED TO REASONABLE SUPERVISE CERTAIN REGISTEREDREPRESENTATIVES AND OTHER EMPLOYEES IN THE SALE OF THESEINTERESTSResolution Date:04/19/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $54,110.00Firm StatementON 1/18/96, PWI ANNOUCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATE SPECIALCOMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH KANSAS PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $54,110.00Cease and Desist/InjunctionConsentDisclosure 382 of 450iReporting Source:RegulatorAllegations:BASED UPON CHARGES BY THE U.S. SECURITIES &EXCHANGE COMMISSION (SEC) THAT PAINEWEBBER, INC., HAD BROKENCurrent Status:Final613©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ALPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/19/1996Docket/Case Number:CO-96-0024URL for Regulatory Action:Principal Product Type:Other Product Type(s):FEDERAL FRAUD AND RECORD KEEPING LAWS AND FAILING TOPROPERLYSUPERVISE ITS BROKERS, CONCERNING MISLEADING THOUSANDS OFINVESTORS IN THE SALE OF RISKY LIMITED PARTNERSHIPS OVER ASIX-YEAR PERIOD, PAINEWEBBER, INC. ENTERED INTO A CONSENTORDERWITH THAT AGENCY WITHOUT ADMITTING OR DENYING THE MATTERS SETFORTH THEREIN. THE ORDER REQUIRED PAINEWEBBER, INC. TO PAY ATOTAL OF $292,500,000 TO INVESTORS. THE VIOLATIONS ENUMERATEDIN THE ORDER OF THE SEC, CONSTITUTED VIOLATIONS OF SECTIONNS8-6-3(i), 8-6-3(j)(10) AND 8-6-17(a) OF THE ALABAMA SECURITIESACT. BASED UPON THE ACTION OF THE SEC IN ENSURING REPAYMENT TOALABAMA INVESTORS, THE ALABAMA VIOLATIONS WERE RESOLVED BYPAINEWEBBER, INC. ENTERING INTO A CONSENT ORDER WITH THEALABAMA SECURITIES COMMISSION, NEITHER ADMITTING NOR DENYINGTHE ALLEGATIONS. THE CONSENT ORDER REQUIRED THAT PAINEWEBBERINC., CEASE AND DESIST FROM FUTURE VIOLATIONS OF THE ACT; THEPAYMENT OF ADMINISTRATIVE ASSESSMENT OF $47,081.00 ANDINVESTIGATIVE COSTS OF $2,000. HOWEVER, THE ORDER DID NOTSETTLE OR ADJUDICATE ANY CLAIMS, CAUSES OF ACTION, OR RIGHTS OFANY PERSON WHOMSOEVER.Resolution Date:04/19/1996Resolution:Other Sanctions Ordered:Sanction Details:ISSUED CONSENT ORDER CO-96-0024, ISSUED 04/19/96.Regulator StatementSAME AS ALLEGATIONS CONTACT: JAMES G. PUGHSPECIAL AGENT (334)242-2984.Sanctions Ordered:Cease and Desist/InjunctionConsent614©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:FINE OF $49,081.00Date Initiated:04/19/1996Docket/Case Number:CO-96-0024Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Other Product Type(s):Allegations:ALLEGED THAT PWI VIOLATED CERTAIN ANTI-FRAUD &RECORDKEEPING PROVISIONS OF APPLICABLE STATE LAWS IN THEOFFER AND SALE OF CERTAIN DIRECT INVESTMENT PROGRAMSBETWEEN 1986-92 AND FAILED TO REASOONABLE SUPERVISE CERTAINREGISTERED REPRESENTATIVES AND OTHER EMPLOYEES IN THE SALEOF THESE INTERESTSCurrent Status:FinalResolution Date:04/29/1996Resolution:Other Sanctions Ordered:Sanction Details:PWI CONSENTED WITHOUT ADMITTING OR DENYING THE FINDS THEREIN,TO THE ENTRY ORDER TO CEASE & DESIST FROM FURTHER VIOLATIONSAND TO PAY $49,081.00Firm StatementON 1/18/96, PWI ANNOUNCED THAT IT HAD REACHED SETTLEMENTAGREEMENTS WITH THE SEC AND CLASS ACTION PLAINTIFFS RESOLVINGISSUES RELATED TO THE FIRMS PAST SALE OF PUBLIC- PROPRIETARYDIRECT INVESTMENT. AS PART OF THAT PROCESS, PWI ALSO CONCLUDEDAN AGREEMENT IN PRINCIPLE WITH THE MULTISTATESPECIAL COMMITTEE PURSUANT TO WHICH IT WAS CONTEMPLATED THATSETTLEMENT AGREEMENT WOULD BE REACHED WITH ALL STATES, P.R.AND D.C. THIS FILING REFLECTS THE SETTLEMENT AGREEMENTREACHED WITH ALABAMA PURSUANT TO THAT AGREEMENTSanctions Ordered:Monetary/Fine $49,081.00Cease and Desist/InjunctionConsent615©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 383 of 450iReporting Source:RegulatorInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/08/1996Docket/Case Number:95-0029Principal Product Type:Other Product Type(s):Allegations:see summaryCurrent Status:FinalResolution Date:04/08/1996Resolution:Other Sanctions Ordered:Sanction Details:$10,000 fine and a censureRegulator StatementA PaineWebber customer entered a spread orderwith PaineWebber. Brownstein erroneously entered the wrongspread order with PaineWebber's floor broker. Upon discoveryof this error, Brownstein caused the entire error to be placedinto a PaineWebber error account. Thereafter, Brownsteindirected a PaineWebber clerk to fill its customer's order outof the PaineWebber error account. The PaineWebber clerk theneffected three cross transactions at the PaineWebber boothbetween PaineWebber's error account and the customer.PaineWebber and Brownstein crossed or caused to be crossed theorders described above in a manner that was non-competitive,not in open outcry and inconsistent with just and equitableprinciples of trade. (CBOE Rules 4.1, 6.43 and 6.74a)Sanctions Ordered:CensureMonetary/Fine $10,000.00Orderi616©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:THE CHICAGO BOARD OPTIONS EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/13/1995Docket/Case Number:95-0029Principal Product Type:OptionsOther Product Type(s):Allegations:ALLEGATIONS OF VIOLATIONS OF CBOE RULES 4.1;6.43;6.73(A);6.74(A)Current Status:FinalResolution Date:04/08/1996Resolution:Other Sanctions Ordered:Sanction Details:ALLEGED VIOLATIONS OF RULES 4.1 AND 6.73 (A) WERE DISMISSED. AFINDING OF A VIOLATION OF RULES 4.1,6.3 AND6.74(A) WAS ENTERED. PAINEWEBBER WAS CENSURED AND A $10,000JOINT AND SEVERAL FINE WAS IMPOSED.Firm StatementPURSUANT TO AN OFFER OF SETTLEMENT IN WHICH PAINEWEBBERNEITHER ADMITTED NOR DENIED THE ALLEGATIONS, PAINEWEBBERAGREED TO THE ABOVE DISPOSITION OF THE PROCEEDING.Sanctions Ordered:CensureMonetary/Fine $10,000.00DecisionDisclosure 384 of 450iReporting Source:RegulatorInitiated By:TEXAS STATE SECURITIES BOARDDate Initiated:04/22/1996Docket/Case Number:CEN/CDO-1100Allegations:Not ProvidedCurrent Status:Final617©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:04/22/1996Resolution:Other Sanctions Ordered:Sanction Details:RESPONDENT VIOLATED CERTAIN ANTI-FRAUD PROVISIONSOF THE SECURITIES ACT BY MAKING CERTAIN MATERIAL MISTATEMENTSAND OMISSIONS OF MATERIAL FACTS IN THE SALE OF FOUR DIRECTINVESTMENT PROGRAMS. THESE PROGRAMS WERE ALSO CONSIDEREDUNSUITABLE INVESTMENTS FOR SOME INVESTORS. RESPONDENT ALSOFAILED TO REASONABLY SUPERVISE CERTAIN SALES AGENTS ANDEMPLOYEES AND FAILED TO KEEP ADEQUATE BOOKS AND RECORDSWITHRESPECT TO SECONDARY MARKET ACTIVITIES. RESPONDENT WASORDEREDTO CEASE AND DESIST FROM FURTHER VIOLATIONS OF THE SECURITIESACT AND TO PAY AN ADMINISTRATIVE FINE.Regulator StatementCONTACT: JOYCE MILLER (512) 305-8390Sanctions Ordered:CensureMonetary/FineCease and Desist/InjunctionOrderiReporting Source:FirmInitiated By:TEXAS SECURITIES BOARDDate Initiated:04/22/1996Docket/Case Number:CEN/CDO-1100Principal Product Type:Direct Investment(s) - DPP & LP Interest(s)Allegations:ALLEGED VIOLATIONS OF CERTAIN ANTI-FRAUD PROVISIONS OF THESECURITIES ACT.Current Status:Final618©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:04/22/1996Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM, THE MONETARY FINE INFORMATION ISUNAVAILABLE.Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $0.00Cease and Desist/InjunctionOrderDisclosure 385 of 450iReporting Source:RegulatorInitiated By:FLORIDA DIVISION OF SECURITIES AND INVESTORPROTECTIONPrincipal Sanction(s)/ReliefSought:Date Initiated:02/20/1996Docket/Case Number:2284-S-1/96URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:THE FLORIDA DEPARTMENT OF BANKING AND FINANCEALLEGES THAT PAINEWEBBER INCORPORATED VIOLATED THEREGISTRATIONPROVISIONS OF CHAPTER 517, FLORIDA STATUTES AND THE RULES OFTHE DEPARTMNT, BY OPERATING BRANCH OFFICES IN THE STATE OFFLORIDA WHEN THE BRANCH OFFICES WERE NOT LICENSED WITH THEDEPARTMENT.Current Status:Final619©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:02/20/1996Resolution:Other Sanctions Ordered:Sanction Details:ON 2/20/96, THE FLORIDA DEPARTMENT OF BANKING ANDFINANCE ISSUED A FINAL ORDER ENTERING INTO A STIPULATION ANDCONSENT AGREEMENT REGARDING THE RESPONDENTS PAINEWEBBERINCORPORATED. THE FINAL ORDER INCORPORATES THE STIPULATIONANDCONSENT AGREEMENT, DATED 2/2/96, IN WHICH THE RESPONDENTSNEITHER ADMIT NOR DENY THAT THEY HAVE VIOLATED CHAPTER 517,FLORIDA STATUTES. IN ACCORDANCE WITH THE AGREEMENT THEDEPARTMENT AGREED TO APPROVE THE APPLICATIONS FORREGISTRATIONFOR BRANCH OFFICE IN FLORIDA, EFFECTIVE 1/23/96 AND PAINEWEBBERINC. AGREED TO PAY A $10,000 ADMINISTRATIVE FINE.Regulator StatementNot ProvidedSanctions Ordered:Monetary/Fine $10,000.00Stipulation and ConsentiReporting Source:FirmInitiated By:STATE OF FLORIDA DIVISION OF SECURITIES & INVESTOR PROTECTIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1996Docket/Case Number:2284-S-1/96Principal Product Type:No ProductOther Product Type(s):Allegations:THE DEPARTMENT ALLEGED THAT PAINEWEBBER OPERATED TWOBRANCH OFFICES, LOCATED IN MIAMI & PENSACOLA, FLORIDA, THATWERE NOT LICENSED WITH THE DEPARTMENT, THEREBY VIOLATING THEREGISTRATION PROVISION OF CHAPTER 517, FLORIDA STATUTES.Current Status:Final620©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:02/20/1996Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER CONSENTED, WITHOUT ADMITTING OR DENYING ORLIABILITY, TO PAY AN ADMINISTRATIVE FINE OF $10,000. IN ACCORDANCEWITH THE STIPULATIONS & CONSENT AGREEMENT,THEDEPARTMENT AGREED TO APPROVE PAINEWEBBER'S APPLICATIONS TOREGISTER ITS BRANCH IN MIAMI & PENSACOLA.Sanctions Ordered:Monetary/Fine $10,000.00ConsentDisclosure 386 of 450iReporting Source:RegulatorInitiated By:Maryland Division of SecuritiesPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/08/1996Docket/Case Number:S-95-063/S-92-102URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Unregistered investment advisory activitiesCurrent Status:FinalResolution Date:03/29/1999Resolution:Other Sanctions Ordered:Sanction Details:On 2/8/96, the Maryland Securities Commissionerissued a Consent Order against PaineWebber, Inc., in which anagreement to a $25,000 fine and compliance enhancements forfailure to comply with the Division's I.A. representativeregistration requirements and with the terms of previous OrdersSanctions Ordered:Monetary/Fine $25,000.00Consent621©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidanceissued against Respondent by the Commissioner.Regulator StatementContact: Julie L. Tewey, AAG, (410) 576-7037iReporting Source:FirmInitiated By:MARYLAND SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/08/1996Docket/Case Number:S-95-063Principal Product Type:No ProductOther Product Type(s):Allegations:MARYLAND SECURITIES DIVISION ALLEGED THAT PAINEWEBBER ("PW")VIOLATED SECTION 11-402 OF MARYLAND SECURITIES ACT AND THETERMS OF 1992 & 1993 CONSENT ORDERS BY EMPLOYING ANUNREGISTERED INVESTMENT ADVISOR WHO ENGAGED IN ACTIVITIESREQUIRING SUCH REGISTRATION DURING THE PERIOD OF 10/90 TO 9/94.Current Status:FinalResolution Date:03/29/1999Resolution:Other Sanctions Ordered:Sanction Details:ON 2/8/96. PW AGREED TO CONSENT ORDER REQUIRING PW TO REGISTERWITH THE STATE AS INVESTMENT ADVISORS ALL BRANCH MANAGERS ANDBROKER-DEALER AGENTS LOCATED IN MARYLAND WITHIN 60 DAYS OFENTRY OF ORDER AND TO MAINTAIN COMPLIANCE WITH TERMS OF 1992 &1993 CONSENT ORDERS. PW WAS FINED $25,000. ON MARCH 29, 1999, THESTATE AMENDED THE CONSENT ORDER ELIMINATING THE FIRM'SREQUIREMENT TO CONTINUE COMPLIANCE WITH CERTAIN TERMS OFTHE 1996 ORDER.Sanctions Ordered:Monetary/Fine $25,000.00ConsentDisclosure 387 of 450iReporting Source:Regulator622©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/29/1987Docket/Case Number:MS-535-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:07/29/1987Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT #MS-535-AWC, FILED4/23/87:LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) ALLEGESVIOLATIONS OF PART I, SECTION C.3.(c) OF SCHEDULE D IN THATRESPONDENT (PAINEWEBBER, INC.) FAILED TO REPORT ITS NASDAQVOLUME. THE AWC WAS ACCEPTED BY THE MARKET SURVEILLANCECOMMITTEE ON 5/19/87 AND BY THE NATIONAL BUSINESS CONDUCTCOMMITTEE ON 7/29/87. $500 FINE*********** NFC #276 - $500 FINE PAID 8/25/87 **********Sanctions Ordered:Monetary/Fine $500.00Acceptance, Waiver & Consent(AWC)iReporting Source:FirmInitiated By:NASD MARKET SURVEILLANCE COMMITTEEAllegations:ALLEGED NASDAQ TRADE REPORTING VIOLATIONS ON EIGHT OCCASIONSIN JANUARY AND FEBRUARY 1987Current Status:Final623©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1987Docket/Case Number:MS-535-AWCPrincipal Product Type:Equity - OTCOther Product Type(s):Resolution Date:04/01/1987Resolution:Other Sanctions Ordered:Sanction Details:IN APRIL, 1987, PAINEWEBBER ACCEPTED A FINE OF $500.00WITHOUT CONTEST FROM THE NATIONAL ASSOCIATION OFSECURITIES DEALERS' MARKET SURVEILLANCE COMMITTEE TORESOLVE CHARGES OF NASDAQ TRADE REPORTING VIOLATIONS ONEIGHT OCCASIONS IN JANUARY AND FEBRUARY 1987.Sanctions Ordered:Monetary/Fine $500.00OtherDisclosure 388 of 450iReporting Source:RegulatorAllegations:ON JANUARY 30, 1986, THE EASTERN REGIONAL BUSINESS CONDUCTCOMMITTEE ISSUED A COMPLAINT CHARGING PAINE WEBBER JACKSONCURTIS INC. ("PAINE WEBBER") WITH VIOLATIONS OF NFA REQUIREMENTSARISING OUT OF PAINE WEBBER'S HANDLING OF COMMODITY FUTURESACCOUNTS FOR INDIVIDUAL'S AND COMPANY'S THROUGH ITS SAN DIEGOBRANCH OFFICE DURING 1983 AND 1984. THE COMPLAINT ALLEGEDVIOLATIONS OF NFA BYLAW 1101 FOR TRANSACTING CUSTOMERBUSINESS WITH PERSONS WHO WERE REQUIRED TO BE REGISTEREDWITH THE CFTC AS COMMODITY POOL OPERATORS ("CPOS") AND WERENOT MEMBERS OF NFA. IT ALSO ALLEGED THAT PAINE WEBBER FAILED TOOBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST ANDEQUIT- ABLE PRINCIPLES OF TRADE, IN VIOLATION OF NFA COMPLIANCERULE 2-4, BY TRANSACT- ING CUSTOMER BUSINESS WITH PERSONS WHOWERE ACTING AS UNREGISTERED CPOS. IN ADDITION, THE COMPLAINTALLEGED THAT PAINE WEBBER VIOLATED NFA COMPLIANCE RULE 2-9 BYFAILING TO ADEQUATELY SUPERVISE ITS EMPLOYEES WHO HANDLED THECurrent Status:Final624©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL FUTURES ASSOCIATIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/30/1986Docket/Case Number:NFA CASE #86BCC00002Principal Product Type:OtherOther Product Type(s):ACCOUNTS, IN QUESTION.Resolution Date:03/11/1987Resolution:Other Sanctions Ordered:Sanction Details:ON MARCH 11, 1987, THE EASTERN REGIONAL BUSINESS CONDUCTCOMMITTEE ACCEPTED AN OFFER OF SETTLEMENT SUBMITTED BY PAINEWEBBER AND ISSUED A DECISION DIRECTING PAINE WEBBER TO REFRAINFROM VIOLATIONS OF NFA REQUIREMENTS AND TO PAY A FINE OF $15,000.IN SUBMITTING ITS OFFER PAINE WEBBER NEITHER ADMITTED NORDENIED THE ALLEGATIONS OF THE COMPLAINT.Sanctions Ordered:Monetary/Fine $15,000.00DecisioniReporting Source:FirmInitiated By:NATIONAL FUTURES ASSOCIATIONPrincipal Sanction(s)/ReliefSought:OtherDate Initiated:01/30/1986Docket/Case Number:86BCC00002Principal Product Type:OtherOther Product Type(s):Allegations:ALLGED VIOLATION OF NFA BYLAW 1101 AND COMPLIANCE RULE 2-4.Current Status:Final625©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:03/11/1987Resolution:Other Sanctions Ordered:Sanction Details:THE FIRM NEITHER ADMITTED NOR DENIED THE ALLEGATIONS ANDAGREED TO REFRAIN FROM VIOLATIONS OF NFA REQUIREMENTS.Sanctions Ordered:Monetary/Fine $15,000.00DecisionDisclosure 389 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/23/1985Docket/Case Number:MS-164Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:02/20/1986Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement2/4/86: MARKET SURVEILLANCE COMMITTEE COMPLAINT #MS-164 FILED7/23/85 ALLEGED VIOLATIONS OF ARTICLE III, SECTION 2 AGAINSTRESPONDENT MARY FARRELL FOR CHANGING A PREVIOUSLY PUBLISHEDPAINEWEBBER RECOMMENDATION REGARDING ZONDERVAN CORP.(ZOND) ONSanctions Ordered:Monetary/Fine $25,000.00Decision626©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHE BASIS OF MATERIAL NON-PUBLIC INFORMATION. SUCHRECOMMENDATION WAS DISSEMINATED TO PAINEWEBBER'S OFFICESANDTRADING DEPARTMENT.3/17/86: AT ITS MEETING ON FEBRUARY 5, 1986, THE MARKETSURVEILLANCE COMMITTEE, AFTER CONSIDERABLE DELIBERATION,AFFIRMED THE HEARING PENAL'S FINDINGS OF THE VIOLATIONS ALLEGEDAND ASSESSED THE FOLLOWING PENALTIES: RESPONDENT MEMBERPAINEWEBBER, INC.: CENSURED AND FINED $50,000. FURTHER, PAINEWEBBER,INC. MUST DEVISE COMPREHENSIVE WRITTEN COMPLIANCEPROCEDURES,COUPLED WITH A PROGRAM OF CONTINUING EDUCATION, ENSURINGTHATEMPLOYEES RECOGNIZE AND PROPERLY HANDLE MATERIAL, NON-PUBLICINFORMATION WITHIN THIRTY CALENDAR DAYS OF THE DATE OF THEDECISION.THE COMMITTEE DECISION WAS DATED FEBRUARY 7, 1986. EACHRESPONDENT FILED AN APPEAL DATED FEBRUARY 20, 1986.FEBRUARY 20, 1986-APPEALED TO THE BOARD OF GOVERNORS. THEBOARDOF GOVERNORS DECISION RENDERED DECEMBER 1, 1986 WHEREIN ALLOFTHE ALLEGATIONS ARE DISMISSED EXCEPT THOSE INVOLVING PW'SVIOLATIONS OF PART IX, SECTION 2 OF SCHEDULE D FOR FAILING TOREPORT CERTAIN TRANSACTIONS IN ZOND AND REPORTING OTHERSTHATSHOULD NOT HAVE BEEN REPORTED. RESPONDENT PW IS THEREFOREFINEDIN THE AMOUNT OF $25,000.$25,000 FINE PAID 6/24/88iReporting Source:FirmAllegations:ALLEGED VIOLATIONS OF ARTICLE III, SECTION 2 AGAINST AN EMPLOYEEIN THE FIRMS RESEARCH DIVISION FOR CHANGING A PREVIOUSLYPUBLISHED RECOMMENDATION ON THE BASIS OF MATERAIL NON-PUBLICINFORMATIONCurrent Status:Final627©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERSPrincipal Sanction(s)/ReliefSought:Civil and Administrative Penalt(ies) /Fine(s)Other Sanction(s)/ReliefSought:Date Initiated:07/23/1985Docket/Case Number:MS-164Principal Product Type:No ProductOther Product Type(s):Resolution Date:02/20/1986Resolution:Other Sanctions Ordered:Sanction Details:FINE OF $25,000.00, WHICH WAS PAID ON 06/24/1988.Firm StatementITEM WAS APPEALED TO THE BOARD OF GOVERNORS, WHO RENDERED ADECISION ON DECEMBER 1, 1986, DISMISSING ALL ALLEGATIONS EXCEPTTHOSE INVOLVING THE FIRM'S VIOLATIONS OF PART IX, SECTION 2 OF THESCHEDULE D FOR FAILING TO REPORT CERTAIN TRANSACTIONSINVOLVING THE SECURITY IN QUESTION.Sanctions Ordered:Monetary/Fine $25,000.00OtherDisclosure 390 of 450iReporting Source:RegulatorInitiated By:PENNSYLVANIA CONTACT: COMPLIANCE AND EXAMINATIONS(717)-783-4689Date Initiated:09/25/1985Docket/Case Number:8509-6URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:CASE CLOSED 04/30/1986.Current Status:Final628©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:04/30/1986Resolution:Regulator StatementFORM U-6 RECEIVED 10/2/85 DISCLOSES; ORDER TO SHOW CAUSEISSUED AGAINST RESPONDENT ALLEGING THE EMPLOYMENT OFUNREGISTERED AGENTS TO EFFECT SECURITIES TRANSACTIONS IN PA.CASE NO. 8509-6. CASE CLOSED 04/30/1986.Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?NoOtheriReporting Source:FirmInitiated By:STATE OF PENNSYLVANIAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/25/1985Docket/Case Number:8509-6Principal Product Type:No ProductOther Product Type(s):Allegations:A FORM U-6 DISCLOSES; ORDER TO SHOW CAUSE ISSUED AGAINST THEFIRM ALLEGING THE EMPLOYMENT OF UNREGISTERED AGENTS TOEFFECT SECURITIES TRANSACTIONS IN PENNSYLVANIA.Current Status:FinalResolution Date:04/30/1986Resolution:Otheri629©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 391 of 450Reporting Source:RegulatorInitiated By:MASSACHUSETTSPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/25/1978Docket/Case Number:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/25/1978Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementSTATE OF MASSACHUSETTS: 10-25-78SUSPENDED 15 DAYS. SUSPENSION SUSPENDED.Sanctions Ordered:SuspensionDecisioniReporting Source:FirmInitiated By:THE COMMONWEALTH OF MASSACHUSETTSDate Initiated:11/01/1978Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLEGATIONS BASED UPON FINDINGS THAT ADEQUATE PROCEDURESWERE NOT ENFORCED IN ONE BRANCH OFFICE.Current Status:Final630©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:11/01/1978Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1978, THE COMMONWEALTH OF MASSACHUSETTSISSUED AN ORDER SUSPENDING THE AGENT REGISTRATION OFAN EMPLOYEE OF PAINE, WEBBER, JACKSON & CURTIS, INC. ANDSUSPENDING THE BROKER DEALER REGISTRATION OF PAINE, WEBBER,JACKSON & CURTIS, INC., SUCH SUSPENSIONS BEING IMMEDIATELYREVOKED. THE ORDER WAS ISSUED BASED UPON FINDINGS THATADEQUATE PROCEDURES WERE NOT ENFORCED IN ONE BRANCHOFFICE.Sanctions Ordered:SuspensionOrderDisclosure 392 of 450iReporting Source:RegulatorInitiated By:WISCONSINPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/24/1978Docket/Case Number:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:05/24/1978Resolution:Consent631©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRegulator Statement5-24-78, STATE OF WISCONSIN: ORDER ISSUED BY THE COMMISSIONERBY CONSENT PROHIBITING THE FIRM FROM EFFECTING SECURITIESTRANSACTIONS FOR THE ACCOUNTS OF PERSONS IN WISCONSIN FROMORTHROUGH ITS MINNEAPOLIS, MN OFFICE AND EMPLOYEES THEREIN FORA PERIOD OF FIVE BUSINESS DAYS.iReporting Source:FirmInitiated By:STATE OF WISCONSINPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1978Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:UNKNOWNCurrent Status:FinalResolution Date:05/01/1978Resolution:Other Sanctions Ordered:PROHIBITIONSanction Details:IN MAY 1978, THE STATE OF WISCONSIN PROHIBITED THE MINNEAPOLIS,MN, OFFICE OF PAINE, WEBBER, JACKSON & CURTIS, INCORPORATED,FROM EFFECTING SECURITIES TRANSACTIONS FOR THE ACCOUNTS OFPERSONS IN WISCONSIN FOR FIVE BUSINESS DAYS.Sanctions Ordered:DecisionDisclosure 393 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Allegations:Current Status:Final632©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/12/1970Docket/Case Number:SEA-161Principal Product Type:Other Product Type(s):Resolution Date:02/04/1972Resolution:Regulator StatementCOMPLAINT #SEA-161 FILED 1-12-70 AGAINST SEATTLE, WA OFFICE.B/G DECISION 1-5-72FINAL: 2-4-72DecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTIONS AREUNAVAILABLE.Date Initiated:01/12/1970Docket/Case Number:SEA-161Principal Product Type:No ProductOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Allegations:DUE TO THE AGE OF THE ITEM, THE SPECIFIC ALLEGATIONS AREUNAVAILABLE.Current Status:FinalResolution Date:02/04/1972Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTIONS ARESanctions Ordered:Decision633©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNAVAILABLE.Sanction Details:DUE TO THE AGE OF THE ITEM, SANCTION DETIAL IS UNAVAILABLE.Disclosure 394 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/23/1970Docket/Case Number:P-336Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:02/11/1972Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT P-336 (DISTRICT 11) FILED 10-23-70AGAINST PHILADELPHIA, PA BRANCH2-11-72: CENSURED AND FINEDSanctions Ordered:CensureMonetary/FineDecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Allegations:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL ALLEGATIONS AREUNAVAILABLE.Current Status:Final634©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTION ISUNAVAILABLE.Date Initiated:10/23/1970Docket/Case Number:P-336Principal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Resolution Date:02/11/1972Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTIONS AREUNAVAILABLE.Sanction Details:DUE TO THE AGE OF THE ITEM, SACTION DETAIL IS UNAVAILABLE.Sanctions Ordered:CensureDecisionDisclosure 395 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/01/1959Docket/Case Number:B-103Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:04/29/1961Resolution:Decision635©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT B-103 DISTRICT 13 FILED: 10-1-59 CENSURED: 4-29-61Sanctions Ordered:CensureiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:10/01/1959Docket/Case Number:B-103Principal Product Type:OtherOther Product Type(s):Allegations:DUE TO THE AGE OF THE ITEM, THE ALLEGATIONS ARE UNAVAILABLE.Current Status:FinalResolution Date:04/29/1961Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureOtherDisclosure 396 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:03/29/1972Allegations:Current Status:Final636©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:N-V-119Principal Product Type:Other Product Type(s):Resolution Date:08/24/1972Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementNASDAQ COMPLAINT N-V-119 FILED 3-29-727-10-72: FINED $1007/27/72: PAID FINE8/24/72: FINALSanctions Ordered:Monetary/Fine $100.00DecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:FINE OF $100.00Date Initiated:03/29/1972Docket/Case Number:N-V-119Principal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTION ISUNAVAILABLE.Allegations:DUE TO THE AGE OF THE ITEM, THE ALLEGATIONS ARE UNAVAILABLE.Current Status:FinalResolution Date:08/24/1972Resolution:Decision637©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILBLE.Sanctions Ordered:Monetary/Fine $100.00Disclosure 397 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/23/1973Docket/Case Number:N-WD-24Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:09/04/1973Resolution:Regulator StatementNASDAQ COMPLAINT N-WD-244-23-73: FINAL7-20-73: NO MONETARY PENALTY IMPOSED9-4-73: FINALDecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:04/23/1973Docket/Case Number:N-W-D-24Allegations:DUE TO THE AGE OF THE ITEM, THE ALLEGATIONS ARE UNAVAILABLE.Current Status:Final638©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:DUE TO THE AGE OF THE ITEM, THE PRINCIPAL SANCTION ISUNAVAILABLE.Principal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Resolution Date:09/04/1973Resolution:Other Sanctions Ordered:DUE TO THE AGE OF THE ITEM AND BASED UPON THE INFORMATIONAVAILABLE, THE RESOLUTION DETAIL IS UNAVAILABLE.Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:DecisionDisclosure 398 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/24/1972Docket/Case Number:N-V-50Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:07/24/1972Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $25.00Decision639©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:Regulator StatementNASDAQ COMPLAINT N-V-50 FILED 2-24-726-7-72: FINED $25.006-22-72: PAID FINE7-24-72: FINALiReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1972Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO REPORT VOLUME ON NASDAQ.Current Status:FinalResolution Date:06/01/1972Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1972, PAINE, WEBBER, JACKSON & CURTIS INCORPORATED WASFINED $25. BY THE NASD FOR FAILURE TO REPORT VOLUME ON NASDAQ.Sanctions Ordered:Monetary/Fine $25.00DecisionDisclosure 399 of 450iReporting Source:RegulatorInitiated By:SECURITIES AND EXCHANGE COMMISSIONDate Initiated:Allegations:Current Status:Final640©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:Principal Product Type:Other Product Type(s):Resolution Date:Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementADMINISTRATIVE PROCEEDINGS INSTITUTED. THE COMMISSION'S ORDERCENSURES THE FIRM AND REQUIRES THAT FIRM COMPLY WITH ITSUNDERTAKING TO INSTITUTE AND MAINTAIN PROCEDURES REASONABLYTOBE EXPECTED TO PREVENT AND DETECT, INSOFAR AS PRACTICABLE, THEREOCCURRENCE OF VIOLATIONS SUCH AS THOSE DESCRIBED IN THEORDER.CONSENTED TO THE ORDER WITHOUT ADMITTING OR DENYING THECHARGES.(ND 76-54, REL. 34-12223).Sanctions Ordered:CensureConsentiReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureDate Initiated:12/01/1980Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF SECTIONS 15(C) (3) AND 17(A) OF THE SECURITIESEXCHANGE ACT AND RULES 15C-3-3, 17A-3, 17A-11 AND 17A-13Current Status:Final641©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:12/01/1980Resolution:Other Sanctions Ordered:Sanction Details:IN DECEMBER, 1980, THE SECURITIES AND EXCHANGE COMMISSIONCENSURED PAINE, WEBBER, JACKSON & CURTIS, INC FOR VIOLATION OFSECTIONS 15(C) (3) AND 17(A) OF THE SECURITIES EXCHANGE ACT ANDRULES 15C-3-3, 17A-3, 17A-11 AND 17A-13 THEREUNDER.Sanctions Ordered:CensureDecisionDisclosure 400 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/01/1977Docket/Case Number:ATL-553Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:11/01/1977Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT ATL-553 FILED 4-1-77DISTRICT #711-1-77: FINED $500Sanctions Ordered:Monetary/Fine $500.00Decision642©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceALL RIGHTS WAIVED11-1-77: FINAL11-11-77: F & C #6903 PAIDiReporting Source:FirmInitiated By:A DISTRICT BUSINESS CONDUCT COMMITTEE OF THE NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/01/1977Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:FAILING TO REGISTER AN EMPLOYEE AS A REGISTERED PRINCIPAL.Current Status:FinalResolution Date:11/01/1977Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1977, A DISTRICT BUSINESS CONDUCT COMMITTEEOF THE NASD FINED PAINE, WEBBER, JACKSON & CURTIS, INC.$500.00 FOR FAILING TO REGISTER AN EMPLOYEE AS A REGISTEREDPRINCIPAL.Sanctions Ordered:Monetary/Fine $500.00DecisionDisclosure 401 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:08/31/1981Docket/Case Number:CA-881Allegations:Current Status:Final643©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Other Product Type(s):Resolution Date:05/31/1983Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementCOMPLAINT CA-881, FILED 8-31-81DISTRICT #2S5/31/83: CENSURED AND FINED $5,000, J & SFC# 8474 PAID IN FULL 7-19-83Sanctions Ordered:CensureMonetary/Fine $5,000.00DecisioniReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/01/1983Docket/Case Number:CA-881Principal Product Type:No ProductOther Product Type(s):Allegations:VIOLATIONS OF SECTION 1 AND 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICECurrent Status:FinalResolution Date:05/01/1983Resolution:Decision & Order of Offer of Settlement644©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:IN MAY, 1983, PAINE, WEBBER, JACKSON & CURTIS, INC. ASSUCCESSOR TO BLYTH EASTMAN DILLON & COMPANY WAS CENSUREDAND FINED IN THE AMOUNT OF $5,000.00 PURSUANT TO ANOFFER OF SETTLEMENT SUBMITTED TO AND ACCEPTED BY THENATIONAL ASSOCIATION OF SECURITIES DEALERS INC FORVIOLATIONS OF SECTION 1 AND 27 OF THE ASSOCIATION'SRULES OF FAIR PRACTICE.Sanctions Ordered:CensureMonetary/Fine $5,000.00Disclosure 402 of 450iReporting Source:RegulatorInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/30/1995Docket/Case Number:95-0001Principal Product Type:Other Product Type(s):Allegations:see summaryCurrent Status:FinalResolution Date:05/25/1995Resolution:Other Sanctions Ordered:Sanction Details:each censured and fined $10,000Regulator StatementPaineWebber, Inc., an Exchange memberorganization and Louis Donato, a Firm trader at PaineWebber'sNew York office were each censured and fined in the amount of$10,000 for the following conduct: A PaineWebber customerSanctions Ordered:CensureMonetary/Fine $10,000.00Decision645©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance("Customer") entered two staddle orders with PaineWebber's NewYork office to close a November position in Bank of New York("BK") option contracts and open a December BK position. TheCustomer's first staddle order was to purchase BK November 55call option contracts and purchase BK November 55 put optioncontracts for the purpose of closing the Customer's previouslyestablished short position in the BK November 55 put optioncontracts. The Customer's second straddle order was to sell BKDecember 55 call option contracts and sell BK December 55 calland BK December 55 put option contracts. After entering thesetwo straddle orders and before those orders were executed, andafter discussing them with PaineWebber, the Customer canceledthe two straddle orders and entered new orders. One new orderconsisted of a purchase to close BK November 55 put optioncontracts and a sale to open BK December 55 put optioncontracts. PaineWebber did not record in a written form thisnew put spread order. Donato, on behalf of PaineWebber, enteredthis put spread order subject to facilitation. PaineWebber'sfloor broker represented and executed a substantial portion ofthe put spread order as a facilitation cross with PaineWebber'saccount. In addition to the put spread order described above,the Customer entered an additional, related order. Thisadditional, related order was a call spread consisting of apurchase to close BK November 55 call option contracts and asale to open BK December 55 call option contracts. PaineWebberdid not record in a written form this new call spread order. Inaddition, this new call spread order was not disclosed to thetrading crowd before the new put spread order was facilitatedby t*See FAQ #1*iReporting Source:FirmInitiated By:CBOEDate Initiated:01/30/1995Docket/Case Number:95-0001Principal Product Type:No ProductOther Product Type(s):Allegations:VIOLATION OF CBOE RULE 6.74(B). "CROSSING" ORDERS.Current Status:Final646©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:05/25/1995Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENT WITHOUTADMITTING OR DENYING THE ALLEGATIONS, TO A FINDING OF VIOLATIONOF CBOE RULE 6.74(B). "CROSSING" ORDERS. PAINEWEBBER PAID A FINEOF $10,000.00 AND WAS CENSURED.Sanctions Ordered:CensureMonetary/Fine $10,000.00SettledDisclosure 403 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/17/1994Docket/Case Number:CMS940017 AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:11/18/1994Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $500.00Consent647©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS940017 AWC.LETTER OF ACCEPTANCE, WAIVER, AND CONSENT (AWC) ALLEGESVIOLATIONS OF SEC RULE 10b-6A AND ARTICLE III, SECTION 1 OF THEASSOCIATION'S RULES OF FAIR PRACTICE (PASSIVE MARKET MAKING) INTHAT PAINEWEBBER INCORPORATED FAILED TO REDUCE ITS BID TO ALEVEL NO HIGHER THAN THE HIGHEST INDEPENDENT MARKET AMKERBID.THE COMPLAINT WAS FILED ON FEBRUARY 17, 1994, AND ACCEPTED BYTHE NBCC ON NOVEMBER 18, 1994. THE FIRM WAS CENSURED AND FINED$500.***$500 PAID ON 12/15/94 INVOICE #94-MS-779***iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/17/1994Docket/Case Number:CMS940017Principal Product Type:Equity - OTCOther Product Type(s):Allegations:ALLEGED THAT IN CONNECTION WITH ITS PASSIVE MARKET MAKINGACTIVITIES, PW FAILED TO REDUCE ITS BID ON A SECURITY AS REQUIRED,IN VIOLATION OF RULE 10B-6 (A) OF THE SECURITIES EXCHANGE ACT OF1934 AND ARTICLE III, SECTION 1 OF THE NASD'S RULES OF FAIRPRACTICE.Current Status:FinalResolution Date:11/08/1994Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $500.00Acceptance, Waiver & Consent(AWC)648©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:PWI AND NASD ENTERED INTO A LETTER OF ACCEPTANCE, WAIVER ANDCONSENT, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,PAINEWBBER CONSENTED TO A CENSURE AND $500FINE.Disclosure 404 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/13/1994Docket/Case Number:CMS940059Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/25/1994Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS940059 AWC.LETTER OF ACCEPTANCE, WAIVER, AND CONSENT (AWC) ALLEGEVIOLATIONS OF SECTION c)2(E) OF THE RULES OF PRACTICE ANDPROCEDURE FOR SOES (SOES RULES) AND ARTICLE III, SECTION 1 OFTHE ASSOCIATIION'S RULES OF FAIR PRACTICE (RFP) IN THAT THERESPONDENTS ENTERED ORDERS ON AN AGENCY BASIS INTO SOES FORSECURITIES IN WHICH THEY WERE REGISTERED MARKET MAKERS. THECOMPLAINT WAS FILED ON JULY 13, 1994, AND ACCEPTED BY THE NBCCON OCTOBER 25, 1994. THE FIRM WAS FINED $$2,000. THE AWC BECAMEFINAL ON OCTOBER 25, 1994.Sanctions Ordered:Monetary/Fine $2,000.00Consent649©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance***$2,000 PAID ON 11/25/94 INVOICE #94-MS-722***iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/25/1994Docket/Case Number:AWC NO. CMS930059Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED VIOLATIONS OF SECTION C 2 (E) OF THE SOES RULES ANDARTICLE III, SECTION 1 OF THE NASD RULES.Current Status:FinalResolution Date:10/25/1994Resolution:Other Sanctions Ordered:Sanction Details:PAINE WEBBER CONSENTED, WITHOUT ADMITTING OR DENYING THEALLEGATIONS, TO PAY A FINE OF $2,0000Sanctions Ordered:Monetary/Fine $2,000.00ConsentDisclosure 405 of 450iReporting Source:RegulatorInitiated By:MISSOURI SECURITIES DIVISIONDate Initiated:07/28/1994Docket/Case Number:AO-94-22URL for Regulatory Action:Principal Product Type:Allegations:AMENDMENT OF ADMINISTRATIVE ORDERCurrent Status:Final650©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:07/28/1994Resolution:Other Sanctions Ordered:Sanction Details:Not ProvidedRegulator StatementPAINEWEBBER WAS RELEASED FROM THE PROVISION INTHE CONSENT ORDER WHICH REQUIRED PAINEWEBBER TO SENDINFORMATION TO MISSOURI INVESTORS. THE OTHER PROVISIONS OF THEORDER REMAIN UNCHANGED. CONTACT: MARY HOSMER (573)751-4704.Sanctions Ordered:Monetary/Fine $75,000.00OrderiReporting Source:FirmInitiated By:MISSOURI SECRETARY OF STATE-SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/28/1994Docket/Case Number:A094-22Principal Product Type:No ProductOther Product Type(s):Allegations:FAILED TO SUPERVISE IN VIOLATION OF 409.204(A)(2)(J)Current Status:FinalResolution Date:07/28/1994Resolution:Other Sanctions Ordered:Sanctions Ordered:Monetary/Fine $75,000.00Consent651©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:PAINEWEBBER WILL PROVIDE EDUCATION MATERIALS TO ALL EXISTINGAND NEW CLIENTS FOR A PERIOD OF 3 YEARS. FINED IN THE AMOUNT OF$75,000. PAINEWEBBER WAS RELEASED FROM THE PROVISION IN THECONSENT ORDER WHICH REQUIRED THE FIRM TO SEND INFORMATION TOMISSOURI INVESTORS. THE OTHER PROVISIONS OF THE CONSENTORDER REMAIN UNCHANGED.Disclosure 406 of 450iReporting Source:RegulatorInitiated By:IOWA SECURITIES BUREAUPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:05/24/1994Docket/Case Number:C94-04-427URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:FAILURE TO FILE AUDITED FINANCIALS IN ATIMELY MANNER.Current Status:FinalResolution Date:05/24/1994Resolution:Other Sanctions Ordered:Sanction Details:WILLFULLY FAILED TO OBEY A STATUTE OR RULE.$500.00 FINE.Regulator StatementCONTACT: GARY L. MARQUETT, ENFORCEMENT DIRECTOR,515-281-4441Sanctions Ordered:Monetary/Fine $500.00DecisioniReporting Source:FirmCurrent Status:Final652©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:IOWA SECURITIES BUREAUPrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:FINE OF $500.00Date Initiated:05/24/1994Docket/Case Number:C94-04-427Principal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO FILE AUDITED FINANCIALS IN A TIMELY MANNER.Resolution Date:05/24/1994Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:Monetary/Fine $500.00DecisionDisclosure 407 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/29/1984Docket/Case Number:KC-322Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution:Decision & Order of Offer of Settlement653©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:11/14/1985Other Sanctions Ordered:Sanction Details:Regulator StatementCOMP #KC-322, FILED 10/29/84, DIST. #4, ALLEGING VIOLATIONS OFARTICLE III, SECTIONS 1 AND 27 OF THE RULES OF FAIR PRACTICE INTHAT RESPONDENTS MEMBER, JAMES R. HUKLE AND OSCAR A. FAILED TOMAKE A BONA FIDE PUBLIC DISTRIBUTION OF SHARES OF AN OFFERINGTHAT WENT TO AN IMMEDIATE PREMIUM IN THE SECONDARY MARKET INTHAT SHARES WERE SOLD TO RESTRICTED ACCOUNTS INCONTRAVENTIONOF THE B/G'S INTERPRETATION W/RESPECT TO FREE- RIDING ANDWITHHOLDING; AND, RESPONDENTS MEMBER, FRANK W. HOOVER,DANIELC. ARENDT, WAYNE E. BREWSTER AND RICHARD T. HUEBNER FAILED TOPROPERLY SUPERVISE THE ACTIVITIES OF RESPONDENTS HUKLE ANDSANDBERG.ENTERED 1/2/86:DECISION RENDERED 11/14/85, WHEREIN THE OFFER OF SETTLEMENTSUBMITTED BY THE RESPONDENTS WAS ACCEPTED; THEREFORE,RESPONDENTS HUKLE, SANDBERG, HOOVER AND ARENDT ARECENSURED AND,TOGETHER WITH THE RESPONDENT MEMBER, ARE FINED $2,000.00,JOINTLY AND SEVERALLY. ALLEGATIONS AS CONTAINED IN THE SECONDCAUSE OF COMPLAINT OF A FAILURE TO PROPERLY SUPERVISE AREDISMISSED WITH REGARD TO RESPONDENTS MEMBER, BREWSTER ANDHUEBNER. ***2/4/86, FC# 9293, PAID IN FULL.Sanctions Ordered:Monetary/Fine $2,000.00iReporting Source:FirmInitiated By:THE BOARD OF GOVERNORS OF THE NASD, INC.Date Initiated:11/01/1985Docket/Case Number:KC-322Principal Product Type:No ProductAllegations:ALLEGED VIOLATIONS OF THE ASSOCIATION'S FREE-RIDING ANDWITHHOLDING INTERPRETATION.Current Status:Final654©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:11/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1985, THE BOARD OF GOVERNORS OF THE NATIONALASSOCIATION OF SECURITIES DEALERS, INC. ACCEPTED AN OFFER OFSETTLEMENT FINING PAINEWEBBER INC $2,000.00 AND CENSURING FOURINDIVIDUALS FOR ALLEGED VIOLATIONS OF THE ASSOCIATION'S FREE-RIDING AND WITHHOLDING INTERPRETATION.Sanctions Ordered:CensureMonetary/Fine $2,000.00Decision & Order of Offer of SettlementDisclosure 408 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/23/1993Docket/Case Number:CMS930086 AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:04/19/1994Resolution:Sanctions Ordered:Monetary/Fine $3,000.00Consent655©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:Regulator Statement4/22/94: MARKET SURVEILLANCE COMPLAINT #CMS930086 AWC (A)LETTER OF ACCEPTANCE, WAIVER AND CONSENT FILED ON NOVEMBER23,1993 AGAINST RESPONDENT MEMBER PAINEWEBBER INCORPORATEDALLEGING VIOLATIONS OF PART V, SECTION 2(d) OF SCHEDULE D FORENTERING NASDAQ QUOTATIONS CONTAINING EXCESS SPREADS.THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE ON MARCH 9, 1994 AND BY THENATIONAL BUSINESS CONDUCT COMMITTEE ON APRIL 19, 1994. $3,000FINE.***$3,000 PAID 6/6/94 INVOICE #94-MS-315***iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/23/1994Docket/Case Number:CMS930086Principal Product Type:Equity - OTCOther Product Type(s):Allegations:ALLEGED VIOLATION OF PART V SECTION 2 (D) OF SCHEDULE D FORENTERING NASDAQ QUOTATIONS CONTAINING EXCESS SPREADS.Current Status:FinalResolution Date:04/19/1994Resolution:Other Sanctions Ordered:Sanction Details:$3000 FINESanctions Ordered:Monetary/Fine $3,000.00Decision656©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 409 of 450iReporting Source:RegulatorInitiated By:VERMONT SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/12/1994Docket/Case Number:93-076-SURL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:FAILURE TO PRE-FILE ADVERTISEMENT ANDOMMISSION OF PERTINENT PROSPECTUS LANGUAGE IN THEADVERTISEMENT- 9 VSA 4234(b)Current Status:FinalResolution Date:04/12/1994Resolution:Other Sanctions Ordered:Sanction Details:CONSENT ORDER SETTLEMENT - FINED $1250, COSTS$500Regulator StatementCONTACT: ENFORCEMENT ATTORNEY 802-828-3420Sanctions Ordered:Monetary/Fine $1,250.00ConsentiReporting Source:FirmInitiated By:VERMONT SECURITIES DIVISIONDate Initiated:04/01/1994Allegations:ALLEGED THAT CERTAIN ADVERTISING MATERIAL HAD NOT BEEN PRE-FILED WITH THE STATE AND OMITTED CERTAIN REQUIRED LANGUAGE.Current Status:Final657©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:93-076-SPrincipal Product Type:No ProductOther Product Type(s):Resolution Date:04/12/1994Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM AGREEDTO PAY $1,750 IN FINES AND COSTSSanctions Ordered:Monetary/Fine $1,750.00OtherDisclosure 410 of 450iReporting Source:RegulatorInitiated By:ALABAMA SECURITIES COMMISISON 770 WASHINGTONSTREET*See FAQ #1*Date Initiated:02/04/1994Docket/Case Number:S89-0008URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:PAINEWEBBER ENTERED INTO A CONSENT ORDER THATREQUIRES THE COMPANY TO INSTITUTE NEW TRADING PROCEDURESINITSBIRMINGHAM, ALABAMA OFFICE, OBTAIN A REVIEW OF ITS PROCEDURESBY AN OUTSIDE CONSULTANT, CONDUCT A TRAINING SEMINAR FOR ALLSUPERVISORY AND MANAGERIAL EMPLOYEES, PAY SATISFACTORYRESTITUTION TO THE VI TIMS IN THE CASE AND PAY $87,000 TO THEASC AS PARTIAL REIMBURSEMENT FOR THE COMMISSION'SINVESTIGATIONCOSTS.Current Status:Final658©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:02/04/1994Resolution:Other Sanctions Ordered:Sanction Details:SAME AS ALLEGATIONSRegulator StatementSAME AS ALLEGATIONS CONTACT: ROBERT L. PRINCE,DEPUTY DIRECTOR, 205-242-2984Sanctions Ordered:Disgorgement/RestitutionConsentiReporting Source:FirmInitiated By:ALABAMA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1994Docket/Case Number:S89-0008Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT CERTAIN TRADING ACTIVITY IN PAINEWEBBER'SBIRMINGHAM, ALABAMA BRANCH OFFICE VIOLATED APPLICABLEREGULATIONS.Current Status:FinalResolution Date:02/01/1994Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMSanctions Ordered:Monetary/Fine $87,000.00Disgorgement/RestitutionOther659©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNDERTOOK TO MAKE APPROPRIATE RESTITUTION, PAY $87,000TOWARDS THE STATE'S INVESTIGATIVE COSTS, AND IMPLEMENTADDITIONAL REMEMDIAL MEASURES.Disclosure 411 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/25/1994Docket/Case Number:C02930046Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:01/25/1994Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON JANUARY 25, 1994, DISTRICT NO. 2 NOTIFIED RESPONDENTSPAINEWEBBER, INC. JOHN L SHERMAN AND JOHN K. COOLIDGE THAT THELETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. C02930046 WASACCEPTED; THEREFORE, THE FIRM IS CENSURED AND FINED $50,000;RESPONDENT SHERMAN IS CENSURED, FINED $20,000, AND PRIOR TOASSOCIATING WITH ANY NASD MEMBER AS A PRINCIPAL, SHALL BEREQUIRED TO REQUALIFY AS SUCH; AND, RESPONDENT COOLIDGE ISCENSURED, FINED $10,000, AND REQUIRED TO REQUALIFY AS A GENERALSECURITIES SALES SUPERVISOR (SERIES 8) BY THE END OF 90 DAYSFROM THE DATE THIS LETTER WAS ACCEPTED. SHOULD RESPONDENTCOOLIDGE FAIL TO REQUALIFY BY THAT TIME, HE WILL BE SUSPENDEDIN THAT CAPACITY UNTIL SUCH TIME AS HE PASSES THE SERIES 8Sanctions Ordered:CensureMonetary/Fine $50,000.00Consent660©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceEXAMINATION - (ARTICLE III, SECTIONS 1 AND 27 OF THE RULES OFFAIR PRACTICE - RESPONDENT MEMBER, ACTING THROUGHRESPONDENTSSHERMAN AND COOLIDGE, FAILED TO SUPERVISE THE ACTIVITIES OF TWOOF ITS REGISTERED REPRESENTATIVES PROPERLY).***$50,000 PAID ON 4/5/94 INVOICE #94-02-111***iReporting Source:FirmInitiated By:NASD DISTRICT 2Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1994Docket/Case Number:AWC NO. C02930046Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT PAINEWEBBER FAILED TO SUPERVISE TWO REGISTEREDREPRESENTATIVESCurrent Status:FinalResolution Date:01/01/1994Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM AGREEDTO CENSURE AND $50,000 FINE. TWO OF THE FIRM'S EMPLOYEESCHARGED WITH SUPREVISING THE ACTIVITIES IN QUESTION WERE ALSOCENSURED AND FINED.Sanctions Ordered:CensureMonetary/Fine $50,000.00Acceptance, Waiver & Consent(AWC)Disclosure 412 of 450iReporting Source:RegulatorCurrent Status:Final661©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/28/1993Docket/Case Number:C10930097Principal Product Type:Other Product Type(s):Allegations:Resolution Date:12/28/1993Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON DECEMBER 28, 1993, DISTRICT NO. 10 NOTIFIED PAINEWEBBERINCORPORATED THAT THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENTNO. C10930097 WAS ACCEPTED; THEREFORE, RESPONDENT MEMBER ISCENSURED AND FINED $7,500 - (ARTICLE III, SECTIONS 1 AND 35(c)AND (d) OF THE RULES OF FAIR PRACTICE, SECTION 8 OF THEGOVERNMENT SECURITIES RULES, AND MSRB RULE G-21 - IN 18INSTANCES, CERTAIN ADVERTISEMENTS AND SALES LITERATURE WEREPREPARED AND DISTRIBUTED BY ACCOUNT EXECUTIVES IN VARIOUSBRANCH OFFICES OF RESPONDENT MEMBER, SOME OF WHICH, WERENOTSUBMITTED TO THE RESPECTIVE BRANCH MANAGER FOR APPROVAL;AND,IN THREE INSTANCES, ADVERTISEMENTS OR SALES LITERATURE WEREPREPARED AND APPROVED BY DEPARTMENTS WITHIN THE MAIN OFFICEOFRESPONDENT MEMBER). *$7,500.00 PAID ON 2/7/94 INVOICE #94-10-48**Sanctions Ordered:CensureMonetary/Fine $7,500.00ConsentiReporting Source:Firm662©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/01/1993Docket/Case Number:AWC NO. C10930097Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT CERTAIN REGISTERED REPRESENTATIVES EMPLOYED BYPAINEWEBBER HAD, ON OCCASION USED CERTAIN ADVETTISING ANDSALES LITERATURE THAT HAD NOT BEEN PROPERLY REVIEWED ANDAPPROVED.Current Status:FinalResolution Date:12/01/1993Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATIONS, FIRMAGREED TO A CENSURE AND $7500 FINESanctions Ordered:Monetary/Fine $7,500.00Acceptance, Waiver & Consent(AWC)Disclosure 413 of 450iReporting Source:RegulatorInitiated By:MARYLAND DIVISION OF SECURITIESDate Initiated:10/25/1993Docket/Case Number:BD-93-0278Allegations:BASED UPON INFORMATION SUBMITTED BYPAINEWEBBER, THE DIVISION CONCLUDED THAT FROM A PERIODBEGINNING 3/25/93, PAINEWEBBER PERMITTED JOSEPH ANTHONYLaFERLATO EFFECT TRANSACTIONS AT DURING WHICH TIME HIS AGENTREGISTRATION WAS NOT EFFECTIVE IN MARYLAND.Current Status:Final663©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:URL for Regulatory Action:Principal Product Type:Other Product Type(s):Resolution Date:10/25/1993Resolution:Other Sanctions Ordered:Sanction Details:THE COMMISSIONER ACCEPTED A CONSENT ORDER INSETTLEMENT OF THIS PROCEEDING IN ADDITION TO THE PAYMENT OF AFINE IN THE AMOUNT OF $2500.00.Regulator StatementJOSEPH ANTHONY LaFERLA'S REGISTRATION WAS MADEEFFECTIVE 10/25/93. CONTACT: ELLEN E. CHERRY, (410) 576-6494.Sanctions Ordered:Monetary/Fine $2,500.00ConsentiReporting Source:FirmInitiated By:MARYLAND DIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/01/1993Docket/Case Number:BD-93-0278Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT ONE OF PAINEWEBBER'S REGISTERED REPRESENTATIVESDOING BUSINESS IN THE STATE HAD NOT BEEN PROPERLY REGISTEREDAT ALL RELEVANT TIMES.Current Status:FinalResolution:Consent664©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:10/01/1993Other Sanctions Ordered:Sanction Details:PAINEWEBBER INCORPORATED CONSENTED TO ENTRY OF AN ORDER BYTHE MARYLAND DIVISION OF SECURITIES ALLEGING THAT ONE OF SREGISTERED REPRESENTATIVES DOING BUSINESS IN THE STATE HADNOT BEEN PROPERLY REGISTERED AT ALL RELEVANT TIMES. THE FIRMAGREED TO PAY A $250 FINE.Sanctions Ordered:Monetary/Fine $250.00Disclosure 414 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/12/1993Docket/Case Number:CMS930026 AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:08/26/1993Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMPLAINT NO. CMS930026 AWC:THE FOLLOWING LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC)FILED ON 4/12/93, ALLEGES VIOLATIONS OF PART VI, SECTION 2(d)OF SCHEDULE D FOR ENTERING NASDAQ QUOTATIONS CONTAININGEXCESSSPREADS, ACCEPTED BY MSC ON 7/19/93, AND BY NBCC ON 8/26/93.Sanctions Ordered:Monetary/Fine $2,000.00Consent665©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceFINE $2,000. **$2,000.00 PAID ON 9/30/93 INVOICE #93-MS-678**iReporting Source:FirmInitiated By:NASD MARKET SURVEILLANCE COMMITTEEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1993Docket/Case Number:UNKNOWNPrincipal Product Type:Equity - OTCOther Product Type(s):Allegations:ENTERING QUOTATIONS INTO THE NASDAQ SYSTEM IN THE SECURITIESOF CAMBRIDGE TECHNOLOGY PARTNERS THAT WERE NOT REASONABLYRELATED TO THE PREVAILING MARKET.Current Status:FinalResolution Date:08/01/1993Resolution:Other Sanctions Ordered:Sanction Details:PAINE WEBBER WITHOUT ADMITTING OR DENYING THE ALLEGATIONSCONSENTED TO THE IMPOSITION OF A MONETARY FINE IN THE AMOUNTOF $2,000.00.Sanctions Ordered:Monetary/Fine $2,000.00ConsentDisclosure 415 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:07/12/1993Docket/Case Number:C04920072Allegations:Current Status:Final666©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Other Product Type(s):Resolution Date:07/12/1993Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON JULY 12, 1993, DISTRICT NO. 4 NOTIFIED PAINEWEBBERINCORPORATED THAT THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENTNO. C04920072 WAS ACCEPTED; THEREFORE, RESPONDENT MEMBER ISCENSURED AND FINED $8,000 - (ARTICLE III, SECTION 1 OF THERULES OF FAIR PRACTICE - RESPONDENT MEMBER, ACTING THROUGHVARIOUS ASSOCIATED PERSONS, FAILED TO RESPOND IN A TIMELYFASHION TO NASD REQUESTS FOR INFORMATION MADE PURSUANT TOARTICLE IV, SECTION 5 OF THE RULES OF FAIR PRACTICE INCONNECTION WITH THREE CUSTOMER COMPLAINTS AND TWOTERMINATIONSFOR CAUSE; AND, FAILED TO TIMELY FILE AMENDMENTS TO UNIFORMAPPLICATIONS FOR SECURITIES INDUSTRY REGISTRATION FORMS U-4ANDFORMS U-5 ON SIX SEPARATE OCCASIONS). ***$8,000 PAID ON 8/24/93 INVOICE #93-04-5888***Sanctions Ordered:CensureMonetary/Fine $8,000.00ConsentiReporting Source:FirmInitiated By:NASD-DISTRICT 4Allegations:PWI FAILED TO RESPOND TO INFORMATION REQUESTS IN A TIMELYMANNER REGARDING 3 CUSTOMER COMPLAINTS & 2 TERMINIATIONS ANDFAILED TO TIMELY FILE AMENDMENTS TO UNIFORM APPLICATION FORSECURITIES INDUSTRY REGISTRATION ON SIX SEPARATE OCCASIONSCurrent Status:Final667©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/12/1993Docket/Case Number:C04920072Principal Product Type:No ProductOther Product Type(s):Resolution Date:07/12/1993Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,CONSENTED TO THE IMPOSITION OF A CENSURE AND MONETARY FINE OF$8,000Sanctions Ordered:CensureMonetary/Fine $8,000.00ConsentDisclosure 416 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/31/1993Docket/Case Number:CMS930016 AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:07/07/1993Resolution:Consent668©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:Regulator Statement7/9/93: MARKET SURVEILLANCE COMMITTEE COMPLAINT #CMS930016 AWC(A) LETTER OF ACCEPTANCE, WAIVER AND CONSENT FILED MARCH 31,1993 AGAINST RESPONDENT MEMBER PAINEWEBBER INCORPORATEDALLEGING VIOLATIONS OF PART VI, SECTION 2(d) OF SCHEDULE D FORENTERING NASDAQ QUOTATIONS CONTAING EXCESS SPREADS.THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE COMPLAINT ON 6/3/93 AND BYTHE NATIONAL BUSINESS CONDUCT COMMITTEE ON JULY 7, 1993.*$1,000.00 FINE* ***$1,000.00 PAID ON 8/16/93 INVOICE #93-12-567***Sanctions Ordered:Monetary/Fine $1,000.00iReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ACCEPTANCE, WAIVER AND CONSENT.Date Initiated:03/31/1993Docket/Case Number:CMS930016 AWCPrincipal Product Type:Equity - OTCOther Product Type(s):Allegations:VIOLATION OF PART VI, SECTION 2(D) OF SCHEDULE D FOR ENTERINGNASDAQU QUOTATIONS CONTAINING EXCESS SPREADS.Current Status:FinalResolution Date:07/07/1993Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISSanctions Ordered:Monetary/Fine $1,000.00Acceptance, Waiver & Consent(AWC)669©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceUNAVAILABLE.Disclosure 417 of 450iReporting Source:RegulatorInitiated By:HEARING BOARDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/05/1993Docket/Case Number:92-187Principal Product Type:Other Product Type(s):Allegations:EXERCISED CONVERSION RIGHTS OF CUSTOMERS;SECURITIES WITHOUT THEIR AUTHORIZATION; EXERCISED CUSTOMERS'EXPIRING RIGHTS AND WARRANTS WITHOUT THEIR AUTHORIZATION; ANDVIOLATED SEC REGULATION 240.17(a)(3) BY FAILING TO MAKE ANDKEEP CURRENT CERTAIN BOOKS AND RECORDS.Current Status:FinalResolution Date:03/05/1993Resolution:Other Sanctions Ordered:Sanction Details:CONSENT TO CENSURE, $65,000 FINE AND ANUNDERTAKING.Regulator StatementCONSENTED TO CENSURE--DECISION IS EFFECTIVEIMMEDIATELY.Sanctions Ordered:CensureMonetary/Fine $65,000.00ConsentiReporting Source:FirmAllegations:ALLEGED THAT PWI EXERCISED CONVERSION RIGHTS OF CUSTOMERSSECURITIES WITHOUT THEIR AUTHORIZATION; EXERCISED CUSTOMERSCurrent Status:Final670©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGE HEARING BOARDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/05/1993Docket/Case Number:92-187Principal Product Type:No ProductOther Product Type(s):EXPIRING RIGHTS AND WARRANTS WITHOUT THEIR AUTHORIZATION;VIOLATED SEC RGULATION 240.17(A)(3) BY FAILING TO MAKE AND KEEPCURRENT BOOKS AND RECORDSResolution Date:03/05/1993Resolution:Other Sanctions Ordered:Sanction Details:CENSURE; PAID $65,000 FINE AND AN UNDERTAKINGSanctions Ordered:CensureMonetary/Fine $65,000.00DecisionDisclosure 418 of 450iReporting Source:RegulatorAllegations:ON 02/18/93 AN ORDER TO SHOW CAUSE WHYREGISTRATION AS A DEALER OR ISSUER OF SECURITIES SHOULD NOT BEREVOKED WAS ISSUED TO PAINEWEBBER INCORPORATED CHARGINGTHATPAINEWEBBER FAILED AND NEGLECTED TO ESTABLISH, MAINTAIN, AND/ORENFORCE WRITTEN SUPERVISORY PROCEDURES WHICH WOULD ENABLETHEMTO EXERCISE REASONABLE AND PROPER SUPERVISION OF THEIREMPLOYEES AND REGISTERED REPRESENTATIVES. DURING THE PERIODOF12/87 THROUGH 03/88, PAINEWEBBER EMPLOYEES EXERCISEDDISCRETIONARY POWER IN A CUSTOMER'S ACCOUNT WITHOUT PRIORWRITTEN AUTHORIZATION AND OBTAINED PERSONAL LOANS FROMCUSTOMERS.Current Status:Pending671©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:ALPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/18/1993Docket/Case Number:SC-93-0020URL for Regulatory Action:Principal Product Type:Other Product Type(s):Other Sanctions Ordered:Sanction Details:02/18/93 AN ORDER TO SHOW CAUSE WHY REGISTRATIONAS A DEALER OR ISSUER OF SECURITIES SHOULD NOTBE REVOKED WASISSUED TO PAINEWEBBER INCORPORATED.Regulator StatementSEE ALLEGATIONSSanctions Ordered:iReporting Source:FirmInitiated By:ALABAMA SECURITIESPrincipal Sanction(s)/ReliefSought:Date Initiated:02/18/1993Docket/Case Number:SC-93-0020Principal Product Type:OptionsOther Product Type(s):Allegations:PWI FAILED AND NEGLECTED TO ESTABLISH, MAINTAIN AND/OR ENFORCEWRITTEN SUPERVISORY PROCEDURES WHICH WOULD ENABLE THEM TOEXERCISE REASONABLE AND PROPER SUPERVISION OF THEIREMPLOYEES AND REGISTERED REPRESENTATIVES. DURING THE PERIODOF 12/87-3/88, PWI EMPLOYEES EXERCISED DISCRETIONARYPOWER IN A CUSTOMER'S ACCOUNT WITHOUT PRIOR WRITTENAUTHORIZATION AND OBTAINED PERSONAL LOANS FROM CUSTOMERS.Current Status:Final672©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:02/04/1994Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER CONSENTED TO AN EXTRA REVIEW OF ALL ORDERTICKETS FOR A PERIOD OF TWO (2) YEARS AND PAYMENT OF $87,000.00TO COVER COSTS OF INVESTIGATION. PAINEWEBBER MUST ALSO ATTESTTHAT NEW POLICIES AND PROCEDURES HAVE BEEN IMPLEMENTED ANDTHAT ALL SUPERVISORS OF THE BIRMINGHAM, AL OFFICE HAVEATTENDED A TWO (2) DAY SEMINAR APPRISING THEM OF THESE NEWPOLICIES AND PROCEDURES.Sanctions Ordered:Monetary/Fine $87,000.00ConsentDisclosure 419 of 450iReporting Source:RegulatorInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/18/1993Docket/Case Number:Principal Product Type:OtherOther Product Type(s):Allegations:FAILED REASONABLY TO SUPERVISE REGISTERED REPRESENTATIVESENGAGED IN SALES PRACTICE ABUSES, INCLUDING UNSUITABLE ANDEXCESSIVE TRADING, MISREPRESENTATIONS AND OMISSIONS TO STATEMATERIAL FACTS TO CLIENTS AND MISAPPROPRIATION OF MONEY FROMCUSTOMER ACCOUNTS;Current Status:FinalResolution Date:02/18/1993Resolution:Sanctions Ordered:CensureConsent673©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:CENSURES PAINEWEBBER AND REQUIRES SEVERAL UNDERTAKINGS,INCLUDING A PROHIBITION AGAINST OPENING NEW ACCOUNTS FOR 30DAYS AT THE FOUR OFFICES THAT WERE INVOLVED IN THE SALESPRACTICE VIOLATIONS, AND THE HIRING OF AN INDEPENDENTCONSULTANT TO REVIEW PROCEDURES RELATING TO SALES OFRESTRICTED SECURITIES AND SALES PRACTICES AT PAINEWEBBER.Regulator Statement[TOP] +2/23/93+ SEC NEWS DIGEST, ISSUE 93-31, DATED 02/18/1993ADMINISTRATIVE PROCEEDINGS DISCLOSES: SEC ANNOUNCED THEENTRY OF AN ORDER INSTITUTING PUBLIC ADMINISTRATIVEPROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONSAGAINST PAINEWEBBER INCORPORATED (PAINEWEBBER) ANDACCEPTING THE OFFER OF SETTLMENT SUBMITTED BY PAINEWEBBER.PAINEWEBBER CONSENTED TO THE ISSUANCE OF THE ORDER WITHOUTADMITTING OR DENYING SEC?S FINDINGS THAT PAINWEBBER FAILEDREASONABLY TO SUPERVISE REGISTERED REPRESENTATIVES ATOFFICES IN BIRMINGHAM, ALABAMA, BEVERLY HILLS, CALIFORNIA,NORTHBROOK, ILLINOIS, OAK BROOK, ILLINOIS AND HOUSTON, TEXAS.FROM 11/1986 THROUGH 06/1988, VARIOUS REGISTEREDREPRESENTATIVES AT OFFICES ENGAGED IN SALES PRACTICE ABUSES,INCLUDING UNSUITABLE AND EXCESSIVE TRADING,MISREPRESENTATIONS AND OMISSIONS TO STATE MATERIAL FACTS TOCLIENTS AND MISAPPROPRIATION OF MONEY FROM CUSTOMERACCOUNTS; AND ENTERED ORDERS FOR INDEX OPTIONS WITHOUTDESIGNATING THE ACCOUNT TO WHICH THE ORDERS RELATED UNTILAFTER THE VALUE OF THE INDEX OPTIONS ROSE OR DECLINED AND THENALLOCATED THE PROFITABLE TRADE TO HIS OWN ACCOUNT OR TOOTHER PARTICIPANTS IN THE SCHEME AND THE LOSING TRADES TO TWOCUSTOMER ACCOUNTS. FROM 08/1989 THROUGH 10/1990, A REGISTEREDREPRESENTATIVE AT THE NORTHBROOK OFFICE ENGAGED IN VIOLATIONSOF THE REGISTRATION PROVISIONS OF THE FEDERAL SECURITIES LAWS.PAINEWEBBER FAILED REASONABLY TO SUPERVISE THE REGISTEREDREPRESENTATIVES WITH A VIEW TOWARD PREVENTING THEIRVIOLATIONS OF THE SECURITIES LAWS WITHIN THE MEANING OF SECTION15(B)(4)(E)(II) OF THE EXCHANGE ACT. SEC?S ORDER CENSURESPAINEWEBBER AND REQUIRES SEVERAL UNDERTAKINGS, INCLUDING APROHIBITION AGAINST OPENING NEW ACCOUNTS FOR 30 DAYS AT THEFOUR OFFICES THAT WERE INVOLVED IN THE SALES PRACTICEVIOLATIONS, AND THE HIRING OF AN INDEPENDENT CONSULTANT TOREVIEW PROCEDURES RELATING TO SALES OF RESTRICTED SECURITIESAND SALES PRACTICES AT PAINEWEBBER.iReporting Source:Firm674©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:02/18/1993Docket/Case Number:UNKNOWNPrincipal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNKNOWN.Allegations:ALLEGATIONS THAT THE FIRM FAILED TO SUPERVISE REGISTEREDREPRESNEATIVES ENGAGED IN SALES PRACTICE ISSUES.Current Status:FinalResolution Date:02/18/1993Resolution:Other Sanctions Ordered:PROHIBITION AGAINST OPENING NEW ACCOUNTS FOR 30 DAYS AT FOUROFFICES INVOLVED IN THE ALLEGATIONS.Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Firm StatementWITHOUT ADMITTING OR DENYING THE SECS' FINDINGS, THE FIRMCONSENTED TO THE ORDER.Sanctions Ordered:CensureConsentDisclosure 420 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:02/11/1992Docket/Case Number:CMS920007-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:Final675©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:04/24/1992Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement4/30/92: MARKET SUVRVEILLANCE COMMITTEE COMPLAINT#CMS920007-AWC (A): LETTER OF ACCEPTANCE, WAIVER AND CONSENTFILED FEBRUARY 11, 1992 AGAINST RESPONDENT MEMBER PAINEWEBBERINCORPORATED ALLEGEING VIOLATIONS OF PART IV, SECTION 2(B) OFSCHEDULE D FOR BACKING AWAY:THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT WAS ACCEPTED BYTHE MARKET SURVEILLANCE COMMITTEE ON MARCH 18, 1992 AND BY THENATIONAL BUSINESS CONDUCT COMMITTEE ON APRIL 24, 1992. ***$500.00 FINE*** **$500.00 PAID ON 6/12/92 INVOICE #92-MS-441**Sanctions Ordered:Monetary/Fine $500.00ConsentiReporting Source:FirmInitiated By:NASD INC. SURVEILLANCE COMMITTEEPrincipal Sanction(s)/ReliefSought:Date Initiated:02/01/1992Docket/Case Number:CMS-9200007-AWCPrincipal Product Type:Equity - OTCOther Product Type(s):Allegations:IT WAS ALLEGED THAT PAINEWEBBER A MARKET MAKER IN THE STOCK OFROADWAY SERVICES, INC., HAD BACKED-AWAY FROM A MARKETQUOTATION WHICH PAINEWEBBER HAD DISPLAYED FOR THE ISSUE ONTHE NASDAQ SYSTEM ON DECEMBERR 11, 1991, IN VIOLATION OF PART IV,SECTION 2(B) OF SCHEDULE D OF THE ASSOCIATION'S BY-LAWS.Current Status:Final676©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:02/01/1992Resolution:Other Sanctions Ordered:Sanction Details:IN FEBRUARY 1992, PAINEWEBBER INCORPORATED ENTERED INTOA LETTER OF ACCEPTANCE, WAIVER AND CONSENT ("AWC") WITH THENATIONAL ASSOCIATION OF SECURITIES DEALERS INC. ("NASD")SURVEILLANCE COMMITTEE (CMS-9200007-AWC), WHEREBYPAINEWEBBER WITHOUT ADMITTING OR DENYING VARIOUS ALLEGEDVIOLATIONS, CONSENTED TO PAY A FINE OF $500.00.Sanctions Ordered:Monetary/Fine $500.00Acceptance, Waiver & Consent(AWC)Disclosure 421 of 450iReporting Source:RegulatorInitiated By:HEARING PANELAllegations:PERMITTED OR FAILED TO PREVENT SOLICITATIONAND RECOMMENDATION BY ONE OR MORE REGISTEREDREPRESENTATIVES OFCUSTOMER PURCHASES OF ONE OR MORE SECURITIES UNSUITABLE FORTHECUSTOMERS; VIOLATED EXCHANGE RULE 723 BY PERMITTING OR FAILINGTO PREVENT THE RECOMMENDATION BY ONE OR MORE OF ITSREGISTEREDREPRESENTATIVES OF UNSUITABLE OPTIONS TRANSACTIONS FORCUSTOMERS; VIOLATED EXCHANGE RULE 431(f)(7), (8) and (9) ANDREGULATION T BY PERMITTING CUSTOMERS AND EMPLOYEES TOENGAGE INPRACTICES, OR FAILING TO CANCEL OR OTHERWISE LIQUIDATETRANSACTIONS; IN THEIR ACCOUNTS, PROHIBITED BY SUCH RULE ANDREGULATION; VIOLATED EXCHANGE RULE 351 BY FAILING TO MAKETIMELY REPORTS OF CERTAIN EVENTS; VIOLATED EXCHANGE RULE 342BYFAILING TO CONDUCT ANNUAL SUPERVISORY BRANCH OFFICEINSPECTIONS, FAILING TO MAINTAIN ADEQUATE WRITTEN TABLES OFSUPERVISION, AND FAILING TO MAINTAIN APPROPRIATE PROCEDURESFORSUPERVISION AND CONTROL OF SALES PRACTICES ACTIVITIES.Current Status:Final677©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/18/1991Docket/Case Number:91-192Principal Product Type:Other Product Type(s):Resolution Date:01/10/1992Resolution:Other Sanctions Ordered:Sanction Details:CONSENT TO CENSURE, FINES TOTALLING $900,000, ANDSPECIAL INTERNAL REVIEW OF SALES PRACTICE POLICIES ANDPROCEDURES.Regulator StatementDECISION IS NOW FINAL.Sanctions Ordered:CensureMonetary/Fine $900,000.00ConsentiReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE, INC.Date Initiated:11/18/1991Docket/Case Number:UNKNOWNAllegations:ALLEGED THAT THE FIRM ENGAGED IN CONDUCT INCONSISTENT WITHJUST AND EQUITABLE PRINCIPALS OF TRADE ON VARIOUS OCCASIONSDURING 1984-87; VIOLATED NYSE RULE 723 ON VARIOUS OCCASIONSDURING 1984-87; VIOLATED NYSE RULE 431 (F)(7)(8)(9) AND SECTION 220.8OF REGULATION T ON VARIOUS OCCASIONS DURING 1984-87; VIOLATEDNYSE RULE 351 DURING 1987-90; AND VIOLATED NYSE RULE 342(A) AND(B) BY FAILING TO CONDUCT SUPERVISORY BRANCH OFFICEINSPECTIONS AT LEAST ANNUALLY (1985-88), FAILING TO MAINTAINADEQUATE WRITTEN TABLES OF SUPERVISION (1984-88) AND FAILING TOMAINTAIN APPROPRIATE PROCEDURES FOR SUPERVISION AND CONTROLOF SALES PRACTICE ACTIVITIES (1984-88).Current Status:Final678©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:No ProductOther Product Type(s):Resolution Date:01/10/1992Resolution:Other Sanctions Ordered:Sanction Details:FOLLOWING A STIPULATION OF FACTS AND CONSENT TO PENALTY, AHEARING PANEL OF THE NEW YORK STOCK EXCHANGE, INC. RENDERED ADECISION, DATED NOVEMBER 18, 1991 (NOTICE OF FINALITY SERVEDJANUARY 10, 1992). THE DECISION NAMED AS RESPONDENTPAINEWEBBER INCORPORATED AND IT'S PRESENT AND FORMEREMPLOYEES LEE HAROLD LOVEJOY, SHELDON ALAN CHAIKEN, ROBERTBRADLEY FULLER, DAVID WARE STRANGER, GARY PRICE EVANS, JOHNARNOLD MCFERRAN, DONALD DELIA DEST, BURGESS ASKEW DAVIS ANDWILLIAM OGRAM WEBSTER JR. THE NYSE CENSURED THE FIRM,ORDERED IT TO PAY FINES TOTALLING $900,000.00 (INCLUDING A FINE OF$800,000.00 ASSESSED AGAINSTTHE FIRM AND A CONTRIBUTION OF $100,000.00 TOWARD THE FINESASSESSED AGAINST INDIVIDUAL SUPERVISORS) AND DIRECTED IT TOCONDUCT AN INTERNAL REVIEW OF PROCEDURESFirm StatementTHE NYSE FOUND THAT THE FIRM ENGAGED IN CONDUCT INCONSISTENTWITH JUST AND EQUITABLE PRINCIPALS OF TRADE ON VARIOUSOCCASIONS DURING 1984-87; VIOLATED NYSE RULE 723 ON VARIOUSOCCASIONS DURING 1984-87; VIOLATED NYSE RULE 431 (F)(7)(8)(9) ANDSECTION 220.8 OF REGULATION T ON VARIOUS OCCASIONS DURING 1984-87; VIOLATED NYSE RULE 351 DURING 1987-90; AND VIOLATED NYSE RULE342(A) AND (B) BY FAILING TO CONDUCT SUPERVISORY BRANCH OFFICEINSPECTIONS AT LEAST ANNUALLY (1985-88), FAILING TO MAINTAINADEQUATE WRITTEN TABLES OF SUPERVISION (1984-88) AND FAILING TOMAINTAIN APPROPRIATE PROCEDURES FOR SUPERVISION AND CONTROLOF SALES PRACTICE ACTIVITIES (1984-88). THE PENALITIES ASSESSEDAGAINST THE INDIVIDUALS, ALL OF WHOM WERE CHARGED WITH FAILURETO SUPERVISE, ARE REPORTED IN FORMS U-5 AND FORMSU-4 AS APPLICABLE.Sanctions Ordered:CensureMonetary/Fine $900,000.00Stipulation and Consenti679©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 422 of 450Reporting Source:RegulatorInitiated By:SECURITIES AND EXCHANGE COMMISSION.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/16/1992Docket/Case Number:Principal Product Type:Debt - GovernmentOther Product Type(s):Allegations:VIOLATIONS, OF SECTIO N 17(A) OF THE EXCHANGE ACT AND 17 C.F.R.&&240.17A-3 AND 240.17A-4 THEREUNDER (LAW) IN CONNECTION WITHANY PRIMARY DISTRIBUTION OF GSE-DEBT,.Current Status:FinalResolution Date:01/16/1992Resolution:Other Sanctions Ordered:MAINTAIN OR DEVELOP, IMPLEMENT AND, THEREAFTER, MAINTAINPOLICIES AND PROCEDURES (PPS) REASONABLY DESIGNED TO ENSUREFUTURE COMPLIANCE WITH THE LAW. THE PPS MAY BE MODIFIED,PROVIDED SUCH MODIFICATIONS ARE REASONABLY DESIGNED TOENSURE PAINEWEBBER'S FUTURE COMPLIANCE WITH THE LAW, ANDSUCH PPS SHALL BE AVAILABLE FOR SEC INSPECTION.Sanction Details:CIVIL PENALTY OF $100,000.00Regulator Statement[TOP] +3/12/92+ SEC NEWS DIGEST, ISSUE 92-11, DATED 01/16/1992ADMINISTRATIVE PROCEEDINGS DISCLOSES: SEC ANNOUNCEDADMINISTRATIVE PROCEEDINGS INSTITUTED JOINTLY BY SEC, THEOFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC) AND THEBOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (FRB)AGAINST 98 REGISTERED BROKER-DEALERS, REGISTERED GOVERNMENTSECURITIES BROKERS AND/OR AND BANKS (RESPONDENTS); THEISSUANCE OF SEC, OCC AND FRB ORDERS IMPOSING SANCTIONS, WHICHINCLUDE PROVISIONS DIRECTING THE RESPONDENTS TO CEASE ANDDESIST FROM COMMITTING FUTURE VIOLATIONS AND REQUIRING THEPAYMENT OF CIVIL PENALTIES TO THE US TREASURY IN THE TOTALSanctions Ordered:Cease and Desist/InjunctionOrder680©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAMOUNT OF $5,165,000; AND SEC?S ISSUANCE OF A REPORT PURSUANTTO SECTION 21(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (?34 ACT)REGARDING THE DISTRIBUTION OF CERTAIN DEBT (DEBT) SECURITIESISSUED BY GOVERNMENT-SPONSORED ENTERPRISES (GSE?S). (RELS. 34-30192 - 34-30251) +3/20/92+ SEC DOCKET VOLUME 50 NO. 12, DATED01/28/1992 DISCLOSES ADMINISTRATIVE FILE NO. 3-7646 PAGES 1183 &1184; IT IS HEREBY ORDERED THAT PAINEWEBBER SHALL CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATION, AND FROMCOMMITTING OR CAUSING ANY FUTURE VIOLATIONS, OF SECTIO N 17(A)OF THE EXCHANGE ACT AND 17 C.F.R. &&240.17A-3 AND 240.17A-4THEREUNDER (LAW) IN CONNECTION WITH ANY PRIMARY DISTRIBUTIONOF GSE-DEBT, SHALL PAY A CIVIL PENALTY OF $100,000.00 TO THE USTREASURY, SHALL CONTINUE TO MAINTAIN OR DEVELOP, IMPLEMENTAND, THEREAFTER, MAINTAIN POLICIES AND PROCEDURES (PPS)REASONABLY DESIGNED TO ENSURE PAINEWEBBER'S FUTURECOMPLIANCE WITH THE LAW. THE PPS MAY BE MODIFIED, PROVIDEDSUCH MODIFICATIONS ARE REASONABLY DESIGNED TO ENSUREPAINEWEBBER'S FUTURE COMPLIANCE WITH THE LAW, AND SUCH PPSSHALL BE AVAILABLE FOR SEC INSPECTION.iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:CIVIL PENALTY OF $100000.00Date Initiated:01/16/1992Docket/Case Number:3-7646Principal Product Type:Debt - GovernmentOther Product Type(s):Allegations:ALLEGED VIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND 17C.F.R. & 240.17A-3 AND 240.17A-4.Current Status:FinalResolution Date:06/16/1992Resolution:Sanctions Ordered:Monetary/Fine $100,000.00Cease and Desist/InjunctionOrder681©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Firm StatementTHE ADMINISTRATIVE PROCEEDING WAS INSTITUTED JOINTLY BY THESEC, THE OFFICE OF THE COMPTROLLER OF THE CURRENCY AND THEBOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AGAINSTNINETY EIGHT BROKER DEALERS. THE $100,000.00 CIVIL PENALTY PAID BYTHE FIRM WAS ASSESSED ON A $5,165,000.00 TOTAL AGAINST ALL FIRMS.Disclosure 423 of 450iReporting Source:RegulatorInitiated By:ALABAMA SECURITIES COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/28/1992Docket/Case Number:OS 92-0007URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:OPERATING AS AN UNREGISTERED INVESTMENTADVISER AND EMPLOYING UNREGISTERED INVESTMENT ADVISERREPRESENTATIVES IN THE STATE OF ALABAMACurrent Status:FinalResolution Date:02/28/1992Resolution:Other Sanctions Ordered:Sanction Details:AGREED TO PAY A FINE OF $132,500 AND $17,500 ININVESTIGATIVE COSTS;AGREED TO ENSURE THAT ALABAMA CLIENTSENJOYED A POSITIVE RETURN ON THEIR ACCOUNT DURING THEUNREGISTERED PERIOD;SUBMIT TO ADDITIONAL REPORTINGREQUIREMENTSFOR THE NEXT 24 MONTHS.Sanctions Ordered:Monetary/Fine $132,500.00Order682©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRegulator StatementALABAMA SECURITIES COMMISSION AND PAINEWEBBERINC ENTERED INTO A SETTLEMENT ORDER ON FEBRUARY 28, 1992. THEALLEGATIONS WERE THAT PAINEWEBBER INC HAD OPERATED AS ANUNREGISTERED INVESTMENT ADVISER IN THE STATE OF ALABAMA.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS PAINEWEBBER INCAGREED TO PAY A FINE OF $132,500 AND INVESTIGATIVE COSTS OF$17,500, TO ENSURE THAT ALL ALABAMA CLIENTS ENJOYED A POSITIVERETURN DURING THE PERIOD THE FIRM OPERATED AS ANUNREGISTEREDINVESTMENT ADVISER AND TO PROVIDE THE COMMISSION WITHADDITIONAL INFORMATION FOR THE NEXT 24 MONTHS WITH REGARD TOITS INVESTMENT ADVISORY ACTIVITIES IN ALABAMA.iReporting Source:FirmInitiated By:ALABAMA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/28/1992Docket/Case Number:OS #92-0007Principal Product Type:No ProductOther Product Type(s):Allegations:PWI OPERATED AS AN UNREGISTERED INVESTMENT ADVISOR ANDEMPLOYING UNREGISTERED INVESTMENT ADVISORS IN THE STATE OFALABAMACurrent Status:FinalResolution Date:02/28/1992Resolution:Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,PWI AGREED TO PAY A FINE OF $132,500 AND INVESTIGATIVE COSTS OF$17,500; AGREED TO ENSURE THA ALABAMA CLIENTS ENJOYED APOSITIVE RETURN ON THEIR ACCOUNT DURING THE UNREGISTEREDPERIOD; SUBMIT TO ADDITIONAL REPORTING REQUIREMENTS FOR THESanctions Ordered:Monetary/Fine $150,000.00Settled683©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceNEXT 24 MONTHS.Disclosure 424 of 450iReporting Source:RegulatorInitiated By:INDIANA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/09/1991Docket/Case Number:91-0144 CAURL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:AGENT CHRIS SHOOT SOLICITED PERSONAL LOANSFROM CLIENTS.Current Status:FinalResolution Date:12/09/1991Resolution:Other Sanctions Ordered:Sanction Details:THE DIVISION ENTERED INTO A CONSENT AGREEMENTWITH PAINEWEBBER WHEREBY PAINEWEBBER AGREED TO PAY THEDIVISIONCIVIL PENALTIES & FULL RESTITUTION & INTEREST TO ALLPAINEWEBBER CLIENTS WHO WERE FOUND TO BE VICTIMS OF AGENTCHRISSHOOTS' SOLICITATIONS FOR PERSONAL LOANS. SHOOT ALLEGEDLYSOLICITED 4 INDIANA CLIENTS FOR PERSONAL LOANS FOR A TOTALAMOUNT EXCEEDING $50.000.00 . SHOOT AND PAINEWEBBER WERENAMEDIN AN ADMINISTRATIVE COMPLAINT FILED BY THE DIVISION. SHOOT HASBEEN TERMINATED BY PAINEWEBBER AND IS NOT A PARTY TO THECURRENT CONSENT AGREEMENT.Regulator StatementSEE RESULTSSanctions Ordered:Disgorgement/RestitutionConsent684©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceiReporting Source:FirmInitiated By:INDIANA SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/09/1991Docket/Case Number:91-01-44-CAPrincipal Product Type:No ProductOther Product Type(s):Allegations:AGENT CHRIS SHOOT SOLICITED PERSONAL LOANS FROM CLIENTS FOR ATOTAL AMOUNT EXCEEDING $50,000. SHOOT AND PAINEWEBBER WERENAMED IN AN ADMINISTRATIVE COMPLAINT FILED BY THE DIVISIONCurrent Status:FinalResolution Date:12/09/1991Resolution:Other Sanctions Ordered:Sanction Details:THE DIVISION ENTERED INTO A CONSENT AGREEMENT WITHPAINEWEBBER WHEREBY PAINEWEBBER AGREED TO PAY THEDIVISION CIVIL PENALTIES A FULL RESTITUTION AND INTEREST TO ALLPAINEWEBBER CLIENTS WHO WERE FOUND TO BE VICTIMS OF AGENTSHOOT'S SOLICITATIONS FOR PERSONAL LOANS. SHOOT HAS BEENTERMINATED BY PAINEWEBBER AND IS NOT A PARTY TO THE CONSENTAGREEMENT.Sanctions Ordered:Monetary/FineConsentDisclosure 425 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:06/27/1991Allegations:Current Status:Final685©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Docket/Case Number:C06900013Principal Product Type:Other Product Type(s):Resolution Date:06/27/1991Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON JUNE 27, 1991, THE LETTER OF ACCEPTANCE, WAIVER AND CONSENTC06900013 (TEX-784-AWC) (DISTRICT NO. 6) SUBMITTED BYRESPONDENT PAINEWEBBER INCORPORATED WAS ACCEPTED;THEREFORE,RESPONDENT MEMBER IS CENSURED AND FINED $5,000 - (ARTICLE III,SECTION 1 OF THE RULES OF FAIR PRACTICE - FAILED TO FILE ANACCURATE UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRYREGISTRATION (FORM U-5) IN THAT RESPONDENT MEMBER FAILED TOINDICATE THAT IT WAS CONDUCTING AN INVESTIGATION RELATING TO ACUSTOMER COMPLAINT AT THE TIME OF AN INDIVIDUAL'S TERMINATION). ***$5,000.00 PAID ON 9/3/91 INVOICE #91-06-771***Sanctions Ordered:CensureMonetary/Fine $5,000.00ConsentiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:06/27/1991Docket/Case Number:C06900013Allegations:VIOLATION OF ARTICLE III, SECTION 1 OF THE RULES OF FAIR PRACTICE,IN THAT THE FIRM FAILED TO FILE AN ACCURATE UNIFORM TERMINATIONNOTICE FOR SECURITIES INDUSTRY REGISTRATION BY FAILING TOINDICATE THAT IT WAS CONDUCTING AN INVESTIGATION.Current Status:Final686©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE OF $5000.00Principal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNAVAILABLE.Resolution Date:06/27/1991Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETIAL ISUNAVAILABLE.Sanctions Ordered:Monetary/Fine $5,000.00ConsentDisclosure 426 of 450iReporting Source:RegulatorInitiated By:VIRGINIA - STATE CORPORATION COMMISSIONDIVISION OF SECURITIESPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/02/1991Docket/Case Number:SEC900143URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:ALLEGED THAT PAINWEBBER VIOLATED THE VIRGINIASECURITIES ACT SECTION 13.1-504B IN THAT THE FIRM EMPLOYED ANUNREGISTERED AGENT, JAMES WILSON FEINGOLD, WHO OFFERED ANDSOLDSECURITIES TO A VIRGINIA RESIDENT.Current Status:FinalResolution:Consent687©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:01/02/1991Other Sanctions Ordered:Sanction Details:WITHOUT ADMITTING OR DENYING ALLEGATIONSPAINEWEBBER AGREED TO MAKE AN OFFER OF RESCISSION OF SALES TOVIRGINIA RESIDENT IN TRADES EXECUTED BY THE AGENT IN QUESTION,FEINGOLD.Regulator StatementCONTACT BRIAN SILVERMAN, BROKER-DEALER EXAMINER,804-786-7751.Sanctions Ordered:iReporting Source:FirmInitiated By:STATE OF VIRGINIAPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:11/01/1990Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:INVESTIGATION REGARDING THE SALE OF SECURITIES IN THE STATE OFVIRGINIACurrent Status:FinalResolution Date:11/01/1990Resolution:Other Sanctions Ordered:Sanction Details:IN NOVEMBER, 1990, PAINEWEBBER INCORPORATED ACCEPTED ASETTLEMENT WITH THE STATE OF VIRGINIA AND AGREED TO MAKE AWRITTEN OFFER OF RECISSION TO A VIRGINIA INVESTOR WHO HADPURCHASED A SECURITY THROUGH AN UNREGISTERED AGENT IN THEEMPLOY OF PAINEWEBBER INCORPORATED.Sanctions Ordered:Disgorgement/RestitutionSettledi688©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 427 of 450Reporting Source:RegulatorInitiated By:NEW MEXICO SECURITIES DIVISIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/15/1990Docket/Case Number:90-NR-05URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:FAILURE TO PRODUCE DOCUMENTS PURSUANT TOSTATUTORY INSPECTION POWER AND SUBPOENACurrent Status:FinalResolution Date:02/01/1991Resolution:Other Sanctions Ordered:Sanction Details:Not ProvidedRegulator StatementDURING INVESTIGATION FIRM FAILED TO PROVIDEDOCUMENTS AS REQUESTED BY LETTER AND SUBPOENA IN A TIMELYFASHION.Sanctions Ordered:Monetary/Fine $2,500.00ConsentiReporting Source:FirmInitiated By:THE STATE OF NEW MEXICODate Initiated:08/01/1990Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductAllegations:FAILURE TO TIMELY PRODUCE REQUESTED DOCUMENTATION.Current Status:Final689©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Other Product Type(s):Resolution Date:02/01/1991Resolution:Other Sanctions Ordered:Sanction Details:IN FEBRUARY OF 1991, THE STATE OF NEW MEXICO ISSUED AWITHDRAWAL OF ORDER OF ITS NOTICE OF INTENT ISSUED IN AUGUST OF1990, THAT THE FIRM HAD NOT TIMELY PRODUCED REQUESTEDDOCUMENTATION. WHILE NEITHER ADMITTING NOR DENYING THEALLEGATIONS, THE PARTIES AGREED TO THE PAYMENT OF A $2,500.00FINE AND ASSESSMENT OF COSTS IN THE AMOUNT OF $2,500.00.Sanctions Ordered:Monetary/Fine $5,000.00SettledDisclosure 428 of 450iReporting Source:RegulatorInitiated By:IDAHO DEPARTMENT OF FINANCE, SECURITIESBUREAUPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/11/1990Docket/Case Number:1990-7-44URL for Regulatory Action:Principal Product Type:Other Product Type(s):Allegations:SECURITIES SALES AND SOLICITATIONS BY ANUNLICENSED AGENT, LACK OF ADEQUATE SUPERVISION.Current Status:FinalResolution Date:09/11/1990Resolution:Consent690©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:AGREEMENT AND ORDER WHEREBY 1) PAINEWEBBER AGREESTO CENSURE KADZIEL, 2) ADMISSION OF SALES BY AN UNLICENSEDREPRESENTATIVE, 3) REVIEW OF COMPLIANCE PROCEDURES 3) RONALDKADZIEL TO REQUALIFY BY EXAM PRIOR TO IDAHO LICENSURE, JOINTAND SEVERAL FINE OF $4000.Regulator StatementNot ProvidedSanctions Ordered:Monetary/Fine $4,000.00iReporting Source:FirmInitiated By:STATE OF IDAHOPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/01/1990Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:INVESTIGATION RELATING TO ACTIVITIES INVOLVING THE SALE OFSECURITIES BY AN UNREGISTERED AGENT.Current Status:FinalResolution Date:09/01/1990Resolution:Other Sanctions Ordered:Sanction Details:IN SEPTEMBER OF 1990, THE FIRM AND ONE OF ITS SUPERVISORSENTERED INTO AN AGREEMENT AND ORDER WITH THE STATE OF IDAHORELATING TO ACTIVITIES INVOLVING THE SALE OF SECURITIES BY ANUNREGISTERED AGENT. THE PENALTY IMPOSED WAS A JOINT ANDSEVERAL FINE OF $4,000.00 AND THAT THE SUPERVISOR WOULD NOTAPPLY FOR A LICENSE IN THE STATE OF IDAHO UNTIL HE TAKES ANDPASSESTHE SERIES 24 OR SERIES 8 EXAMINATIONS.Sanctions Ordered:Monetary/Fine $4,000.00Decision & Order of Offer of Settlement691©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 429 of 450iReporting Source:RegulatorInitiated By:COMMODITY FUTURES TRADE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:09/30/1988Docket/Case Number:UnknownPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:09/30/1988Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement^9/14/90^ SEC LITIGATION, ACTIONS AND PROCEEDINGS BULLETIN FORTHE QUARTER ENDING 3/31/89 (VOLUME 55, BULLETIN 01, PAGE 67)DISCLOSES: PAINEWEBBER INCORPORATED WAS ISSUED A CEASE AND ADESIST ORDER BY THE COMMODITY FUTURES TRADING COMMISSION ON9/30/88.Sanctions Ordered:Cease and Desist/InjunctionDecisioniReporting Source:FirmInitiated By:COMMODITY FUTURES TRADE COMMISSION.Date Initiated:09/30/1988Docket/Case Number:UNKNOWNAllegations:DUE TO THE AGE OF THE ITEM, THE ALLEGATIONS ARE UNKNOWN.Current Status:Final692©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Cease and DesistOther Sanction(s)/ReliefSought:Principal Product Type:OtherOther Product Type(s):DUE TO THE AGE OF THE ITEM, THE PRINCIPAL PRODUCT TYPE ISUNKNOWN.Resolution Date:09/30/1988Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:Cease and Desist/InjunctionDecisionDisclosure 430 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Date Initiated:07/20/1989Docket/Case Number:NY-7089Principal Product Type:OtherOther Product Type(s):Allegations:COMPLAINT NO. NY-7089 (DISTRICT NO. 12) FILED JULY 20, 1989AGAINST RESPONDENT PAINEWEBBER INCORPORATED AND OTHERSALLEGING VIOLATIONS OF ARTICLE III, SECTIONS 1, 2, AND 27 OF THERULES OF A FAIR PRACTICE IN THAT RESPONDENT MEMBER FIRM ACTINGTHROUGH AN INDIVIDUAL EXERCISED DISCRETIONARY AUTHORITY IN THEACCOUNT OF A PUBLIC CUSTOMER WITHOUT HAVING REASONABLEGROUNDS TO BELIEVE THE TRANSACTIONS BEING MADE WERE SUITABLEFOR THE CUSTOMER BASED ON THE CUSTOMERS FINANCIAL SITUATIONAND INVESTMENT OBJECTIVES; AND, RESPONDENT MEMBER, ACTINGTHROUGH AN INDIVIDUAL, FAILED TO IMPLEMENT ITS SUPERVISORYPROCEDURES TO DETECT AND PREVENT THE INDIVIDUAL'S MISCONDUCT.Current Status:Final693©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanction(s)/ReliefSought:Resolution Date:07/17/1990Resolution:Other Sanctions Ordered:Sanction Details:DECISION RENDERED JULY 17, 1990 CONSOLIDATING NY-7050 ANDNY-7089, WHEREIN THE OFFER OF SETTLEMENT SUBMITTED BYRESPONDENT MEMBER WAS ACCEPTED; THEREFORE RESPONDENTPAINEWEBBER INC. IS CENSURED AND FINED $30,000, JOINTLY ANDSEVERALLY.Sanctions Ordered:CensureMonetary/Fine $30,000.00ConsentiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/20/1989Docket/Case Number:NY-7089Principal Product Type:OtherOther Product Type(s):UNKNOWNAllegations:COMPLAINT NO. NY-7089 (DISTRICT NO. 12) FILED JULY 20, 1989 AGAINSTRESPONDENT PAINEWEBBER INCORPORATED AND OTHERS ALLEGINGVIOLATIONS OF ARTICLE III, SECTIONS 1, 2, AND 27 OF THE RULES OF AFAIR PRACTICE IN THAT RESPONDENT MEMBER FIRM ACTING THROUGHAN INDIVIDUAL EXERCISED DISCRETIONARY AUTHORITY IN THE ACCOUNTOF A PUBLIC CUSTOMER WITHOUT HAVING REASONABLE GROUNDS TOBELIEVE THE TRANSACTIONS BEING MADE WERE SUITABLE FOR THECUSTOMER BASED ON THE CUSTOMERS FINANCIAL SITUATION ANDINVESTMENT OBJECTIVES; AND, RESPONDENT MEMBER, ACTINGTHROUGH AN INDIVIDUAL, FAILED TO IMPLEMENT ITS SUPERVISORYPROCEDURES TO DETECT AND PREVENT THE INDIVIDUAL'S MISCONDUCT.Current Status:Final694©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:07/17/1990Resolution:Other Sanctions Ordered:Sanction Details:DECISION RENDERED JULY 17, 1990 CONSOLIDATING NY-7050 AND NY-7089, WHEREIN THE OFFER OF SETTLEMENT SUBMITTED BYRESPONDENT MEMBER WAS ACCEPTED; THEREFORE RESPONDENTPAINEWEBBER INC. IS CENSURED AND FINED $30,000, JOINTLY ANDSEVERALLYSanctions Ordered:CensureMonetary/Fine $30,000.00ConsentDisclosure 431 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/03/1986Docket/Case Number:LA-4093Principal Product Type:No ProductOther Product Type(s):Allegations:NASD ARTICLE III, SECTIONS 1, 2, APPENDIX E, SECTION 19 AND SECTION27 OF THE RULES OF FAIR PRACTICE IN THAT RESPONDENT MEMBERFAILED TO PROPERLY AND ADEQUATELY SUPERVISE THE ACTIVITIES OFREGISTERED REPRESENTATIVE.Current Status:FinalResolution Date:01/27/1988Resolution:Other Sanctions Ordered:COSTS.Sanction Details:HEARING PANEL DECISION RENDERED JUNE 1, 1987, WHEREINRESPONDENT MEMBER IS CENSURED, FINED $5,000.00 AND ASSESSEDSanctions Ordered:CensureMonetary/Fine $10,000.00Decision695©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCOSTS OF $1,867.25. IF NO FURTHER ACTION, DECISION WILL FINAL JULY15, 1987. ON JULY 6, 1987, APPEALED TO THE BOARD OF GOVERNORS. THEBOARD OF GOVERNORS' DECISION RENDERED ON DECEMBER 28, 1987,WHEREIN THE FINDINGS ARE AFFIRMED AND THE SANCTIONS AREMODIFIED; THEREFORE, RESPONDENT MEMBER IS CENSURED, FINED$10,000.00 AND ASSESSED COSTS OF $1,867.25. IF NO FURTHER ACTION,DECISION WILL FINAL JANUARY 27, 1988. THE DECISION IS NOW FINAL ONJANUARY 27, 1988.iReporting Source:FirmInitiated By:NASDPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1987Docket/Case Number:DBCC COMPLAINT #LA-4093Principal Product Type:No ProductOther Product Type(s):Allegations:NASD ALLEGED THAT PAINEWEBBER HAD FAILED TO MAINTAIN ANDENFORCE ADEQUATE SUPERVISORY PROCEDURES, IN VIOLATION OFARTICLE III, SECTIONS 1 AND 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICE.Current Status:FinalResolution Date:06/01/1987Resolution:Other Sanctions Ordered:Sanction Details:PWI WAS FINED $5,000Sanctions Ordered:Monetary/Fine $5,000.00DecisionDisclosure 432 of 450iReporting Source:RegulatorCurrent Status:Final696©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/07/1989Docket/Case Number:MS-878-AWC(A)Principal Product Type:Other Product Type(s):Allegations:Resolution Date:04/23/1990Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT #MS-878-AWC (A):LETTEROF ACCEPTANCE, WAIVER AND CONSENT FILED DECEMBER 7, 1989AGAINST RESPONDENT MEMBER PAINEWEBBER, INC. ALLEGINGVIOLATIONSPART VI, SECTION 2(d) OF SCHEDULE D FOR ENTERING NASDAQQUOTATIONS CONTAINING EXCESS SPREADS. THE LETTER OFACCEPTANCE,WAIVER AND CONSENT WAS ACCEPTED BY THE MARKET SURVEILLANCECOMMITTEE ON MARCH 20, 1990 AND BY THE NATIONAL CONDUCTCOMMITTEE ON APRIL 23, 1990. $500 FINE. ***$500.00 PAID ON 7/16/90 INVOICE #90-MS-564***Sanctions Ordered:Monetary/Fine $500.00ConsentiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:12/07/1989Allegations:ALLEGED VIOLATIONS OF PART VI, SECTION 2(D) OF SCHEDULE D FORENTERING NASDAQ QUOTATIONS CONTAINING EXCESS SPREADS.Current Status:Final697©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ACCEPTANCE WAIVER AND CONSENT.Docket/Case Number:MS-878-AWC(A)Principal Product Type:Equity - OTCOther Product Type(s):Resolution Date:04/23/1990Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:Monetary/Fine $500.00Acceptance, Waiver & Consent(AWC)Disclosure 433 of 450iReporting Source:RegulatorInitiated By:NEW YORK STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:Date Initiated:11/24/1989Docket/Case Number:D-NYSE-89-111Principal Product Type:OtherOther Product Type(s):Allegations:PAINWEBBER INCOPORATED, A MEMBER ORGANIZATION OF THEEXCHANGE, VIOLATED EXCHANGE RULE 351(A)(8) IN THAT IT DID NOTPROMPTLY REPORT TO THE EXCHANGETHAT A CLAIM FORM DAMAGES BY A CUSTOMER HAD BEEN SETTLED FORAN AMOUNT EXCEEDING $5,000 -- CONSENT TO CENSURE AND 2,500FINE.DOCKET/CASE NO. D-NYSE-89-111, DATED 11/24/89.Current Status:FinalResolution:Consent698©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:11/24/1989Other Sanctions Ordered:Sanction Details:PAINWEBBER INCOPORATED, A MEMBER ORGANIZATION OF THEEXCHANGE, VIOLATED EXCHANGE RULE 351(A)(8) IN THAT IT DID NOTPROMPTLY REPORT TO THE EXCHANGETHAT A CLAIM FORM DAMAGES BY A CUSTOMER HAD BEEN SETTLED FORAN AMOUNT EXCEEDING $5,000 -- CONSENT TO CENSURE AND 2,500FINE.DOCKET/CASE NO. D-NYSE-89-111, DATED 11/24/89.Sanctions Ordered:CensureMonetary/Fine $2,500.00iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE OF $2500.00Date Initiated:11/24/1989Docket/Case Number:D-NYSE-89-111Principal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED VIOLATION OF EXCHANGE RULE 351(A)(80 IN THAT THE FIRM DIDNOT PROMPLTY REPORT TO THE ECHANGE THAT A CLAIM FOR DAMAGESBY A CUSTOMER HAD BEEN SETTLED IN EXCESS OF $5000.00Current Status:FinalResolution Date:11/24/1989Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $2,500.00Consenti699©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 434 of 450Reporting Source:RegulatorInitiated By:CHICAGO BOARD OF OPTION EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/25/1989Docket/Case Number:89-0061Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:04/25/1989Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement8/23/89: FORM U6 (8145-22689) DISCLOSES: THIS CASE WAS RESOLVEDBY A LETTER OF CONSENT WHEREBY RESPONDENT PAINEWEBBER, INC.DIDNOT ADMIT OR DENY THAT CBOE RULES HAD BEEN VIOLATED.PAINEWEBBER EXCEEDED THE EXCHANGE'S POSITION LIMIT ON 3 TRADEDATES. SANCTION: A $5,000 FINE. DOCKET/CASE #89-0061, DATEDAPRIL 25, 1989Sanctions Ordered:Monetary/Fine $5,000.00ConsentiReporting Source:FirmInitiated By:CBOEDate Initiated:04/01/1989Docket/Case Number:89-0061Allegations:POSITION LIMITS VIOLATIONS.Current Status:Final700©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:OptionsOther Product Type(s):Resolution Date:04/01/1989Resolution:Other Sanctions Ordered:Sanction Details:IN APRIL, 1989, THE FIRM AGREED TO A $5,000.00 FINEISSUED BY THE CBOE FOR POSITION LIMITS VIOLATIONS.Sanctions Ordered:Monetary/Fine $5,000.00OtherDisclosure 435 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/30/1989Docket/Case Number:ATL-1008-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:06/30/1989Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $15,000.00Consent701©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:Regulator StatementON JUNE 30, 1989, THE LETTER OF ACCEPTANCE, WAIVER AND CONSENTNO. ATL-1008-AWC (DISTRICT NO. 7) SUBMITTED BY RESPONDENTPAINEWEBBER INCORPORATED WAS ACCEPTED; THEREFORE, THEY ARECENSURED AND FINED $15,000.00 (ARTICLE III, SECTIONS 1 AND 27(a)OF THE RULES OF FAIR PRACTICE - FAILED AND NEGLECTED TOESTABLISH, MAINTAIN AND ENFORCE PROCEDURES WHICH WOULD HAVEENABLED IT TO DETECT AND SUPERVISE EXCESSIVE TRADING ACTIVITYOFA SALES REPRESENTATIVE). $15,000 PAID ON 7/28/89.iReporting Source:FirmInitiated By:NASD, DISTRICT #7Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/30/1989Docket/Case Number:ATL-1008 AWCPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED THAT THE FIRM HAD NOT PROPERLY SUPERVISEDTHE ACTIVITIES OF FORMER REGISTERED REPRESENTATIVE TIM HAILE.Current Status:FinalResolution Date:06/30/1989Resolution:Other Sanctions Ordered:Sanction Details:ON JUNE 30, 1989 PAINEWEBBER INCORPORATED AGREED TO SIGN ALETTER OF ACCEPTANCE, WAIVER AND CONSENT AND WAS FINED $15,000BY DISTRICT NO. 7 OF THE NASD (ATL-1008 AWC). WITHOUT ADMITTING ORDENYING THE FACTS STATED IN THE ORDER IT WAS DETERMINED THATTHE FIRM HAD NOT PROPERLY SUPERVISED THE ACTIVITIES OF FORMERREGISTERED REPRESENTATIVE TIM HAILE.Sanctions Ordered:Monetary/Fine $15,000.00Acceptance, Waiver & Consent(AWC)702©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 436 of 450iReporting Source:RegulatorInitiated By:CHICAGO BOARD OF OPTION EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/27/1989Docket/Case Number:88-0098(A)Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:01/27/1989Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement5/9/89-FORM U6 (8028-10289) DISCLOSES: THIS CASE WAS RESOLVEDBY AN OFFER OF SETTLEMENT WHEREBY THE RESPONDENTS NEITHERADMITOR DENY THAT CBOE RULES HAD BEEN VIOLATED. DURING ANAPPROXIMATE 17 MONTH PERIOD, PAINEWEBBER AND DONALD ALBRIGHT,ABRANCH OFFICE MANAGER AT PAINEWEBBER'S MONTEREY, CA BRANCHOFFICE, FAILED ADEQUATELY TO SUPERVISE A REGISTEREDREPRESENTATIVE ("RR") BY ALLOWING THE RR 1) TO EFFECT NUMEROUSUNSUITABLE OPTION TRANSACTIONS AND FOR NUMBEROUS PUBLICCUSTOMER ACCOUNTS; 2) TO EFFECT NUMEROUS OPTIONTRANSACTIONSFOR NUMEROUS PUBLIC CUSTOMER ACCOUNTS WHICH WAS EXCESSIVEINFERQUENCY AND SIZE; 3) BY ALLOWING THE RR TO SOLICIT SEVERALPUBLIC CUSTOMERS TO MAKE INVESTMENTS PRIOR TO THE RRSanctions Ordered:CensureMonetary/Fine $15,000.00Consent703©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceBECOMINGLICENSED AS A RR; AND 4) TO EFFECT OPTION TRANSACTIONS FORSEVERAL PUBLIC CUSTOMER ACCOUNTS WHICH WERE BEYOND THEAPPROVEDLEVELS AS INDICATED ON PAINEWEBBER'S OPTIONS CLIENTQUALIFICATION FORM. SANCTION: A JOINT AND SEVERAL FINE OF$15,000 AND A CENSURE. DOCKET/CASE NO. 88-0098(a), DATEDJANUARY 27, 1989.iReporting Source:FirmInitiated By:CBOEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/01/1989Docket/Case Number:88-0098APrincipal Product Type:OptionsOther Product Type(s):Allegations:FAILURE TO SUPERVISE THE OPTIONS ACTIVITY OF A FORMERREGISTERED REPRESENTATIVECurrent Status:FinalResolution Date:02/01/1989Resolution:Other Sanctions Ordered:Sanction Details:IN FEBRUARY, 1989, THE FIRM AND ITS FORMER EMPLOYERDONALD ALBRIGHT AGREED TO A CENSURE AND A JOINT ANDSEVERAL FINE OF $15,000.00 FOR FAILING TO SUPERVISE THEOPTIONS ACTIVITY OF A FORMER REGISTERED REPRESENTATIVESanctions Ordered:CensureMonetary/Fine $15,000.00OrderDisclosure 437 of 450iReporting Source:Regulator704©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NEW YORK STOCK EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/07/1985Docket/Case Number:85-28Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:06/07/1985Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementNEW YORK STOCK EXCHANGE WEEKLY BULLETIN, JUNE 7, 1985 (REC'D6/17/85): PAINE WEBBER INCORPORATED SUBMITTED A STIPULATION OFFACTS AND CONSENT TO PENALTY WHICH WAS ACCEPTED BY ANEXCHANGEHEARING PANEL. FOR THE SOLE PURPOSE OF SETTLING THISDISCIPLINARY PROCEEDING AND WITHOUT ADMITTING OR DENYINGGUILT,THE FIRM CONSENTED TO A FINDING THAT IT ENGAGED IN CONDUCTINCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE INTHATIT ESTABLISHED POSITIONS IN COMMON STOCK AND OPTIONS OF ACORPORATION SHORTLY BEFORE IT WAS TO ISSUE A RESEARCH REPORTRECOMMENDING THAT CORPORATION'S SECURITIES TO THE GENERALPUBLIC; AND VIOLATED EXCHANGE RULE 342(b) IN THAT IT FAILED TOEFFECTIVELY IMPLEMENT ITS SUPERVISORY CONTROLS SO AS TOPREVENTTHE FOREGOING CONDUCT. THE HEARING PANEL IMPOSED THE PENALTYCONSENTED TO BY THE FIRM OF A CENSURE AND A FINE OF $30,000,$15,000 OF WHICH IS DEEMED REMITTED IN VIEW OF A FINE IN THATAMOUNT TO BE PAID TO THE CHICAGO BOARD OPTIONS EXCHANGE.Sanctions Ordered:CensureMonetary/Fine $30,000.00Consent705©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance(DECISION 85-28)iReporting Source:FirmInitiated By:NEW YORK STOCK EXCHANGE.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE OF $30000.00Date Initiated:06/07/1985Docket/Case Number:85-28Principal Product Type:Equity Listed (Common & Preferred Stock)Other Product Type(s):Allegations:ALLEGED VIOLATIONS OF THE JUST AND EQUITABLE PRINCIPLES OFTRADE.Current Status:FinalResolution Date:06/07/1985Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Firm StatementFOR THE SOLE PURPOSE OF SETTLING THE PROCEEDING AND WITHOUTADMITTING OR DENYING GUILT, THE FIRM CONSENTED TO A FINDING THATIT ENGAGED IN CONDUCT INCONSISTENT WITH THE JUST AND EQUITABLEPRINCIPLES OF TRADE.Sanctions Ordered:CensureMonetary/Fine $30,000.00ConsentDisclosure 438 of 450iReporting Source:RegulatorAllegations:COMPLAINT NO. NY-7050 FILED MARCH 23, 1989 BY DISTRICT NO. 12AGAINST RESPONDENT PAINEWEBBER INCORPORATED AND OTHERSALLEGING VIOLATIONS OF ARTICLE III, SECTIONS 1, 2 AND 27 OF THECurrent Status:Final706©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/23/1989Docket/Case Number:NY-7050 AND NY-7089Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIESRULES OF FAIR PRACTICE IN THAT INDIVIDUAL RESPONDENT("REGISTERED REPRESENTATIVE") EXECUTED TRANSACTIONS IN ACUSTOMER'S ACCOUNT WITH RESPONDENT MEMBER AND LATER, IN THECUSTOMER'S ACCOUNT AT HIS NEXT EMPLOYING-MEMBER, WHICH WERESHORT-TERM AND EXCESSIVE IN NATURE, WITHOUT HAVINGREASONABLE GROUNDS TO BELIEVE THAT SUCH TRANSACTIONS WERESUITABLE FOR THE CUSTOMER IN LIGHT OF HER FINANCIAL SITUATIONAND INVESTMENT OBJECTIVES; AND, RESPONDENT PAINEWEBBER,ACTING THROUGH ANOTHER INDIVIDUAL RESPONDENT, FAILED TOIMPLEMENT ITS SUPERVISORY PROCEDURES TO DETECT AND PREVENTTHE MISCONDUCT OF REGISTERED REPRESENTATIVE.Resolution Date:07/17/1990Resolution:Other Sanctions Ordered:Sanction Details:DECISION RENDERED JULY 17, 1990, WHEREIN THE OFFER OFSETTLEMENT SUBMITTED BY RESPONDENT MEMBER WAS ACCEPTED;THEREFORE RESPONDENTS PAINEWEBBER IS CENSURED AND FINED$30,000, JOINTLY AND SEVERALLY.Regulator StatementCOMPLAINT NO. NY-7089 (DISTRICT NO. 12) FILED JULY 20, 1989 AGAINSTRESPONDENTS PAINEWEBBER INCORPORATED AND OTHERS ALLEGINGVIOLATIONS OF ARTICLE III, SECTIONS 1, 2, AND 27 OF THE RULES OF AFAIR PRACTICE IN THAT INDIVIDUAL RESPONDENT ("REGISTEREDREPRESENTATIVE") EXERCISED DISCRETIONARY AUTHORITY IN THEACCOUNT OF A PUBLIC CUSTOMER WITHOUT HAVING REASONABLEGROUNDS TO BELIEVE THE TRANSACTIONS BEING MADE WERE SUITABLEFOR THE CUSTOMER BASED ON HER FINANCIAL SITUATION ANDINVESTMENT OBJECTIVES; AND, RESPONDENT MEMBER, ACTINGSanctions Ordered:CensureMonetary/Fine $30,000.00Decision & Order of Offer of Settlement707©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceTHROUGH ANOTHER INDIVIDUAL RESPONDENT, FAILED TO IMPLEMENT ITSSUPERVISORY PROCEDURES TO DETECT AND PREVENT REGISTEREDREPRESENTATIVE'S MISCONDUCT. DECISION RENDERED JULY 17, 1990CONSOLIDATING NY-7050 AND NY-7089, WHEREIN THE OFFER OFSETTLEMENT SUBMITTED BY RESPONDENT MEMBER WAS ACCEPTED;THEREFORE RESPONDENTS PAINEWEBBER IS CENSURED AND FINED$30,000, JOINTLY AND SEVERALLY.iReporting Source:FirmInitiated By:NASD DBCC DIST. #12Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:07/20/1989Docket/Case Number:NY7050 & NY7089Principal Product Type:No ProductOther Product Type(s):Allegations:ON JULY 20, 1989, PAINEWEBBER INCORPORATED AND ITS EMPLOYEEJOSEPH PATRICK TOTA WERE CHARGED BY THE DBCC DIST. #12 (NASD)WITH TWO SEPARATE INSTANCES OF FAILUE TO SUPERVISE THEACTIVITIES OF FORMER REGISTERED REPRESENTATIVE NELDA ZIM.Current Status:FinalResolution Date:07/05/1990Resolution:Other Sanctions Ordered:Sanction Details:THE DBCC DETERMINED THAT MR. TOTA AND PAINEWEBBER VIOLATEDARTICLE III SECTION 1 & 27 OF THE ASSOCIATION'S RULES OF FAIRPRACTICE. MR. TOTA WAS SUSPENDED FROM ASSOCIATING WITH ANYMEMBER IN A PRINCIPAL CAPACITY FOR FIVE (5) BUSINESS DAYS.PAINEWEBBER AND MR. TOTA WERE CENSURED AND JOINTLY ANDSEVERALLY FINED $30,000.00Sanctions Ordered:CensureMonetary/Fine $30,000.00Decisioni708©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 439 of 450Reporting Source:RegulatorInitiated By:CONNECTICUTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/31/1989Docket/Case Number:URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:BANKING COMMISSIONER FOR THE STATE OF CONNECTICUT SIGNED ASTIPULATION AGREEMENT, IN WHICH PAINEWEBBER NEITHER ADMITTEDNOR DENIES THAT IT ALLOWED TWO INDIVIDUALS TO EFFECT SECURITIESTRANSACTIONS FOR CONNECTICUT RESIDENTS WITHOUT BEINGREGISTERED WITH THE SECURITIES AND BUSINESS INVESTMENTSDIVISION.Current Status:FinalResolution Date:01/31/1989Resolution:Other Sanctions Ordered:RESCIND THE TRADES.Sanction Details:THE COMMISSIONER FINDS THAT A STIPULATION AGREEMENT ISAPPROPRIATE, IN THE PUBLIC INTEREST AND CONSISTENT WITH THEPURPOSES FAIRLY INTENDED BY THE POLICY AND PROVISIONS OF THECONNECTICUT UNIFORM SECURITIES ACT; THE COMMISSIONER ANDPAINEWEBBER HEREBY MUTUALLY AGREED TO THE FOLLOWING: 1.PAINEWEBBER, INC. SHALL OFFER TO THE INVESTORS INVOLVED INTHE TRANSACTIONS THE RIGHT TO RESCIND THE TRADES; AND 2.PAINEWEBBER, INC. SHALL PAY A TOTAL FINE OF $750, $250 OFWHICH IS RELATED TO THE ACTIVITIES OF AN INDIVIDUAL AND $500OF WHICH IS RELATED TO THE ACTIVITIES OF ANOTHER INDIVIDUAL.Sanctions Ordered:Monetary/Fine $750.00ConsentiReporting Source:Firm709©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:THE DEPARTMENT OF BANKING OF THE STATE OF CONNECTICUTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLOWING TWO INDIVIDUALS TO CONDUCT BUSINESS WITHOUT BEINGREGISTERED WITH THE DEPARTMENT OF BANKING.Current Status:FinalResolution Date:08/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST, 1988, PAINEWEBBER INCORPORATED WAS FINED $750.00 BYTHE DEPARTMENT OF BANKING OF THE STATE OF CONNECTICUT, FORALLOWING TWO INDIVIDUALS TO CONDUCT BUSINESS WITHOUT BEINGREGISTERED WITH THE DEPARTMENT OF BANKING. IN ADDITION,PAINEWEBBER INCORPORATED AGREED TO OFFER RESTITUTION TO THEINDIVIDUAL INVESTOR INVOLVED AND TO REVIEW ITS SUPERVISORYPROCEDURES TO DETECT AND PREVENT SUCH ACTIVITIES. THEDECISION RESULTED FROM A STIPULATION AGREEMENT SUBMITTED BYPAINEWEBBER AND ACCEPTED BY THE DEPARTMENT OF BANKING.Sanctions Ordered:Monetary/Fine $750.00Disgorgement/RestitutionStipulation and ConsentDisclosure 440 of 450iReporting Source:RegulatorAllegations:ON JANUARY 31, 1989, BANKING COMMISSIONER FOR THE STATE OFCONNECTICUT, SIGNED A SETTLEMENT AGREEMENT, IN WHEREPAINEWEBBER NEITHER ADMITTED OR DENIES THAT IT ALLOWED ANINDIVIDUAL TO EFFECT SECURITIES TRANSACTIONS FORCONNECTICUT RESIDENTS WITHOUT BEING REGISTERED WITH THECurrent Status:Final710©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CONNECTICUTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/31/1989Docket/Case Number:URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):SECURITIES AND BUSINESS INVESTMENTS DIVISION.Resolution Date:01/31/1989Resolution:Other Sanctions Ordered:UNDERTAKINGSSanction Details:THE COMMISSIONER FINDS THAT A SETTLEMENT AGREEMENT ISAPPROPRIATE, IN THE PUBLIC INTEREST AND CONSISTENT WITH THEPURPOSES FAIRLY INTENDED BY THE POLICY AND PROVISIONS OF THEACT; THE COMMISSIONER AND PAINEWEBBER, HEREBY MUTUALLYAGREED TO THE FOLLOWING: 1. PAINEWEBBER SHALL REVIEW, MODIFYAND IMPLEMENT ITS SUPERVISORY PROCEDURES SO AS TO MOREPROMPTLY DETECT SIMILAR SECURITIES ACTIVITIES AND TO PREVENTVIOLATIONS OF THE ACT AND THE REGULATIONS PROMULGATEDTHEREUNDER IN CONNECTION THEREWITH. 2. PAINEWEBEER SHALL PAYA FINE WHICH WILL INCLUDE THE COSTOF THE DIVISION'S INVESTIGATION INTO THE SECURITIES ACTIVITIES OFAN INDIVIDUAL. THE FINE SHALL AMOUNT TO $10,000. PAYMENT IS DUE ONTHE DATE THIS AGREEMENT IS SIGNED BY THE COMMISSIONER. 3.PAINEWEBBER SHALL PAY A $5,000 DONATION TO A CHARITY LOCATED INCONNECTICUT.Sanctions Ordered:Monetary/Fine $10,000.00ConsentiReporting Source:FirmAllegations:PAINEWEBBER ALLOWED MICHAEL J PORTERA TO EFFECT SECURITIESTRANSACTIONS FOR CONNECTICUT RESIDENTS WITHOUT BEINGREGISTERED WITH THE SECURITIES AND BUSINESS INVESTMENTSCurrent Status:Final711©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:STATE OF CONNECTICUTPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1998Docket/Case Number:8105-04189Principal Product Type:No ProductOther Product Type(s):DIVISIONResolution Date:01/31/1998Resolution:Other Sanctions Ordered:Sanction Details:PAINEWEBBER SHALL REVIEW , MODIFY AND IMPLEMENT ITSSUPERVISORY PROCEDURES; SHALL PAY AND FINE WHICH WILL INCLUDETHE COST OF THE DIVISION'S INVESTIGATION INTO THE SECURITIESACTIVITIES OF PORTERA. THE FINE SHLL AMOUNT TO $10,000; PWI SHALLPAY A $5,000 DONATION TO A CHARITY LOCATED IN CONNECTICUT.Sanctions Ordered:Monetary/Fine $15,000.00DecisionDisclosure 441 of 450iReporting Source:RegulatorInitiated By:NEW MEXICODate Initiated:01/31/1989Docket/Case Number:89-NR-03URL for Regulatory Action:Principal Product Type:No ProductOther Product Type(s):Allegations:A NOTICE OF INTENT TO SUSPEND OR REVOKE LICENSE WAS ISSUEDAGAINST RESPONDENTS PAINEWEBBER INCORPORATED FOR CONDUCTINVIOLATION OF THE NEW MEXICO SECURITIES ACT.Current Status:Pending712©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:iReporting Source:FirmInitiated By:STATE OF NEW MEXICOPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:02/06/1989Docket/Case Number:UNKNOWNPrincipal Product Type:No ProductOther Product Type(s):Allegations:INFORMATION SOUGHT BY AN EXAMINER WAS NOT TIMELY PRODUCED.Current Status:FinalResolution Date:05/18/1989Resolution:Other Sanctions Ordered:Sanction Details:ON FEBRUARY 6, 1989, PAINEWEBBER INCORPORATED WAS SERVEDWITH AN ORDER BY THE STATE OF NEW MEXICO. THE ORDER NAMED THEFIRM AND ITS BRANCH MANGER KENNETH MORRIS. THE ORDER ALLEGEDTHAT INFORMATION SOUGHT BY AN EXAMINER WAS NOT TIMELYPRODUCED.AFTER A PERIOD OF NEGOTIATIONS ON MAY 18, 1989 THE FIRMAGREED TO PAY A $2,500 ADMINISTRATIVE ASSESSMENT AND A$2,500 FINE. IN ADDITION THE STATE AGREED THAT MR. MORRIS WAS NOTCAPABLE FOR ANY VIOLATIVE CONDUCT AND WITHDREW THE ORDERAGAINST HIM ON JULY 19,1989.Sanctions Ordered:Monetary/Fine $5,000.00OtherDisclosure 442 of 450iReporting Source:Regulator713©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:10/06/1988Docket/Case Number:NEW-614-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:10/06/1988Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON OCTOBER 6, 1988, THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENT NO. NEW-614-AWC (DISTRICT NO. 5) SUBMITTED BYRESPONDENTS PAINEWEBBER, INCORPORATED, WILLIAM B. MILLER ANDWILLIAM A. WEIMAR WAS ACCEPTED; THEREFORE, THEY ARE CENSUREDAND FINED $1,000.00, JOINTLY AND SEVERALLY (ARTICLE III,SECTIONS 1 AND 27 OF THE RULES OF FAIR PRACTICE - RESPONDENTWEIMAR EXECUTED OR CAUSED TO BE EXECUTED A PURCHASE OF 23,128SHARES IN A HIGH YIELD TRUST-GOVERNMENT SECURITIES FUND FOR ATOTAL COST OF $244,000.40 FOR THE ACCOUNT OF A CUSTOMER ANDFAILED AND NEGLECTED TO INFORM SAID CUSTOMER THAT THISINVESTMENT WAS NEAR THE FUND'S BREAKPOINT AND THAT ANINVESTMENT OF $250,000.00 INTO THE FUND WOULD HAVE REDUCED THECOMMISSION CHARGE FROM 3.5% TO 2.5% OF THE OFFERING PRICE; AND,RESPONDENT MEMBER, ACTING THROUGH RESPONDENT MILLER, FAILEDTOPROPERLY SUPERVISE RESPONDENT WEIMAR).$1,000 PAID J&S 10/18/88 - DEPOSIT #249Sanctions Ordered:CensureMonetary/Fine $1,000.00Consenti714©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:FINE.Date Initiated:10/06/1988Docket/Case Number:NEW-614-AWCPrincipal Product Type:Mutual Fund(s)Other Product Type(s):Allegations:ALLEGED FAILURE TO SUPERVISE VIOLATION OF A REGISTEREDREPRESENTATIVE.Current Status:FinalResolution Date:10/06/1988Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $1,000.00ConsentDisclosure 443 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:11/17/1988Docket/Case Number:NY-6059-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:Final715©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Resolution Date:11/17/1988Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementON NOVEMBER 17, 1988, THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENT NO. NY-6059-AWC (DISTRICT NO. 12) SUBMITTED BYRESPONDENT PAINEWEBBER INCORPORATED WAS ACCEPTED;THEREFORE,THEY ARE CENSURED AND FINED $2,000.00 (MSRB RULES A-13 ANDG-12(j) FAILED IN CONNECTION WITH CERTAIN MUNICIPALUNDERWRITINGS WHICH THE FIRM MANAGED TO PAY THE UNDERWRITINGASSESSMENT FEE TO THE MSRB WITHIN THIRTY (30) CALDENDAR DAYSFOLLOWING THE DATE OF THE SETTLEMENT WITH THE ISSUER; AND,FAILED IN CERTAIN INSTANCES TO EFFECT FINAL SETTLEMENT WITH THESYNDICATE WITHIN SIXTY (60) DAYS FOLLOWING THE DATE SECURITIESWERE DELIVERED TO THE SYNDICATE MEMBERS). $2,000 PAID 5/5/89 - DEPOSIT #190Sanctions Ordered:CensureMonetary/Fine $2,000.00ConsentiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:11/17/1988Docket/Case Number:NY-6059-AWCPrincipal Product Type:Debt - MunicipalOther Product Type(s):Allegations:ALLEGED VIOLATION OF MSRB RULES A-13 AND G-12(J) IN THAT THE FIRMFAILED IN CONNECTION WITH CERTAIN MUNICIPAL UNDERWRITINGS,WHICH THE FIRM MANAGED, TO PAY THE UNDERWRITING ASSESSMENTFEE TO THE MSRB WITHIN THIRTY CALENDAR DAYS FOLLOWING THE DTEOF THE SETTLEMENT WITH THE ISSUER.Current Status:Final716©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ACCEPTANCE WAIVER AND CONSENT.Resolution Date:11/17/1988Resolution:Other Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:CensureMonetary/Fine $2,000.00ConsentDisclosure 444 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/22/1985Docket/Case Number:WA-461-SCPrincipal Product Type:No ProductOther Product Type(s):Allegations:NASD ARTICLE III, SECTION 1 - IN THAT RESPONDENT FAILED TO RESPONDTO THE ASSOCIATION'S REQUESTS FOR INFORMATION MADE PURSUANTTO ARTICLE IV, SECTION 5 OF THE RULES OF FAIR PRACTICE.Current Status:FinalResolution Date:06/10/1985Resolution:Other Sanctions Ordered:Sanctions Ordered:CensureMonetary/Fine $1,000.00Decision717©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSanction Details:SUMMARY COMPLAINT ACCEPTED JUNE 10, 1985, WHEREIN THE FIRM ISCENSURED AND FINED $1,000.00. DECISION IS FINAL.iReporting Source:FirmInitiated By:THE NATIONAL ASSOCIATION OF SECURITIES DEALERS INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/01/1985Docket/Case Number:WA-461-SCPrincipal Product Type:No ProductOther Product Type(s):Allegations:ALLEGED VIOLATION OF THE ASSOCIATION'S RULES REQUIRING APROMPT RESPONSE TO REQUESTS BY THE ASSOCIATION TO PROVIDEINFORMATION AND DOCUMENTS IN CONNECTION WITH AN INVESTIGATIONBY THE ASSOCIATION'S DISTRICT NO. 10 STAFFCurrent Status:FinalResolution Date:06/01/1985Resolution:Other Sanctions Ordered:Sanction Details:IN JUNE, 1985, PAINE, WEBBER, JACKSON & CURTIS WAS CENSURED ANDFINED $1,000 BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERSINC., PURSUANT TO ITS SUMMARY COMPLAINT PROCEDURE, FORVIOLATING THE ASSOCIATION'S RULES REQUIRING A PROMPT RESPONSETO REQUESTS BY THE ASSOCIATION TO PROVIDE INFORMATION ANDDOCUMENTS IN CONNECTION WITH AN INVESTIGATION BY THEASSOCIATION'S DISTRICT NO. 10 STAFF.Sanctions Ordered:CensureMonetary/Fine $1,000.00DecisionDisclosure 445 of 450iReporting Source:RegulatorCurrent Status:Final718©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CHICAGO BOARD OF OPTION EXCHANGEPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:04/13/1988Docket/Case Number:86-0096(A)Principal Product Type:Other Product Type(s):Allegations:Resolution Date:04/13/1988Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement9/27/88-FORMS U6 (8124/8125-26488) DISCLOSE: PAINEWEBBERINCORPORATED AND MELVIN DAVIDSON FAILED ADEQUATELY TOSUPERVISETHE ACTIVITIES OF A REGISTERED REPRESENTATIVE OF PAINEWEBBERATITS ATLANTA, GEORGIA BRANCH OFFICE BY ALLOWING HIM, INCONNECTION WITH THE OFFER AND SALE OF SECURITIES TO AT LEAST 5PUBLIC CUSTOMERS, TO USE SALES LITERATURE WHICH FAILED FULLYTOEXPLAIN THE RISKS ASSOCIATED WITH INDEX OPTION TRADING. (CBOERULES 4.2 AND 9.8): SANCTION: A JOINT AND SEVERAL FINE OF$1,000....... THOMAS ALISON, IN CONNECTION WITH THE OFFER ANDSALE OF SECURITIES TO AT LEAST 5 PUBLIC CUSTOMERS, UTILIZEDSALES LITERATURE WHICH FAILED FULLY TO EXPLAIN THE RISKSASSOCIATED WITH INDEX OPTIONS TRADING. (CBOE RULES 9.21(a), (i),and 9.21(d) and EXCHANGE RULE INTERPRETATION AND POLICY 9.21.01BY ALISON. SANCTION: A $1,000 FINE. DOCKET/CASE NO. 86-0096(a),DATED APRIL 13, 1988.Sanctions Ordered:Monetary/Fine $1,000.00DecisioniReporting Source:FirmCurrent Status:Final719©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:CHICAGO BOARD OF OPTIONS EXCHANGE.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/01/1988Docket/Case Number:UNKNOWNPrincipal Product Type:OptionsOther Product Type(s):Allegations:A FINDING THAT PAINEWEBBER AND RESPONDENT BRANCH OFFICEMANAGER HAD ALLOWED AN EMPLOYEE OF THE FIRM TO ISSUE SALESLITERATURE WHICH DID NOT ADEQUATELY EXPLAIN THE RISKSASSOCIATED WITH INDEX OPTION TRADING.Resolution Date:03/01/1988Resolution:Other Sanctions Ordered:Sanction Details:IN MARCH, 1988 PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENTTO THE BUSINESS CONDUCT COMMITTEE OF THE CHICAGO BOARD OFOPTIONS EXCHANGE. PAINEWEBBER AGREED TO A JOINT AND SEVERALFINE OF $1,000.00 ALONG WITH ITS RESPONDENT BRANCH OFFICEMANAGER. THE OFFER OF SETTLEMENT WAS IN CONNECTION WITH AFINDING THAT PAINEWEBBER AND RESPONDENT BRANCH OFFICEMANAGER HAD ALLOWED AN EMPLOYEE OF THE FIRM TO ISSUE SALESLITERATURE WHICH DID NOT ADEQUATELY EXPLAIN THE RISKSASSOCIATED WITH INDEX OPTION TRADING.Sanctions Ordered:Monetary/Fine $1,000.00SettledDisclosure 446 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Date Initiated:07/06/1988Docket/Case Number:TEX-547Allegations:Current Status:Final720©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Principal Product Type:Other Product Type(s):Resolution Date:01/18/1989Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementNASD COMPLAINT NO. TEX-547 FILED JULY 6, 1988 BY DISTRICT NO. 6AGAINST RESPONDENTS PAINEWEBBER, INCORPORATED, PAULA AMBERBARSHOP AND JOHN KENNETH JONES, JR. ALLEGING VIOLATIONS OFMSRBRULE G-21 IN THAT RESPONDENT MEMBER, ACTING THROUGHRESPONDENTSBARSHOP AND JONES, CAUSED TO BE PUBLISHED ADVERTISEMENTSWHICHIT HAD REASON TO KNOW WERE MISLEADING.AMENDED COMPLAINT FILED SEPTEMBER 6, 1988 TO SUBSTITUTERESPONDENT SAMUEL EDWARD McGOWAN FOR JOHN KENNETH JONES,JR.DECISION RENDERED JANUARY 18, 1989, WHEREIN THE OFFER OFSETTLEMENT SUBMITTED BY RESPONDENTS WAS ACCEPTED;THEREFORE,RESPONDENTS MEMBER, BARSHOP AND MCGOWAN ARE CENSURED ANDFINED$2,500.00, JOINTLY AND SEVERALLY. $2,500 PAID J&S 4/27/89 - DEPOSIT #072Sanctions Ordered:CensureMonetary/Fine $2,500.00ConsentiReporting Source:FirmAllegations:ALLOWING A NEWSPAPER AD TO RUN THAT WAS NOT IN CONFORMITYWITH MSRB RULESCurrent Status:Final721©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NASD DISTRICT #6Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1989Docket/Case Number:TEX-547Principal Product Type:Debt - MunicipalOther Product Type(s):Resolution Date:01/01/1989Resolution:Other Sanctions Ordered:Sanction Details:IN JANUARY, 1989, THE FIRM AND ITS EMPLOYEES PAULA AMBERAND SAMUEL E. MCGOWAN AGREED TO A CENSURE AND JOINT ANDSEVERAL FINE OF $2500.00 FOR ALLOWING A NEWSPAPER AD TORUN THAT WAS NOT IN CONFORMITY WITH MSRB RULESSanctions Ordered:CensureMonetary/Fine $2,500.00OtherDisclosure 447 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:06/29/1987Docket/Case Number:MS-570-AWCPrincipal Product Type:Other Product Type(s):Allegations:Current Status:Final722©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:11/24/1987Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementMARKET SURVEILLANCE COMMITTEE COMPLAINT #MS-570-AWC:LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) FILED JUNE 29,1987 AGAINST RESPONDENT PAINEWEBBER, INC. ALLEGING VIOLATIONSOF PART VI, SECTION 4(a) OF SCHEDULE D IN THAT RESPONDENTFAILED TO REPORT ITS NASDAQ VOLUME.THE AWC WAS ACCEPTED BY THE MARKET SURVEILLANCE COMMITTEEONNOVEMBER 5, 1987 AND BY THE NATIONAL BUSINESS CONDUCTCOMMITTEEON NOVEMBER 24, 1987. $1,000 FINE$1,000 FINE PAID 6/20/88Sanctions Ordered:Monetary/Fine $1,000.00ConsentiReporting Source:FirmInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:OtherOther Sanction(s)/ReliefSought:ACCEPTANCE, WAIVER AND CONSENT.Date Initiated:06/29/1987Docket/Case Number:MS-570-AWCPrincipal Product Type:Equity - OTCOther Product Type(s):Allegations:VIOLATIONS OF PART VI, SECTION 4(A) OF SCHEDULE D IN THAT THE FIRMFAILED TO REPORT ITS NASDAQ VOLUME.Current Status:FinalResolution Date:11/24/1987Resolution:Acceptance, Waiver & Consent(AWC)723©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABLE.Sanctions Ordered:Monetary/Fine $1,000.00Disclosure 448 of 450iReporting Source:RegulatorInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:03/11/1988Docket/Case Number:Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:03/11/1988Resolution:Other Sanctions Ordered:Sanction Details:Regulator Statement3/21/88-SEC NEWS DIGEST ISSUE 88-47, DATED MARCH 11, 1988 -ADMINISTRATIVE PROCEEDINGS DISCLOSES: `PROCEEDINGS INSTITUTEDAGAINST, AND REMEDIAL SANCTIONS IMPOSED UPON, PAINEWEBBER,INC.'; THE COMMISSION INSTITUTED ADMINISTRATIVE PROCEEDINGSUNDER SECTIONS 15(b) and 19(h) OF THE SECURITIES EXCHANGE ACTOF 1934 AGAINST PAINEWEBBER, INC., A REGISTERED BROKER-DEALER.SIMULTANEOUSLY, PAINEWEBBER SUBMITTED AN OFFER OF SETTLEMENTWHICH THE COMMISSION ACCEPTED. IN THIS OFFER, PAINEWEBBERCONSENTED, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS ORFINDINGS CONTAINED THEREIN, TO THE COMMISSION'S ORDER MAKINGFINDINGS THAT PAINEWEBBER VIOLATED ANTIFRAUD PROVISIONS OF THESanctions Ordered:CensureConsent724©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSECURITIES ACT OF 1933 AND THE EXCHANGE ACT IN CONNECTION WITHTHE SALE AND REPURCHASE OF STRIPPED U.S. TREASURY BONDCOUPONS(STRIPPED COUPONS). SPECIFICALLY, THE ORDER ALLEGES THATBETWEEN JANUARY 1, 1984 AND JULY 31, 1985, PAINEWEBBER CHARGEDCUSTOMERS UNDISCLOSED EXCESSIVE MARKUPS AND MARKDOWNS INSTRIPPED COUPON TRANSACTIONS. THE ORDER CENSURESPAINEWEBBERAND ORDERS IT TO COMPLY WITH ITS UNDERTAKING TO REVIEW ITSEXISTING STRIPPED COUPON MARKUP AND MARKDOWN PRACTICES INORDERTO PREVENT A RECURRENCE OF THIS CONDUCT. IN DETERMINING TOACCEPT THE OFFER, THE COMMISSION CONSIDERED PAINEWEBBER'SVOLUNTARY UNDERTAKING TO REPAY EACH OF ITS CUSTOMERS, WHOSOLDIT STRIPPED COUPONS DURING THE RELEVANT TIME PERIOD, THEAMOUNTBY WHICH THE MARKDOWN CHARGED EXCEEDED 10% OFPAINEWEBBER'SCONTEMPORANOUS SALES PRICE. (REL. 34-25418)iReporting Source:FirmInitiated By:SECURITIES AND EXCHANGE COMMISSIONPrincipal Sanction(s)/ReliefSought:CensureOther Sanction(s)/ReliefSought:CENSURED VIA AN ORDERDate Initiated:03/11/1988Docket/Case Number:UNKNOWNPrincipal Product Type:Debt - GovernmentOther Product Type(s):Allegations:ALLEGED VIOLATIONS OF SECTIONS 15(B) AND 19(H) OF THE SECURITIESAND EXCHANGE ACT OF 1934.Current Status:FinalResolution Date:03/11/1998Resolution:Sanctions Ordered:CensureConsent725©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOther Sanctions Ordered:Sanction Details:DUE TO THE AGE OF THE ITEM, ADDITIONAL SANCTION DETAIL ISUNAVAILABE.Firm StatementTHE FIRM, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS ORFINDINGS CONSENTED TO THE ORDER. IN DETERMINING TO ACCEPT THEOFFER, THE COMMISSION CONSIDERED THE FIRM'S VOLUNTARYUNDERTAKING TO REPAY EACH OF ITS CUSTOMERS EFFECTED BY THEALLEGED ACTIVITY.Disclosure 449 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:12/15/1982Docket/Case Number:SF-938Principal Product Type:Other Product Type(s):Allegations:Current Status:FinalResolution Date:09/26/1984Resolution:Other Sanctions Ordered:Sanction Details:Regulator StatementCOMP #SF-938, FILED 12/15/82, DIST. #2N, ALLEGING VIOLATIONSOF ARTICLE III, SECTIONS 1, 2, 19 APPENDIX E, AND 27 OF THERULES OF FAIR PRACTICE - RESPONDENT MEMBER AND ROBERTSTAMSOSFAILED TO ENFORCE A WRITTEN PROGRAM PROVIDING FOR THESUPERVISION OF THE OPTIONS ACCOUNTS OF RESPONDENT CRAIGSanctions Ordered:CensureMonetary/Fine $5,000.00Decision726©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceALFORD'S CUSTOMERS AND FAILED TO OTHERWISE PROPERLYSUPERVISETHE ACTIVITIES OF ALFORD. ****DECISION RENDERED 10/24/83,WHEREIN RESPONDENTS MEMBER AND STAMSOS ARE CENSURED ANDFINED $10,000, J&S; AND IS ASSESSED COSTS OF $1,358.59. IFNO FURTHER ACTION, DECISION WILL BE FINAL 12/7/83. ****B/GS' DECISION RENDERED 8/28/84, WHEREIN THE FINDINGS MADEAND THE SANCTIONS IMPOSED WITH REGARD TO ALFORD ARE AFFIRMEDAND THE FINDINGS MADE WITH REGARD TO THE MEMBER AND STAMSOSARE AFFIRMED BUT THE SANCTIONS ARE MODIFIED; THEREFORE,MEMBERIS CENSURED AND FINED $5,000, ASSESSED COSTS OF $1,358.59 ANDTHE COSTS OF THE APPEAL OF $2,000. IF NO FURTHER ACTION,DECISION IS FINAL 9/26/84. ***10/19/84, FC# 8865, PAID IN FULL.****10/19/84, FC# 8867, PAID IN FULL.iReporting Source:FirmInitiated By:THE BOARD OF GOVERNORS OF THE NASD INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/01/1984Docket/Case Number:SF-938Principal Product Type:No ProductOther Product Type(s):Allegations:FAILURE TO SUPERVISE THE ACTIVITIES OF A RESPONDENT BROKER INCONNECTION WITH UNSUITABLE TRANSACTIONS IN A SINGLE CLIENT'SACCOUNT.Current Status:FinalResolution Date:08/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN AUGUST, 1984, PAINE, WEBBER, JACKSON & CURTIS, WASSanctions Ordered:CensureMonetary/Fine $5,000.00Decision727©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCENSURED AND FINED $5,000.00 PURSUANT TO A DECISION OFTHE BOARD OF GOVERNORS OF THE NATIONAL ASSOCIATION OFSECURITIES DEALERS INC. FOR FAILURE TO SUPERVISE THEACTIVITIES OF A RESPONDENT BROKER IN CONNECTION WITHUNSUITABLE TRANSACTIONS IN A SINGLE CLIENT'S ACCOUNT.Disclosure 450 of 450iReporting Source:RegulatorInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:08/10/1983Docket/Case Number:NY-2087Principal Product Type:OtherOther Product Type(s):UNKNOWN TYPE OF SECURITIES.Allegations:NASD ARTICLE III, SECTION 1 OF THE RULES OF FAIR PRACTICE - IN THATRESPONDENT FAILED TO MAKE BONA FIDE PUBLIC DISTRIBUTIONS OFSHARES WHICH TRADED AT IMMEDIATE PREMIUMS IN THE SECONDARYMARKET IN THAT SHARES WERE SOLD TO RESTRICTED ACCOUNTS.Current Status:FinalResolution Date:01/20/1984Resolution:Other Sanctions Ordered:Sanction Details:DECISION RENDERED JANUARY 20, 1984, WHEREIN THE OFFER OFSETTLEMENT SUBMITTED BY RESPONDENT MEMBER; THEREFORE, THEFIRM IS CENSURED AND FINED $1,500.00.Sanctions Ordered:CensureMonetary/Fine $1,500.00Decision & Order of Offer of SettlementiReporting Source:FirmAllegations:VIOLATIONS OF THE FREE-RIDING AND WITHHOLDING INTERPRETATIONCurrent Status:Final728©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Principal Sanction(s)/ReliefSought:Other Sanction(s)/ReliefSought:Date Initiated:01/01/1984Docket/Case Number:NY-2087Principal Product Type:No ProductOther Product Type(s):UNDER ARTICLE III, SECTION 1 OF THE RULES OF FAIR PRACTICE OF THENATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.Resolution Date:01/01/1984Resolution:Other Sanctions Ordered:Sanction Details:IN JANUARY 1984, PAINE WEBBER JACKSON & CURTIS WAS CENSUREDAND FINED $1500 FOR ALLEGED VIOLATIONS OF THE FREE-RIDING ANDWITHHOLDING INTERPRETATION UNDER ARTICLE III, SECTION 1 OF THERULES OF FAIR PRACTICE OF THE NATIONAL ASSOCIATION OFSECURITIES DEALERS, INC. THE DECISION RESULTED FROM AN OFFEROF SETTLEMENT SUBMITTED BY PAINE WEBBER AND ACCEPTED BY THEASSOCIATION.Sanctions Ordered:CensureMonetary/Fine $1,500.00Settled729©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCivil - FinalThis type of disclosure event involves (1) an injunction issued by a foreign or domestic court within the last 10 years inconnection with investment-related activity, (2) a finding by a court of a violation of any investment-related statute orregulation, or (3) an action dismissed by a court pursuant to a settlement agreement.Disclosure 1 of 5Reporting Source:RegulatorSEC LITIGATION RELEASE 21956, MAY 4, 2011: THE SECURITIES ANDEXCHANGE COMMISSION ("COMMISSION") CHARGED UBS FINANCIALSERVICES INC. ("UBS") WITH FRAUDULENTLY RIGGING AT LEAST 100MUNICIPAL BOND REINVESTMENT TRANSACTIONS IN 36 STATES ANDGENERATING MILLIONS OF DOLLARS IN ILL-GOTTEN GAINS. THECOMMISSION ALLEGED THAT UBS VIOLATED SECTION 15(C) OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT").WHEN INVESTORS PURCHASE MUNICIPAL SECURITIES, THEMUNICIPALITIES GENERALLY TEMPORARILY INVEST THE PROCEEDS OFTHE SALES IN REINVESTMENT PRODUCTS BEFORE THE MONEY IS USEDFOR THE INTENDED PURPOSES. UNDER RELEVANT IRS REGULATIONS,THE PROCEEDS OF TAX-EXEMPT MUNICIPAL SECURITIES MUSTGENERALLY BE INVESTED AT FAIR MARKET VALUE. THE MOST COMMONWAY OF ESTABLISHING FAIR MARKET VALUE IS THROUGH A COMPETITIVEBIDDING PROCESS IN WHICH BIDDING AGENTS SEARCH FOR THEAPPROPRIATE INVESTMENT VEHICLE FOR A MUNICIPALITY.THE COMMISSION ALLEGED THAT DURING 2000 TO 2004, UBS'SFRAUDULENT PRACTICES AND MISREPRESENTATIONS UNDERMINED THECOMPETITIVE BIDDING PROCESS AND AFFECTED THE PRICES THATMUNICIPALITIES PAID FOR THE REINVESTMENT PRODUCTS BEING BID ONBY THE PROVIDER OF THE PRODUCTS. ITS FRAUDULENT CONDUCT ATTHE TIME ALSO JEOPARDIZED THE TAX-EXEMPT STATUS OF BILLIONS OFDOLLARS IN MUNICIPAL SECURITIES BECAUSE THE SUPPOSEDCOMPETITIVE BIDDING PROCESS THAT ESTABLISHES THE FAIR MARKETVALUE OF THE INVESTMENT WAS CORRUPTED. THE BUSINESS UNITINVOLVED IN THIS MISCONDUCT CLOSED IN 2008 AND ITS EMPLOYEESARE NO LONGER WITH THE COMPANY.THE COMMISSION ALLEGED THAT UBS PLAYED VARIOUS ROLES IN THESETAINTED TRANSACTIONS. UBS ILLICITLY WON BIDS AS A PROVIDER OFREINVESTMENT PRODUCTS, AND ALSO RIGGED BIDS FOR THE BENEFITOF OTHER PROVIDERS WHILE ACTING AS A BIDDING AGENT ON BEHALFOF MUNICIPALITIES. UBS AT TIMES ADDITIONALLY FACILITATED THEPAYMENT OF IMPROPER UNDISCLOSED AMOUNTS TO OTHER BIDDINGAllegations:Current Status:Final730©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONRelief Sought:InjunctionOther Relief Sought:CIVIL PENALTY; DISGORGEMENT; PREJUDGMENT INTERESTDate Court Action Filed:05/04/2011Principal Product Type:OtherOther Product Types:MUNICIPAL BOND REINVESTMENT TRANSACTIONCourt Details:UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY;NEWARK, NJ; 2:11-CV-2539AGENTS. IN EACH INSTANCE, UBS MADE FRAUDULENTMISREPRESENTATIONS OR OMISSIONS, THEREBY DECEIVINGMUNICIPALITIES AND THEIR AGENTS. AS BIDDING AGENT UBS STEEREDBUSINESS THROUGH A VARIETY OF MECHANISMS TO FAVORED BIDDERSACTING AS PROVIDERS OF REINVESTMENT PRODUCTS. IN SOME CASES,UBS GAVE A FAVORED PROVIDER INFORMATION ON COMPETING BIDS IN APRACTICE KNOWN AS "LAST LOOKS." IN OTHER INSTANCES, UBSDELIBERATELY OBTAINED OFF-MARKET "COURTESY" BIDS OR ARRANGED "SET-UPS" BY OBTAINING PURPOSEFULLY NON-COMPETITIVE BIDS FROMOTHERS SO THAT THE FAVORED PROVIDER WOULD WIN THE BUSINESS.UBS ALSO TRANSMITTED IMPROPER, UNDISCLOSED PAYMENTS TOFAVORED BIDDING AGENTS THROUGH INTEREST RATE SWAPS. INADDITION, UBS WAS FAVORED TO WIN BIDS WITH LAST LOOKS AND SET-UPS AS A PROVIDER OF REINVESTMENT PRODUCTS.Resolution:Judgment RenderedResolution Date:05/06/2011Other Sanctions:PREJUDGMENT INTERESTSanction Details:ON MAY 6, 2011, THE UNITED STATES DISTRICT COURT FOR THE DISTRICTOF NEW JERSEY ENTERED A FINAL JUDGMENT AGAINST UBS FINANCIALSERVICES INC. PERMANENTLY ENJOINING IT FROM VIOLATING SECTION15(C) OF THE EXCHANGE ACT. THE COURT ORDERED UBS TO PAYDISGORGEMENT OF $9,606,543 WITH PREJUDGMENT INTEREST THEREONOF $5,100,637. THE COURT ALSO ORDERED UBS TO PAY A CIVIL PENALTYOF $32,500,000.00 PURSUANT TO SECTION 21(D) OF THE EXCHANGE ACT.UBS CONSENTED TO THE ENTRY OF THE JUDGMENT WITHOUT ADMITTINGOR DENYING THE COMMISSION'S ALLEGATIONS.Regulator StatementTO SETTLE THE COMMISSION'S CHARGES, UBS HAS AGREED TO PAY $47.2Monetary/Fine $32,500,000.00Disgorgement/RestitutionCease and Desist/InjunctionSanctions Ordered or ReliefGranted:731©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceMILLION THAT WILL BE RETURNED TO THE AFFECTED MUNICIPALITIES.WITHOUT ADMITTING OR DENYING THE COMMISSION'S ALLEGATIONS, UBSCONSENTED TO THE ENTRY OF A FINAL JUDGMENT ENJOINING IT FROMFUTURE VIOLATIONS OF SECTION 15(C) OF THE EXCHANGE ACT. UBSAGREED TO PAY A PENALTY OF $32.5 MILLION AND DISGORGEMENT OF$9,606,543 WITH PREJUDGMENT INTEREST OF $5,100,637. THESETTLEMENT IS SUBJECT TO COURT APPROVAL.iReporting Source:FirmInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONRelief Sought:InjunctionOther Relief Sought:CIVIL PENALTY; DISGORGEMENT; PREJUDGMENT INTERESTDate Court Action Filed:05/04/2011Principal Product Type:OtherOther Product Types:MUNICIPAL BOND REINVESTMENT TRANSACTIONCourt Details:UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY;NEWARK, NJ; 2:11-CV-2539THE SEC COMPLAINT ALLEGED THAT FROM 2000 THROUGH 2004, UBSFINANCIAL SERVICES INC. ENGAGED IN CERTAIN FRAUDULENTPRACTICES INVOLVING THE TEMPORARY INVESTMENT OF PROCEEDSFROM THE SALE OF TAX-EXEMPT MUNICIPAL SECURITIES INCERTAIN REINVESTMENT PRODUCTS BY STATE AND LOCALGOVERNMENTAL ENTITIES, AND THAT UBS'S FRAUDULENT PRACTICESAND MISREPRESENTATIONS BOTH AFFECTED THE PRICES OF THEREINVESTMENT PRODUCTS AND JEOPARDIZED THE TAX-EXEMPTSTATUS OF THE UNDERLYING MUNICIPAL SECURITIES, THEREBYINJURING AFFECTED MUNICIPALITIES. THE FIRM NEITHERADMITTED NOR DENIED THE ALLEGATIONS IN THE COMPLAINT.Allegations:Current Status:FinalResolution:ConsentResolution Date:05/06/2011Other Sanctions:Sanction Details:UBS AGREED TO PAY A PENALTY OF $32.5 MILLION AND DISGORGEMENTMonetary/Fine $47,207,180.00Disgorgement/RestitutionCease and Desist/InjunctionSanctions Ordered or ReliefGranted:732©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceOF $9,606,543 WITH PREJUDGMENT INTEREST OF $5,100,637.Disclosure 2 of 5iReporting Source:FirmInitiated By:ATTORNEY GENERAL FOR THE STATE OF NEW YORKRelief Sought:DisgorgementOther Relief Sought:CIVIL PENALTY, INJUNCTION, RESTITUTIONDate Court Action Filed:07/24/2008Principal Product Type:OtherOther Product Types:AUCTION RATE SECURITIESCourt Details:650262/2008THE NEW YORK ATTORNEY GENERAL ALLEGED THAT UBS FINANCIALSERVICES INC. (UBSFS) AND ITS AFFILIATE UBS SECURITIES LLC(UBSS)(COLLECTIVELY UBS) VIOLATED SECTION 63 (12) OF THEEXECUTIVE LAW AND ARTICLE 23-A OF THE GENERAL BUSINESS LAW INCONNECTION WITH THE MARKETING AND SALE OF ARS TO UBS'S CLIENTSAND TO UBS'S ROLE AND PARTICIPATION IN ARS AUCTIONS AND SALES OFCERTAIN PERSONAL HOLDINGS IN ARS BY CERTAIN UBS EMPLOYEES.Allegations:Current Status:FinalResolution:ConsentResolution Date:12/11/2008Other Sanctions:Sanction Details:SANCTION DETAILS: UBS AGREED TO CEASE AND DESIST FROMENGAGING IN ANY ACTS IN VIOLATION OF THE MARTIN ACT, GENERALBUSINESS LAW 349 AND/OR EXECUTIVE LAW 63(12). UBS AGREED TOOFFER TO PURCHASE ARS, THAT WERE GENERALLY CONTINUING TO FAILAT AUCTION, AT PAR VALUE PLUS ACCRUED INTEREST FROMCUSTOMERS WHO: (A) HELD ARS AT THE FIRM OR HAD BIDDING RIGHTS INDELIVERY VS. PAYMENT ACCOUNTS AT THE FIRM ON FEBRUARY 13, 2008;OR (B) PURCHASED ARS FROM UBS BETWEEN OCTOBER 1, 2007 ANDFEBRUARY 12, 2008 AND TRANSFERRED THEM TO ANOTHER FIRM.Firm StatementTHE NEW YORK ATTORNEY GENERAL'S COMPLAINT ALLEGED THAT UBSFINANCIAL SERVICES INC. (UBSFS) AND ITS AFFILIATE UBS SECURITIESLLC (UBSS)(COLLECTIVELY UBS) VIOLATED SECTION 63 (12) OF THEMonetary/Fine $75,000,000.00Cease and Desist/InjunctionSanctions Ordered or ReliefGranted:733©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceEXECUTIVE LAW AND ARTICLE 23-A OF THE GENERAL BUSINESS LAW INCONNECTION WITH THE MARKETING AND SALE OF ARS TO UBS'S CLIENTSAND TO UBS'S ROLE AND PARTICIPATION IN ARS AUCTIONS AND SALES OFCERTAIN PERSONAL HOLDINGS IN ARS BY CERTAIN UBS EMPLOYEES.WITHOUT ADMITTING OR DENYING THE ATTORNEY GENERAL'S FINDINGS,UBS AGREED TO CEASE AND DESIST FROM ENGAGING IN ANY ACTS INVIOLATION OF THE MARTIN ACT, GENERAL BUSINESS LAW 349 AND/OREXECUTIVE LAW 63(12). UBS AGREED TO OFFER TO PURCHASE ARS,THAT WERE GENERALLY CONTINUING TO FAIL AT AUCTION, AT PAR VALUEPLUS ACCRUED INTEREST FROM CUSTOMERS WHO: (A) HELD ARS AT THEFIRM OR HAD BIDDING RIGHTS IN DELIVERY VS. PAYMENT ACCOUNTS ATTHE FIRM ON FEBRUARY 13, 2008; OR (B) PURCHASED ARS FROM UBSBETWEEN OCTOBER 1, 2007 AND FEBRUARY 12, 2008 AND TRANSFERREDTHEM TO ANOTHER FIRM.Disclosure 3 of 5iReporting Source:RegulatorSEC LITIGATION RELEASE 20824, DECEMBER 11, 2008: SECTION 15(C) OFTHE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") - THESECURITIES AND EXCHANGE COMMISSION ("COMMISSION") FINALIZED ASETTLEMENT WITH UBS FINANCIAL SERVICES, INC. ("UBS") THAT WILLPROVIDE NEARLY $22.7 BILLION TO TENS OF THOUSANDS OF CUSTOMERSWHO INVESTED IN AUCTION RATE SECURITIES ("ARS") BEFORE THEMARKET FOR THOSE SECURITIES FROZE IN FEBRUARY. THESETTLEMENT RESOLVES THE COMMISSION'S CHARGES THAT UBS MISLEDINVESTORS REGARDING THE LIQUIDITY RISKS ASSOCIATED WITH ARSTHAT IT UNDERWROTE, MARKETED AND SOLD. ON AUGUST 8, 2008, THECOMMISSION'S DIVISION OF ENFORCEMENT ANNOUNCED A PRELIMINARYSETTLEMENT WITH UBS. ACCORDING TO THE COMMISSION'S COMPLAINT,UBS MISREPRESENTED TO CUSTOMERS THAT ARS WERE SAFE, HIGHLYLIQUID INVESTMENTS THAT WERE COMPARABLE TO MONEY MARKETS.ACCORDING TO THE COMPLAINT, IN LATE 2007 AND EARLY 2008, THE FIRMKNEW THAT THE ARS MARKET WAS DETERIORATING, CAUSING THE FIRMTO HAVE TO PURCHASE ADDITIONAL INVENTORY TO PREVENT FAILEDAUCTIONS. AT THE SAME TIME, HOWEVER, THE FIRM KNEW THAT ITSABILITY TO SUPPORT AUCTIONS BY PURCHASING MORE ARS HAD BEENREDUCED AS THE CREDIT CRISIS STRESSED THE FIRM'S BALANCE SHEET.THE COMMISSION ALLEGED THAT UBS FAILED TO MAKE ITS CUSTOMERSAWARE OF THESE RISKS. IN MID-FEBRUARY 2008, ACCORDING TO THECOMPLAINT, UBS DECIDED TO STOP SUPPORTING THE ARS MARKET,LEAVING TENS OF THOUSANDS OF UBS CUSTOMERS HOLDING TENS OFBILLIONS OF DOLLARS IN ILLIQUID ARS. THE SETTLEMENT, WHICH ISAllegations:Current Status:Final734©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceInitiated By:UNITED STATES SECURITIES AND EXCHANGE COMMISSIONRelief Sought:InjunctionOther Relief Sought:CIVIL MONETARY PENALTIESDate Court Action Filed:12/11/2008Principal Product Type:OtherOther Product Types:AUCTION RATE SECURITIES ("ARS")Court Details:UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEWYORK, CIVIL ACTION NO. 08 CIV 10754SUBJECT TO COURT APPROVAL, WILL RESTORE APPROXIMATELY $22.7BILLION TO UBS CUSTOMERS WHO INVESTED IN ARS.Resolution:Judgment RenderedResolution Date:12/22/2008Other Sanctions:UNDERTAKINGS: UBS WILL OFFER TO PURCHASE AT PAR FROM ALLCURRENT OR FORMER UBS CUSTOMERS WHO HELD THEIR ARS AT UBSAS OF FEBRUARY 13, 2008, OR PURCHASED THEIR ARS AT UBS BETWEENOCTOBER 1, 2007 AND FEBRUARY 12, 2008, EVEN IF THEY MOVED THEIRACCOUNTS. DIFFERENT CATEGORIES OF CUSTOMERS WILL RECEIVEOFFERS FROM UBS AT DIFFERENT TIMES. UBS WILL NOT LIQUIDATE ITSOWN INVENTORY OF A PARTICULAR ARS WITHOUT MAKING THATLIQUIDITY OPPORTUNITY AVAILABLE, AS SOON AS PRACTICABLE, TOCUSTOMERS. UBS WILL PAY ELIGIBLE CUSTOMERS WHO SOLD THEIR ARSBELOW PAR THE DIFFERENCE BETWEEN PAR AND THE SALE PRICE OFTHE ARS. UBS WILL REIMBURSE CUSTOMERS FOR ANY EXCESSINTEREST COSTS INCURRED BY USING UBS'S ARS LOAN PROGRAMS.Sanction Details:WITHOUT ADMITTING OR DENYING THE COMMISSION'S ALLEGATIONS, UBSAGREED TO BE PERMANENTLY ENJOINED FROM VIOLATIONS OF THEBROKER-DEALER FRAUD PROVISIONS AND TO COMPLY WITH A NUMBEROF UNDERTAKINGS. UBS WILL ALSO BE PERMANENTLY ENJOINED FROMVIOLATING THE PROVISIONS OF SECTION 15(C) OF THE EXCHANGE ACT,WHICH PROHIBIT THE USE OF MANIPULATIVE OR DECEPTIVE DEVICES BYBROKER-DEALERS. UBS ALSO FACES THE PROSPECT OF FINANCIALPENALTIES FROM THE COMMISSION BASED ON THE TRADITIONALFACTORS THE COMMISSION CONSIDERS FOR PENALTIES AND BASED ONWHETHER UBS HAS FULFILLED ITS OBLIGATIONS UNDER ITS SETTLEMENTAGREEMENT. ON DECEMBER 22, 2008, THE UNITED STATES DISTRICTCOURT FOR THE SOUTHERN DISTRICT OF NEW YORK PERMANENTLYENJOINED UBS FROM VIOLATING SECTION 15(C) OF THE EXCHANGE ACTCease and Desist/InjunctionSanctions Ordered or ReliefGranted:735©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceAND THE COURT SHALL DETERMINE WHETHER A CIVIL PENALTY ISAPPROPRIATE AND THE AMOUNT. THE COURT FURTHER ORDERED THATUBS SHALL COMPLY WITH ALL OF THE UNDERTAKINGS AND AGREEMENTSAND THE COURT SHALL RETAIN JURISDICTION OF THIS MATTER FOR THEPURPOSES OF ENFORCING THE TERMS OF THE JUDGMENT.SEC LITIGATION RELEASE 21658, SEPTEMBER 21, 2010: THE SECURITIESAND EXCHANGE COMMISSION ANNOUNCED THAT UBS FINANCIALSERVICES, INC. SATISFIED ITS OBLIGATIONS UNDER ITS ARS SETTLEMENTWITH THE COMMISSION, WHICH RETURNED MORE THAN $18 BILLION TOTHE FIRM'S ARS CUSTOMERS.iReporting Source:FirmInitiated By:SECRelief Sought:OtherOther Relief Sought:UBS CONSENTED TO THE ENTRY OF A PERMANENT INJUNCTION AGAINSTVIOLATIONS OF SECTION 15(C) OF THE EXCHANGE ACT. UBS ALSOAGREED TO CERTAIN UNDERTAKINGS, INCLUDING OFFERING TOPURCHASE ARS, THAT WERE GENERALLY CONTINUING TO FAIL ATAUCTION, AT PAR VALUE PLUS ACCRUED INTEREST FROM CUSTOMERSWHO: (A) HELD ARS AT THE FIRM OR HAD BIDDING RIGHTS IN DELIVERYVS. PAYMENT ACCOUNTS AT THE FIRM ON FEBRUARY 13, 2008; OR (B)PURCHASED ARS FROM UBS BETWEEN OCTOBER 1, 2007 AND FEBRUARY12, 2008 AND TRANSFERRED THEM TO ANOTHER FIRM. THE JUDGMENTAGAINST UBS ALSO PROVIDES THAT THE SEC MAY PETITION THE COURTAT A LATER DATE TO DETERMINE WHETHER IT IS APPROPRIATE TOIMPOSE A CIVIL PENALTY.Date Court Action Filed:12/11/2008Principal Product Type:OtherOther Product Types:AUCTION RATE SECURITIES ("ARS")Court Details:UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEWYORK. CIVIL ACTION NUMBER 08 CIV 10754.THE SEC ALLEGED THAT UBS FINANCIAL SERVICES INC. VIOLATEDSECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGEACT") RELATING TO ITS MARKETING AND SALE OF AUCTION RATESECURITIES ("ARS"). UBS SECURITIES LLC, AN AFFILIATE OF UBS, WASALSO NAMED IN THE COMPLAINT. (COLLECTIVELY "UBS").Allegations:Current Status:FinalResolution:Judgment Rendered736©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceResolution Date:12/22/2008Other Sanctions:Sanction Details:UBS CONSENTED TO THE ENTRY OF A PERMANENT INJUNCTION AGAINSTVIOLATIONS OF SECTION 15(C) OF THE EXCHANGE ACT. UBS ALSOAGREED TO CERTAIN UNDERTAKINGS, INCLUDING OFFERING TOPURCHASE ARS, THAT WERE GENERALLY CONTINUING TO FAIL ATAUCTION, AT PAR VALUE PLUS ACCRUED INTEREST FROM CUSTOMERSWHO: (A) HELD ARS AT THE FIRM OR HAD BIDDING RIGHTS IN DELIVERYVS. PAYMENT ACCOUNTS AT THE FIRM ON FEBRUARY 13, 2008; OR (B)PURCHASED ARS FROM UBS BETWEEN OCTOBER 1, 2007 AND FEBRUARY12, 2008 AND TRANSFERRED THEM TO ANOTHER FIRM. THE JUDGMENTAGAINST UBS ALSO PROVIDES THAT THE SEC MAY PETITION THE COURTAT A LATER DATE TO DETERMINE WHETHER IT IS APPROPRIATE TOIMPOSE A CIVIL PENALTY.Firm StatementTHE SEC'S COMPLAINT ALLEGED THAT UBS FAILED TO DISCLOSE THERISKS AND OTHER MATERIAL INFORMATION ASSOCIATED WITH ARS. THESEC ALSO ALLEGED THAT A SMALL NUMBER OF UBS EMPLOYEES SOLDTHEIR PERSONAL ARS HOLDINGS BEFORE THE FIRM STOPPEDSUPPORTING THE MARKET. IN AUGUST 2008, UBS ENTERED INTO APRELIMINARY SETTLEMENT WITH THE SEC. IN DECEMBER 2008, A FINALJUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF WASENTERED AGAINST UBS, WITHOUT ADMITTING OR DENYING THEALLEGATIONS. AS PART OF THE SETTLEMENT, UBS AGREED TO, AMONGOTHER THINGS, OFFER TO PURCHASE CERTAIN CUSTOMERS' ARS AT PARVALUE PLUS ACCRUED INTEREST OVER A PERIOD OF TIME.THIS SETTLEMENT WAS REACHED IN CONJUNCTION WITH SETTLEMENTSWITH OTHER REGULATORS, INCLUDING THE NEW YORK STATE ATTORNEYGENERAL, THE MASSACHUSETTS SECURITIES DIVISION, AND MEMBERSOF THE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION.Cease and Desist/InjunctionSanctions Ordered or ReliefGranted:Disclosure 4 of 5iReporting Source:FirmInitiated By:ATTORNEY GENERAL OF THE STATE OF NEW YORKTHIS CIVIL LAWSUIT ALLEGES DECEPTIVE BUSINESS PRACTICES ANDBREACH OF FIDUCIARY DUTY. THE FIRM DENIES THE ALLEGATIONS OFTHE COMPLAINT.Allegations:Current Status:Final737©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceRelief Sought:Cease and DesistOther Relief Sought:MONETARY FINES, DISGORGEMENT/RESTITUTIONDate Court Action Filed:12/12/2006Principal Product Type:OtherOther Product Types:NON-DISCRETIONARY FEE-BASED BROKERAGE ACCOUNTCourt Details:SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORKINDEX NO. 06/405236Resolution:SettledResolution Date:07/16/2007Other Sanctions:Sanction Details:UBS FINANCIAL SERVICES INC. WAS NOT SANCTIONED BUT ENTEREDINTO A SETTLEMENT AGREEMENT WITH THE ATTORNEY GENERAL OF THESTATE OF NEW YORK DATED JULY 16, 2007 PURSUANT TO WHICH ITAGREED TO PAY $21.3 MILLION TOWARDS A REMEDIATION POOL FORAPPROXIMATELY 3,100 CURRENT AND FORMER CUSTOMERS OF THE UBSFINANCIAL SERVICES INC., AND A $2 MILLION PENALTY PAID TO THE NEWYORK STATE ATTORNEY GENERAL. THE SETTLEMENT AGREEMENT DOESNOT CONSTITUTE AN ADMISSION OR DENIAL OF ANY KIND BY UBSFINANCIAL SERVICES INC. A "STIPULATION OF DISCONTINUANCE WITHPREJUDICE" WAS FILED ON JULY 17, 2007 WITH NEW YORK STATESUPREME COURT.Firm StatementTHE ATTORNEY GENERAL OF THE STATE OF NEW YORK NEW YORKATTORNEY GENERAL FILED A CIVIL COMPLAINT ON DECEMBER 12, 2006ALLEGING DECEPTIVE BUSINESS PRACTICES AND BREACH OF FIDUCIARYDUTY. THE FIRM DENIED THE ALLEGATIONS OF THE COMPLAINT. UBSFINANCIAL SERVICES INC. WAS NOT SANCTIONED BUT ENTERED INTO ASETTLEMENT AGREEMENT WITH THE ATTORNEY GENERAL OF THE STATEOF NEW YORK DATED JULY 16, 2007 PURSUANT TO WHICH IT AGREED TOPAY $21.3 MILLION TOWARDS A REMEDIATION POOL FOR APPROXIMATELY3,100 CURRENT AND FORMER CUSTOMERS OF THE UBS FINANCIALSERVICES INC., AND A $2 MILLION PENALTY PAID TO THE NEW YORK STATEATTORNEY GENERAL. THE SETTLEMENT AGREEMENT DOES NOTCONSTITUTE AN ADMISSION OR DENIAL OF ANY KIND BY UBS FINANCIALSERVICES INC. A "STIPULATION OF DISCONTINUANCE WITH PREJUDICE"WAS FILED ON JULY 17, 2007 WITH NEW YORK STATE SUPREME COURT.Monetary/Fine $2,000,000.00Disgorgement/RestitutionSanctions Ordered or ReliefGranted:i738©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 5 of 5Reporting Source:FirmInitiated By:THE CLERK OF COLLIER COUNTY, FLORIDARelief Sought:Money Damages (Private/Civil Complaint)Other Relief Sought:Date Court Action Filed:11/28/1998Principal Product Type:Debt - MunicipalOther Product Types:Court Details:UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDAPUTATIVE CLASS ACTION FILED BY COLLIER COUNTY, FLORIDA, ONBEHALF OF ITSELF AND SIMILARLY SITUATED MUNICIPALITIES, NAMINGUBS PAINEWEBER, INC., J.C. BRADFORD AND A DOZEN UNDERWRITERSAND/OR SELLERS OF UNITED STATES TREASURY SECURITIES. THECOMPLAINT ALLEGES THAT THE DEFENDANTS, IN CONNECTION WITHVARIOUS MUNICIPAL BOND REFUNDINGS, CONSPIRED TO DEFRAUDPLAINTIFF AND THE PUTATIVE CLASS BY CHARGING EXCESSIVE ANDUNDISCLOSED MARKUPS ON TREASURY SECURITIES THEY PURCHASEDFROM DEFENDANTS FOR DEFEASANCE ESCROW ACCOUNTS. PLAINTIFFFURTHER ALLEGES THAT, IN CERTAIN INSTANCES, THESE ALLEGEDEXCESSIVE MARKUPS RESULTED IN "YIELD BURNING", JEOPARDIZING THETAX-EXEMPT STATUS OF MUNICIPAL BONDS ISSUED BY PLAINTIFF ANDTHE PUTATIVE CLASS, AND THAT DEFENDANTS ALLEGEDLY FAILED TOINFORM THE MUNICIPALITIES THAT THE TAX-EXEMPT STATUS OF THEIRBONDS COULD BE IN JEOPARDY. DAMAGES UNSPECIFIED.Allegations:Current Status:FinalResolution:SettledResolution Date:09/26/2001Other Sanctions:THE PARTIES FILED A STIPULATION OF SETTLEMENT WITH THE COURT,AGREEING TO SETTLE THE ACTION FOR AN AGGREGATE PAYMENT OF$4,507,000 BY ALL DEFENDANTS. PAINEWEBBER AND J.C. BRADFORD'STOTAL SHARE OF THAT SETTLEMENT IS $765,000.Sanction Details:PAINEWEBBER AND J.C. BRADFORD'S TOTAL SHARE OF THE SETTLEMENTIS $765,000, AS APPROVED BY THE COURT ON 9/26/01.Firm StatementTHE PARTIES FILED A STIPULATION OF SETTLEMENT WITH THE COURT,AGREEING TO SETTLE THE ACTION FOR AN AGGREGATE PAYMENT OFSanctions Ordered or ReliefGranted:739©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser Guidance$4,507,000 BY ALL DEFENDANTS. PAINEWEBBER AND J.C. BRADFORD'STOTAL SHARE OF THAT SETTLEMENT IS $765,000. BY FINAL JUDGMENTORDER AND FINAL JUDGMENT DATED SEPTEMBER 26, 2001, THE COURTAPPROVED THE SETTLEMENT, FINDING THE SETTLEMENT "FAIR, JUST ANDREASONABLE AS TO THE SETTLING CLASS".740©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Award - Award / JudgmentBrokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.Disclosure 1 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/28/200000-01074DO NOT USE-EXECUTIONS-EXECUTION PRICE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-EXECUTIONS-INCORRECT QUANTITY;DO NOT USE-EXECUTIONS-LIMIT V MRKT ORDRCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUNICIPAL BONDS$2,709,363.00AWARD AGAINST PARTY06/20/2001$72,010.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 2 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD05/15/200000-01625ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-NEGLIGENCE741©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,705.01AWARD AGAINST PARTY05/16/2001$1,160.75There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 3 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/03/200000-03169ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$55,000.00AWARD AGAINST PARTY06/12/2001$2,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 4 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TOEXECUTE; DO NOT USE-NO OTHER CONTROVERSY INVOLVED742©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:09/21/200000-03487COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS; PREFERRED STOCK$23,822.00AWARD AGAINST PARTY08/17/2001$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 5 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/25/200000-03608ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$372,358.32AWARD AGAINST PARTY06/20/2002$105,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 6 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:DO NOT USE-NO OTHER CONTROVERSY INVOLVED; EMPLOYMENT-743©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/31/200000-03726BREACH OF CONTRACT; EMPLOYMENT-COMPENSATIONDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$415,732.00AWARD AGAINST PARTY08/23/2001$2,800.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 7 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/01/200000-05289ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$3,794,926.60AWARD AGAINST PARTY04/17/2002$25,688.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 8 of 433iReporting Source:Regulator744©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/24/200101-00029ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,170,743.26AWARD AGAINST PARTY05/09/2002$419,342.04There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 9 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/01/200101-00859ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BONDS$2,166.00AWARD AGAINST PARTY08/23/2001$620.83There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i745©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 10 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/15/200101-01115ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$125,000.00AWARD AGAINST PARTY07/08/2002$2,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 11 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/10/200101-03349ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$476,127.37AWARD AGAINST PARTY07/10/2002$75,000.00746©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 12 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/28/200101-03408ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$417,000.00AWARD AGAINST PARTY07/23/2002$186,102.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 13 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD09/24/200101-04009ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-MARGIN CALLS; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUNICIPAL BOND FUNDS; MUTUAL FUNDS$880,000.00747©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY08/11/2004$44,117.85There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 14 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/02/200101-04037ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$1,066,062.00AWARD AGAINST PARTY11/21/2002$200,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 15 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD08/15/2001ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCE748©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:01-04256DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$80,000.00AWARD AGAINST PARTY07/08/2003$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 16 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/28/200101-04561ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCECERTIFICATE OF DEPOSIT; COMMON STOCK; DO NOT USE-NO OTHERTYPE OF SEC INVOLVE$23,325.00AWARD AGAINST PARTY03/01/2002$12,962.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 17 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-749©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/17/200101-04787SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$196,500.00AWARD AGAINST PARTY06/12/2003$26,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 18 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/24/200101-04925ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$763,820.00AWARD AGAINST PARTY02/14/2003$410,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 19 of 433iReporting Source:Regulator750©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/17/200101-05146ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY09/13/2002$5,191.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 20 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/08/200101-05662ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$2,100,000.00AWARD AGAINST PARTY11/15/2002$145,938.52There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.751©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 21 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/09/200101-05901ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-MARGIN CALLS; ACCOUNT RELATED-NEGLIGENCECERTIFICATE OF DEPOSIT; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; OTHER TYPES OF SECURITIESUnspecified DamagesAWARD AGAINST PARTY09/04/2003$13,150.34There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 22 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD12/03/200101-06276ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$40,000.00AWARD AGAINST PARTY12/11/2002752©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$87.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 23 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/03/200201-07149ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$500,000.00AWARD AGAINST PARTY03/04/2004$20,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 24 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD04/26/200202-01397ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$2,800,000.00753©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY05/27/2003$595,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 25 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/04/200202-01623ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-EXECUTION PRICECERTIFICATE OF DEPOSIT; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,760.05AWARD AGAINST PARTY09/03/2002$5,161.93There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 26 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD05/15/200202-02758ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVED754©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$26,907.00AWARD AGAINST PARTY10/25/2002$106.25There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 27 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/22/200202-02935ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$9,906.00AWARD AGAINST PARTY03/12/2003$6,057.68There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 28 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-TRANSFER; DO NOT USE-EXECUTIONS-OTHER755©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/26/200202-03030DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$57,627.48AWARD AGAINST PARTY06/17/2003$725.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 29 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/16/200202-04041ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$120,000.00AWARD AGAINST PARTY04/07/2004$300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 30 of 433iReporting Source:RegulatorType of Event:ARBITRATION756©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/22/200202-04068ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$500,000.00AWARD AGAINST PARTY09/25/2003$74,652.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 31 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/22/200202-04072ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$234,000.00AWARD AGAINST PARTY12/03/2003$107,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 32 of 433i757©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/31/200202-04241ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$49,595.21AWARD AGAINST PARTY07/10/2003$15,642.26There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 33 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/30/200202-04768ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE; MUTUAL FUNDSUnspecified DamagesAWARD AGAINST PARTY02/03/2004$300.00758©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 34 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/09/200202-04895ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITYCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$3,095,892.00AWARD AGAINST PARTY01/09/2004$40,600.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 35 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD09/04/200202-05099ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$365,000.00759©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY09/25/2003$64,800.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 36 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/21/200202-05859ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$182,678.00AWARD AGAINST PARTY03/05/2004$27,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 37 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD10/16/2002ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE760©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:02-05926ANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE$147,189.00AWARD AGAINST PARTY02/18/2004$34,200.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 38 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/11/200202-06359ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$1,107,862.36AWARD AGAINST PARTY05/17/2005$54,240.81There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 39 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-761©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/13/200202-06539MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITYCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$503,118.33AWARD AGAINST PARTY09/26/2003$5,493.33There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 40 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/14/200202-06621ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITYANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; MUTUAL FUNDS$1,214,487.00AWARD AGAINST PARTY06/16/2004$473,155.06There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 41 of 433i762©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/20/200202-06817ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$72,000.00AWARD AGAINST PARTY10/15/2003$65,475.53There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 42 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/03/200202-06821ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$25,000.00AWARD AGAINST PARTY02/03/2004$37,809.02763©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 43 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/25/200202-06912ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$430,343.00AWARD AGAINST PARTY11/04/2003$52,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 44 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD11/29/200202-06996ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$120,000.00764©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY04/28/2004$143,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 45 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/03/200202-07121ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;ACCOUNT RELATED-FAILURE TO SUPERVISEANNUITIES; COMMON STOCK; MUTUAL FUNDS; OTHER TYPES OFSECURITIES$8,240,912.00AWARD AGAINST PARTY12/17/2004$242,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 46 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD12/06/2002ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE765©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:02-07221DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$3,000,000.00AWARD AGAINST PARTY10/19/2005$500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 47 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/18/200202-07537ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TOEXECUTE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; CORPORATE BONDS; GOVERNMENT SECURITIES;MUTUAL FUNDS$4,550.42AWARD AGAINST PARTY06/27/2003$4,050.42There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 48 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT766©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/31/200202-07777USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$497,800.20AWARD AGAINST PARTY06/02/2005$202,747.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 49 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/08/200302-07846ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-BREACH OF CONTRACTDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$900,000.00AWARD AGAINST PARTY01/16/2004$292,056.10There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 50 of 433iReporting Source:Regulator767©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/12/200302-07855ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCEANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; MUTUAL FUNDS$300,000.00AWARD AGAINST PARTY06/18/2004$13,824.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 51 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/08/200303-00027DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$25,387.00AWARD AGAINST PARTY07/09/2003$8,212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i768©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 52 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/28/200303-00556ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVED; DO NOT USE-OTHER-OTHERDO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY10/26/2005$50,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 53 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/30/200303-00557ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,000,000.00AWARD AGAINST PARTY10/12/2004$75,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.769©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 54 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/04/200303-00703ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$503,805.00AWARD AGAINST PARTY11/09/2004$237,713.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 55 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD03/12/200303-01655ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$1,200,000.00AWARD AGAINST PARTY770©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:11/17/2005$150,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 56 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/14/200303-01656ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-MARGIN CALLSDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$390,000.00AWARD AGAINST PARTY06/16/2004$52,313.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 57 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD03/28/200303-01737ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFER; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE771©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$36,995.43AWARD AGAINST PARTY10/26/2004$47,289.31There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 58 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/26/200303-01835ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$57,008.00AWARD AGAINST PARTY10/01/2003$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 59 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCE772©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/07/200303-02369COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY03/18/2004$106,633.02There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 60 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/16/200303-02599ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$99,999.00AWARD AGAINST PARTY03/09/2004$225.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 61 of 433iReporting Source:Regulator773©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/14/200303-02620ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; TRADING DISPUTES-TRANSFERSCOMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE; MUTUAL FUNDS$26,349.89AWARD AGAINST PARTY11/26/2003$5,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 62 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/10/200303-03853ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,070,000.00AWARD AGAINST PARTY05/19/2004$500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.774©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 63 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/17/200303-04176ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCEANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUALFUNDS$742,014.00AWARD AGAINST PARTY07/08/2004$138,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 64 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD06/26/200303-04399ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$782,644.09AWARD AGAINST PARTY11/24/2004775©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$73,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 65 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/26/200303-04566ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISEANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$279,170.64AWARD AGAINST PARTY10/15/2004$26,300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 66 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD07/24/200303-04740ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$807,884.67776©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY07/21/2005$111,750.83There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 67 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/22/200303-05245ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-EXECUTION PRICECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$8,000,000.00AWARD AGAINST PARTY03/31/2005$370,788.55There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 68 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD08/22/2003ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-MARGIN CALLS; ACCOUNTRELATED-NEGLIGENCE777©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:03-05969COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$24,500.00AWARD AGAINST PARTY04/01/2004$425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 69 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/10/200303-06220ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$498,000.01AWARD AGAINST PARTY10/11/2004$24,432.28There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 70 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-MARGIN CALLS; ACCOUNT RELATED-NEGLIGENCE778©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/15/200303-07353COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$10,460.00AWARD AGAINST PARTY09/21/2004$75.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 71 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/04/200303-08497ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS; OTHER TYPES OF SECURITIES$231,000.00AWARD AGAINST PARTY01/24/2005$10,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 72 of 433iReporting Source:Regulator779©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/15/200303-08742ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$88,368,192.00AWARD AGAINST PARTY12/15/2005$12,655,235.14There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 73 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/23/200404-00393ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$2,784,000.00AWARD AGAINST PARTY04/23/2008$31,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.780©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 74 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/28/200404-00486ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$253,709.00AWARD AGAINST PARTY06/23/2005$85,306.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 75 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD02/18/200404-01017ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$400,000.00AWARD AGAINST PARTY06/06/2005781©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$60,701.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 76 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/23/200404-01106ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; PREFERRED STOCK$6,370.50AWARD AGAINST PARTY08/13/2004$5,690.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 77 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD03/05/200404-01454ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIESUnspecified Damages782©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY12/10/2004$18,343.86There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 78 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/21/200404-02869ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$450,000.00AWARD AGAINST PARTY03/18/2005$35,616.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 79 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD05/17/2004ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE783©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:04-03474COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,600,000.00AWARD AGAINST PARTY05/09/2005$98,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 80 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/26/200404-03707ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$500,000.00AWARD AGAINST PARTY06/17/2005$145,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 81 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT784©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/07/200404-03967RELATED-NEGLIGENCEANNUITIES; COMMON STOCK; MUTUAL FUNDS; OTHER TYPES OFSECURITIES$113,592.00AWARD AGAINST PARTY07/29/2005$46,058.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 82 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/17/200404-04212ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-MARGIN CALLS; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;PREFERRED STOCK$919,000.00AWARD AGAINST PARTY05/25/2005$275,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 83 of 433i785©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/13/200404-04829ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$200,000.00AWARD AGAINST PARTY11/21/2005$22,702.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 84 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/17/200404-05549ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$669,099.00AWARD AGAINST PARTY07/14/2005$211,778.00786©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 85 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/02/200404-06222ACCOUNT RELATED-BREACH OF CONTRACT; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$10,313.61AWARD AGAINST PARTY10/03/2005$10,313.61There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 86 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD10/22/200404-07387ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES; REAL ESTATE INVESTMENT TRUST$24,425.28AWARD AGAINST PARTY787©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:03/17/2005$425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 87 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/05/200504-07558ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS; OTHERTYPES OF SECURITIES$178,965.00AWARD AGAINST PARTY02/03/2006$38,809.65There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 88 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD12/10/200404-07570ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OF788©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:SECURITIES$330,000.00AWARD AGAINST PARTY04/20/2006$64,872.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 89 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/05/200504-08667ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$480,000.00AWARD AGAINST PARTY01/23/2006$175,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 90 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVED789©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:02/08/200505-00639DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$28,014.74AWARD AGAINST PARTY07/29/2005$106.25There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 91 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/01/200505-01662ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY07/11/2006$3,800.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 92 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-790©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/24/200505-03050EXECUTIONS-FAILURE TO EXECUTEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$25,908.12AWARD AGAINST PARTY05/19/2006$2,561.14There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 93 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/16/200505-05615ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; MUTUAL FUNDS$650,000.00AWARD AGAINST PARTY09/19/2006$0.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 94 of 433i791©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/20/200606-00215ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$280,000.00AWARD AGAINST PARTY12/13/2006$65,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 95 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/28/200606-01530ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$500,000.00AWARD AGAINST PARTY06/06/2007$50,000.00792©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 96 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/22/200606-04247ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$560,000.00AWARD AGAINST PARTY11/06/2007$91,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 97 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD01/09/200707-00051ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$28,417.00AWARD AGAINST PARTY793©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:07/05/2007$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 98 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/16/200707-00114ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; CORPORATE BONDS; OTHER TYPES OF SECURITIES;PREFERRED STOCK$1,800,000.00AWARD AGAINST PARTY02/27/2008$500,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 99 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD04/20/200707-01246ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE794©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:CERTIFICATE OF DEPOSIT; CORPORATE BONDS; GOVERNMENTSECURITIES; PREFERRED STOCK$25,000.00AWARD AGAINST PARTY09/13/2007$425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 100 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/16/200707-01852ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOTUSE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$24,999.00AWARD AGAINST PARTY12/21/2007$125.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 101 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-OTHER; DONOT USE-NO OTHER CONTROVERSY INVOLVED; TRADING DISPUTES-MARK-UPS795©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA08/31/200707-02391DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$6,772.09AWARD AGAINST PARTY02/05/2008$900.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 102 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/15/200808-00102ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-OTHER; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITEDPARTNERSHIPS$2,013.00AWARD AGAINST PARTY11/11/2008$8,614.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 103 of 433iReporting Source:Regulator796©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA02/01/200808-00273ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$18,000,000.00AWARD AGAINST PARTY11/25/2009$60,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 104 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/29/200808-01117ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCEAUCTION RATE SECURITIES; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; OTHER TYPES OF SECURITIESUnspecified DamagesAWARD AGAINST PARTY04/07/2010$95,856.01There may be a non-monetary award associated with this arbitration.797©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePlease select the Case Number above to view more detailed information.Disclosure 105 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/03/200808-01361ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACTAUCTION RATE SECURITIES; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; OTHER TYPES OF SECURITIES$214,485.00AWARD AGAINST PARTY02/03/2010$244,298.77There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 106 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA05/28/200808-01389ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$137,807.81AWARD AGAINST PARTY798©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:05/26/2010$24,549.02There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 107 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/22/200808-02467ACCOUNT RELATED-EXCHANGES; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$695.00AWARD AGAINST PARTY02/06/2009$300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 108 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:FINRA09/23/200808-03293ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT799©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$135,000.00AWARD AGAINST PARTY10/30/2009$67,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 109 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/17/200808-03323ACCOUNT RELATED-DIVIDENDS; ACCOUNT RELATED-MARGIN CALLS; DONOT USE-NO OTHER CONTROVERSY INVOLVED; UNKNOWN TYPE OFCONTROVERSIESDO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY12/18/2009$67,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 110 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS800©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/03/200808-03537DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; PREFERRED STOCK;UNKNOWN TYPE OF SECURITIESUnspecified DamagesAWARD AGAINST PARTY03/25/2009$792.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 111 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/14/200808-03716ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITYCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$10,000,000.00AWARD AGAINST PARTY09/30/2009$250,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 112 of 433iReporting Source:Regulator801©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/18/200808-04010ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; PREFERRED STOCK$24,450.00AWARD AGAINST PARTY04/17/2009$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 113 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/03/200808-04021ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; DONOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$140,000.00AWARD AGAINST PARTY10/29/2009$75,614.33There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i802©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 114 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/12/200808-04152ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACTDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$300,000.00AWARD AGAINST PARTY11/20/2009$185,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 115 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/14/200808-04212ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$500,000.00AWARD AGAINST PARTY04/09/2010$490,610.00803©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 116 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/21/200808-04357ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY;DO NOT USE-NO OTHER CONTROVERSY INVOLVEDAUCTION RATE SECURITIES; DO NOT USE-NO OTHER TYPE OF SECINVOLVE$529,688.00AWARD AGAINST PARTY11/03/2010$529,688.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 117 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA01/02/200908-04398ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; HEDGE FUND$874,452.50AWARD AGAINST PARTY804©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:11/12/2009$875,352.51There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 118 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/06/200908-04592ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$500,000.00AWARD AGAINST PARTY05/19/2010$425,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 119 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:FINRA04/17/200909-00313ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITYAUCTION RATE SECURITIES; DO NOT USE-NO OTHER TYPE OF SEC805©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:INVOLVE$441,735.36AWARD AGAINST PARTY01/28/2011$87,350.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 120 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/22/200909-01078ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER; DO NOTUSE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$6,587.00AWARD AGAINST PARTY09/15/2009$1,510.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 121 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:FINRAACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCE806©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:03/18/200909-01382STRUCTURED PRODUCTS$125,000.00AWARD AGAINST PARTY02/23/2010$108,750.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 122 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/09/200909-01414ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEANNUITIES; VARIABLE ANNUITIES$25,000.00AWARD AGAINST PARTY10/27/2009$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 123 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;807©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA03/19/200909-01431ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEFANNIE MAE; PREFERRED STOCK$60,000.00AWARD AGAINST PARTY07/23/2010$96,523.74There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 124 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/03/200909-01739ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATIONMUNICIPAL BONDS$30,620.00AWARD AGAINST PARTY03/17/2010$150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 125 of 433iReporting Source:Regulator808©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/23/200909-01833ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; MUTUAL FUNDS$15,000,000.00AWARD AGAINST PARTY01/20/2011$600.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 126 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/23/200909-01884ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTEFANNIE MAE$24,900.00AWARD AGAINST PARTY10/15/2009$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.809©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 127 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/17/200909-02027ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHERSTRUCTURED PRODUCTS; UNKNOWN TYPE OF SECURITIES$25,000.00AWARD AGAINST PARTY09/16/2009$25,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 128 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA04/17/200909-02087ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-MARGIN CALLS; ACCOUNT RELATED-NEGLIGENCESTRUCTURED PRODUCTS$2,200,000.00AWARD AGAINST PARTY810©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:12/20/2010$2,200,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 129 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA04/28/200909-02255ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; MUTUAL FUNDS$200,000.00AWARD AGAINST PARTY06/02/2010$60,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 130 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:FINRA05/05/200909-02365ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEOTHER TYPES OF SECURITIES$297,297.17811©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY11/17/2010$100,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 131 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/23/200909-02537ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-EXECUTIONS-LIMIT VMRKT ORDRCOMMON STOCK; MUTUAL FUNDS$63,437.78AWARD AGAINST PARTY05/11/2010$1,956.10There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 132 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-812©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/03/200909-02683EXECUTIONS-FAILURE TO EXECUTECORPORATE BONDS$40,600.00AWARD AGAINST PARTY03/02/2010$150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 133 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA05/21/200909-02865ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACTAUCTION RATE SECURITIES$127,425.00AWARD AGAINST PARTY02/17/2010$68,828.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 134 of 433iReporting Source:Regulator813©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA05/29/200909-02882ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEANNUITIES$782,442.53AWARD AGAINST PARTY04/08/2011$25,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 135 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA05/28/200909-02956ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTSSTRUCTURED PRODUCTS$16,000.00AWARD AGAINST PARTY12/29/2009$16,212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.814©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 136 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/20/200909-03836ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEANNUITIES; VARIABLE ANNUITIES$248,578.03AWARD AGAINST PARTY12/02/2010$81,770.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 137 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/31/200909-03944AUCTION RATE SECURITIES$65,956.00AWARD AGAINST PARTY03/22/2010$59,251.00815©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 138 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/09/200909-03990ACCOUNT RELATED-OTHERAUCTION RATE SECURITIES$110,000,000.00AWARD AGAINST PARTY08/03/2010$80,800,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 139 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:FINRA07/27/200909-04396ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISECOMMON STOCK$434,000.00AWARD AGAINST PARTY10/25/2010816©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 140 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/07/200909-05651ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-NEGLIGENCEMUTUAL FUNDS$808,447.00AWARD AGAINST PARTY12/23/2010$25,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 141 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:FINRA10/13/200909-05793ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK817©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:Unspecified DamagesAWARD AGAINST PARTY10/05/2011$248,874.42There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 142 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/04/200909-05911ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITYCORPORATE BONDS$24,735.25AWARD AGAINST PARTY06/17/2010$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 143 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:FINRA11/16/2009ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE818©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:09-06414MUTUAL FUNDS; OTHER TYPES OF SECURITIES$27,404.00AWARD AGAINST PARTY04/28/2010$2,225.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 144 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/01/200909-06443ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK$75,000.00AWARD AGAINST PARTY12/28/2010$18,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 145 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER;ACCOUNT RELATED-TRANSFER819©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/26/201010-00071AUCTION RATE SECURITIES; OTHER TYPES OF SECURITIES$25,425.00AWARD AGAINST PARTY07/27/2010$25,425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 146 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/29/201010-00361ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECORPORATE BONDS; STRUCTURED PRODUCTS$2,000,000.00AWARD AGAINST PARTY06/09/2011$1,520,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 147 of 433iReporting Source:Regulator820©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA03/22/201010-01085ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTECOMMON STOCK$110,000.00AWARD AGAINST PARTY04/26/2011$13,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 148 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA03/30/201010-01098ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEANNUITIES$19,460.34AWARD AGAINST PARTY09/13/2010$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.821©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 149 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/04/201010-02584ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE;ACCOUNT RELATED-OTHEROTHER TYPES OF SECURITIES$300,000.00AWARD AGAINST PARTY04/25/2012$154,479.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 150 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA10/25/201010-04642ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-NEGLIGENCE; ACCOUNTRELATED-OTHER; DO NOT USE-OTHER-OTHERVARIABLE ANNUITIES$900,000.00AWARD AGAINST PARTY822©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:07/07/2011$357,102.83There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 151 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/14/201110-05715ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; GOVERNMENT SECURITIES; MUNICIPAL BOND FUNDS;MUNICIPAL BONDS; MUTUAL FUNDS; OPTIONS; OTHER TYPES OFSECURITIES; PREFERRED STOCK; PRIVATE EQUITIES$17,381,800.00AWARD AGAINST PARTY07/09/2012$635,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 152 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:FINRA04/20/201111-01537ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY823©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:MUTUAL FUNDS$942,000.00AWARD AGAINST PARTY07/02/2012$375.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 153 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA08/22/201111-01729ACCOUNT ACTIVITY-MISREPRESENTATIONANNUITIES$324,007.56AWARD AGAINST PARTY02/19/2013$102,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 154 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:FINRA06/27/201111-02496ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE824©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; MUTUAL FUNDS$10,162.50AWARD AGAINST PARTY01/09/2012$0.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 155 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA08/01/201111-02687ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEMUTUAL FUNDS; VARIABLE ANNUITIES$1,200,000.00AWARD AGAINST PARTY08/22/2012$50,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 156 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT825©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/22/201111-02700ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERCORPORATE BONDS; HEDGE FUND; MUNICIPAL BOND FUNDS; MUNICIPALBONDS; MUTUAL FUNDS$1,667,448.00AWARD AGAINST PARTY05/09/2013$730,216.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 157 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/30/201111-04768ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-LEHMAN NOTES; MUTUAL FUNDS$146,933.00AWARD AGAINST PARTY02/25/2013$103,290.15There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.826©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 158 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA09/06/201212-02740DO NOT USE-EXECUTIONS-OTHER; TRADING DISPUTES-BUY IN; TRADINGDISPUTES-OTHERCOMMON STOCK$20,513.00AWARD AGAINST PARTY03/04/2013$212.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 159 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/18/201212-03613ACCOUNT RELATED-ERRORS-CHARGESUnspecified DamagesAWARD AGAINST PARTY04/11/2013$250.01There may be a non-monetary award associated with this arbitration.827©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePlease select the Case Number above to view more detailed information.Disclosure 160 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/16/201212-03847ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER; ACCOUNTRELATED-TRANSFER; DO NOT USE-OTHER-OTHER$10,510.00AWARD AGAINST PARTY08/21/2013$2,105.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 161 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA12/18/201212-04128ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-LEHMAN NOTES$484,664.00AWARD AGAINST PARTY828©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:03/21/2014$202,375.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 162 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/06/201313-02866ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$27,872,627.17AWARD AGAINST PARTY01/11/2017$18,214,915.78There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 163 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE829©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/25/201313-03048MUNICIPAL BOND FUNDS$625,000.00AWARD AGAINST PARTY05/13/2015$200,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 164 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/29/201313-03062ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$3,123,160.02AWARD AGAINST PARTY07/28/2015$250,600.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 165 of 433i830©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/26/201313-03403ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$3,781,575.41AWARD AGAINST PARTY10/08/2015$85,625.98There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 166 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:FINRA12/03/201313-03470ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCEOTHER TYPES OF SECURITIES$4,729,731.20AWARD AGAINST PARTY08/01/2016831©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$500,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 167 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/10/201313-03520ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$10,000,000.01AWARD AGAINST PARTY02/17/2017$10,000,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 168 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:FINRA12/12/201313-03586ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURETO SUPERVISE; OTHER-INDEMNIFICATIONDO NOT USE-LEHMAN NOTES832©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$5,000.00AWARD AGAINST PARTY07/17/2014$87.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 169 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/30/201313-03717ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$600,000.01AWARD AGAINST PARTY02/14/2017$363,875.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 170 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TO833©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/07/201413-03784SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERMUNICIPAL BONDS; MUTUAL FUNDSUnspecified DamagesAWARD AGAINST PARTY08/31/2015$2,930,082.41There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 171 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/28/201414-00162ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-MARGIN CALLSCOMMON STOCK$20,000,000.00AWARD AGAINST PARTY05/22/2015$2,000,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 172 of 433i834©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/25/201414-00170ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-MARGIN CALLS; ACCOUNT RELATED-NEGLIGENCEMUTUAL FUNDS$2,033,596.10AWARD AGAINST PARTY05/19/2015$1,000,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 173 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:FINRA02/10/201414-00304ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS$1,000,000.01AWARD AGAINST PARTY08/11/2015835©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$2,545,600.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 174 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA02/22/201414-00442ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS$8,774,788.30AWARD AGAINST PARTY03/21/2016$1,200,299.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 175 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:FINRA05/27/201414-01541ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-MARGINCALLS; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS836©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:Unspecified DamagesAWARD AGAINST PARTY02/18/2016$1,449,665.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 176 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/03/201414-01628ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCECOMMODITIES FUTURES; COMMON STOCK; EXCHANGE-TRADED FUNDS$50,000.00AWARD AGAINST PARTY04/15/2015$15,300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 177 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:FINRA06/09/2014ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OFCONTRACT837©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:14-01649$1,000,000.01AWARD AGAINST PARTY12/18/2015$1,373,933.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 178 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA06/23/201414-01895ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE; TRADING DISPUTES-OTHERCOMMON STOCK$8,000.00AWARD AGAINST PARTY03/10/2015$40,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 179 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE838©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA08/07/201414-02464MUNICIPAL BOND FUNDS; MUNICIPAL BONDS$20,200,000.00AWARD AGAINST PARTY12/05/2016$18,577,413.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 180 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA09/03/201414-02683ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-EXECUTIONS-OTHEREXCHANGE-TRADED FUNDS; MUNICIPAL BOND FUNDS; MUNICIPAL BONDS$3,900,000.01AWARD AGAINST PARTY12/24/2015$795,770.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i839©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 181 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/13/201414-02942ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK$1,000,000.01AWARD AGAINST PARTY12/14/2015$101,072.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 182 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:FINRA10/06/201414-02995ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERMUNICIPAL BOND FUNDS; MUNICIPAL BONDS; MUTUAL FUNDS; OTHERTYPES OF SECURITIES$185,970.00AWARD AGAINST PARTY840©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:06/29/2016$363,551.91There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 183 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/13/201414-03016ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERMUNICIPAL BOND FUNDS; MUNICIPAL BONDS; MUTUAL FUNDS$499,350.03AWARD AGAINST PARTY03/24/2016$470,803.67There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 184 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:FINRAACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE841©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:11/25/201414-03528MUTUAL FUNDS; OTHER TYPES OF SECURITIES$1,057,225.45AWARD AGAINST PARTY07/26/2016$225,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 185 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA01/13/201514-03811ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE;ACCOUNT RELATED-OTHERMUNICIPAL BOND FUNDS; MUNICIPAL BONDS$3,992,811.94AWARD AGAINST PARTY11/18/2016$611,251.52There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 186 of 433iReporting Source:Regulator842©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA02/25/201515-00295ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BONDS; MUTUAL FUNDS$8,536,547.72AWARD AGAINST PARTY09/09/2016$750,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 187 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:FINRA03/30/201515-00709ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-MARGIN CALLS;ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS; MUTUAL FUNDS$5,565,020.00AWARD AGAINST PARTY03/29/2017843©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$4,423,176.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 188 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA07/27/201515-01774ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUTUAL FUNDS$1,000,000.00AWARD AGAINST PARTY11/04/2016$957,796.60There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 189 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:FINRA08/21/2015ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER844©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:15-02121MUNICIPAL BOND FUNDS$6,600,000.00AWARD AGAINST PARTY12/09/2016$391,476.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 190 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA09/04/201515-02205ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS; MUTUAL FUNDS$3,265,000.00AWARD AGAINST PARTY05/25/2018$609,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 191 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT845©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/05/201515-02536RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS$840,000.00AWARD AGAINST PARTY02/23/2018$521,075.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 192 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA10/15/201515-02661ACCOUNT RELATED-FAILURE TO SUPERVISEMUNICIPAL BOND FUNDS; MUNICIPAL BONDS$5,000,000.00AWARD AGAINST PARTY06/26/2017$793,677.62There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 193 of 433iReporting Source:RegulatorType of Event:ARBITRATION846©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/02/201515-02894ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-VIOLATEOF BLUE SKY LWS; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUTUAL FUNDS$625,000.00AWARD AGAINST PARTY04/07/2017$425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 194 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA12/28/201515-03421ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-OTHERMUNICIPAL BOND FUNDS; MUNICIPAL BONDS; OTHER TYPES OFSECURITIES$5,000,000.00AWARD AGAINST PARTY03/20/2018$270,639.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.847©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 195 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA02/08/201616-00290ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITYMUNICIPAL BOND FUNDS; MUNICIPAL BONDS$5,000,000.00AWARD AGAINST PARTY03/09/2017$505,000.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 196 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA02/18/201616-00443ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEANNUITIES; COMMON STOCK; LIMITED PARTNERSHIPS; MUTUAL FUNDS$2,738,431.02AWARD AGAINST PARTY11/03/2016$10,000.00848©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 197 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA03/15/201616-00715ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCEMUNICIPAL BOND FUNDS; MUTUAL FUNDS$5,000,000.00AWARD AGAINST PARTY06/22/2018$4,286,447.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 198 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:FINRA08/19/201616-02377ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCECORPORATE BONDS; MUTUAL FUNDS; OTHER TYPES OF SECURITIES849©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$31,873.35AWARD AGAINST PARTY01/23/2017$300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 199 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA11/02/201616-03148ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; CORPORATE BONDS; EXCHANGE-TRADED FUNDS;LIMITED PARTNERSHIPS; MUTUAL FUNDS; PREFERRED STOCK$7,086,204.00AWARD AGAINST PARTY04/09/2018$805,120.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 200 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY;850©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:FINRA03/10/201717-00592ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHERMUNICIPAL BOND FUNDS; MUTUAL FUNDS$5,000,000.00AWARD AGAINST PARTY03/29/2018$1,880,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 201 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198686-01034ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-COLLECTIONCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$428,500.00AWARD AGAINST PARTY08/08/1989$260,014.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 202 of 433i851©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198686-01394ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$3,056,551.92AWARD AGAINST PARTY05/25/1989$2,069,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 203 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198787-01708ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$31,241.00AWARD AGAINST PARTY10/19/1989$19,972.00852©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 204 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198787-01861ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$163,179.46AWARD AGAINST PARTY07/19/1989$21,250.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 205 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD01/01/198787-02045ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$12,250.00AWARD AGAINST PARTY06/12/1990853©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 206 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD87-02251ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$125,284.00AWARD AGAINST PARTY09/08/1989$41,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 207 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD01/01/198787-02333ACCOUNT RELATED-COLLECTION; ACCOUNT RELATED-MARGIN CALLS; DONOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES854©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$2,250,000.00AWARD AGAINST PARTY07/06/1989$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 208 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-00635ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$1,926.00AWARD AGAINST PARTY05/31/1989$2,094.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 209 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD01/01/1988ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVED855©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:88-00853DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BOND FUNDS$8,000.00AWARD AGAINST PARTY05/24/1989$8,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 210 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/21/198888-01098DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$830,151.60AWARD AGAINST PARTY09/13/1990$59,968.40There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 211 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD01/01/1988ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVED856©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:88-01247DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$5,000.00AWARD AGAINST PARTY08/14/1989$4,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 212 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-01393ACCOUNT RELATED-TRANSFER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$2,259.53AWARD AGAINST PARTY05/23/1989$1,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 213 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO857©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-01493NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$359,684.00AWARD AGAINST PARTY10/17/1989$27,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 214 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-01764DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$21,000.00AWARD AGAINST PARTY07/14/1989$59.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 215 of 433iReporting Source:Regulator858©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-01891ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$50,000.00AWARD AGAINST PARTY06/06/1989$24,062.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 216 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02036ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-NEGLIGENCE; DO NOTUSE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$28,137.48AWARD AGAINST PARTY07/19/1989$13,718.75There may be a non-monetary award associated with this arbitration.859©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePlease select the Case Number above to view more detailed information.Disclosure 217 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02114ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIESUnspecified DamagesAWARD AGAINST PARTY01/23/1990$109,334.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 218 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD01/01/198888-02227ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-COLLECTION; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$25,000.00860©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY09/22/1989$12,976.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 219 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02354ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$1,310,803.00AWARD AGAINST PARTY07/19/1989$85,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 220 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD01/01/198888-02422ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVED861©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$43,490.02AWARD AGAINST PARTY05/30/1990$43,275.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 221 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02441ACCOUNT RELATED-MARGIN CALLS; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$69,858.92AWARD AGAINST PARTY08/22/1989$26,343.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 222 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE862©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:01/01/198888-02507DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$88,811.64AWARD AGAINST PARTY02/15/1990$66,796.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 223 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02580ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$32,162.00AWARD AGAINST PARTY06/30/1989$16,297.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 224 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-863©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02658SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$258,478.15AWARD AGAINST PARTY03/06/1990$11,244.75There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 225 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02700ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURETO SUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$54,930.43AWARD AGAINST PARTY05/31/1990$18,297.24There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 226 of 433iReporting Source:Regulator864©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/30/198988-02740DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$43,000.00AWARD AGAINST PARTY06/05/1991$47,890.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 227 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02964ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPSUnspecified DamagesAWARD AGAINST PARTY09/21/1989$364,679.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 228 of 433i865©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-02971ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY;DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$17,000.00AWARD AGAINST PARTY05/17/1989$2,300.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 229 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/19/198888-03008DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$224,000.00AWARD AGAINST PARTY04/15/1991$50,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 230 of 433i866©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03277ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$3,400.00AWARD AGAINST PARTY05/31/1989$3,400.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 231 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03283DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;PREFERRED STOCK$73,164.00AWARD AGAINST PARTY08/31/1989$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.867©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 232 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03311ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-OTHER;DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$100,000.00AWARD AGAINST PARTY01/22/1990$45,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 233 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/14/198888-03339DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$30,830.00AWARD AGAINST PARTY04/30/1991$16,653.00868©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 234 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03383ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$176,552.00AWARD AGAINST PARTY06/18/1990$12,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 235 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD01/01/198888-03388ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$285,145.00AWARD AGAINST PARTY869©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 236 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03391ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$285,145.00AWARD AGAINST PARTY06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 237 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD01/01/198888-03392ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES870©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$285,145.00AWARD AGAINST PARTY06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 238 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03405ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$285,145.00AWARD AGAINST PARTY06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 239 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD01/01/198888-03407ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVED871©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$285,145.97AWARD AGAINST PARTY06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 240 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03414ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$285,145.00AWARD AGAINST PARTY06/18/1990$18,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 241 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVED872©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:01/01/198888-03584DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GOVERNMENTSECURITIES; MUTUAL FUNDS$25,494.13AWARD AGAINST PARTY10/13/1989$11,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 242 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03751ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$4,604.00AWARD AGAINST PARTY08/25/1989$3,004.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 243 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER873©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198888-03914CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$619.75AWARD AGAINST PARTY07/25/1989$619.75There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 244 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00008ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$400,000.00AWARD AGAINST PARTY04/10/1990$94,652.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 245 of 433iReporting Source:Regulator874©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00175ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-NEGLIGENCE; DO NOTUSE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$10,000.00AWARD AGAINST PARTY08/21/1989$846.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 246 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/17/198989-00191DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$693,432.55AWARD AGAINST PARTY11/19/1990$75,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i875©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 247 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00217ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$1,509.95AWARD AGAINST PARTY08/21/1989$1,509.95There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 248 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00346ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$15,000.00AWARD AGAINST PARTY02/14/1990$3,500.00876©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 249 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00363ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$180,000.00AWARD AGAINST PARTY04/05/1990$21,886.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 250 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/10/198989-00566DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$17,611.00AWARD AGAINST PARTY01/29/1991$3,808.80877©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 251 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00581ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GINNIE MAES$11,400.00AWARD AGAINST PARTY11/15/1989$5,211.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 252 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD01/01/198989-00597ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$24,038.03AWARD AGAINST PARTY878©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:01/30/1990$8,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 253 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-00656DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$258.00AWARD AGAINST PARTY06/06/1990$258.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 254 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD01/01/198989-00713ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OF879©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:SECURITIES$44,311.13AWARD AGAINST PARTY02/27/1990$11,700.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 255 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/02/198989-00849DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$56,119.00AWARD AGAINST PARTY10/24/1990$40,842.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 256 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD01/01/198989-00978ACCOUNT RELATED-ERRORS-CHARGES; DO NOT USE-NO OTHERCONTROVERSY INVOLVED880©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$4,740.00AWARD AGAINST PARTY08/16/1989$3,240.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 257 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-01498ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADINGCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$72,710.00AWARD AGAINST PARTY05/15/1990$30,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 258 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDDO NOT USE-NO OTHER CONTROVERSY INVOLVED881©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:08/01/198989-01737DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$11,500,000.00AWARD AGAINST PARTY01/10/1991$325,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 259 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-01781ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-OTHER;DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$841.00AWARD AGAINST PARTY10/20/1989$841.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 260 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:DO NOT USE-NO OTHER CONTROVERSY INVOLVED882©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/18/198989-01931DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$355,280.11AWARD AGAINST PARTY09/05/1990$350,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 261 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-02049ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE;DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,033,750.00AWARD AGAINST PARTY07/24/1990$40,875.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 262 of 433iReporting Source:RegulatorType of Event:ARBITRATION883©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-02207ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$40,388.63AWARD AGAINST PARTY05/23/1990$14,356.19There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 263 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/11/198989-02393ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$352,000.00AWARD AGAINST PARTY10/05/1990$22,349.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 264 of 433i884©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-02413ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$45,289.92AWARD AGAINST PARTY07/31/1990$30,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 265 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/01/198989-02445ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$225,000.00AWARD AGAINST PARTY06/08/1990$85,000.00885©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 266 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/27/198989-02709DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$161,986.00AWARD AGAINST PARTY12/19/1990$11,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 267 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD11/10/198989-02949ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$3,000,000.00AWARD AGAINST PARTY10/14/1991886©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$789,521.24There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 268 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/31/198989-02968DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,812,568.00AWARD AGAINST PARTY10/31/1990$100,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 269 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD10/31/198989-02982DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,000,000.00AWARD AGAINST PARTY02/21/1991887©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$0.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 270 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/24/199089-03458DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMODITIES FUTURES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$150,000.00AWARD AGAINST PARTY08/09/1991$31,101.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 271 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD12/20/198989-03510DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$394,167.00AWARD AGAINST PARTY12/06/1990888©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$34,600.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 272 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/26/199089-03551DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$149,892.29AWARD AGAINST PARTY08/16/1991$16,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 273 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD01/08/199090-00062DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$12,317.53AWARD AGAINST PARTY11/14/1990889©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$12,317.53There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 274 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/08/199090-00419ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$165,000.00AWARD AGAINST PARTY07/15/1991$25,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 275 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD01/01/199090-00433ACCOUNT RELATED-ERRORS-CHARGES; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,790.34AWARD AGAINST PARTY890©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:06/28/1990$3,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 276 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/07/199090-00520ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACHOF CONTRACT; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$585,260.08AWARD AGAINST PARTY03/04/1991$24,045.85There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 277 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD04/20/199090-01054ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$73,000.00891©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY01/27/1992$55,800.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 278 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/17/199090-01381ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$68,602.72AWARD AGAINST PARTY03/25/1991$25,933.22There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 279 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD06/22/199090-01563ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-OTHER; ACCOUNTACTIVITY-SUITABILITYCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE892©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$5,601,000.00AWARD AGAINST PARTY06/19/1991$1,255,524.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 280 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/18/199090-01569ACCOUNT ACTIVITY-CHURNING; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$40,055.00AWARD AGAINST PARTY09/13/1991$1,200.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 281 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD07/05/1990ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE893©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:90-01829DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$23,785.26AWARD AGAINST PARTY04/05/1991$23,785.26There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 282 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/09/199090-02644ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$37,386.89AWARD AGAINST PARTY07/11/1991$19,688.06There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 283 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT894©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/10/199190-02716RELATED-NEGLIGENCEOPTIONS; UNKNOWN TYPE OF SECURITIES$516,529.16AWARD AGAINST PARTY03/09/1992$25,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 284 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/24/199090-02725ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$5,000.00AWARD AGAINST PARTY06/20/1991$5,375.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 285 of 433iReporting Source:RegulatorType of Event:ARBITRATION895©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/15/199090-02732ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$53,828.00AWARD AGAINST PARTY09/26/1991$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 286 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/25/199190-02919ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$300,000.00AWARD AGAINST PARTY09/14/1992$92,792.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 287 of 433i896©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/27/199090-02999ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITYCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$148,000.00AWARD AGAINST PARTY11/06/1991$107,649.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 288 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/31/199190-03176ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$9,000.00AWARD AGAINST PARTY10/01/1991$8,664.77There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.897©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 289 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/22/199190-03264ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$720,000.00AWARD AGAINST PARTY02/10/1992$57,506.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 290 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD03/20/199190-03336ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-ERRORS-CHARGES;ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDCOMMODITIES FUTURES; MUTUAL FUNDS; UNKNOWN TYPE OFSECURITIES$500.00AWARD AGAINST PARTY08/30/1991898©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 291 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/13/199190-03354ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; UNKNOWN TYPE OF SECURITIES$1,699,892.69AWARD AGAINST PARTY09/09/1992$2,252,027.78There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 292 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD03/21/199190-03579ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,185.79899©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY08/30/1991$1,814.66There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 293 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/15/199190-03620ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$13,550.00AWARD AGAINST PARTY08/14/1991$2,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 294 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD01/28/199191-00024ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVED900©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$10,000,000.00AWARD AGAINST PARTY03/05/1993$2,732,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 295 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/21/199191-00294ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$270,000.00AWARD AGAINST PARTY11/22/1991$150,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 296 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVED901©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:03/21/199191-00454COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$431,980.00AWARD AGAINST PARTY01/20/1992$39,471.34There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 297 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/22/199191-00528ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$13,750.00AWARD AGAINST PARTY08/08/1991$13,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 298 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-902©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/22/199191-00644SUITABILITYCOMMON STOCK; OPTIONS; UNKNOWN TYPE OF SECURITIES$117,134.04AWARD AGAINST PARTY01/06/1993$123,471.57There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 299 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/19/199191-00770ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OTHERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$14,638,101.00AWARD AGAINST PARTY06/30/1992$1,000,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 300 of 433iReporting Source:Regulator903©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/20/199191-00814ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$58,786.00AWARD AGAINST PARTY02/19/1992$28,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 301 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/06/199191-00909ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; UNKNOWN TYPE OF CONTROVERSIESCORPORATE BONDS; UNKNOWN TYPE OF SECURITIES$52,755.39AWARD AGAINST PARTY05/26/1992$28,099.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 302 of 433i904©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/24/199191-00955ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; CORPORATE BONDS; LIMITED PARTNERSHIPS;WARRANTS/RIGHTS$600,000.00AWARD AGAINST PARTY03/18/1992$20,552.06There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 303 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/22/199191-00987ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-OTHERGOVERNMENT SECURITIES; LIMITED PARTNERSHIPS; MUNICIPAL BONDFUNDS; REAL ESTATE INVESTMENT TRUST$244,474.00AWARD AGAINST PARTY05/18/1992$128,018.64905©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 304 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/09/199191-01029ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; UNKNOWN TYPEOF CONTROVERSIESOPTIONS; UNKNOWN TYPE OF SECURITIES$100,000.00AWARD AGAINST PARTY10/16/1991$67,885.61There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 305 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD04/24/199191-01043ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCECORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$86,340.00AWARD AGAINST PARTY906©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:07/22/1992$46,512.23There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 306 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/12/199191-01079ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$5,125.00AWARD AGAINST PARTY09/23/1991$5,125.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 307 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD05/06/199191-01389ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF907©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:SEC INVOLVE$179,000.00AWARD AGAINST PARTY03/26/1992$42,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 308 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/15/199191-01407ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDOTHER TYPES OF SECURITIES; UNKNOWN TYPE OF SECURITIES$13,150.00AWARD AGAINST PARTY03/19/1992$13,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 309 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD05/23/1991DO NOT USE-EXECUTIONS-EXECUTION PRICE; DO NOT USE-NO OTHERCONTROVERSY INVOLVED908©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:91-01497COMMON STOCK; UNKNOWN TYPE OF SECURITIES$1,552.71AWARD AGAINST PARTY01/10/1992$1,552.71There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 310 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/20/199191-01818ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVEAWARD AGAINST PARTY12/02/1991There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 311 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING909©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/08/199191-01841COMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE$1,244,000.00AWARD AGAINST PARTY05/13/1992$68,521.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 312 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/02/199191-01956ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITYGOVERNMENT SECURITIES; MUTUAL FUNDS; OTHER TYPES OFSECURITIES; UNKNOWN TYPE OF SECURITIES$34,791.52AWARD AGAINST PARTY02/10/1992$16,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 313 of 433iReporting Source:Regulator910©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/24/199191-02055ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDLIMITED PARTNERSHIPS; UNKNOWN TYPE OF SECURITIES$6,228.00AWARD AGAINST PARTY06/24/1992$3,485.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 314 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/29/199191-02159ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$70,000.00AWARD AGAINST PARTY06/16/1992$37,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i911©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 315 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/22/199191-02194ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$24,777.00AWARD AGAINST PARTY08/17/1992$7,092.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 316 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/20/199191-02344ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; DO NOT USE-EXECUTIONS-OTHER; UNKNOWN TYPE OF CONTROVERSIESLIMITED PARTNERSHIPS; UNKNOWN TYPE OF SECURITIES$10,000.00AWARD AGAINST PARTY04/10/1992$548.00There may be a non-monetary award associated with this arbitration.912©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePlease select the Case Number above to view more detailed information.Disclosure 317 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/05/199191-02507ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;WARRANTS/RIGHTS$6,010.00AWARD AGAINST PARTY05/12/1992$1,504.40There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 318 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD09/23/199191-02760ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$9,784.00AWARD AGAINST PARTY07/27/1992913©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$4,900.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 319 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/11/199191-02761ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADINGCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITEDPARTNERSHIPS$7,780,318.00AWARD AGAINST PARTY03/24/1993$2,644,327.89There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 320 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD12/03/199191-03187ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADINGDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS;WARRANTS/RIGHTS914©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$30,000.00AWARD AGAINST PARTY10/05/1992$75,522.66There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 321 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/30/199191-03211ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$65,000.00AWARD AGAINST PARTY08/19/1992$4,125.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 322 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD11/07/1991ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-NEGLIGENCE915©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:91-03221COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$8,695,148.00AWARD AGAINST PARTY12/04/1992$9,685,600.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 323 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/20/199191-03642ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$609,003.00AWARD AGAINST PARTY10/19/1992$70,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 324 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACHOF CONTRACT; DO NOT USE-NO OTHER CONTROVERSY INVOLVED916©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:12/12/199191-03857DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$14,960.00AWARD AGAINST PARTY06/30/1992$3,142.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 325 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/19/199291-03908ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOTUSE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; PREFERRED STOCK$91,500.00AWARD AGAINST PARTY02/24/1993$21,985.21There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 326 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; UNKNOWN TYPE OF CONTROVERSIES917©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/27/199191-03916COMMON STOCK; UNKNOWN TYPE OF SECURITIES$177,783.32AWARD AGAINST PARTY12/09/1992$6,288.77There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 327 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/10/199291-04150ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADINGCOMMON STOCK; UNKNOWN TYPE OF SECURITIES$325,000.00AWARD AGAINST PARTY02/05/1993$27,554.06There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 328 of 433iReporting Source:RegulatorType of Event:ARBITRATION918©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/12/199292-00142ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; MUTUAL FUNDS; UNKNOWN TYPE OF SECURITIES$40,000.00AWARD AGAINST PARTY07/20/1993$11,565.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 329 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/21/199292-00176ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$20,000.00AWARD AGAINST PARTY11/04/1992$28,365.80There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 330 of 433i919©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/03/199292-00303ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-FAILURE TO SUPERVISE; DONOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$250,000.00AWARD AGAINST PARTY12/31/1992$40,672.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 331 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/13/199292-00430ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADINGDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$574,797.00AWARD AGAINST PARTY04/22/1993$102,363.61There may be a non-monetary award associated with this arbitration.920©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidancePlease select the Case Number above to view more detailed information.Disclosure 332 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/13/199292-00458ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISECORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$122,331.00AWARD AGAINST PARTY11/23/1992$40,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 333 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD03/09/199292-00552ACCOUNT ACTIVITY-CHURNING; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GINNIE MAES$5,000.00AWARD AGAINST PARTY09/10/1992921©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$1,093.15There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 334 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/04/199292-00575ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$5,853.00AWARD AGAINST PARTY09/24/1992$2,155.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 335 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD03/06/199292-00582ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITEDPARTNERSHIPS; OPTIONS922©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$83,613.00AWARD AGAINST PARTY09/24/1992$73,109.26There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 336 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/03/199292-00636ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCECORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$500,000.00AWARD AGAINST PARTY01/28/1993$42,920.08There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 337 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD04/03/1992ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE923©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:92-00982COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITEDPARTNERSHIPS; MUTUAL FUNDS$734,174.00AWARD AGAINST PARTY02/15/1994$0.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 338 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/16/199292-01097ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;PREFERRED STOCK$5,000,000.00AWARD AGAINST PARTY02/17/1993$447,312.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 339 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHER924©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/23/199292-01129CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$10,000.00AWARD AGAINST PARTY09/24/1992$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 340 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/04/199292-01285ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE; GINNIE MAES$30,265.00AWARD AGAINST PARTY06/29/1993$25,687.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 341 of 433iReporting Source:Regulator925©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/18/199292-01426ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$940,951.00AWARD AGAINST PARTY03/04/1994$306,103.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 342 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/18/199292-01502ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GINNIE MAES; LIMITEDPARTNERSHIPS; MUTUAL FUNDS$1,300,000.00AWARD AGAINST PARTY05/05/1993$210,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.926©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 343 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/18/199292-01521DO NOT USE-NO OTHER CONTROVERSY INVOLVED; UNKNOWN TYPE OFCONTROVERSIESCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$3,420.00AWARD AGAINST PARTY11/12/1992$818.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 344 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/22/199292-01705ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$500,000.00AWARD AGAINST PARTY03/10/1993$318,367.00927©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 345 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/22/199292-01858ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$42,988.00AWARD AGAINST PARTY04/14/1993$11,600.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 346 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD06/04/199292-01867ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$250,000.00AWARD AGAINST PARTY928©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:06/25/1993$150,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 347 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/07/199292-01936ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADINGDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$110,000.00AWARD AGAINST PARTY02/08/1993$109,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 348 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD08/06/199292-02056ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OF929©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:SECURITIES$266,702.66AWARD AGAINST PARTY11/30/1993$381,149.66There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 349 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/06/199292-02084ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,752,000.00AWARD AGAINST PARTY09/24/1993$198,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 350 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NOOTHER CONTROVERSY INVOLVED930©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:08/18/199292-02523COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$400,000.00AWARD AGAINST PARTY06/17/1993$2,467.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 351 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/11/199292-02632ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; WARRANTS/RIGHTS$8,271.00AWARD AGAINST PARTY01/15/1993$2,200.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 352 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NOOTHER CONTROVERSY INVOLVED931©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/18/199292-02916COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$9,204.93AWARD AGAINST PARTY05/24/1993$7,193.18There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 353 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/03/199292-02946ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$9,836.00AWARD AGAINST PARTY07/01/1993$1,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 354 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACH932©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/30/199292-03220OF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTEANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$40,377.00AWARD AGAINST PARTY11/22/1993$2,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 355 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/13/199292-03436ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GINNIE MAES$11,787.94AWARD AGAINST PARTY05/20/1993$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 356 of 433iReporting Source:Regulator933©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/09/199292-03562DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$22,500.00AWARD AGAINST PARTY08/18/1993$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 357 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/08/199292-04140ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; PREFERRED STOCK$5,225.00AWARD AGAINST PARTY05/28/1993$786.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 358 of 433i934©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/21/199393-00112ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-OTHER; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$100,000.00AWARD AGAINST PARTY12/23/1993$37,800.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 359 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/07/199393-00668ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS; WARRANTS/RIGHTS$41,000.00AWARD AGAINST PARTY06/20/1994$14,294.97There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.935©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 360 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/07/199393-00829ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$26,688.00AWARD AGAINST PARTY12/28/1993$17,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 361 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD04/02/199393-00993ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$30,000.00AWARD AGAINST PARTY02/07/1994936©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$3,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 362 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/18/199393-01454ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$600,090.00AWARD AGAINST PARTY10/13/1994$29,250.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 363 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD06/29/199393-01567ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE937©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$500,000.01AWARD AGAINST PARTY03/11/1994$30,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 364 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/30/199393-02066ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$500,000.00AWARD AGAINST PARTY08/02/1994$18,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 365 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD08/10/1993ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVED938©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:93-02503DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$3,800,000.00AWARD AGAINST PARTY05/04/1996$2,180,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 366 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/11/199393-02832DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$26,297.00AWARD AGAINST PARTY04/10/1995$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 367 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NOOTHER CONTROVERSY INVOLVED939©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/21/199393-03028DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BONDS$230,000.00AWARD AGAINST PARTY07/29/1994$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 368 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/11/199393-03446ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BONDS;OTHER TYPES OF SECURITIES$1,366.30AWARD AGAINST PARTY02/18/1994$50.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 369 of 433iReporting Source:Regulator940©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/09/199393-03468ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$200,000.00AWARD AGAINST PARTY05/26/1994$127,897.12There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 370 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/10/199493-03545ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$10,187.00AWARD AGAINST PARTY11/16/1994$1,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i941©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 371 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/22/199393-04578ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTSCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$83,200.00AWARD AGAINST PARTY09/29/1994$1,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 372 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/07/199493-04604ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$218,000.00AWARD AGAINST PARTY03/03/1995$75,950.00942©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 373 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/27/199393-04856ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS$340,000.00AWARD AGAINST PARTY06/16/1995$30,425.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 374 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD07/18/199494-00381ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$10,000.00943©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY04/17/1995$13,150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 375 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/20/199494-01675ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$6,341.00AWARD AGAINST PARTY05/09/1995$3,229.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 376 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD10/14/199494-02836ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GOVERNMENT944©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:SECURITIES; MUNICIPAL BOND FUNDS; OTHER TYPES OF SECURITIES$10,000.00AWARD AGAINST PARTY04/24/1995$10,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 377 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/19/199494-03095DO NOT USE-EXECUTIONS-OTHER; DO NOT USE-NO OTHERCONTROVERSY INVOLVED; TRADING DISPUTES-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$3,413.00AWARD AGAINST PARTY06/23/1995$892.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 378 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD11/22/1994DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVED945©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:94-04371DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$6,209.78AWARD AGAINST PARTY07/27/1995$4,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 379 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/19/199494-04870ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITEDPARTNERSHIPS$47,257.14AWARD AGAINST PARTY11/21/1995$16,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 380 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;946©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/27/199595-00282ACCOUNT RELATED-FAILURE TO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BOND FUNDS$266,854.00AWARD AGAINST PARTY07/30/1996$38,004.97There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 381 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/01/199595-00320ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISECORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,440,000.00AWARD AGAINST PARTY06/21/1996$40,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 382 of 433iReporting Source:Regulator947©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/24/199595-00730ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUNICIPAL BONDS;UNKNOWN TYPE OF SECURITIES$400,000.00AWARD AGAINST PARTY05/09/1997$194,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 383 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/02/199595-00871ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-ERRORS-CHARGES; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DONOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$8,184.89AWARD AGAINST PARTY11/27/1995$7,610.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.948©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 384 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/02/199595-01577ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; FANNIE MAE$70,214.00AWARD AGAINST PARTY04/04/1996$15,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 385 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD04/13/199595-01681ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHERTYPES OF SECURITIES$300,000.00AWARD AGAINST PARTY10/24/1996949©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$82,573.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 386 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/08/199595-01918ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$9,841.30AWARD AGAINST PARTY10/06/1995$1,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 387 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:NASD06/12/199595-02001ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$3,461.00AWARD AGAINST PARTY950©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition Date:Sum of All Relief Awarded:11/20/1995$3,586.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 388 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/10/199595-02183ACCOUNT RELATED-ERRORS-CHARGES; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; CORPORATE BONDS; GOVERNMENT SECURITIES;PREFERRED STOCK$937.50AWARD AGAINST PARTY03/20/1996$430.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 389 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD05/24/199595-02268ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE951©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$10,000.00AWARD AGAINST PARTY11/16/1995$150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 390 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/15/199595-02276ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIESUnspecified DamagesAWARD AGAINST PARTY03/03/1997$154,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 391 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY952©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:08/07/199595-03773DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; FANNIE MAE; FREDDIEMACS; OTHER TYPES OF SECURITIES$57,054.97AWARD AGAINST PARTY05/17/1996$82,994.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 392 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/22/199696-00119ACCOUNT RELATED-ERRORS-CHARGES; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$10,083.03AWARD AGAINST PARTY03/14/1997$1,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 393 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHER CONTROVERSY INVOLVED953©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/01/199696-00810DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS$13,979.00AWARD AGAINST PARTY10/08/1996$10,150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 394 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/26/199696-03092ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OTHERCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$70,000.00AWARD AGAINST PARTY05/05/1997$1,181.52There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 395 of 433iReporting Source:RegulatorType of Event:ARBITRATION954©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/29/199696-03192ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$6,827.62AWARD AGAINST PARTY03/20/1997$6,977.62There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 396 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/12/199696-03344ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS; OTHER TYPES OF SECURITIES$254,600.00AWARD AGAINST PARTY06/16/1997$4,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 397 of 433i955©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/29/199696-03964ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-FAILURE TO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$65,000.00AWARD AGAINST PARTY08/01/1997$500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 398 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD10/24/199696-04139ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$6,904.88AWARD AGAINST PARTY06/10/1997$150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.956©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 399 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/22/199696-04589ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-TRANSFERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$178,000.00AWARD AGAINST PARTY08/05/1998$40,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 400 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD11/12/199696-04687DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$9,180.00AWARD AGAINST PARTY06/06/1997957©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$75.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 401 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/19/199696-05117ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE;EMPLOYMENT-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$20,000.00AWARD AGAINST PARTY07/15/1997$3,215.50There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 402 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD02/14/199797-00033ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$9,204.00958©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY01/14/1998$4,997.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 403 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/21/199797-00602DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,160.24AWARD AGAINST PARTY08/12/1997$3,245.18There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 404 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD06/04/199797-01126ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCE959©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$4,148,697.00AWARD AGAINST PARTY03/09/1999$420,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 405 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/16/199797-01379ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OFCONTRACTDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$250,000.00AWARD AGAINST PARTY03/16/1998$40,568.35There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 406 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE960©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/18/199797-01748COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$10,400.00AWARD AGAINST PARTY12/19/1997$3,135.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 407 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/22/199797-02453ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITYDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$96,288.00AWARD AGAINST PARTY07/29/1998$0.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 408 of 433iReporting Source:Regulator961©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/10/199797-03320ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$41,000.00AWARD AGAINST PARTY04/23/1998$520.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 409 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/24/199797-03622ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OPTIONS$9,674.00AWARD AGAINST PARTY03/13/1998$75.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.i962©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 410 of 433Reporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD08/29/199797-03713ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISEANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,320,272.56AWARD AGAINST PARTY07/20/1998$31,826.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 411 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/12/199797-04412DO NOT USE-NO OTHER CONTROVERSY INVOLVED; EMPLOYMENT-BREACH OF CONTRACT; EMPLOYMENT-COMMISSIONS; EMPLOYMENT-OTHERDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$1,800,000.00AWARD AGAINST PARTY07/28/1998$82,400.00963©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceThere may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 412 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD11/07/199797-04943ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE$33,300.00AWARD AGAINST PARTY07/13/1998$24,900.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 413 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD12/18/199797-05377ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-OTHER; DONOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$164,127.00AWARD AGAINST PARTY04/22/1999964©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$82,750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 414 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/20/199897-06021ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$540,000.00AWARD AGAINST PARTY12/09/1998$20,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 415 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:NASD03/03/199898-00602ACCOUNT ACTIVITY-MISREPRESENTATION; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$4,158.96965©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisposition:Disposition Date:Sum of All Relief Awarded:AWARD AGAINST PARTY09/01/1998$2,578.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 416 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/01/199898-00934ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OF CONTRACTCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$33,200.00AWARD AGAINST PARTY04/05/1999$33,200.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 417 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:NASD07/10/199898-01407ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;ACCOUNT RELATED-NEGLIGENCE966©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES$12,300.00AWARD AGAINST PARTY10/22/1999$5,743.72There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 418 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD06/10/199898-02007ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$40,000.00AWARD AGAINST PARTY02/29/2000$5,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 419 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Allegations:NASD07/10/1998ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURETO SUPERVISE; DO NOT USE-NO OTHER CONTROVERSY INVOLVED967©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:98-02435DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; GOVERNMENTSECURITIES$1,976.50AWARD AGAINST PARTY02/08/1999$557.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 420 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD09/10/199898-03116ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHER CONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$324,524.15AWARD AGAINST PARTY06/07/1999$9,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 421 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; DO NOTUSE-NO OTHER CONTROVERSY INVOLVED968©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/19/199998-03144DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$600,000.00AWARD AGAINST PARTY05/24/2001$175,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 422 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD05/10/199998-04021ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE$32,464.86AWARD AGAINST PARTY08/01/2000$47,098.61There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 423 of 433iReporting Source:Regulator969©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/24/199999-00083ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVEUnspecified DamagesAWARD AGAINST PARTY12/08/2000$244,021.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 424 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD03/01/199999-00090ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-FAILURE TOSUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$370,633.01AWARD AGAINST PARTY08/08/2001$750.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.970©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceDisclosure 425 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/17/199999-00446ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$134,709.00AWARD AGAINST PARTY08/14/2000$98,710.40There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 426 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:NASD04/09/199999-01046ACCOUNT RELATED-MARGIN CALLS; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDCOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$10,150.00AWARD AGAINST PARTY01/24/2000971©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Awarded:$150.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 427 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD04/15/199999-01265ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE$100,000.00AWARD AGAINST PARTY04/25/2000$35,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 428 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:NASD05/24/199999-01847ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES972©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceSum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:$98,000.00AWARD AGAINST PARTY08/25/2000$30,000.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 429 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD07/16/199999-02476ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISEDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$18,350.30AWARD AGAINST PARTY01/29/2001$20,500.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 430 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Allegations:NASDACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVED973©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceCase Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:10/26/199999-04434DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$10,000.00AWARD AGAINST PARTY10/30/2000$10,150.38There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 431 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD02/24/200099-04551ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-NEGLIGENCE; DO NOT USE-NO OTHERCONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS$7,900.00AWARD AGAINST PARTY01/17/2001$8,225.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 432 of 433iReporting Source:RegulatorType of Event:ARBITRATIONAllegations:ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-974©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceArbitration Forum:Case Initiated:Case Number:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD01/04/200099-04757CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTRELATED-FAILURE TO SUPERVISECOMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS$5,500,000.00AWARD AGAINST PARTY03/16/2001$220,360.00There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.Disclosure 433 of 433iReporting Source:RegulatorType of Event:ARBITRATIONArbitration Forum:Case Initiated:Case Number:Allegations:Disputed Product Type:Sum of All Relief Requested:Disposition:Disposition Date:Sum of All Relief Awarded:NASD12/30/199999-05436ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; DO NOT USE-NOOTHER CONTROVERSY INVOLVEDDO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES$724,324.00AWARD AGAINST PARTY01/11/2001$135,375.01There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.975©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. www.finra.org/brokercheckUser GuidanceEnd of ReportThis page is intentionally left blank.976©2018 FINRA. All rights reserved. Report about UBS FINANCIAL SERVICES INC. REFERENCES City of Huntington Beach Alisa Cutchen Treasurer PO Box 190 Huntington Beach, CA 92648 (714) 536-5299 City of Orange Josephine Chan Investment Officer 300 E. Chapman Ave. Orange, CA 92702 (714) 744-2236 Kings County Tammy Phelps Assistant Treasury Manger 1400 West Lacey Blvd Hanford, CA 93230 (559) 852-2462 Stanislaus County Dolores Sarenana Chief Deputy Treasurer 1010 Tenth Street, Suite 5700 Modesto, CA 95353 (209) 525-4466 UBS Financial Services Inc. Sacramento Regional Institutional Sales Group 1610 Arden Way, Suite 200 Sacramento, CA 95815 Phone: 916-648-7200 Toll Free 800-354-3895 www.ubs.com UBS Financial Services Inc. is a subsidiary of UBS AG UBS Group AG Annual Report 2018 UBS Group Funding (Switzerland) AG Consolidated Standalone 31 December 2018 Pillar 3 report UBS Group and significant regulated subsidiaries and sub-groups (UBS Group AG, UBS AG, UBS Switzerland AG, UBS Limited, UBS Americas Holding LLC) UBS Switzerland AG UBS AG Standalone legal entity reports Standalone legal entity reports for UBS AG, UBS Switzerland AG and UBS Group Funding (Switzerland) AG are available from 15 March 2019. UBS Limited was merged into UBS Europe SE effective 1 March 2019. UBS Europe SE will be considered a signifi cant regulated subsidiary and beginning with our fi rst quarter 2019 reporting, we will provide respective information in our quarterly and annual reporting. There is no requirement to externally publish an annual report for UBS Americas Holding LLC. Information for other subsidiaries is available under “Other subsidiaries” at www.ubs.com/investors. Other legal entity-specifi c disclosures in accordance with article 89 of the EU Capital Requirements Directive IV (CRD IV) are provided under “EU CRD IV disclosures” at www.ubs.com/investors. The GRI Document provides comprehensive disclosures on environmental, social and governance factors and includes the disclosures on non-fi nancial information required by German law implementing the EU Directive 2014/95 (CSR-Richtlinie- Umsetzungsgesetz, CSR-RUG). The German translation includes the following sections of our Annual Report 2018: “Group performance,” IFRS-required disclosures in “Risk, treasury and capital management,” “Corporate governance,” “Compensation” and consoli dated and standalone fi nancial statements for UBS Group AG. The Basel III capital adequacy framework requires us to publish a range of Pillar 3 disclosures, mainly covering risk, capital, leverage, liquidity and remuneration. These Pillar 3 disclosures are supplemented by specifi c additional requirements of the Swiss Financial Market Supervisory Authority (FINMA) and voluntary disclosures on our part. We are also required to disclose certain regulatory information for our signifi cant regulated subsidiaries and sub-groups. Global Reporting Initiative (GRI) Document 2018 UBS Group AG GRI Select Swiss franc disclosures i iUBS AG iUBS Group AG Management’s discussion and analysisMG MT Supplemental SEC disclosuresSEC Selected financial and regulatory informationi Global Reporting InitiativeGRIFinancial statementsCHF CHF USD USD USD Auszug aus dem Geschäftsbericht 2018 – UBS Group AG UBS Group AG MG MT USD USD Annual Report 2018 – UBS Group AG and UBS AG SEC Form 20-F, including XBRL filing UBS Group AG SEC Information for UBS AG con solidated does not differ materially from UBS Group AG on a consoli dated basis. Information provided in management’s discussion and analysis applies to both UBS Group AG consolidated and UBS AG consolidated, except for certain disclosures in the “Risk, treasury and capital management” section where information for UBS|AG consoli dated is separately provided. UBS AG SECUSD Annual Report 2018 – UBS Group AG This document is at the center of our external reporting approach. UBS AG i UBS Switzerland AG i UBS Limited i UBS Americas Holding LLC i UBS Group AG MG MT USD USD www.ubs.com/annualreporting Our external reporting approach Our external reporting requirements and the scope of our external reports are defined by accounting standards, relevant stock and debt listing rules, SEC (US Securities and Exchange Commission) and other regulatory requirements, as well as by our financial reporting policies. We prepare and publish consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) on a half-yearly basis, in line with the requirements of the SIX Swiss Exchange and the New York Stock Exchange, where our shares are listed. We also publish our results on a quarterly basis in order to provide shareholders with more frequent disclosures than required by law. Statutory financial statements for UBS Group AG are prepared annually as the basis for our Swiss tax return, the appropriation of retained earnings and a potential distribution of dividends, subject to shareholder approval at the Annual General Meeting. Management’s discussion and analysis complements our IFRS financial statements. The Annual Report 2018 – UBS Group AG and UBS AG is the basis for our SEC Form 20-F filing, which includes Extensible Business Reporting Language (XBRL) interactive financial data, as required for non-US private issuers that prepare financial statements in accordance with IFRS. •%QOOQPGSWKV[VKGT %'6 ECRKVCN USD 34.1 billion •6QVCNNQUUCDUQTDKPIECRCEKV[ USD 84 billion •4KUMYGKIJVGFCUUGVU USD 264 billion •.GXGTCIGTCVKQFGPQOKPCVQT USD 905 billion •5VTQPIDCNCPEGUJGGVTGƃGEVKPIJKIJCUUGVSWCNKV[CPFNQYTKUMRTQƂNG GIJKIJSWCNKV[NKSWKFCUUGVU USD 173 billion •9GEQPVKPWGVQKPXGUVKPVGEJPQNQI[VQGPJCPEGQWTDWUKPGUU having spent USD 3.5 billionKPCPFGZRGEVVQOCKPVCKPCTQWPF VJKUNGXGNQHURGPFVJTQWIJOCKPN[QPPGYVGEJPQNQIKGU (inanEiaN ›What we put into the equation 9GFGRNQ[CPFKPXGUVQWTECRKVCNe eVQFGNKXGTCFFGFXCNWGVJTQWIJQWT DWUKPGUUCEVKXKVKGU • Over 150 [GCTUQHGZRGTKGPEGKPDCPMKPI • Strong brand • 10,677 CFXKUQTUUGTXGQWTENKGPVUKP)NQDCN9GCNVJ/CPCIGOGPV •7$5DWKNFUCPFUVTGPIVJGPUENKGPVCPFKPFWUVT[TGNCVKQPUJKRU VJTQWIJVJGXCTKQWURNCVHQTOUCPFQHHGTKPIUUWEJCU UBS Evidence Lab Innovations, UBS Partner, UBS Atrium and we.trade 4GNCVKQPUJKRUCPFKPVGNNGEVWCN *uman •/QTGVJCP 68,000 RGQRNGYQTNFYKFG QHYJKEJ` KP5YKV\GTNCPF • )NQDCNN[YGJKTGFCNOQUV1,700LWPKQTVCNGPVUKPVQ GPVT[NGXGNVTCKPKPIRTQITCOU • 104 KPFKXKFWCNU VQFCVG TGNCWPEJGFVJGKTECTGGTUVJTQWIJ QWTCYCTFYKPPKPIUBS Career Comeback Program •(QEWUQPJKTKPITGVCKPKPICPFRTQOQVKPIOQTGYQOGP CETQUUVJGƂTO •9GYCPVVQDGVJGƂPCPEKCNRTQXKFGTQHEJQKEGHQTENKGPVUYKUJKPI VQFKTGEVECRKVCNVQYCTFKPXGUVOGPVUVJCVUWRRQTVVJG5WUVCKPCDNG &GXGNQROGPV)QCNUCPFVJGVTCPUKVKQPVQCNQYECTDQPGEQPQO[ • %QORTGJGPUKXGGPXKTQPOGPVCNCPFUQEKCNTKUM '54 HTCOGYQTM IQXGTPKPIENKGPVCPFUWRRNKGTTGNCVKQPUJKRUCRRNKGFƂTOYKFG VQCNNCEVKXKVKGU • USD ~41 million FKTGEVECUJEQPVTKDWVKQPUVQEQOOWPKVKGU • 197,807 XQNWPVGGTKPIJQWTUQPEQOOWPKV[RTQLGEVU •7$51RVKOWU(QWPFCVKQP USD ~67 million raised in donations •6JTQWIJQWTUWRRN[EJCKPYGUQWTEGF75&DKNNKQPQHRTQFWEVU CPFUGTXKEGUQHYJKEJYGRWTEJCUGF75&DKNNKQPQHIQQFU HTQOCRRTQZKOCVGN[UWRRNKGTUKP5YKV\GTNCPF 5QEKCNCPFPCVWTCN As of or for the year ended 31 December 2018 Corporate C e n t e r CNients Ass et /a n a ge mentInvestment Ban M 2 e r s o n a N C orporate BanMingGNobaN W eaNth /a nagementOur approach to long-term value creation • Dividend of CHF 0.70RGTUJCTGRTQRQUGFHQTVJGƂPCPEKCN[GCT •%QODKPKPIVJGRTQRQUGFFKXKFGPFYKVJQWTUJCTGTGRWTEJCUGUQH%*(OKNNKQPNCUV[GCTQWTVQVCN RC[QWVTCVKQHQTYKNNDG ECNEWNCVGFCUCEETWCNUHQTRTQRQUGFFKXKFGPFUVQUJCTGJQNFGTU RNWUVJGUJCTGTGRWTEJCUGUKPFKXKFGFD[PGVRTQƂVCVVTKDWVCDNGVQUJCTGJQNFGTU •0GVRTQƂVCVVTKDWVCDNGVQUJCTGJQNFGTU USD 4,516 million KP •4GVWTPQPVCPIKDNGGSWKV[ 10.0%#FLWUVGFTGVWTPQPVCPIKDNGGSWKV[GZENFGHGTTGFVCZGZRGPUGDGPGƂV CPFFGHGTTGFVCZCUUGVU 12.9% •7RFCVGFCPPWCNRGTHQTOCPEGVCTIGVUCODKVKQPUCPFECRKVCNCPFTGUQWTEGIWKFGNKPGUGHHGEVKXGHTQO •9GCEJKGXGFC13.1%TGVWTPQP%'6ECRKVCN YKVJCVCTIGVQH`HQTVJGHWNN[GCT •7$5#)TCVKPIU /QQF[oU #C UVCDNGQWVNQQM 52 # UVCDNGQWVNQQM (KVEJ ## UVCDNGQWVNQQM Investors ›to create long-term value for our stakeholders eDCNCPEKPIQRRQTVWPKVKGUCPF TKUMUTGUWNVKPIHTQOQWTGPXKTQPOGPV and our business eVQCEJKGXGRQUKVKXGTGUWNVUHQTQWTUVCMGJQNFGTU •.GCFKPIRTQXKFGTQHUWUVCKPCDNGKPXGUVOGPVRTQFWEVUKP5YKV\GTNCPFYKVJ`OCTMGVUJCTG COQPITGURGEVKXGCUUGVCPFYGCNVJOCPCIGTU •5WUVCKPCDNGKPXGUVKPICUUGVUTGRTGUGPVGFUSD 1,110 billion,EQPUVKVWVKPI`QHVQVCNKPXGUVGFCUUGVU • 1WT'54UVCPFCTFUCRRN[VQENKGPVCPFUWRRNKGTTGNCVKQPUJKRUGSWCNN[1HVJGCUUGUUOGPVU D[QWT'54HWPEVKQP`YGTGTGLGEVGFQTPQVHWTVJGTRWTUWGF`TGNCVKQPUJKRUYGTGCRRTQXGF YKVJSWCNKƂECVKQPU •1PGQHVJGVQRVCZRC[GTUKP5YKV\GTNCPF • /QTGVJCP343,000 FKTGEVDGPGƂEKCTKGUCUCTGUWNVQHQWTEQOOWPKV[KPXGUVOGPV •7$51RVKOWU(QWPFCVKQPoUYQTMJGNRGFKORTQXGVJGYGNNDGKPIQH2.8 million EJKNFTGPINQDCNN[ •6QVCNTGFWEVKQPQHITGGPJQWUGICUHQQVRTKPVD[HTQODCUGNKPG[GCT 5QEKGV[ •6TWN[INQDCN QWTGORNQ[GGUCTGYQTMKPIKP50EQWPVTKGUCTGEKVK\GPUQH133EQWPVTKGUCPFURGCM more than 150NCPIWCIGU •#OQPIVJGYQTNFoUOQUVCVVTCEVKXGGORNQ[GTU 7PKXGTUWO6QR'SWKNGCR)GPFGT'SWCNKV[)NQDCN4CPMKPI0Q •1WTKPJQWUGUBS UniversityJGNRUVQGPUWTGGORNQ[GGUJCXGVJGUMKNNUVJG[PGGFHQTVJGHWVWTG •#UCTGUWNVQHKPUQWTEKPIKPKVKCVKXGUCPFKORTQXGFGHƂEKGPE[YGUKIPKƂECPVN[TGFWEGFQWTGZVGTPCNUVCHHKP %QTRQTCVG%GPVGTCPFUCYCTGUWNVKPIKPETGCUGKPGORNQ[GGUYKVJKPQWT$WUKPGUU5QNWVKQPU%GPVGTU 'ORNQ[GGU •+PXGUVGFCUUGVU USD 3,101 billion •+P5YKV\GTNCPF7$5JCUENKGPVTGNCVKQPUJKRUYKVJQPGKPVJTGGJQWUGJQNFUOQTGVJCPQH VJGOKFVQNCTIGƂTOUCPFOQTGVJCPQHVJGNCTIGEQTRQTCVGU •#EEGUUVQCEQORTGJGPUKXGQHHGTKPICPFEQPXGPKGPVFKIKVCNDCPMKPI •+P#UUGV/CPCIGOGPVYGUGTXGCRRTQZKOCVGN[3,000EQTRQTCVGCPFKPUVKVWVKQPCNENKGPVUCTQWPFVJGYQTNF •1WT+PXGUVOGPV$CPMYKVJCRTGUGPEGKPEQWPVTKGURTQXKFGUUGTXKEGUINQDCNN[VQCXCTKGV[QHENKGPVU UWEJCUKPUVKVWVKQPCNKPXGUVQTUCUUGVOCPCIGTUJGFIGHWPFUEQTRQTCVGURGPUKQPHWPFUEGPVTCNDCPMU UQXGTGKIPUƂPCPEKCNCFXKUQTUCPFHCOKN[QHƂEGUCUYGNNCUVQQWTDWUKPGUUFKXKUKQPU •.CWPEJQHUBS Manage5WUVCKPCDNG+PXGUVKPI 5+ FKUETGVKQPCT[OCPFCVG DCUGFQPPGY%+15+ UVTCVGIKECUUGVCNNQECVKQP 5+GZENWFKPINKSWKFKV[CNNQECVKQP %NKGPVU As of or for the year ended 31 December 2018 Our Pillars are the foundation for everything we do. Capital strength Effi ciency and effectiveness Risk management Our Principles are what we stand for as a fi rm. Client focus Excellence Sustainable performance Our Behaviors are what we stand for individually. Integrity Collaboration Challenge Contents 2 Letter to shareholders 6 Our key figures 8 Our Board of Directors 10 Our Group Executive Board 12 Our evolution 1.Our strategy, business model and environment 16 Our strategy 17 Performance targets and measurement 19 Our businesses 29 Our environment 32 How we create value for our stakeholders 43 Regulation and supervision 45 Regulatory and legal developments 50 Risk factors 2.Financial and operating performance 64 Critical accounting estimates and judgments 65 Significant accounting and financial reporting changes 68 Group performance 82 Global Wealth Management 86 Personal & Corporate Banking 92 Asset Management 97 Investment Bank 103 Corporate Center 3.Risk, treasury and capital management 119 Risk management and control 173 Treasury management 194 Capital management 4.Corporate governance and compensation 216 Corporate governance 250 Compensation 5.Financial statements 301 Consolidated financial statements 505 Standalone financial statements 6.Significant regulated subsidiary and sub-group information 530 Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups Appendix 532 Abbreviations frequently used in our financial reports 535 Information sources 536 Cautionary statement 2 Annual Report 2018 Letter to shareholders Dear shareholders, Axel A. Weber Chairman of the Board of Directors Sergio P. Ermotti Group Chief Executive Officer Building on your positive feedback from last year, our shareholder letter this year again answers a series of questions that we are regularly asked by different stakeholders of the bank. What was the market context in 2018? The year started off positively, but nervousness set in by the end of the first half. Markets started fearing a downturn well ahead of any real economy indicators. Our private clients became less active, and from the fourth quarter onward, markets sold off as well. The most striking example to illustrate what developed over the course of 2018 is the fact that about 90% of asset classes were down on a year-over-year basis. That’s quite extraordinary. And when you look at what happened in December 2018, it was one of the worst months since the Great Depression in terms of market performance. The coexistence of macroeconomic and geopolitical issues caused even more concerns with investors. For example, according to our fourth quarter client survey, cash balances with our US wealth management clients reached a record-high level of 24%. How do you assess the financial performance of the Group in 2018? We had a very successful 2018, despite the market conditions just described. Against this backdrop, we increased net profit1 by USD 0.6 billion or 16% to USD 4.5 billion, and achieved a strong adjusted return on tangible equity excluding deferred tax expense / benefit and DTAs2 of 12.9%. Reported return on CET1 capital was 13.1%, markedly above most of our European peers and in line with American banks. We also generated USD 4.0 billion of additional capital in 2018 and our total loss-absorbing capacity increased to USD 84 billion. How did 2018 reflect your capital returns policy? Consistent with our capital returns policy, we accrued for a higher dividend and exceeded our share buyback goal of CHF 550 million by CHF 200 million. The Board of Directors intends to propose an 8% increase in our dividend to CHF 0.70 per share for the financial year 2018. Combined with the share buyback of CHF 750 million last year, our total payout ratio3 for 2018 will be 76%. To sum up, we continue to deliver attractive shareholder returns, while maintaining a strong capital position and investing for further growth. Why has the UBS share price lost so much ground despite these achievements? In our view, the current share price doesn’t reflect the long-run value of our franchise. The entire banking sector saw significant share price corrections in 2018. One needs to look at both absolute and relative performance. Investors’ profitability expectations for the industry reflect the fear of a global economic slowdown, more challenging market conditions or a combination of both. Nevertheless, we are among the highest- valued banks in Europe and compare well to a number of US peers. In terms of total shareholder return, we also outperformed our main European peers. Our focus is on sustainable performance, which is at the core of our strategy and should drive valuation growth over the cycle. Why do you believe UBS still has the right strategy – how does it set you apart from others? Secular trends such as global wealth creation, including the increased need for pension products, and the opening up of China’s financial markets will continue to drive the unique value of our franchise. We are the preeminent global wealth manager to high net worth and ultra high net worth clients as well as the number one Swiss bank, enhanced by an investment bank that is strong in the areas where we choose to compete, and a successful asset manager. The strength of our business model and our strategic focus have generated more than USD 19 billion in net profits over the last five years. More than half of our profits come from asset-gathering businesses, and our Swiss business further contributes to the stability of our earnings. We are diversified geographically, and well positioned in the world’s largest and fastest growing markets. Of course we review and recalibrate our strategy each year, as we constantly evolve in response to new challenges, but we have strategic clarity and consistency. 3 Are you satisfied with your combined wealth management division’s performance – where can you improve? We’ve made good progress in exploiting the combined scale and capabilities of the businesses. Global Wealth Management achieved a decade-high pre-tax profit of USD 3.6 billion in 2018. Working as an integrated business creates new opportunities for revenue growth and improves our ability to execute existing opportunities, which we expect to enable us to achieve our 10−15% profit growth target. We also expect to generate cost synergies of USD 600 million over the next three years that will help fund our investments for growth and efficiency. We intend to make strategic investments totaling more than USD 1 billion through 2021 to further improve client and advisor experience. We remain confident in our growth plans even though net new money was not what we wanted it to be in 2018. Therefore, we will be intensifying our efforts to attract and retain a higher proportion of our current and prospective clients’ assets. Your adjusted cost / income ratio is currently 79.5%. How do you intend to reach your 2021 ambition of around 72%? First, when measuring efficiency, it’s important to include risk- adjusted capital returns and not look at the cost / income ratio in isolation. Our goal is to balance revenue growth with both cost and capital efficiency. We delivered 3% positive operating leverage in 2018, as we increased revenues while reducing expenses. Our aim is to keep costs, excluding performance- based compensation, broadly flat over the next three years. And we have a range of tactical measures to address market headwinds. For example, while we cannot and do not want to halt our investments, we can adjust the pace and relative priority. And we will be focusing our hiring plans on the most important strategic growth areas. Where and how do you expect to grow going forward? We believe we can grow our revenues at more than the rate of global economic expansion over the cycle. From a geographic standpoint, the greatest growth is expected to come from gaining market share in the US and Asia Pacific. In the US, we have a sizeable opportunity with ultra high net worth clients. And we want to build our share of wallet with US persons outside the US. Also, further globalizing our Global Family Office capabilities is another part of our growth initiatives. In China, we became the first foreign bank to increase its stake to a majority of 51% in a securities joint venture, giving us a great foothold for future expansion. And in Switzerland, net new business volume growth in Personal & Corporate Banking was double GDP growth last year. Our aim is to further solidify this leadership position by, for example, expanding our digital lead. These are just some of the opportunities we are focused on, there are plenty of others, many of which are discussed in the pages of our annual report. You want to be the bank for US, Asian and European entrepreneurs and corporates for their local and global needs – why should they choose UBS? Because we are a truly global bank. Our clients globally require advice and solutions for both their own wealth and their businesses. They expect us to deliver the whole of UBS to them, with global wealth management and investment bank capabilities under one roof, from M&A all the way to succession planning, as well as the best teams when it comes to research and execution. We have the breadth and the expertise to bridge between both their corporate and their personal financial needs. This makes UBS an obvious choice, given our leading position in those fields that matter most to our clients. Sustainability is a key part of your strategy, how is that reflected in your client offering? We provide a broad range of products and solutions to both private and institutional clients, including sustainable and impact investing opportunities. For example, Asset Management followed its successful UK Climate Aware rules-based fund with a similar fund available for international investors. The portfolio is oriented toward companies that are better prepared for a low- carbon future while reducing exposure to, rather than excluding, companies with higher carbon risk, in order to pursue strategic engagement with these companies. Also in 2018, Global Wealth Management launched the world’s first fully sustainable investing (SI) cross-asset mandate portfolio for private clients. As of 31 December 2018, clients had invested USD 2.8 billion assets under management in this innovative solution. What are you doing to prepare UBS for the digital future of banking? We’re not just preparing for the future, we’re actively shaping it. Technology is changing the way banks, including UBS, operate. That’s why we are investing more than 10% of revenues, more than USD 3 billion each year, into technology. For example, we’ve accelerated our journey into the cloud space, thereby reducing the number of costly traditional data centers. We also increased the number of robots performing routine tasks from roughly 700 to 1,000 last year. We will more broadly leverage machine learning and artificial intelligence-powered engines to automate more complex tasks and allow for better and faster decision-making, for example in risk management or anti-money laundering. But the big focus is on front-to-back digitalization ultimately driving a better client experience, so technology is about much more than just cost savings. 4 Annual Report 2018 Letter to shareholders You put several legacy issues behind you in 2018, but just received an adverse verdict in France. Can you comment on this matter? We continued to make significant progress last year on legacy litigation, including resolution of two RMBS-related cases. In the two most prominent open matters, the FIRREA litigation and the French cross-border case, UBS has chosen to defend the bank in court with the best interests of shareholders in mind. We are confident in our legal position, and contesting these cases has also allowed us to present our arguments to stakeholders publicly. We strongly disagree with the verdict in France. UBS respected and followed its obligations under Swiss and French law as well as the European Savings Tax Directive. The judgment is not supported by the facts. For example, no evidence was provided that any French client was solicited on French soil by a UBS AG client advisor to open an account in Switzerland. This is acknowledged by the decision itself. Even assuming liability - which we contest - the calculation of the fine and the damages are, in our view, inconsistent and not in line with applicable law. We have appealed the French court’s decision to the Court of Appeal, which will retry the case in its entirety. The Court of Appeal operates under the supervision of the French Supreme Court and is required to address our arguments in its decision. Based on the law and the facts, we believe the verdict should be reversed. What provisions have you taken for the France case? Notwithstanding the strength of our legal arguments and the lack of evidence to support the charges, we have increased the provision for this matter to a total of EUR 450 million (USD 516 million). Under the accounting standard, we are required to judge if an outflow is probable and to estimate the extent of such an outflow considering a wide range of outcomes. In light of the first judgment and considering the full range of potential final decisions, the provision on our balance sheet reflects our best estimate of possible financial implications. That said, we still believe the verdict should be reversed, at which time we would release the provision. Looking back at the Investor Update in October last year, how was the start into 2019? Given the market developments since last October, our starting point for the year is different than we had planned, making this year’s journey toward our targets steeper. Also, despite some rebound in equity markets, clients so far have remained cautious in the first quarter of 2019. Nevertheless, we will have to see how the rest of the year develops. One of our goals at the 2018 Investor Update was to be transparent about the factors that we can and cannot control. We do not control the external environment, nor equity markets and interest rates. But of course this doesn’t mean we are passively waiting for markets to improve. It’s up to us to continue executing our plans with energy and commitment, with a focus on sustainable, long-term value creation. What are the biggest opportunities medium to long term? Over the last ten years, we have reconfigured UBS, while delivering strong results, and we are excited about the potential for the next decade. We had to deal with many challenges and that also taught us a lot, which will allow us to execute even better going forward. To achieve that, we need to take partnership within UBS to the next level. Because we know it leads to better results for clients, which in turn leads to more capital generation and even better returns for shareholders. We expect to generate almost as much capital in the next three years as we did in the previous six. And to tie in with our global growth ambitions mentioned earlier, our global infrastructure has the capacity to accommodate far more assets at marginal cost – so more scale is a significant opportunity. From a client perspective, we’ve seen that those who have navigated this environment most successfully are those who develop a clear long-term plan to allow for a sustainable legacy. With that in place, clients will be well positioned to seek opportunities amid the short-term noise. That’s exactly what we at UBS are doing ourselves. Thank you for your ongoing support. We look forward to your feedback and also to welcoming you at our AGM on 2 May 2019 in Basel. Yours sincerely, Axel A. Weber Sergio P. Ermotti Chairman of the Group Chief Executive Officer Board of Directors 11 Net profit attributable to shareholders, excluding the USD 2,939 million net write-down of deferred tax assets (DTAs) following the enactment of the US Tax Cuts and Jobs Act in the fourth quarter of 2017. 2 Adjusted return on tangible equity excluding deferred tax expense / benefit and DTAs; calculated as adjusted net profit / loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense / benefit, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. 3 Calculated as accruals for proposed dividends to shareholders plus the share buyback in 2018 divided by net profit attributable to shareholders. 5 1 2 3 Corporate information UBS Group AG is incorporated and domiciled in Switzerland and operates under art. 620ff. of the Swiss Code of Obligations as an Aktiengesellschaft, a corporation limited by shares. Its registered office is at Bahnhofstrasse 45, CH-8001 Zurich, Switzerland, phone +41-44-234 11 11, and its corporate identification number is CHE-395.345.924. UBS Group AG was incorporated on 10 June 2014 and was established in 2014 as the holding company of the UBS Group. UBS Group AG shares are listed on the SIX Swiss Exchange and on the New York Stock Exchange (ISIN: CH0244767585; CUSIP: H42097107). UBS Group AG owns 100% of the outstanding shares of UBS AG. Contacts Switchboards For all general inquiries. www.ubs.com/contact Zurich +41-44-234 1111 London +44-207-567 8000 New York +1-212-821 3000 Hong Kong +852-2971 8888 Singapore +65-6495 8000 Investor Relations UBS’s Investor Relations team supports institutional, professional and retail investors from our offices in Zurich, New York and Krakow. UBS Group AG, Investor Relations P.O. Box, CH-8098 Zurich, Switzerland www.ubs.com/investors Hotline Zurich +41-44-234 4100 Hotline New York +1-212-882 5734 Media Relations UBS’s Media Relations team supports global media and journalists from offices in Zurich, London, New York and Hong Kong. www.ubs.com/media Zurich +41-44-234 8500 mediarelations@ubs.com London +44-20-7567 4714 ubs-media-relations@ubs.com New York +1-212-882 5857 mediarelations-ny@ubs.com Hong Kong +852-2971 8200 sh-mediarelations-ap@ubs.com Office of the Group Company Secretary The Group Company Secretary receives inquiries on compensation and related issues addressed to members of the Board of Directors. UBS Group AG, Office of the Group Company Secretary P.O. Box, CH-8098 Zurich, Switzerland sh-company-secretary@ubs.com Hotline +41-44-235 6652 Shareholder Services UBS’s Shareholder Services team, a unit of the Group Company Secretary office, is responsible for the registration of UBS Group AG registered shares. UBS Group AG, Shareholder Services P.O. Box, CH-8098 Zurich, Switzerland sh-shareholder-services@ubs.com Hotline +41-44-235 6652 US Transfer Agent For global registered share-related inquiries in the US. Computershare Trust Company NA P.O. Box 505000 Louisville, KY 40233-5000, USA Shareholder online inquiries: https://www-us.computershare.com/ investor/Contact Shareholder website: www.computershare.com/investor Calls from the US +1-866-305-9566 Calls from outside the US +1-781-575-2623 TDD for hearing impaired +1-800-231-5469 TDD foreign shareholders +1-201-680-6610 Corporate calendar UBS Group AG Publication of the first quarter 2019 report: Thursday, 25 April 2019 Annual General Meeting 2019: Thursday, 2 May 2019 Publication of the second quarter 2019 report: Tuesday, 23 July 2019 Publication of the third quarter 2019 report: Tuesday, 22 October 2019 Imprint Publisher: UBS Group AG, Zurich, Switzerland | www.ubs.com Language: English / German | SAP-No. 80531E © UBS 2019. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. Printed in Switzerland on chlorine-free paper with mineral oil-reduced inks. Paper production from socially responsible and ecologically sound forestry practices Returning home In 2018, we returned to our newly-renovated historic headquarters. This story and more in our Annual Review 2018. Available from 1 April 2019 ubs.com/annualreview 6 Annual Report 2018 Our key figures As of or for the year ended USD million, except where indicated 331.12.18 31.12.17 31.12.16 GGroup results Operating income 330,213 29,622 28,729 Operating expenses 224,222 24,272 24,519 Operating profit / (loss) before tax 55,991 5,351 4,209 Net profit / (loss) attributable to shareholders 44,516 969 3,348 Diluted earnings per share (USD)1 11.18 0.25 0.88 PProfitability and growth2 Return on equity (%)3 88.6 1.8 6.1 Return on tangible equity (%)4 110.0 2.2 7.1 Adjusted return on tangible equity excluding deferred tax expense / benefit and deferred tax assets (%)5 112.9 13.7 11.3 Return on common equity tier 1 capital (%)6 113.1 3.0 10.9 Return on risk-weighted assets, gross (%)7 111.8 12.6 13.1 Return on leverage ratio denominator, gross (%)7 33.3 3.3 3.2 Cost / income ratio (%)8 779.9 81.6 85.2 Adjusted cost / income ratio (%)9 779.5 78.2 80.8 Net profit growth (%)10 3366.0 (71.1) (48.3) RResources Total assets 9958,489 939,279 918,906 Equity attributable to shareholders 552,928 52,495 52,916 Common equity tier 1 capital11 334,119 33,516 30,156 Risk-weighted assets11 2263,747 243,636 218,785 Common equity tier 1 capital ratio (%)11 112.9 13.8 13.8 Going concern capital ratio (%)11 117.5 17.6 17.9 Total loss-absorbing capacity ratio (%)11 331.7 33.0 31.1 Leverage ratio denominator11 9904,598 909,032 855,255 Common equity tier 1 leverage ratio (%)11 33.77 3.69 3.53 Going concern leverage ratio (%)11 55.1 4.7 4.6 Total loss-absorbing capacity leverage ratio (%)11 99.3 8.8 7.9 Liquidity coverage ratio (%)12 1136 143 132 OOther Invested assets (USD billion)13 33,101 3,262 2,761 Personnel (full-time equivalents)666,888 61,253 59,387 Market capitalization14,15 445,907 68,477 58,177 Total book value per share (USD)14 114.35 14.11 14.25 Total book value per share (CHF)14,16 114.11 13.75 14.51 Tangible book value per share (USD)14 112.55 12.34 12.52 Tangible book value per share (CHF)14,16 112.33 12.03 12.74 11 Refer to “Note 9 Earnings per share (EPS) and shares outstanding” in the “Consolidated financial statements” section of this report for more information. 2 Refer to the “Performance targets and measurement” section of this report for more information on our performance targets. 3 Calculated as net profit attributable to shareholders / average equity attributable to shareholders. 4 Calculated as net profit attributable to shareholders before amortization and impairment of goodwill and intangible assets / average equity attributable to shareholders less average goodwill and intangible assets. 5 Calculated as adjusted net profit attributable to shareholders before amortization and impairment of goodwill and intangible assets and before deferred tax expense or benefit / average equity attributable to shareholders less average goodwill and intangible assets and less average deferred tax assets that do not qualify as common equity tier 1 capital. 6 Calculated as net profit attributable to shareholders before amortization and impairment of goodwill and intangible assets / average common equity tier 1 capital. 7 Calculated as operating income before credit loss expense or recovery / average risk-weighted assets and average leverage ratio denominator, respectively. 8 Calculated as operating expenses / operating income before credit loss expense or recovery. 9 Calculated as adjusted operating expenses / adjusted operating income before credit loss expense or recovery. 10 Calculated as change in net profit attributable to shareholders from continuing operations between current and comparison periods / net profit attributable to shareholders from continuing operations of comparison period. 11 Based on the Swiss systemically relevant bank framework as of 1 January 2020. Refer to the “Capital management” section of this report for more information. 12 Effective 1 January 2017 the reported quarterly average is the average of daily values during the quarter. The 2016 figure is based on the average of the three month-end values. Refer to the “Balance sheet, liquidity and funding management” section of this report for more information. 13 Includes invested assets for Global Wealth Management, Asset Management and Personal & Corporate Banking. 14 Refer to “UBS shares” in the “Capital management” section of this report for more information. 15 The calculation of market capitalization has been amended to reflect total shares outstanding multiplied by the share price at the end of the period. The calculation was previously based on total shares issued multiplied by the share price at the end of the period. Market capitalization has been reduced by USD 2.1 billion as of 31 December 2018, by USD 2.4 billion as of 31 December 2017 and by USD 2.2 billion as of 31 December 2016 as a result. 16 Total book value per share and tangible book value per share in Swiss francs are calculated based on a translation of equity under our US dollar presentation currency. As a consequence of the restatement to a US dollar presentation currency, amounts may differ from those originally published in our quarterly and annual reports. Events subsequent to the publication of the unaudited fourth quarter 2018 report The 2018 results and the balance sheet as of 31 December 2018 differ from those presented in the unaudited fourth quarter 2018 report published on 22 January 2019 as a result of events adjusted for after the balance sheet date. Provisions for litigation, regulatory and similar matters increased, which reduced 2018 operating profit before tax and 2018 net profit attributable to shareholders by USD 382 million. As a result, basic earnings per share decreased by USD 0.10 and diluted earnings per share decreased by USD 0.09. 7 Changes to our functional and presentation currencies Effective from 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland changed from Swiss francs to US dollars and that of UBS AG’s London Branch from British pounds to US dollars, in compliance with the requirements of International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. The presentation currency of UBS Group AG’s consolidated financial statements has changed from Swiss francs to US dollars to align with the functional currency changes of significant Group entities. Prior periods have been restated for this change in presentation currency. Assets, liabilities and total equity were translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses were translated at the respective average rates prevailing for the relevant periods. Performance measures reason for use Return on equity This measure provides information on the profitability of the business in relation to equity. Return on tangible equity This measure provides information on the profitability of the business in relation to tangible equity. Adjusted return on tangible equity excluding This measure provides information on the profitability of the business in relation to tangible equity, excluding deferred tax deferred tax expense / benefit and expense / benefit and deferred tax assets. We believe that excluding these items better reflects the underlying returns deferred tax assets of the businesses, as deferred tax items are generally not included in capital and have volatility that is unrelated to the performance of the business divisions and the Group in that period. Return on common equity tier 1 capital This measure provides information on the profitability of the business in relation to common equity tier 1 capital. Return on risk-weighted assets, gross This measure provides information on the revenues of the business in relation to risk-weighted assets. Return on leverage ratio denominator, gross This measure provides information on the revenues of the business in relation to leverage ratio denominator. Cost / income ratio This measure provides information on the efficiency of the business by comparing operating expenses with gross income. Adjusted cost / income ratio This measure provides information on the efficiency of the business by comparing operating expenses with gross income, while excluding items that management believes are not representative of the underlying performance of the businesses. Net profit growth This measure provides information on profit growth in comparison with the prior period. Terms used in this report, unless the context requires otherwise “UBS,” “UBS Group,” “UBS Group AG consolidated,” “Group,” “the Group,” “we,” “us” and “our” UBS Group AG and its consolidated subsidiaries “UBS AG consolidated” UBS AG and its consolidated subsidiaries “UBS Group AG” and “UBS Group AG standalone” UBS Group AG on a standalone basis “UBS AG” and “UBS AG standalone” UBS AG on a standalone basis “UBS Switzerland AG”UBS Switzerland AG on a standalone basis “UBS Limited” UBS Limited on a standalone basis “UBS Americas Holding LLC consolidated”UBS Americas Holding LLC and its consolidated subsidiaries 8 3 4 5 6 10 11 2 1 7 8 9 1. Axel A. Weber Chairman of the Board of Directors / Chairperson of|the Corporate Culture and Responsibility Committee / Chairperson of the Governance and Nominating Committee 2. Julie G. Richardson Member of the Compensation Committee / member of the Risk Committee 3. Ann F. Godbehere Chairperson of the Compensation Committee / member of the Audit Committee 4. Jeremy Anderson Chairperson of the Audit Committee / member of the Corporate Culture and Responsibility Committee 5. Dieter Wemmer Member of the Compensation Committee / member of the Risk Committee 6. David Sidwell Senior Independent Director / Chairperson of the Risk Committee / member of the Governance and Nominating Committee 7. Beatrice Weder di Mauro Member of the Audit Committee / member of the Corporate Culture and Responsibility Committee 8. Fred Hu Member of the Board of Directors 9. Isabelle Romy Member of the Audit Committee / member of the Governance and Nominating Committee 10. Reto Francioni Member of the Corporate Culture and Responsibility Committee / member of the Risk Committee 11. Michel Demaré Independent Vice Chairman / member of the Audit Committee / member of the Compensation Committee / member of the Governance and Nominating Committee 12. Robert W. Scully* Member of the Risk Committee *Robert W. Scully is not present on the picture Our Board of Directors 9 The Board of Directors (BoD) of UBS Group AG, under the leadership of the Chairman, consists of six to 12 members as per our Articles of Association. The BoD decides on the strategy of the Group upon recommendation of the Group Chief Executive Officer (Group CEO) and is responsible for the overall direction, supervision and control of the Group and its management as well as for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over UBS Group AG and its subsidiaries and is responsible for establishing a clear Group governance framework to provide effective steering and supervision of the Group, taking into account the material risks to which UBS Group AG and its subsidiaries are exposed. The BoD has ultimate responsibility for the success of the Group and for delivering sustainable shareholder value within a framework of prudent and effective controls, approves all financial statements for issue and appoints and removes all Group Executive Board (GEB) members. 10 UBS Group AG operates under a strict dual board structure, as mandated by Swiss banking law, and therefore the BoD delegates the management of the business to the GEB. Under the leadership of the Group CEO, the GEB has executive management responsibility for the steering of the Group and its business. It assumes overall responsibility for developing the Group and business division strategies and the implementation of approved strategies. →Refer to “Board of Directors” and “Group Executive Board” in the “Corporate governance” section of this report or to www.ubs.com/bod and www.ubs.com/geb for the full biographies of our BoD and GEB members Our Group Executive Board 11 1. Sergio P. Ermotti Group Chief Executive Offi cer 2. Edmund Koh President UBS Asia Pacifi c 3. Kirt Gardner Group Chief Financial Offi cer 4. Sabine Keller-Busse Group Chief Operating Offi cer 5. Markus Ronner Group Chief Compliance and Governance Offi cer 6. Robert Karofsky Co-President Investment Bank 7. Piero Novelli Co-President Investment Bank 8. Ulrich Körner President Asset Management and President UBS Europe, Middle East and Africa 9. Axel P. Lehmann President Personal & Corporate Banking and President UBS Switzerland 10. Martin Blessing Co-President Global Wealth Management 11. Christian Bluhm Group Chief Risk Offi cer 12. Tom Naratil Co-President Global Wealth Management and President UBS Americas 13. Markus U. Diethelm Group General Counsel 2 3 4 5 7 10 11 12 1 6 8 9 13 12 Our evolution Since our origins in the mid-19th century, many financial institutions have become part of the history of our firm and have helped to shape its development. 1998 was a major turning point for the firm, when two of the then three largest banks of Switzerland, Union Bank of Switzerland and Swiss Bank Corporation (SBC), merged to form today’s UBS. At the time of the merger, both banks were already well established and successful in their own right. Union Bank of Switzerland had grown organically to become the largest Swiss bank. In contrast, SBC had grown mainly through a combination of strategic partnerships and acquisitions, including S.G. Warburg in 1995. In 2000, we acquired PaineWebber, a US brokerage and asset management firm whose roots went back to 1879, establishing us as a significant player in the US. Over the past half century and more, we have largely organically built a strong presence in the Asia Pacific region, where we are the largest wealth manager (measured by invested assets), a top-tier investment bank and an established player in asset management. During the financial crisis of 2008, we incurred significant losses. In 2011, we initiated a strategic transformation of our firm toward a business model that focused on our core businesses of wealth management and personal and corporate banking in Switzerland. We sought to revert to our roots, emphasizing a client-centric model that requires less risk-taking and capital, and have successfully completed this transformation. Three keys Our Pillars, Principles and Behaviors, launched in 2013, are the foundation for our corporate strategy, identity and culture. Today, we are a global financial services firm, consisting of the preeminent global wealth manager to high net worth and ultra high net worth clients, the leading personal and corporate banking business in Switzerland, a global asset manager and a focused investment bank. The chart on the next page provides an overview of our principal legal entities and reflects our legal entity structure. →Refer to www.ubs.com/history for more information • UBS Group AG became the holding company of the Group • Transferred our personal and corporate banking and wealth management businesses booked in Switzerland from UBS AG to the newly established UBS Switzerland AG • Implemented a more self-suffi cient business and operating model for UBS Limited • UBS Business Solutions AG, a direct subsidiary of UBS Group AG, was established as the Group service company 2014 2015 Holding company UBS structure Most recent changes to our legal entity structure In 2014, we began adapting our legal entity structure to improve the resolvability of the Group in response to too big to fail requirements in Switzerland and recovery and resolution regulation in other countries in which the Group operates. We continue to consider further changes to the Group’s legal structure in response to regulatory requirements and other external developments. Such changes may include further consolidation of operating subsidiaries in the EU and adjustments to the booking entity or location of products and services. ➔Refer to the “Risk factors” section of this report for more information ➔Refer to the “Regulatory and legal developments” section of this report for more information 13 The legal structure of the UBS Group as of 1 March 2019 • Shared services functions transferred in|Switzerland and the UK from UBS AG to|UBS Business Solutions AG • Completed the transfer of shared services functions in the US to our US service company, UBS Business Solutions US LLC, a wholly-owned subsidiary of UBS Americas Holding LLC • Transferred our then outstanding TLAC-eligible senior unsecured debt to UBS Group Funding (Switzerland) AG as|the issuer • Substituted UBS Group AG where it was the issuer of outstanding AT1 capital instruments with UBS Group Funding (Switzerland) AG • Merger of UBS Limited, our UK- headquartered subsidiary, into UBS Europe SE, our German- headquartered European subsidiary, prior to the UK’s scheduled departure from the EU at the end of March 2019 • UBS Americas Holding LLC designated as our intermediate holding company for our US subsidiaries • Wealth management subsidiaries in various European countries merged into UBS Europe SE • Majority of Asset Management’s operating subsidiaries transferred to UBS Asset Management AG • UBS Group Funding (Switzerland) AG established as a wholly owned direct subsidiary to issue loss-absorbing AT1 capital instruments and TLAC-eligible senior unsecured debt, guaranteed by UBS Group AG 2016 2017 UBS Business Solutions UBS Group Funding (Switzerland) AG UBS Group Funding (Switzerland) AG UBS Europe SEUBS structure 2018 2019 7$5)TQWR(WPFKPI 5YKV\GTNCPF #)KUUWGUNQUUCDUQTDKPICFFKVKQPCNVKGT #6 ECRKVCNKPUVTWOGPVUCPFVQVCNNQUUCDUQTDKPIECRCEKV[ 6.#% GNKIKDNGUGPKQTWPUGEWTGFFGDVYJKEJCTGIWCTCPVGGFD[7$5)TQWR#) 7$5.KOKVGFYCUOGTIGFKPVQ7$5'WTQRG5'GHHGEVKXG/CTEJ1VJGTUKIPKƂECPVPQP75UWDUKFKCTKGUCTGIGPGTCNN[JGNFGKVJGTFKTGEVN[D[7$5#)QTKPFKTGEVN[VJTQWIJ7$55YKV\GTNCPF#)QT7$5#UUGV /CPCIGOGPV#)FKTGEVN[JGNFD[7$5#OGTKECU+PECPFJGNFD[7$5#OGTKECU*QNFKPI..%1VJGTUKIPKƂECPV75UWDUKFKCTKGUCTGIGPGTCNN[JGNFGKVJGTFKTGEVN[D[7$5#OGTKECU+PEQTKPFKTGEVN[VJTQWIJ 7$5(KPCPEKCN5GTXKEGU+PE4GHGTVQp0QVG+PVGTGUVUKPUWDUKFKCTKGUCPFQVJGTGPVKVKGUqKPVJGp%QPUQNKFCVGFƂPCPEKCNUVCVGOGPVUqUGEVKQPQHVJKUTGRQTVHQTOQTGKPHQTOCVKQPQP7$5oUUWDUKFKCTKGUKPENWFKPI KPFKXKFWCNN[UKIPKƂECPVUWDUKFKCTKGUCPFUWDITQWRU *QNFKPIEQORCP[CPFUKIPKƂECPVTGIWNCVGFUWDUKFKCTKGUCPFUWDITQWRUUWDLGEVVQFKUENQUWTGKP7$5)TQWR#)CPPWCNCPFSWCTVGTN[TGRQTVKPI 7$5)TQWR#)EQPUQNKFCVGF 7$5#)EQPUQNKFCVGF 7$55YKV\GTNCPF#) 7$5'WTQRG5' 7$5#UUGV /CPCIGOGPV#) 7$5$WUKPGUU 5QNWVKQPU#) 7$5)TQWR(WPFKPI 5YKV\GTNCPF #) 7$5$WUKPGUU 5QNWVKQPU75..% 7$5(KPCPEKCN 5GTXKEGU+PE 7$5$CPM75# 7$55GEWTKVKGU..% 1VJGTUKIPKƂECPV PQP75UWDUKFKCTKGU 7$5#OGTKECU *QNFKPI..% 7$5)TQWR#) 1VJGTUKIPKƂECPV75 UWDUKFKCTKGU 7$5#) 7$5#OGTKECU+PE Our strategy, business model and environment Management report 16 Our strategy, business model and environment Our strategy Our strategy Attractive business model Our strategy is centered on our leading global wealth management business and our premier personal and corporate banking business in Switzerland, complemented by our focused investment bank and global asset manager. We concentrate on capital-efficient businesses in our targeted markets, where we have a strong competitive position and an attractive long-term growth or profitability outlook. We are the preeminent global wealth manager to high net worth and ultra high net worth clients, based on invested assets. We have a strong presence in the largest market, the United States, and the leading position in the fastest-growing region, Asia Pacific, based on invested assets. Our global wealth management business benefits from its scale, which is difficult to replicate organically, and leading positions across the high net worth and ultra high net worth client segments in an industry with attractive growth prospects. The partnership between our business divisions is critical to the success of our strategy and a source of competitive advantage. Capital strength is the foundation of our strategy and our business model is capital-accretive and capital-efficient. Long-term value creation through cost- and capital- efficient growth We are managing UBS for the long term, focusing on sustainable profit growth and responsible resource deployment. We aim to balance growth opportunities with cost and capital efficiency in order to drive attractive risk-adjusted returns and sustainable performance. Revenue growth We believe we can grow our revenues at least at the rate of global economic expansion over the cycle, by executing our plans with discipline and by taking advantage of favorable market and industry trends. Improved collaboration and partnership across our business divisions provide further revenue growth potential and enable us to better meet the needs of our ultra high net worth and Global Family Office clients. Geographically, we expect the US and Asia Pacific to be the strongest contributors to future profit growth. We are already a strong player in the US and Latin America, with ambitions to grow further by capturing market share and benefiting from secular growth trends. We believe Asia Pacific, particularly China, presents a significant long-term opportunity, given its economic expansion and wealth creation. Our competitive position in the region is strong and we are well positioned to capture the growth opportunities across our businesses. In Switzerland, our home market, we intend to reinforce our leadership position. In Europe, the Middle East and Africa, we want to leverage our existing capabilities to grow our market share during the further consolidation that is expected in the financial services industry. →Refer to “Industry trends” in the “Our environment” section of this report for more information on the expected industry consolidation Cost efficiency We are a cost-conscious organization with objectives to improve our overall cost efficiency. Our aim is to keep costs, excluding performance-based compensation which is linked to revenues, broadly flat over the next three years, while growing our revenues. We plan to continue to invest in technology to improve efficiency and effectiveness, drive growth and better serve our clients. In order to further strengthen the business divisions’ ownership of Corporate Center costs and align Group and divisional performance, we have adjusted our Corporate Center cost allocation methodology. A higher proportion of these costs will be allocated to the business divisions from the first quarter of 2019. →Refer to the “Significant accounting and financial reporting changes” section of this report for more information on the changes in cost allocations to business divisions Capital efficiency We remain disciplined when deploying capital across our businesses, aiming to cover the cost of capital where capital is allocated. We are improving transparency and accountability regarding the use of resources, allowing the business divisions to further optimize their capital usage and pursue growth opportunities in a capital-efficient manner. Consequently, we have adapted our equity attribution framework and, from the first quarter of 2019, will further allocate to the business divisions resources that were previously centrally held. →Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information on how equity is attributed to our business divisions →Refer to the “Significant accounting and financial reporting changes” section of this report for more information on the changes in resource allocations to business divisions Attractive capital returns Our capital strength and capital-accretive business model allow us to grow our business while delivering attractive capital returns to our shareholders. We aim to increase our ordinary dividend per share at a mid- to-high single-digit percentage each year. We also aim to return excess capital, after accruals for ordinary dividends, most likely in the form of share repurchases. We consider our business outlook and capital plan, as well as other developments, in determining excess capital available for share repurchases. 17 Performance targets and measurement Targets, ambitions and capital and resource guidelines In October 2018, we refined our performance target framework, introducing more specific targets and ambitions for the Group and business divisions. Our targets and ambitions are underpinned by our latest three-year strategic plan. Our strategic plan reflects our strategic initiatives, management actions as well as certain economic and market assumptions. The changes take into account the effects of the changes in Corporate Center allocations and our equity attribution methodology, which came into effect on 1 January 2019. Targets are measured on an annual basis, except our adjusted profit before tax growth targets for Global Wealth Management, Personal & Corporate Banking and Asset Management, and the adjusted return on attributed equity target for the Investment Bank, all of which represent the average annual performance we aim to deliver over the cycle. The table on the next page shows the performance targets, ambitions, and capital and resource guidelines for the Group and business divisions for the 2019–2021 period. Our targets represent what we expect to achieve in the short term. Our ambitions reflect what we aim to achieve within the next three years. Both Group and business division performance against targets are taken into account when determining variable compensation. →Refer to “Performance and compensation at a glance” in the “Compensation” section of this report for more information on variable compensation Group targets and ambitions Our Group targets reflect our overarching goal of growing our business while delivering attractive capital returns and maintaining disciplined resource management. Regulatory capital plays an important role in how we manage our business. It drives our regulatory capital ratios, which are a key input for defining our risk appetite and a primary constraint on our ability to invest or return capital to shareholders. We have therefore adopted return on common equity tier 1 (CET1) capital as a Group target, aiming at around 15% on a reported basis in 2019, with an ambition to improve to around 17% by 2021. For our cost efficiency target, we believe adjusted financials better reflect our fundamental business performance than reported financials. Our reported and adjusted results have been converging as we have reduced restructuring expenses, and we expect this convergence to continue. We are targeting an adjusted cost / income ratio of around 77% in 2019, with the ambition to improve to around 72% by 2021. Divisional targets and ambitions Our divisional targets include measures of profitability, efficiency and growth, tailored to the strategic objectives and market conditions of each business division, and underpin our Group targets.Our strategy, business model and environment 18 Our strategy, business model and environment Performance targets and measurement Targets, ambitions and capital and resource guidelines 2019–2021 Targets Ambitions Capital / resource guidelines FY19 FY19–21 FY19–21 1 Reported return on CET1 capital ~15%~17% 2 Adjusted cost / income ratio1 ~77%~72% 3 CET1 capital ratio ~13%Group 4 CET1 leverage ratio ~3.7% 5 Adjusted pre-tax profit growth1 10–15%2 2 Adjusted cost / income ratio1 ~75% ~70% Global Wealth Management 6 Net new money growth 2–4% 5 Adjusted pre-tax profit growth1 3–5%2 2 Adjusted cost / income ratio1 ~59% ~56% Personal & Corporate Banking 7 Net interest margin 145–155 bps 5 Adjusted pre-tax profit growth1 ~10%2 2 Adjusted cost / income ratio1 ~72% ~68%Asset Management 6 Net new money growth (excl. money markets) 3–5% 8 Adjusted return on attributed equity1 ~15%2,3 2 Adjusted cost / income ratio1 ~78% ~75%Investment Bank 9 RWA and LRD in relation to Group ~1/3 1 Refer to the “Group performance” section of this report for information on adjusting items. 2 Over the cycle. 3 Repositioned from a minimum return to a performance target. Definitions 1 Reported return on CET1 capital Net profit attributable to shareholders divided by average CET1 capital. 2 Adjusted cost / income ratio Adjusted operating expenses divided by adjusted operating income before credit loss (expense) / recovery. 3 CET1 capital ratio CET1 capital divided by risk-weighted assets as of period end. 4 CET1 leverage ratio CET1 capital divided by leverage ratio denominator as of period end. 5 Adjusted pre-tax profit growth Change in business division adjusted profit before tax between current and comparison periods divided by business division adjusted profit before tax in the comparison period. For Asset Management, this metric excludes the effect of business exits. For Personal & Corporate Banking, it is measured in Swiss francs. 6 Net new money growth Net new money for the period (annualized as applicable) divided by invested assets at the beginning of the period. 7 Net interest margin Net interest income (annualized as applicable) divided by average loans. 8 Adjusted return on attributed equity (RoAE)Business division adjusted operating profit before tax (annualized as applicable) divided by average attributed equity. 9 RWA and LRD in relation to Group Risk-weighted assets (RWA) or leverage ratio denominator (LRD) attributed to the Investment Bank divided by total Group RWA or LRD, as applicable. 19 Definitions Reported return on CET1 capital Adjusted cost / income ratio CET1 capital ratio CET1 leverage ratio Adjusted pre-tax profit growth Net new money growth Net interest margin Adjusted return on attributed equity (RoAE) RWA and LRD in relation to Group Our businesses Working in partnership We operate through four business divisions – Global Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank – as well as our Corporate Center. We see partnership as key to our growth, both within and between business divisions. We are at our best when we combine our strengths to provide our clients with more comprehensive and better solutions. Our global reach and the breadth of our expertise are major assets that set us apart from our competitors. Combining our strengths makes us a better firm. Initiatives such as the Group Franchise Awards encourage employees to look for ways to build bridges between areas and offer the whole firm to our clients. How we deliver the whole firm to our clients – examples Investment BankGlobal Wealth M anag e m e n t Perso n al & C o r por at e BankingAsset ManagementWealth Management Platform Our Wealth Management Platform was built on our Swiss IT platform – as Global Wealth Management migrates to one operating platform outside of the US. The same interface is shared by Personal & Corporate Banking clients in Switzerland and Global Wealth Management clients outside the US. In the US the Wealth Management Americas Platform is expected to improve advisor productivity by leveraging a newly-created advisory utility. Client evolution, shifts and referrals Personal & Corporate Banking generates client shifts and referrals to other business divisions. For example, personal banking clients are shifted to Global Wealth Management, and corporate and institutional segment clients are referred to Asset Management for pension fund solutions or the Investment Bank for capital market and corporate transactions. Global Family Offi ce Our Global Family Offi ce unit brings together the capabilities of Global Wealth Management, Asset Management and the Investment Bank. It provides customized, institutional-style service to wealthy families and individuals seeking access to, or advice on, capital market activities. Cross-divisional product development Asset Management and Global Wealth Management collaborate to design products such as the Systematic Allocation Portfolio, which in the three years since it was launched has attracted more than USD 28 billion in invested assets. In partnership with the World Bank and other institutions, we have also developed a fully sustainable investing cross-asset mandate portfolio for private clients. Investment solutions aligned with this asset allocation have attracted USD 2.8 billion of investments in support of objectives like the Sustainable Development Goals (SDG) as of 31 December 2018.Our strategy, business model and environment 20 Our strategy, business model and environment Our businesses Global Wealth Management We are the preeminent global wealth manager to high net worth and ultra high net worth clients, with USD 2.3 trillion in invested assets. Our goal is to provide tailored investment advice and solutions to private clients, in particular in the ultra high net worth and high net worth segments. At the start of 2018, Wealth Management and Wealth Management Americas were combined into a single unit designed to better deliver our services to clients, realize meaningful improvements in efficiency and accelerate growth for our shareholders. We combined the central functions of Chief Investment Office (CIO), Investment Platforms and Solutions (IPS), Client Strategy Office (CSO) and Chief Operating Office (COO), which enables us to operate these central functions efficiently and effectively support the regional business units, which remain close to our clients with decentralized service delivery. The unification of the ultra high net worth business unit enables us to leverage best practices in serving the wealthiest individuals globally and supporting our growth ambitions by working closer together. We have established a referral and collaboration framework that fosters cross-regional teamwork. Our focus We serve high net worth and ultra high net worth individuals, families and family offices around the world and affluent clients in selected markets. Our business is focused on the high net worth and ultra high net worth segments, including family offices. Our unified Global Wealth Management division helps us to better serve clients with global needs. We are already a market leader in the ultra high net worth segment outside the US.1 We believe that Global Wealth Management can become the firm of choice for the wealthiest clients both in and outside the US. We expect that increasing our market share with ultra high net worth clients in the US could generate approximately USD 70 billion of cumulative net new money from 2019 to 2021. We expect that our business growth will occur primarily in the US, in part from the initiatives described above, and in Asia Pacific, where we are already the largest wealth manager based on invested assets. We are focusing on increasing mandate and lending penetration with innovative solutions for our clients as well as enhancing the advisors’ productivity in these regions by making operational processes more efficient. Additionally, we aim to maintain low attrition and to increase our share of clients’ business. As of 31 December 2018, approximately 80% of invested assets booked outside the Americas were on the Wealth Management Platform. We plan to eventually converge to a single operating platform outside the Americas. In parallel, we are working on creating the Wealth Management Americas Platform in collaboration with third-party software provider Broadridge. This platform is anticipated to improve advisor productivity and support advisors in growing their businesses. We expect the platform, scheduled to go live in 2021, to increase efficiency and scalability. →Refer to “Our focus on technology” in the “How we create value for our stakeholders” section of this report for more information on the Wealth Management Platform and Group- wide technology spend How we operate We have a global footprint, with a strong presence in the world’s largest and fastest-growing markets. The US is our largest market, representing more than 50% of our invested assets. We are the largest wealth manager in Asia Pacific and the second largest in Latin America, based on invested assets.1 In Switzerland, we maintain the leading market position and collaborate closely with Personal & Corporate Banking, Asset Management and the Investment Bank. Our broad domestic footprint in Europe enables us to provide locally adapted offerings, while local offices across Central Europe, the Middle East and Africa keep us close to our clients. Collaboration with the Investment Bank and Asset Management allows us to offer ultra high net worth clients tailored institutional coverage and global execution. →Refer to “Working in partnership” in this section for more information on the Global Family Office We continue to control costs and are focused on identifying new synergies across Global Wealth Management. We expect to realize USD 600 million of cost savings over the next three years by delayering and removing duplicate functions, reducing replacement hiring and optimizing third-party spending. At the same time, we expect to make strategic investments totaling more than USD 1 billion through 2021, including USD 600 million in technology, to further improve client and advisor experience. Our main competitors are either large US players, but with less reach outside the US – including Bank of America, Citigroup, JPMorgan Chase, Morgan Stanley and Wells Fargo – or geographically diverse firms without our scale or US exposure, such as BNP Paribas, Credit Suisse, Deutsche Bank, HSBC and Julius Baer. Our size and diversified client portfolio are exceptional and would be difficult and expensive for other wealth managers to replicate organically. 11 Statements of market position for Global Wealth Management are UBS's estimates based on published invested assets and internal estimates. 21 1 What we offer By operating as a single business, we aim to offer our clients the best wealth management solutions, services and expertise globally. We deliver our investment solutions through our IPS offerings, including flagship investment mandates, consisting of our innovative long-term themes and sustainable investment offerings. Our core investment solutions consist of: UBS Transact, a self-directed account granting clients access to UBS execution capabilities and the UBS House View; UBS Advice, which adds portfolio monitoring against an agreed investment strategy to self-directed accounts; and UBS Manage, a discretionary mandate solution where we use our expertise to invest clients’ assets according to a predefined investment strategy. We provide our clients with investment analysis and thought leadership and formulate our client investment strategies through the CIO and the CSO. The CIO provides a concise, comprehensive UBS House View, which identifies and communicates investment opportunities and market risks to help protect and grow our clients’ wealth over generations. The CSO aims at deepening the firm’s understanding of clients’ needs, behaviors and preferences to tailor our offerings and better serve our clients. Clients benefit from our comprehensive set of capabilities and expertise, including wealth planning, investing, lending, philanthropy, corporate and banking services as well as family office services in collaboration with the Investment Bank and Asset Management. →Refer to “Working in partnership” in this section for more information on collaboration between the business divisions We are continuously working to improve our offering. Key innovations launched in 2018 include enhancements to UBS Manage, which now incorporates mandate solutions with 100% sustainable investments, and two additional impact investment solutions. In addition, we launched the Systematic Allocation Portfolio in the US, a UBS Manage offering based on the UBS CIO World Equity Market Model, which analyzes economic and financial data to detect signs of improving or deteriorating equity markets to adjust portfolio exposure dynamically. How we serve our clients We serve our clients through local offices and dedicated advisors. Our ultra high net worth business is managed globally across the regions. We use a mix of digital and non-digital channels (including marketing campaigns, events, advertising, publications and digital-only solutions) to help drive greater awareness of UBS among prospects and reinforce trust-based relationships between advisors and clients. How we are organized Our business division is organized into the regional business units the Americas, which includes the US, Canada and Latin America; Europe, Middle East and Africa (EMEA); Asia Pacific; and Switzerland, as well as the business unit for our ultra high net worth clients. Central functions for global capabilities supporting these business units are the CIO, IPS, the CSO and the COO. We are governed by executive, risk, operating as well as asset and liability committees. 4 regional business units The Americas, including the US, Canada and Latin America, EMEA, Asia Pacific, and Switzerland ultra high net worth business unit Serves clients globally across the regions Our strategy, business model and environment 22 Our strategy, business model and environment Our businesses Personal & Corporate Banking As the leading personal and corporate bank in Switzerland, we provide comprehensive financial products and services to private, corporate and institutional clients. We are among the country’s foremost players in the private and corporate loan market, with a well-collateralized and conservatively managed lending portfolio. Personal & Corporate Banking is at the core of our universal bank delivery model in Switzerland. Our focus We are the premier personal and corporate bank in Switzerland, providing superior client experience and combining technology with a personal touch. We have a strong pipeline of growth initiatives in both of our business areas. In Personal Banking, for example, we are further improving technology-enabled mortgage advisory and aim to improve efficiency by streamlining processes and introducing new digital self-service tools. In Corporate & Institutional Clients (CIC), we are investing for growth with a focus on our SMEs, corporates and multinationals businesses and leveraging our transaction banking capabilities. We have recently launched a number of innovations and digital solutions such as the UBS Atrium investor portal, which allows institutional investors to invest in mortgages directly, our vendor leasing solution and the trade finance platform we.trade, based on blockchain technology, which we developed as part of a consortium with other banks. Technology plays a key role in our client-centered operating model and we aim to expand our digital leadership. Our multi- year digitalization program enables us to further enhance the client experience. On the basis of advanced analytics and blockchain technologies, we are able to offer clients new products and to identify new cross-selling opportunities. →Refer to “Our focus on technology” in the “How we create value for our stakeholders” section of this report for more information on our investment in technology Operationally, we strive for superb execution, focusing on efficiency while improving our service quality and overall agility. How we operate While we operate primarily in our home market of Switzerland, we also provide capabilities to support the growth of the international business activities of our corporate and institutional clients through our local hubs in Frankfurt, New York, Hong Kong and Singapore. In the CIC business, our main competitors are Credit Suisse, the cantonal banks and globally active foreign banks. We compete in areas covering basic banking services, cash management, trade and export finance, asset servicing, corporate finance and lending, as well as cash and securities transactions for banks. In the Swiss personal banking business, our competitors are Credit Suisse, PostFinance, Raiffeisen, the cantonal banks and other regional and local Swiss banks. We compete in areas including basic banking, mortgages and foreign exchange, as well as investment mandates and funds. What we offer Our personal banking clients have access to a comprehensive life cycle-based offering and convenient digital banking. We deliver a broad range of basic banking products, from payments to deposits, cards, online and mobile banking, as well as lending (predominantly mortgages), investments and retirement services. The overall service range is complemented by our KeyClub reward program. In close collaboration with Global Wealth Management, we offer leading private banking and wealth management services. →Refer to “Working in partnership” in this section for more information on collaboration between the business divisions Our corporate and institutional clients benefit from our financing and investment solutions, notably from access to equity and debt capital markets, syndicated and structured credit, private placements, leasing and traditional financing. Our transaction banking offers solutions for payment and cash management services, trade and export finance, receivables finance, as well as global custody solutions to institutional clients. In real estate, we offer our mortgage platform UBS Atrium, connecting institutional investors with Swiss mortgage holders to create a competitive offering and attractive investment opportunities for institutional investors. We collaborate closely with the Investment Bank to offer capital market and foreign exchange products, hedging strategies and trading capabilities, as well as corporate finance advice. In cooperation with Asset Management, we also provide fund and portfolio management solutions. 23 How we serve our clients We are the recognized digital leader with the highest online and mobile penetration in Switzerland and continue to invest in a multi-channel distribution strategy to further enhance our leading position. We are adapting existing branch formats to suit evolving client needs, converting some locations to smaller, more agile branches that serve as marketing and digital support hubs and ensure a strong local presence. We aim to further reshape our physical footprint in an innovative and client-centric way, namely by defining future branch formats with different purposes. In addition, we continue to shift basic banking services and transactions from branches to contact centers and digital channels, which already serve most of our 2.5 million personal banking clients. Dedicated client advisors serve personal banking clients who have more individualized needs. Similarly, we bundle our digital offering for small businesses in our Digital Corporate Bank, which offers the convenience and leading digital solutions that small companies look for. For marketing campaigns, we use online media (including social media and search engine advertising), out-of-home media (posters and digital billboards) and, very selectively, print, TV, radio and cinema advertising. In line with our position as a digital leader in Swiss banking, and because of the channel’s cost effectiveness, we follow a digital-first media strategy. More than 50% of our media investment goes into online channels. How we are organized Our business division is organized into Personal Banking and CIC, and further into client and (for corporate banking) product segments. Geographically, our business and our 279 branches are organized into 10 regions, covering distinct Swiss economic areas. We are governed by executive, risk and operating committees, and operate mainly through UBS Switzerland AG. 279 branches in Switzerland Personal Banking with 279 branches in Switzerland, of which 91 branches are shared with GWM and 60 branches are shared with CIC Our strategy, business model and environment 24 Our strategy, business model and environment Our businesses Asset Management Asset Management is a large-scale and diversified global asset manager, with USD 781 billion in invested assets. We offer investment capabilities and styles across all major traditional and alternative asset classes, as well as platform solutions and advisory support to institutions, wholesale intermediaries and Global Wealth Management clients around the world. Our focus Building on our global reach and strengths across all major traditional and alternative asset classes, as well as our differentiated client proposition, our strategy focuses on capturing opportunities in areas with above-average industry growth and is based on six priorities. In wholesale, which is a rapidly evolving and attractive segment, we aim to significantly expand our market share through a combination of product innovation, the development of strategic partnerships and increased leverage of our comprehensive Platform Services capabilities. We continue to develop our award-winning1 Indexed and Alternative Beta business (including exchange-traded funds (ETFs) in Asia Pacific, Europe and Switzerland). Since the end of 2016, this business has grown by approximately 50% in terms of invested assets driven by continued product innovation and our highly scalable platform. Our Investment Solutions business provides access to the breadth and depth of our capabilities across public and private markets, and combines them to meet the needs of clients across the globe, as few other firms can. To drive further growth, we are focused on delivering superior multi-asset strategies for wholesale clients and providing components of the investment process to strategic partners. Sustainable & Impact Investing is a further key area, as clients are increasingly seeking solutions that combine their investment goals with sustainability objectives. We aim to establish ourselves as a leading provider through: product and service innovation; dedicated research; integration of environmental, social and governance factors into our investment processes; leveraging our proprietary analytics; and active corporate engagement. Geographically, we are further expanding our onshore business in China, one of the fastest-growing asset management markets in the world, building on our extensive and long- standing presence in Asia Pacific. To support our growth, we have a continuous emphasis on increasing efficiency and effectiveness, driven through our operational excellence initiatives. This includes our flagship programs to replace our core IT platform, develop our data analytic capabilities and further evolve our operations platform. These programs are expected to be completed by 2020. We also continue to optimize processes and leverage new technologies across our Client Coverage, Investments and Products, Platforms & Specialists areas. →Refer to “Our focus on technology” in the “How we create value for our stakeholders” section of this report for more information on our UBS Partner offering How we operate We cover the main asset management markets globally, with a presence in 23 countries grouped in four regions: the Americas; Europe, Middle East and Africa; Switzerland; and Asia Pacific. Our main competitors are global firms with wide-ranging capabilities and distribution channels, such as Amundi, BlackRock, DWS, Goldman Sachs Asset Management, Invesco, JPMorgan Asset Management, Morgan Stanley Investment Management and Schroders, as well as firms with a specific market or asset class focus. What we offer We offer clients a wide range of investment products and services in different asset classes in the form of segregated, pooled or advisory mandates as well as registered investment funds in various jurisdictions. Our traditional and alternative capabilities include equities, fixed income, hedge funds, real estate and private markets, indexed and alternative beta strategies (including ETFs) as well as sustainable and impact investing products and solutions. Our Investment Solutions business draws on the breadth of our capabilities to offer asset allocation and currency investment strategies across the risk / return spectrum; customized multi- asset solutions, advisory and fiduciary services; and multi- manager hedge fund solutions and advisory services. Our Platform Services capabilities include UBS Fondcenter, a leading fund platform in Europe and Asia; Fund Management Services, providing fund corporate governance and white- labeling services; and UBS Partner, our innovative new offering that provides banks with powerful tools and analytics to support their advisory offering. 11 Second largest Europe-based indexed player based on peers’ public reporting as of November 2018 (UBS calculation) and ranked fifth largest ETF provider in Europe as of December 2018 (source: ETFGI). 25 1 How we serve our clients We deliver our investment products and services directly to institutional clients. High net worth and retail clients are served through Global Wealth Management, third-party banks and distributors. Our clients require world-class holistic advice and global coverage. In order to enable our client relationship managers to provide the specialized advice our clients need, and to deliver to them the full strengths of our firm, our Client Coverage teams are aligned along global segments (institutional, wholesale and Global Wealth Management). In addition, we believe it is equally important that our relationship managers are located near our clients to help ensure that our teams are best placed to build long-term relationships and develop a deep understanding of the challenges they face. →Refer to “Working in partnership” in this section for examples of areas of collaboration How we are organized Our business division is organized by the products and services we offer: Client Coverage, Investments, Real Estate & Private Markets, Products, Platforms & Specialists, and the Chief Operating Officer area. While we are based in 23 countries worldwide across four regions, our business is driven out of eight main hubs: Chicago, Hong Kong, London, New York, Singapore, Sydney, Tokyo and Zurich. We are governed by executive, risk and operating committees, supplemented by business unit-specific committees. 23 countries Covering the main asset management markets globally 8 main hubs Connecting the full breadth of our investment insights across the world to serve our clients New York Singapore Sydney London Zurich Hong Kong Chicago Tokyo Our strategy, business model and environment 26 Our strategy, business model and environment Our businesses Investment Bank The Investment Bank provides a range of services to institutional, corporate and wealth management clients to help them raise capital, grow their businesses, invest and manage risks. We are focused on our traditional strengths in advisory, capital markets, equities and foreign exchange, complemented by a targeted rates and credit platform. We use our powerful research and technology capabilities to support our clients as they adapt to the evolving market structures and changes in the regulatory, technological, economic and competitive landscape. We aspire to deliver market-leading solutions to clients, using our intellectual capital and electronic platforms. We also provide services to Global Wealth Management, Personal & Corporate Banking and Asset Management, while managing our balance sheet, costs, risk-weighted assets and leverage ratio denominator with discipline. Our focus Our key priority is disciplined growth in the capital-light advisory and execution businesses, while accelerating our digital transformation. Corporate Client Solutions is focused on deepening selected industry verticals, providing macro views complemented by expertise within specific sub-sectors, and increasing senior-level client interactions. In Equities, we aim to offer our clients a range of products, innovative solutions, expert advice, access to liquidity and seamless execution, as well as a continued flow of differentiated content. In Foreign Exchange, Rates and Credit, our focus is on delivering returns from recent investments made in talent and technology. We also plan to expand our Foreign Exchange business and our Solutions business within Rates and Credit. We continue to build out UBS Evidence Lab Innovations to concentrate on data-driven research. →Refer to “Our focus on technology” in the “How we create value for our stakeholders” section of this report for more information on Evidence Lab Innovations Our digital strategy is led by our businesses, which harness technology to deliver superior and differentiated client service and content. We established UBS Investment Bank Innovation Lab to speed up innovation by enabling proofs of concept. We are also making efforts to digitalize our entire front-to- back processes. Our balanced global reach gives us attractive options for growth across various regions. In the Americas, the largest investment banking fee pool globally, we are focusing on increasing our market share in our Advisory, Equity Capital Markets, Equities and Foreign Exchange, Rates and Credit businesses. In Asia Pacific, we see opportunities primarily from expected market internationalization and growth in China. We are planning to grow there by further strengthening Corporate Client Solutions, both onshore and offshore. Partnership across the Investment Bank’s businesses and the Group should also lead to growth by delivering global products to each region, leveraging our global connectivity across borders and sharing and strengthening our best client relationships. →Refer to “Working in partnership” in this section for examples of areas of collaboration How we operate We have a global reach, with a presence in 33 countries and principal offices in the major financial hubs. Our business is geographically balanced, with 45% of adjusted profit before tax in 2018 coming from the Americas, 25% from Europe, Middle East and Africa (including Switzerland), and 30% from Asia Pacific. Competing firms are active in many of our markets, but our strategy differentiates us with its focus on leadership in the selected areas where we have chosen to compete, and a business model that leverages talent and technology rather than balance sheet. Our main competitors are the major global investment banks, including Morgan Stanley, Credit Suisse and Goldman Sachs, as well as corporate investment banks, including Bank of America, Barclays, Citigroup, Deutsche Bank and JPMorgan Chase. We also compete with boutique investment banks and fintechs in certain regions and products. What we offer Through our Corporate Client Solutions business, we advise our clients on strategic business opportunities and help them raise capital to fund their activities. Our Investor Client Services business enables our clients to buy, sell and finance securities on capital markets across the globe and to manage their risks and liquidity. In Equities, we distribute, structure, execute, finance and clear equity cash and derivative products. Foreign Exchange, Rates and Credit provides execution services and solutions, with an emphasis on electronic trading, and maintains high levels of balance sheet velocity. In Foreign Exchange, we help our clients manage their currency exposures and to buy and sell precious metals, and are recognized as one of the leading foreign exchange market-makers. Rates and Credit encompasses sales, trading and market-making in a selected range of products, including tailored financing solutions. Furthermore, in Research, we offer clients key insights on major financial markets and securities around the globe. Separately, our team of experts in UBS Evidence Lab Innovations specializes in creating insight-ready datasets for companies of all sizes, spanning over 50 sectors and 30 countries. 27 We seek to develop new products and solutions that are consistent with our capital-efficient business model. These are typically related to new technologies or changing market standards. Some examples are UBS Data Solutions, a centralized data processing and distribution platform, which was launched to meet client demand for both financial and alternative data, and UBS Evidence Lab Innovations, as mentioned above. Since 2005, we have addressed increasing client demand for sustainable investing by providing thematic and sector research. We also provide investment solutions through socially responsible and impact exchange-traded funds and index-linked notes. In addition, we offer capital-raising and strategic advisory services globally to companies that make a positive contribution to climate change mitigation and adaptation. How we serve our clients We use a variety of marketing channels, including online and face-to-face, to interact with our clients. In Corporate Client Solutions, we leverage our intellectual capital and relationships to deliver high-quality solutions for our clients. In Equities, we use our execution capabilities, differentiated research content, bespoke solutions and our global platform to expand our coverage across a broad set of institutional and corporate clients. In Foreign Exchange, Rates and Credit, we deliver seamless client service through One Client. This is the evolution of our client franchise coverage model, which aims to drive the best client outcomes through relationships, collaboration, technology and data-driven client intelligence. In Research, we deliver high-quality differentiated research to our institutional clients using a wide range of methods, including UBS Neo, our multi-channel platform. How we are organized Our business division is organized into the following units: Corporate Client Solutions, Investor Client Services, and Research and UBS Evidence Lab Innovations. We are governed by executive, operating, risk, and asset and liability committees. Each business unit is organized globally by product and, within that, by region. 9 financial hubs In all major financial centers 33 countries Ensuring a global reach New York Singapore Frankfurt Zurich Hong Kong Chicago Shanghai Tokyo London Our strategy, business model and environment 28 Our strategy, business model and environment Our businesses Corporate Center Our Corporate Center provides services to the Group through the Corporate Center – Services and Group Asset and Liability Management (Group ALM) units with a focus on quality, risk mitigation and efficiency. Corporate Center also includes the Non-core and Legacy Portfolio unit. How we are organized Until the end of 2018, we reported Corporate Center as three separate units: Corporate Center – Services, Group ALM and Non-core and Legacy Portfolio. Beginning with our first quarter 2019 report, we will provide results for total Corporate Center only and will not separately disclose Corporate Center – Services, Group ALM and Non-core and Legacy Portfolio. Furthermore, we will operationally combine Group Treasury with Group ALM and their net retained operating income will be reported as a separate line item within Corporate Center. →Refer to the “Significant accounting and financial reporting changes” section in this report for more information on the changes in the structure of Corporate Center Corporate Center – Services Corporate Center – Services consists of the Group Chief Operating Officer area (Group Technology, Group Corporate Services, Group Human Resources, Group Operations and Group Sourcing), Group Finance (excluding Group ALM), Group Legal, Group Risk Control, Group Communications & Branding, Group Compliance, Regulatory & Governance, and UBS in society. Specifically, in the areas of finance, legal, compliance and risk management and control, we aim to provide high-quality advice while optimizing resources and mitigating risk. In other areas, such as human resources, information technology, operations, and marketing and communications, we align services based on demand and delivery of defined strategies. These functions partner with business divisions and Group ALM through a service-based operating model. Corporate Center – Services allocates the majority of its operating expenses to the business divisions and other Corporate Center units, and determines cost allocations with them as part of the annual business planning cycle. In 2018, we aligned our Corporate Center more closely with the business divisions, while keeping the benefits of a strong Corporate Center. Increasing proximity between the business and Corporate Center means UBS can be more agile and responsive to the needs of our clients, positioning us better to capture front-to-back opportunities in areas such as digitalization. By bringing the activities of the businesses and Corporate Center closer together, we also increase efficiency and create a working environment built on a culture of accountability and collaboration. Corporate Center – Group ALM Group ALM manages the structural risk of our balance sheet, including interest rate risk, structural foreign exchange risk and collateral risk, as well as the risks associated with our liquidity and funding portfolios. Group ALM also seeks to optimize financial performance by matching assets and liabilities. Group ALM serves all business divisions and the other Corporate Center units through three main risk management areas, and its risk management is fully integrated into the Group’s risk governance framework. Business division-aligned risk management activities include managing the interest rate risk in the banking book on behalf of Global Wealth Management and Personal & Corporate Banking, and managing high-quality liquid asset (HQLA) portfolios, as well as risk management of credit, debit and funding valuation adjustments for our over-the-counter derivatives portfolio. Net income generated by these activities is fully allocated to the associated business divisions and other Corporate Center units. Capital investment and issuance activities consist of managing our equity and capital instruments as well as instruments that contribute to our total loss-absorbing capacity (TLAC). Revenues from investing the Group’s equity, and the incremental expenses of issuing capital and TLAC instruments at the UBS Group AG level relative to issuing senior debt out of operating subsidiaries, are fully allocated to the business divisions and other Corporate Center units. Group structural risk is managed to meet overall objectives. These activities include managing the Group’s HQLA and long- term debt portfolios. The net positive or negative income generated is allocated to the business divisions and other Corporate Center units based on their consumption of the underlying risks and resources. Corporate Center – Non-core and Legacy Portfolio Non-core and Legacy Portfolio manages legacy positions from businesses exited by the Investment Bank, following a largely passive wind-down strategy. It is overseen by a committee chaired by the Group Chief Risk Officer. The portfolio also includes positions relating to legal matters arising from businesses that were transferred to it at the time of its formation. →Refer to “Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information on litigation, regulatory and similar matters 29 Our environment Current market climate Global economic developments in 2018 The global economy maintained its pace of growth in 2018. World GDP expanded by 3.8%, almost identical to the 3.9% growth of 2017. Economic expansion was as broadly based as in 2017, with no G20 nations in recession. The US provided much of the growth impetus, driven, in part, by its Tax Cuts and Jobs Act introduced in December 2017, which put the US on course for 2.8% growth (up from 2.2% in 2017). The stronger economy and lower tax rates contributed to more than 20% higher corporate earnings, despite concerns over a potential trade conflict with China. Growth was slower in the eurozone. However, the region managed to get through the year without major political or economic shocks. A dispute between the Italian government and the European Commission was resolved, and the Greek debt crisis, which in recent years seemed to threaten the integrity of the eurozone, was largely absent from the headlines. Overall, eurozone GDP increased by close to 2% for the year. Outside of the eurozone, the Swiss economy did especially well, expanding 2.6% after 1.7% in the prior year. Emerging markets faced mounting pressures. Efforts by China to restrain domestic corporate borrowing cooled its economy, with growth slowing to 6.5%, from 6.9% in 2017. Other emerging nations were also affected as the trade conflict between the US and China dampened business confidence. Despite such obstacles, most emerging market economies achieved solid GDP expansion – with the Indian economy even seeing growth improve to 7.3%, from 6.7%. This relatively benign backdrop and muted inflation pressures allowed developed market central banks to continue gradually tightening monetary policy. The European Central Bank announced it would end its quantitative easing program, while the Federal Reserve contracted its balance sheet by USD 50 billion a month and increased its target overnight rate by 1 percentage point in four steps during 2018. For much of the year, US equities performed strongly in this environment of sound growth, rising earnings and only gradual central bank tightening of monetary policy. The strength of the US market helped lift global stock indexes, more than offsetting a muted performance from emerging market and eurozone indexes. However, markets turned volatile in October 2018. The Morgan Stanley Capital International (MSCI) All Country World Index – which by late September 2018 had climbed 6% year to date – saw a correction in the last quarter and ended the year with a loss of 7.7%. This was the first year of negative returns since 2011. Safer assets, such as 10-year US Treasury bonds (USTs), proved more stable to investors. Yields on 10-year USTs fell around 40 basis points in the last three months of the year. Uncertainty over the terms of the UK withdrawal from the EU captured headlines but had limited effect on global markets. Economic and market outlook for 2019 The economic cycle is maturing. Potential setbacks such as trade turmoil and monetary tightening could create obstacles for investors. However, we do not think they will tip the global economy into recession. The US-China trade dispute looks set to remain a concern, but a major escalation that could end the global economic expansion appears unlikely. We do not expect the ongoing negotiations on the UK’s withdrawal from the EU to exert a major influence over global markets. Equally, we expect the world’s main central banks to avoid excessive tightening of monetary policy. For the first time since the 2008 financial crisis, central bank balance sheets are likely to be smaller at the end than at the start of the year. The withdrawal of stimulus will remove a powerful force inhibiting market volatility. However, with inflation still under control, policy makers can afford to be gradual in tightening, reducing the risk that they will undermine growth or unsettle markets with accelerated rises. In the US, expectations about multiple interest rate hikes during 2019 have diminished. We do not see signs of overvaluation in global equity markets. As of the end of 2018, global stocks traded at a discount to their 30-year average on a trailing price-to-earnings basis, reflecting the aggressive sell-off in the fourth quarter and the higher earnings achieved throughout the year. Equity markets recovered at the start of 2019, supporting our view that the sell-off in late 2018 was excessive. Our strategy, business model and environment 30 Our strategy, business model and environment Our environment Industry trends While our industry was heavily affected by regulatory developments over the past decade, technology is slowly emerging as the main driver of change going forward and is expected to affect the competitive landscape as well as our products and operations. Digitalization Technology is changing the way banks operate and we expect this to continue in step with exponential advances in computing capability, evolving customer needs and digital trends. Technology spend is no longer solely considered a means to make banks more efficient. Today, technology investment is the key to keeping banks flexible and competitive in a digitalized world and creates the opportunity to develop new business models. We strive to deliver state-of-the-art digital tools and services to provide a better experience for clients and employees. In doing so, we are continuously improving the ability to transact, perform day-to-day tasks and add value for the firm. UBS’s digital ecosystem is powered by a growing number of automated systems and processes that generate data, which in turn drive our efforts in artificial intelligence. It is this convergence of automation, artificial intelligence and strong human capital that will drive innovation and superior client experience, as well as enable business growth. Consolidation We expect further consolidation in the financial services industry, driven by ongoing margin pressure as well as the increasing scale advantages resulting from the fixed costs of technology and regulation. Many regions and businesses are still highly fragmented and the search for scale and cost efficiencies is expected to be a key driver for consolidation. Many banks are also seeking exposure to regions with attractive growth profiles, such as Asia and emerging markets, through local acquisitions or partnerships. Lastly, the increased focus on core capabilities or geographical footprints and the ongoing simplification of operating models to reduce operational and compliance risks will also result in further disposals of non-core businesses and assets. New competitors Our competitive environment is also evolving. In addition to our traditional competitors in the asset-gathering businesses, new entrants are targeting selected components of the value chain. However, we have not yet seen a fundamental unbundling of the value chain and client relationships, ultimately resulting in the disintermediation of banks by new competitors. Over the longer term, we believe the entry into the financial services industry of large platform companies could pose a significant competitive threat, given their strong client franchises and access to client data. Regulation The measures set out by the post-2008 regulatory reform agenda are now largely in place. While some areas, such as funding in resolution, must still be fully addressed, and implementation of certain standards, such as the Basel III capital rules, is continuing on a national level, the focus is shifting from regulation to supervision. In parallel, some regulators are considering reassessing the efficiency of the new frameworks. In general, regulatory-driven change continues to consume substantial resources. In 2019, we expect further adjustments to the Swiss too big to fail framework, including concrete proposals to implement the finalized Basel III standard at national level. We anticipate continued work on resolution- related and derivatives reforms, and a sustained high focus on conduct and anti-money laundering. The overall context of these developments is a backdrop of increased protectionism and new regulatory hurdles, posing challenges to the provision of cross-border financial services. Market access restrictions into the EU in particular would have a significant effect on Switzerland as a financial center including UBS. Variations in how different countries implement rules, and an increasing national focus, bring a risk of additional regulatory fragmentation across the globe, which in turn may lead to higher costs for us and new financial stability risks. However, we believe the adaptations made to our business model and proactive management of regulatory change put us in a strong position to absorb upcoming changes to the regulatory environment. →Refer to the “Regulatory and legal developments” and “Capital management” sections of this report for more information 31 Wealth transfer Demographic and socioeconomic developments continue to generate shifts in wealth among age and gender groups. As a result, the client base of the wealth management industry is becoming increasingly diverse. The industry is therefore bound to adapt its services and offerings to meet the specific needs and expectations of growing client groups. We are working to defend our status as the preferred wealth manager for these clients through our active segment management strategy. Our wealth planning expertise is also supported by dedicated intergenerational wealth transfer services for all segments, such as Great Wealth for ultra high net worth clients. Wealth Way is another example that covers wealth transfer. This offering takes a holistic view of our clients’ financial matters and covers needs beyond their lifetime to support them in creating a legacy. Retirement funding Over recent years, the pension industry has faced two key challenges: fundamental demographic shifts, such as aging populations, and lower expected returns. Beyond structural answers to these challenges, such as the progressive shift from defined benefit to defined contribution pensions, we believe pension funds are reassessing their asset allocation approach. Indeed, many pension funds are now allocating a higher share of their portfolios to alternative investments such as private equity, hedge funds, real estate and infrastructure in a search for higher-yielding exposures. We see this development as positive for UBS as these funds will likely need further support to define their investment strategy and target portfolio allocation. In addition, our private banking and wealth management clients are expected to need further financial and retirement planning advice, which we are able to provide holistically through our wealth planning services. Our strategy, business model and environment 32 Our strategy, business model and environment How we create value for our stakeholders How we create value for our stakeholders Clients With clients at the heart of our business, we are committed to building and sustaining long-term relationships based on mutual respect, trust and integrity. Understanding our clients’ needs and expectations allows us to serve their best interests and to create value for them. Our clients and what matters most There is no archetypal UBS client. Our clients have varying needs, but each of them expects outstanding advice and service, a wide range of choices, and an excellent client experience. Global Wealth Management serves high net worth and ultra high net worth individuals, families, and family offices around the world and affluent clients in selected markets. We provide these clients with access to outstanding advice, service, and opportunities from around the globe delivered by experts they can trust. Global Wealth Management clients demand a bank that understands their unique needs and circumstances. A bank that values long-term relationships built on trust and dependability, and a bank that helps them maintain their lifestyles today, improve their lifestyles in the future, and improve the lives of others. In Switzerland, Personal & Corporate Banking serves approximately 2.5 million individuals and 121,000 corporate and institutional clients, ranging from small and medium-sized companies to larger corporates and multinational companies. Personal & Corporate Banking clients look for financial advice based on their needs at each stage of their life cycle, as well as a comprehensive digital offering enabling them to bank at their convenience, wherever they are, whenever they want to. We provide tailored advice, drawing on our broad product offering in all relevant areas: basic banking services, investing, financing (including mortgages), retirement planning, cash management, trade and export finance, global custody, and company succession among others. In Asset Management, we deliver investment products and services directly to approximately 3,000 clients around the world – including sovereign institutions, central banks, supranational corporations, pension funds, insurers and charities, as well as Global Wealth Management and its clients, wholesale intermediaries and financial institutions. Our clients seek global insights and a holistic approach to tailoring solutions. By building long-term, personalized relationships with our clients and partners, we aim to achieve a deep understanding of their needs and to earn their trust. We draw on the breadth and depth of our global offering across asset classes and our Platform Services capabilities to deliver the solutions they need. With over 900 investment professionals, our teams bring distinct investment styles and philosophies with one shared goal – to provide clients with best-in-class ideas and superior investment performance. The Investment Bank provides corporate, institutional and wealth management clients with expert advice, financial solutions, best-in-class execution, and comprehensive access to the world’s capital markets. Our model is specifically built around our clients and their needs. Corporate clients can access advisory services, debt and equity capital market solutions and bespoke financing through our Corporate Client Solutions business. Our Investor Client Services business is focused on helping institutional clients engage with local markets globally, offering equities and equity- linked products, foreign exchange, rates and credit, and is underpinned by our research offering, which gives clients an edge when it comes to understanding markets. UBS Evidence Lab Innovations provides clients with access to insight-ready datasets for thousands of companies – the same evidence we provide to our UBS Research analysts. Enhancing the client experience through digitalization We strive to personalize interactions with our clients, while streamlining and simplifying them through front-to-back digitalization. In Global Wealth Management we provide our clients with a hybrid approach that preserves and enhances the value of human relationships. Clients expect digital tools but say personal time spent with advisors is more important than ever. This means providing technology that empowers client advisors so they spend more time with clients. And our clients want digital tools that improve their experience – high end e-banking, access to bespoke research that is tailored to their needs, and multiple ways to communicate with their client advisors. 33 In Personal & Corporate Banking, more than 60% of our personal banking client relationships are now completely paperless and we pioneered video onboarding in Switzerland. In addition, front-to-back digitalization enables corporate clients to create customized product bundles based on their specific needs. We also pioneered the new blockchain-based trade finance platform we.trade, together with other industry participants, which allows corporate and institutional clients to easily and safely create trade orders online and manage the entire trade process from order to payment. In Asset Management we are investing in new tools and technologies, as well as our alternative data capabilities, to support our teams’ investment decision-making processes and enhance client service. In addition, our flagship operational excellence programs are focused on building a scalable and globally integrated operating platform to better enable our teams to deliver the full breadth of our capabilities to clients around the world. We also continue to develop our comprehensive Platform Services capabilities including UBS Partner, our new and innovative private-label technology solution, which will enable a step change in the advisory process and services offered by our wholesale clients. The Investment Bank strives to be the digital investment bank of the future, with innovation-led businesses that drive efficiencies and solutions. Our investments in new technologies and data science teams help us to better understand our clients’ investment processes and trading needs. This allows us to deliver tailored sales and trading commentary, research, access to liquidity and prime brokerage products. We recently established the UBS Investment Bank Innovation Lab to help connect business teams to leverage best practice, build and test proof of concepts safely and quickly and inspire a culture of innovation. We see increasing interest from clients in financial and alternative datasets that they can incorporate into their models. In response, we set up UBS Data Solutions to meet those needs through a centralized robust data processing and distribution platform. →Refer to “Our focus on technology” in this section for more examples on how technology is used for the benefit of our clients Our strategy, business model and environment 34 Our strategy, business model and environment How we create value for our stakeholders Our focus on technology As digitalization continues to transform the banking industry, investment in technology plays a critical role in maintaining our position as the largest global wealth manager. In 2018, we spent USD 3.5 billion on technology and we expect to maintain around this level of spend through 2021. We gear our investments toward technologies to enable business growth through innovation and superior client experience, and to continue to increase efficiency across the organization. Significant achievements in 2018 include laying the foundations for enterprise-wide Cloud adoption. We expect that leveraging the Cloud will enable us to respond more rapidly to market changes and client needs without compromising on security or efficiency. We aim to take advantage of the Cloud by improving the scalability of our systems and reducing the time to market for innovative IT products. Additionally, we continued deploying robots (i.e., automated processes) to reduce manual work and ensure the stability of our systems. We are growing capabilities for smarter cognitive technologies including artificial intelligence (AI) to support more insightful and faster decision making. Advanced technologies are used in our business divisions and Corporate Center to enhance the client experience by increasing front-to-back digitalization, improving product excellence and distribution, driving efficiency gains and maintaining platform security. Selected highlights are described below. Wealth Management Online is a digital offering for clients with a UBS investment solution, fully integrated in UBS Digital Banking and available for desktop and mobile devices. The content is tailored to clients’ underlying investment solutions. Clients benefi t from up-to-date portfolio quality information and notifi cation thereof, and direct execution of investment proposals to optimize the portfolio quality. The hybrid servicing model offers the possibility to involve the client advisor for further advice at any stage. Structured Product Investor is a single platform with multi-location, multi-issuer and multi-asset class capabilities for customized structured products. The strategic, client-centric Wealth Manage- ment Platform, which also hosts the Personal & Corporate Banking business, enables scalability and effi ciency through standardization as well as fl exibility for innovative offerings. Our wealth management clients in the Americas can now benefi t from an innovative banking app that allows them to set personalized and tailored investment and savings goals. The app also features the option to receive portfolio diagnostics and tailored investment proposals as well as personal fi nancial advisor support. This all serves to facilitate the achievement of the set objectives. In addition, fi nancial advisors can leverage social media to engage with clients and prospects in a more meaningful and differentiating way. Wealth Management Online Wealth Management Platform Structured Product Investor UBS Wealth Management USA App Global Wealth Management 35 eDiscovery service capabilities include the collection, processing, review and production of electronically stored UBS data to provide better results for internal investigation and litigation activities by using machine learning. This allows UBS to substantially reduce legal spend and to meet regulators’ expectations in a timely manner with reasonable effort. The strategic fi rm-wide end user platform, A3, seeks to enable access to any UBS application, from any device, anywhere, within cross border restrictions. This private cloud-based technology increases fl exibility and staff productivity. UBS Evidence Lab Innovations provides clients with access to insight-ready datasets for a large set of companies and sectors. Experts work across 45 specialized areas to harvest, cleanse, and connect billions of data items each month to surface evidence that relates to investment decisions. Investment Bank Corporate Center UBS Partner is a unique offering within our compre- hensive Platform Services capabilities, creating a step change in analysis capability for wholesale clients. It can scan and analyze millions of portfolios every night against clients’ risk profi les, instrument quality criteria and investment goals, fl agging issues and providing actionable investment options to address them. Centered on each client’s investment goals, UBS Partner can support wholesale clients in increasing client satisfaction levels and willingness to refer. UBS Partner Asset Management The UBS Investment Bank Innovation Lab works with businesses and operations across the bank with the ambition to create innovative and user-centric solutions for our clients. Driving a culture of innovation, the lab makes it easier for people to collaborate by connecting them to expert internal and external resources, ideas, and new technologies to test and deploy new proof of concepts faster. UBS Investment Bank Innovation Lab UBS Evidence Lab Innovations A3 eDiscovery The new UBS Access App offers a fast, convenient and secure way to access UBS e-banking without a special log-in device and to confi rm online credit card transactions via a new 3-D Secure process. we.trade is an open and inter operable trade fi nance platform based on blockchain technology that grants clients across the globe digital, transparent, effi cient and cost-effective access to international trade. Digital Business is an integrated corporate portal, offering Swiss small and medium-sized entities tailored banking packages consisting of up to 20 modular digital solutions covering online and mobile banking, payment transactions and liquidity and credit planning. UBS Access App we.trade Digital Business Personal & Corporate Banking Our strategy, business model and environment 36 Our strategy, business model and environment How we create value for our stakeholders Investors We build long-term value for our investors by executing our strategy with discipline, striving for cost- and capital-efficient growth, long-term sustainable value creation and attractive shareholder returns. Cost- and capital-efficient revenue growth Our ambition is to grow our Group revenues faster than global real GDP. Our Global Wealth Management business is well positioned to take advantage of two secular trends: wealth creation and continued economic growth, notably in Asia, where China is opening its financial markets. Each of our businesses has initiatives to achieve revenue growth and improve operating efficiency in its area. →Refer to “Industry trends” in the “Our environment” section of this report for more information on wealth creation While we aim to increase revenues, cost efficiency is a strategic priority for us. Similarly, capital efficiency is of utmost importance for UBS overall and for each business division. To provide further transparency and increase accountability on costs and capital consumption, we have revised our cost allocation methodology and equity attribution framework effective on 1 January 2019. →Refer to the “Significant accounting and financial reporting changes” section of this report for more information Shareholder returns We aim to increase our ordinary dividend per share at a mid-to- high single-digit percentage each year. We also aim to return excess capital, after accruals for ordinary dividends, most likely in the form of share repurchases. We consider our business outlook and capital plan, as well as other developments, in determining excess capital available for share repurchases. Alignment of interests We aim to align the interests of our employees with those of our equity and debt investors. This is reflected in our compensation philosophy and practices. →Refer to “Our compensation philosophy” in the “Compensation” section of this report for more information Communications Our Investor Relations function serves as the primary point of contact between UBS and the institutional investor community. Our senior management and the Investor Relations team regularly interact with investors, financial analysts and other market participants, such as credit rating agencies. Clear, transparent and relevant disclosures, together with regular and direct interactions with existing and prospective shareholders, form the basis for our communications. The Investor Relations team also relays the views of and feedback from the institutional investor community on UBS to our senior management. The Investor Relations and Corporate Responsibility teams work together and interact with those investors focusing on sustainability topics relevant to UBS and society at large. →Refer to “Corporate governance” and “Information policy” in the “Corporate governance and compensation” section of this report for more information →Refer to ”Society” in this section of the report for more information on our sustainability efforts 37 Employees Our employees are crucial to our business strategy. Accordingly, our human resource (HR) strategy seeks to attract, develop and retain talented people at all levels with the diverse skills, experience and commitment to effectively advise our clients, deliver innovative solutions, manage risk, navigate evolving regulatory requirements, and drive change. Our corporate culture A strong culture drives sustainable success and adds value at the individual, team and corporate levels. We invest in our employees and promote measures that build engagement and a cohesive, collaborative work environment. Our strategy and culture are underpinned by our three keys to success: our Pillars, Principles and Behaviors. These keys are the foundation for how we manage our workforce, how we work with our stakeholders and each other, and how we make business decisions and deliver on our strategy. →Refer to the contents page of this report for more information on the Pillars, Principles and Behaviors Since 2013, we have embedded the three keys into our culture, including all HR processes, through transformative initiatives like our firm-wide Senior Leadership Experience and, more recently, our Group Franchise Awards (GFA) program. The GFA program fosters cross-divisional collaboration and ideas for simplifying our processes, with more than 14,300 business referrals and nearly 900 simplification ideas submitted in 2018. We measure our culture-building progress through regular employee surveys. In 2018, responses indicated that employee engagement, appreciation for our talent management practices and pride in working at UBS were at, or above, the norm for high-performing organizations. Employer of choice We are widely recognized as an employer of choice, as evidenced by the numerous external awards that we have received. Key to this is ensuring our employees can build rewarding careers here. Internal mobility therefore remained a priority in 2018, as it builds cross-firm connections, increases engagement and enables employees to leverage and develop their skills. We further enhanced our suite of in-house recruitment tools during the year to better match internal talent with open roles, and developed specialized training to increase line manager effectiveness. We received nearly 847,000 applications and hired a total of 13,249 external candidates in 2018. For our graduate talent programs, we hired 467 new university graduates and 585 interns. In Switzerland, we hired 268 apprentices for business and IT roles, and 151 trainees into our bank entry programs for high school graduates. Our UK apprenticeship program hired 57 school leavers across various roles. →Refer to www.ubs.com/employerawards for more information Our diverse and inclusive workplace Our diverse workforce and inclusive culture are critical to our long-term success. We are committed to further increasing our diversity and to ensuring equal opportunities for all employees. We are especially focused on hiring, retaining and promoting more women across the firm, with a stated aspiration to increase the representation of women in management roles to one-third. Our award-winning UBS Career Comeback Program, already established in the UK, US and Switzerland, was extended to India in 2018. The program offers permanent roles to professionals wishing to return to corporate jobs after a career break and supports them with on-the-job experience, classroom learning and mentoring. To date, Career Comeback has helped 102 women and 2 men at senior levels to relaunch their careers. In addition to our strategic initiatives, every year we sponsor numerous activities to promote inclusiveness. For example, this year we became a supporter of the UN Standards of Conduct for Business, a set of anti-discrimination guidelines. Additionally, our employee networks regularly host events regarding gender, culture, ethnicity, LGBTI / Pride, disability, veterans, parenting, elder care and other topics. In 2018, we sponsored 43 employee networks globally. →Refer to www.ubs.com/diversity for more information Our integrated workforce strategy Throughout the year, the firm focused on enabling higher productivity, enhancing the client experience, building critical in- house expertise and managing costs. Our integrated workforce strategy contributed to these achievements through a combination of insourcing (especially in Group Technology) and regular hiring of staff. As a result, our Business Solutions Centers (BSCs) in China, India, Poland, Switzerland and the US grew substantially. Our BSC employee population increased by 3,115 in 2018 through hiring or insourcing, including 1,893 in India and 822 in Poland. We also expanded our BSC presence in Switzerland with the opening of a new BSC in Manno, focused on data analytics and artificial intelligence. At year-end, offshore and nearshore employees accounted for around 29% of our global Corporate Center employee population. As a result of insourcing initiatives and improved efficiency, we reduced our external staff in Corporate Center by 5,515.Our strategy, business model and environment 38 Our strategy, business model and environment How we create value for our stakeholders Personnel by region As of % change from Full-time equivalents 331.12.18 31.12.17 31.12.16 31.12.17 Americas 21,309 20,770 20,522 3 of which: USA 20,495 19,944 19,695 3 Asia Pacific 12,119 8,959 7,539 35 Europe, Middle East and Africa 12,620 11,097 10,746 14 of which: UK 5,782 5,274 5,206 10 of which: rest of Europe 6,670 5,662 5,373 18 of which: Middle East and Africa 168 161 167 5 Switzerland 20,840 20,427 20,581 2 TTotal1 66,888 61,253 59,387 9 11 The increase in workforce in 2018 was mainly due to insourcing initiatives and was more than offset by a decrease in external staff. Gender distribution by employee category1 Officers (Director and above) Officers (other officers) Employees Total By headcount, as of 31.12.18 Number % Number % Number %Number % Male 18,514 75 15,465 61 7,794 43 41,773 61 Female 6,078 25 10,059 39 10,428 57 26,565 39 Total 24,592 100 25,524 100 18,222 100 68,338 100 1 Calculated on the basis that a person (working full time or part time) is considered one headcount (in this table only). This accounts for the total UBS employee number of 68,338 as of 31 December 2018, which excludes staff from UBS Card Center, Wolfsberg and Hotel Seepark Thun. Developing and retaining talent Our business strategy and culture are advanced through education and leadership development, with our in-house UBS University as the one-stop shop for all learning activities at UBS. Through our suite of development programs, business skills and risk management classes, as well as lifelong learning opportunities, we seek to ensure that all employees have the skills and expertise to meet client needs and grow their careers. Our Master in Wealth Management program remains the pinnacle of development for client-facing staff in Global Wealth Management. By the end of 2018, 208 senior client advisors, desk heads and client-aligned managers had successfully completed (or were on track to complete) the two- year degree program. In 2018, UBS University transformed its offering to connect employees with global trends, transform their businesses, lead in a digital world and re-skill to prepare for the future. Monthly recommended learning playlists enable employees to explore a wide variety of topics. Our permanent employees completed approximately 812,000 learning activities in 2018, including mandatory training on compliance, business and other topics. This averaged to 11.9 sessions, or 1.76 training days, per employee. Clear expectations, challenging goals, continuous feedback and a performance-centric compensation framework promote long-term success for employees, as well as for the firm. Since we believe that how we achieve results is as important as the results themselves, our annual year-end reviews assess both performance goals and the behaviors of integrity, collaboration and challenge. Both ratings are then considered in development, reward and promotion decisions. Our firm-wide talent management and succession-planning processes, including accelerated development and internal mobility opportunities for key talent, support employee satisfaction and retention and help ensure our long-term success. 39 Our workforce at a glance1 19% in EMEA 31% in Americas 32% in Switzerland 18% in APAC 39% are women (26,565) 66,888 total employees (FTE) 5,635 more than a year ago (FTE) 68,338 employees (by headcount) 61% are men (41,773) 50 countries More than 150 languages spoken Citizens of 133 countries 7,836 5,124 13,342 8,221 13,728 7,954 6,867 5,266 1 Calculated as of 31.12.18 on a headcount basis of 68,338 internal employees only (2017: 62,558) unless specifi ed to be on a full-time equivalent (FTE) basis, where we include proportionate numbers of part-time employees. 49% of employees in Switzerland have worked here 10+ years 8 is the average years of service 20% under 30 years old, 59% between 30 and 50, 21% over 50 Our strategy, business model and environment 40 Our strategy, business model and environment How we create value for our stakeholders Society We want to promote global economic development that is sustainable for the planet and humanity. We have embodied the overarching objective of the 17 Sustainable Development Goals (SDGs), which provide a roadmap to solve the common sustainability-related challenges of our society. →Refer to the UBS World Economic Forum white paper 2019 under www.ubs.com/wef for more information As the preeminent global wealth manager to high net worth and ultra high net work clients, we aspire to take a leading role in shaping the future. Our firm is in a powerful position to contribute toward achieving the SDGs by integrating sustainability in our mainstream offerings, through new and innovative financial products with a positive effect on the environment and society, and by advising our clients on their philanthropic works. We contribute to the setting of standards and collaborate in and beyond our industry. We do so through the management of environmental and social risks, the management of our environmental footprint and our comprehensive sustainability disclosures. Information on all of these efforts and commitments is provided in the Global Reporting Initiative (GRI) Document on our website. For all references to the GRI Document 2018, refer to “Annual reporting” at www.ubs.com/investors. The content of the GRI Document has been prepared in accordance with the GRI Standards (“comprehensive” option) and with the German rules implementing the EU directive on disclosure of non-financial and diversity information (2014/95/EU). Our reporting on sustainability has been reviewed by Ernst & Young Ltd against the GRI Standards providing limited assurance. Code of Conduct and Ethics In our Code of Conduct and Ethics (Code), the Board of Directors and the Group Executive Board set out the principles and practices that define our ethical standards and the way we do business. These principles apply to all aspects of our business. All employees must confirm annually that they have read and will adhere to the Code and other key policies, supporting a culture where ethical and responsible behavior is part of our everyday operations. →Refer to the Code of Conduct and Ethics of UBS at www.ubs.com/code for more information Strategy UBS in society UBS in society is a dedicated organization within the firm, focused on maximizing our positive effect and minimizing any negative effects UBS has on society and the environment. It covers topics such as sustainable and impact investing, client philanthropy, environmental and human rights policies governing client and supplier relationships, and our community investment. Through UBS in society, UBS is driving change that matters by using our firm’s expertise to bring about sustainable performance. The activities driven by UBS in society are overseen, at the highest level of our firm, by our Board of Directors’ Corporate Culture and Responsibility Committee (CCRC). The Group CEO proposes the UBS in society strategy and annual objectives to the CCRC, supervises their execution and informs the Group Executive Board and CCRC, as appropriate. Reporting to the Group CEO, the Head UBS in society is UBS’s senior-level representative for sustainability issues. →Refer to “Board of Directors” in the “Corporate governance” section of this report for more information on the CCRC →Refer to the GRI Document 2018 for more information on UBS’s sustainability governance and UBS in society Supporting clients in their sustainability efforts At the heart of our approach to sustainability are both our clients and society at large. We support clients in their sustainability efforts through thought leadership, innovation and partnerships, and strive to incorporate environmental, social and governance (ESG) impacts into the products and services we provide, serving society through them. We know that ESG topics are increasingly important to society and our clients alike. Our research found that 58% of high net worth investors expected sustainable investing to become the standard within 10 years, while 82% believed SI returns would match or surpass those of traditional investments. Moreover, we are among the 2,200 signatories of the Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment. The PRI works to support its signatories in incorporating ESG factors into their investment and ownership decisions. 41 Sustainable investing Sustainable investing (SI) is an approach that seeks to incorporate ESG considerations into investment decisions. SI strategies seek to achieve one or more of the following objectives: achieve a positive environmental or social impact, align investments with an investor’s personal environmental or social values or improve portfolio risk and return characteristics. We aim to be a leader in SI for private and institutional clients, measurable by the size of SI assets under management (AuM). As of 31 December 2018, total SI assets represented USD 1,110 billion (2017: USD 1,133 billion), or 35.8% (2017: 34.7%), of our total invested assets. Our core SI assets increased to USD 313 billion (2017: USD 182 billion), representing 10.1% (2017: 5.6%) of our total invested assets. Core SI products involve a strict and diligent asset selection process through either exclusions (of companies / sectors from the portfolio where the companies are not aligned to an investor’s values) or positive selections (such as best-in-class, thematic or ESG integration and impact investing). →Refer to the ”Our businesses” section of this report for more information on how individual business divisions incorporate sustainability into their approach →Refer to the “Sustainable investments” table in the “Our clients” section of the GRI Document 2018 for more information on SI Philanthropy – partnering with clients for good We believe our clients can make a meaningful, and measurable, difference for their chosen causes with advice from our philanthropy experts and programs carefully selected through our UBS Optimus Foundation. We increase social impact by combining our expertise with capital and networks. Together with the UBS Optimus Foundation, our experts offer clients unique access to social and financial innovation and philanthropic advice, as well as tailored program design, co- funding and co-development opportunities. The UBS Optimus Foundation is an award-winning grant- making foundation that helps our clients use their wealth to drive positive and sustainable social change for children. The Foundation connects clients with inspiring entrepreneurs, new technologies and proven models that make a measureable difference to the world’s most vulnerable children. In 2018, the Foundation’s work helped improve the well-being of 2.8 million children globally. →Refer to www.ubs.com/optimus for more information Climate action We believe the transition to a low-carbon economy is vital and we are focused on supporting our clients in preparing for success in an increasingly carbon-constrained world. We implement our climate strategy in four different ways: – by seeking to protect our assets from climate change risks; – by supporting our clients’ efforts to assess, manage and protect themselves from climate-related risks; – by mobilizing private and institutional capital toward investments that facilitate climate change mitigation and adaptation, and by supporting the transition to a low-carbon economy as a corporate advisor and / or with our lending capacity; and – by continuing to reduce our greenhouse gas emissions and increase the firm’s share in renewable energy. We regularly report on the implementation of our climate strategy and follow the recommendations on climate-related disclosures provided by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). → Refer to “Our climate strategy – taking action to support a low- carbon economy” in the “Our Governance and principles” section of the GRI Document 2018 for our full climate-related disclosures Environmental and social risk We consider environmental and social risk (ESR) management critical to our sustainability strategy. Our comprehensive ESR framework governs client and supplier relationships and applies firm-wide to all activities, meets the highest industry standards (as recognized by ESG ratings) and is integrated in management practices and control principles. We have set ESR standards pertaining to environmental and human rights topics in product development, investments, financing and supply chain management. We have identified certain controversial activities that we will not engage in at all, or only under stringent criteria. As part of this process, we engage with clients and suppliers to better understand their processes and policies, and to explore how any environmental and social risks may be mitigated. →Refer to the GRI Document 2018 for a full description of our ESR management and framework Community investment We recognize that our long-term success depends on the health and prosperity of the communities of which we are a part. We seek to redress disadvantages through long-term investments in education and entrepreneurship. We provide strategic financial commitments and targeted employee volunteering to drive change. →Refer to the “Our communities” section of the GRI Document 2018 for more information Our strategy, business model and environment 42 Our strategy, business model and environment How we create value for our stakeholders Aims and progress We work with a long-term focus on providing appropriate returns to all of our stakeholders in a responsible manner. To underline our commitment, we provide transparent targets and report on progress made against them wherever possible. In 2018, we made good progress in delivering against the Group aims. WWe aim to be OOur progress AA leader in sustainable investing (SI) for private and institutional clients as demonstrated by the size of UBS’s SI AuM, for which UBS has: – set the ambition to double the penetration of core SI assets by the end of 2020, from 5.6% (USD 182 billion) of our total invested assets at the end of 20171; and – set a target of directing USD 5 billion of client assets into new impact investments for the SDGs by the end of 2021. – The penetration of core SI assets increased to 10.1% (USD 313 billion) of our total invested assets in 2018, a 72% increase over 2017 (USD 182 billion).1, 2 – USD 1.9 billion of client assets were directed into SDG-related impact investments3. AA recognized innovator and thought leader in philanthropy as shown by the engagement with our key stakeholders and our work to support positive social impact, for which UBS aims to: – achieve 40% of employees volunteering by the end of 2020, of which 40% of volunteer hours will be skills based; and – pioneer new ways to bring substantial funding to the SDGs and substantially increase donations to the UBS Optimus Foundation to improve the well-being of vulnerable children. – 36% of our global workforce volunteered and 45% of the volunteer hours were skills based.4 – UBS Optimus Foundation: USD 66.6 million in donations raised; USD 81.8 million grants approved; well-being of 2.8 million children globally improved; three Development Impact Bonds in education and health care launched. AAn industry leader in sustainability by retaining favorable positions in key environmental, social and governance (ESG) ratings and driving optimization in areas that are important to ESG investors. – UBS maintained its industry leadership in the Dow Jones Sustainability Indices (DJSI). – MSCI ESG Research upgraded UBS to an AA rating. – Sustainalytics ranked UBS an industry leader. – CDP awarded UBS a position on the Climate A List. 1 Core SI are SI products that involve a strict and diligent asset selection process through either exclusions (of companies/sectors from the portfolio where the companies are not aligned to an investor’s values) or positive selections (such as best-in-class, thematic or ESG integration and impact investing). Refer to the “Sustainable investments” table in the ”Our clients” section of the GRI Document 2018. 2 The increase in core SI assets was mainly driven by the ESG integration strategy of Asset Management. Refer to the “Sustainable investments” table in the “Our clients” section of the GRI Document 2018. 3 Strategies, where the investment has the intention to generate measurable environmental and social impact alongside a financial return. 4 Refer to the “Our communities” section in the GRI Document 2018. 43 1 2 3 4 Regulation and supervision As a financial services provider based in Switzerland, UBS is subject to the consolidated supervision of the Swiss Financial Market Supervisory Authority (FINMA). Our entities are also regulated and supervised by the authorities in each of the countries where they conduct business. Through UBS AG and UBS Switzerland AG, which are licensed as banks in Switzerland, the Group may engage in a full range of financial services activities in Switzerland and abroad, including personal banking, commercial banking, investment banking and asset management. As a global systemically important bank (G-SIB), as designated by the Financial Stability Board, and a systemically relevant bank (SRB) in Switzerland, we are subject to stricter regulatory requirements and supervision than most other Swiss banks. The significant changes to financial regulation after the financial crisis in 2008 have had a material effect on how we conduct our business and have required significant investment. →Refer to the “Our evolution” section of this report for more information →Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information Regulation and supervision in Switzerland Supervision UBS Group AG and its subsidiaries are subject to consolidated supervision by FINMA under the Swiss Federal Law on Banks and Savings Banks (Swiss Banking Act) and related ordinances, which impose, among other requirements, minimum standards for capital, liquidity, risk concentration and internal organization. FINMA fulfills its statutory supervisory responsibilities through licensing, regulation, monitoring and enforcement. It is responsible for prudential supervision and mandates audit firms to perform regulatory audits and other supervisory tasks on its behalf. Capital adequacy and liquidity regulation As an internationally active Swiss SRB, we are subject to capital and total loss-absorbing capacity requirements, which are based on both risk-weighted assets and leverage ratio denominator and are among the most stringent in the world. Furthermore, we are subject to shorter-term liquidity coverage ratio rules, and following the introduction of the net stable funding ratio in Switzerland, we will be subject to longer-term minimum funding requirements. →Refer to the “Capital management” section of this report for more information on the Swiss SRB framework and the Swiss too big to fail requirements →Refer to “Assets and liquidity management” in the “Treasury management” section of this report for more information on liquidity coverage ratio requirements Resolution planning and resolvability The Swiss Banking Act and related ordinances provide FINMA with intervention powers to resolve a failing financial institution, including UBS Group AG, UBS AG and UBS Switzerland AG. These measures may be triggered when thresholds are breached and allow FINMA considerable discretion in determining whether, when or in what manner to exercise such powers. In case of impending insolvency, FINMA may impose more onerous requirements on UBS, including limiting payment of dividends and interest, as well as measures to alter our legal structure (e.g., to separate lines of business into dedicated entities, with limits on our intra-Group funding and intra-Group guarantees) or to reduce business risk in some manner. The Swiss Banking Act allows FINMA to extinguish or convert to common equity the liabilities of the Group in connection with its resolution. Swiss too big to fail provisions require Swiss SRBs to establish an emergency plan that shows how Swiss systemically important functions can be maintained in a crisis. In response to these requirements in Switzerland, and to similar requirements in other jurisdictions, UBS – in close cooperation with its main resolution authorities under the lead of FINMA – has developed recovery plans and resolution strategies to manage a crisis. UBS has also developed plans for restructuring or winding down businesses if the firm could not be stabilized by other means. In recent years, we have invested significantly in making UBS simpler from a structural, financial and operational perspective. Regulation and supervision outside Switzerland Regulation and supervision in the US In the US, UBS is subject to regulation and supervision by the Board of Governors of the Federal Reserve System (Federal Reserve Board) under a number of laws. UBS Group AG and UBS AG are both subject to the Bank Holding Company Act, under which the Federal Reserve Board has supervisory authority over the US operations of both UBS Group AG and UBS AG. UBS’s US operations are also subject to oversight by the Federal Reserve Board’s Large Institution Supervision Coordinating Committee. In addition to being a financial holding company under the Bank Holding Company Act, UBS AG maintains several branches and representative offices in the US, which are authorized and supervised by the Office of the Comptroller of the Currency. UBS AG is registered as a swap dealer with the Commodity Futures Trading Commission (CFTC) and we expect to register as a security-based swap dealer with the Securities and Exchange Commission (SEC) when such registration becomes required.Our strategy, business model and environment 44 Our strategy, business model and environment Regulation and supervision UBS Americas Holding LLC – the intermediate holding company for our non-branch operations in the US, as required under the Dodd-Frank Act – is subject to requirements established by the Federal Reserve Board related to risk-based capital, liquidity, the Comprehensive Capital Analysis and Review stress testing and capital planning process, resolution planning and governance. UBS Bank USA, a Federal Deposit Insurance Corporation- insured depository institution subsidiary, is licensed and regulated by state regulators in Utah. UBS Financial Services Inc., UBS Securities LLC and several other US subsidiaries are subject to regulation by a number of different government agencies and self-regulatory organizations, including the SEC, the Financial Industry Regulatory Authority, the CFTC, the Municipal Securities Rulemaking Board and national securities exchanges, depending on the nature of their business. Regulation and supervision in the UK Our regulated operations in the UK are mainly subject to the authority of the Prudential Regulation Authority (PRA), which is part of the Bank of England, and the Financial Conduct Authority (FCA). We are also subject to the rules of the London Stock Exchange and other securities and commodities exchanges of which UBS AG is a member. UBS AG and UBS Europe SE have UK-registered branches in London. UBS AG London Branch serves as a global booking center for our Investment Bank. In addition, our regulated subsidiaries in the UK that provide asset management services are authorized and regulated mainly by the FCA, with one entity being also subject to the authority of the PRA. Regulation and supervision in Germany With the transfer and merger of certain UBS Limited businesses into UBS’s German-incorporated subsidiary UBS Europe SE, headquartered in Frankfurt, Germany, supervision of UBS Europe SE was transferred from the German Federal Financial Supervisory Authority (BaFin) to the European Central Bank. The entity is subject to EU and German laws and regulation. UBS Europe SE has branches in Austria, Denmark, France, Italy, Luxembourg, the Netherlands, Poland, Spain, Sweden, Switzerland, and the UK, and is subject to conduct supervision by authorities in all these countries. Anti-money laundering and anti-corruption Combating money laundering and terrorist financing has been a major focus of government policies relating to financial institutions in recent years. The US Bank Secrecy Act and other laws and regulations applicable to UBS require the maintenance of effective policies, procedures and controls to detect, prevent and report money laundering and terrorist financing, and to verify the identity of our clients. Failure to maintain and implement adequate programs to prevent money laundering and terrorist financing could result in significant legal and reputation risk. In addition, we are subject to laws and regulations, in jurisdictions in which we operate, prohibiting corrupt or illegal payments to government officials and others, including the US Foreign Corrupt Practices Act and the UK Bribery Act. We maintain policies, procedures and internal controls intended to comply with these regulations. Data protection We are subject to regulations concerning the use and protection of customer, employee, and other personal and confidential information. This includes provisions under Swiss law, the EU General Data Protection Regulation (GDPR) – which provides significant new data protection – and laws of other jurisdictions. If implemented as proposed, we will become subject to the revised Swiss data protection law (Swiss Federal Act on Data Protection), which seeks to improve data protection for individuals by enhancing the transparency and accountability rules for companies processing data, among other measures. This would align Swiss data regulation with revised European legislation, including the GDPR, and is intended to ensure the equivalence necessary for the continued cross-border transmission of data. We expect the revised law to take effect in 2019. →Refer to the “Risk factors” section of this report for more information on regulatory change 45 Regulatory and legal developments Switzerland TBTF framework in Switzerland In November 2018, the Swiss Federal Council adopted a revision of the Capital Adequacy Ordinance (CAO), which features the following elements: (i) gone concern capital requirements for the three Swiss domestic systemically important banks were set at 40% of the going concern capital requirements already in force; (ii) a risk-weighting approach was introduced for the treatment of systemically important banks’ participations in their subsidiaries; and (iii) group entities that provide services necessary for the continuation of a bank’s business processes, including UBS Business Solutions AG, will now be subject to consolidated supervision by the Swiss Financial Market Supervisory Authority (FINMA). The Federal Council is expected to initiate a separate consultation in the first half of 2019 regarding potential revisions to the gone concern capital requirements at legal entity level for the two Swiss global systemically important banks, including UBS. Separately, in December 2018, the Swiss Parliament approved changes to the tax treatment of too big to fail (TBTF) instruments issued by the holding companies of Swiss systemically important banks. The new law aims to eliminate the additional tax burden imposed on systemically important banks as a result of required issuances of TBTF instruments at the holding company level. In March 2019, the Federal Council determined that the rule would enter into force retroactively as of 1 January 2019. Going forward, we will issue new loss- absorbing additional tier 1 capital instruments and total loss- absorbing capacity (TLAC)-eligible senior unsecured debt directly out of UBS Group AG. We also expect UBS Group AG to assume outstanding capital and debt instruments that were previously issued by UBS Group Funding (Switzerland) AG as a means of managing the aforementioned tax burden. Consultation on ordinance specifying FinSA In October 2018, the Swiss government initiated a consultation on, among other items, the proposed Financial Services Ordinance (FinSO), which would specify the details of the Financial Services Act (FinSA). The act will come into force on 1 January 2020, as would the ordinances. FinSO, together with FinSA and the Financial Institutions Act (FinIA), would introduce new investor protection rules, including significantly enhanced information and documentation requirements. We have begun preparing for implementation of the new rules. EU equivalence for Swiss trading venues In December 2018, the European Commission (EC) extended its equivalence decision for Swiss trading venues by six months, until the end of June 2019. The EC has stated that any further extension of its equivalence decision will be contingent upon the Federal Council’s endorsement of a framework agreement. If the EC does not extend recognition of Switzerland’s trading venues beyond June 2019, the Swiss contingency measure, which was adopted by the Swiss Federal Council in November 2018, would come into effect. The measure would introduce a new Swiss standard recognizing non-EU foreign trading venues that admit Swiss shares to trading, but disallowing trading in Swiss shares on EU trading venues. We would then be required to significantly alter our trading arrangements, for which UBS has taken the appropriate preparations. We expect that EU trading venues would comply with the Swiss measure, resulting in a shift of liquidity in shares issued in Switzerland from EU trading venues to Swiss trading venues. Automatic exchange of information In September 2018, as a consequence of the automatic exchange of information (AEI) introduced in Switzerland as of 1 January 2017, financial data was exchanged for the first time with the first 36 partner states to have signed an agreement for information exchange. On 1 January 2018, an additional 41 countries were added to Switzerland’s network of AEI partner states. Financial data is expected to be exchanged with them for the first time in 2019. Before the first transmission, these jurisdictions will be subject to a mandatory review by the Federal Council to ensure compliance with data exchange requirements. On 1 January 2019, the Swiss Parliament approved the introduction of the AEI with another 89 partner states, out of a total of 107 states that have committed to implementing the AEI. In December 2018, the Swiss government launched a consultation on AEI implementation with the remaining 18 partner states. We have experienced outflows of cross-border client assets in connection with the AEI, as well as with other changes in tax regimes or their enforcement.Our strategy, business model and environment 46 Our strategy, business model and environment Regulatory and legal developments Adoption of Swiss corporate tax reform In September 2018, the Swiss Parliament adopted corporate tax reform measures, previously known as Tax Proposal 17, that abolish preferential corporate tax treatment for holding companies and introduce a series of tax measures aligned to the Organisation for Economic Co-operation and Development (OECD) standards to maintain Switzerland’s competitiveness as a business location. The measures include an optional relief on capital tax that compensates for the proposed elimination of the current preferential holding company capital tax rate. In addition, the cantonal share of direct federal tax revenue would increase, giving the cantons leeway to reduce their cantonal corporate income tax rate. The popular vote will take place on 19 May 2019 and, if the vote is successful, the reform will enter into force on 1 January 2020. The changes would increase our tax liability in Switzerland by a modest amount, which we expect to be largely offset by the changes in cantonal tax rates, if enacted. Revision of AML regulation in Switzerland In June 2018, the Swiss Federal Council initiated a consultation on amendments to the Anti-Money Laundering Act, aiming to implement the recommendations from the Financial Action Task Force’s Mutual Evaluation Report of Switzerland. The consultation proposes changes to enhance due diligence obligations for certain services, beneficial owner verification, and monitoring and reporting of suspicious activities. Implementation of these amendments may require changes to our client onboarding and ongoing compliance processes and may lead to increased costs. The precise effect on UBS depends on the final law, which is subject to parliamentary debate. Developments related to cyber resilience in the financial system In April 2018, the Swiss Federal Council adopted the national strategy for Switzerland’s protection against cyber risks for 2018-2022. The financial sector is deemed a critical infrastructure and will be required to implement measures to strengthen its resilience in terms of cybersecurity and further enhance its cooperation with relevant public-sector bodies as a result of the national strategy. Also in April 2018, the European Central Bank (ECB) consulted on its cyber resilience oversight expectations for financial market infrastructures (FMIs) and banks, based on global guidance by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions, aiming to address fragmentation of approaches, but stop short of imposing a single set of standards. In December 2018, the ECB finalized the FMI cyber resilience oversight expectations, thus providing FMIs with detailed steps on how to operationalize the guidance and reflecting the feedback from the consultation, in particular on the need for harmonization across different jurisdictions and among regulators to reduce the current fragmentation. In November 2018, the Financial Stability Board (FSB) finalized its Cyber Lexicon, which comprises a set of approximately 50 core terms related to cybersecurity and cyber resilience in the financial sector. The lexicon is intended to support the work of the FSB, standard-setting bodies, authorities and private-sector participants. In addition, in July 2018, the UK Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) published a joint discussion paper on an approach to improve the operational resilience of FMIs. Among other things, the paper envisages that boards and senior management can achieve better standards of operational resilience through increased focus on setting, monitoring and testing specific impact tolerances for key business services. Separately, the Basel Committee on Banking Supervision (BCBS) confirmed in its June 2018 update on the 2018–2019 work program that cyber risk and operational resilience remain priorities. 47 International NSFR implementation In November 2018, the Swiss Federal Council announced that it would consider finalization of the net stable funding ratio (NSFR) requirement at the end of 2019. The NSFR requirement, as originally proposed in 2017, could result in a significant increase in long-term funding requirements on a legal entity level. In the EU, the political agreement on the Risk Reduction Measures package implies implementation of the NSFR in the first half of 2021. This is expected to apply at both consolidated and legal entity level, with the possibility for cross-border waivers at the legal entity level. There will be a four-year transitional period during which certain derivatives, repurchase and reverse repurchase agreements will receive lower required stable funding factors. UBS’s EU entities are expected to be within the scope of the NSFR requirements, although at Group consolidated level UBS will be subject to the Swiss NSFR requirements, once implemented. In the United States, the US Department of Treasury in its June 2017 Core Principles report recommended delaying the implementation of the NSFR until it can be appropriately calibrated and assessed. While the proposal has been outstanding for over two years, representatives of the US banking agencies have not indicated how this will be achieved, though comments provided earlier in 2018 indicated that the proposal was near finalization. While recent tailoring of prudential standards has indicated which US bank holding companies would be subject to the final rule, including a modified approach, it has not been clarified for US-based intermediate holding companies of foreign banks. Any difference between the US implementation and that applied by other jurisdictions could present competitive challenges for non- US banking organizations. →Refer to “Liabilities and funding management” in the “Treasury management” section of this report for more information on the NSFR Adjustments to the market risk framework In January 2019, the Basel Committee published final revisions of the market risk framework, which followed its fundamental review of the trading book and will serve as the Pillar 1 minimum capital requirement as of 1 January 2022. The revisions include adjustments to the risk sensitivity of the standardized approach and clarifications on the scope of application, amendments to the risk sensitivity of the standardized approach and to the internal models approach, in particular to the profit and loss attribution test and the non- modelable risk factors. We are currently assessing any potential effect on UBS. Pillar 3 disclosure requirements revised In December 2018, the BCBS published its updated Pillar 3 disclosure requirements, completing revisions to the disclosure framework started earlier. In particular, the revision reflects the final Basel III standards issued in December 2017. In addition, the updated framework sets out new disclosure requirements on asset encumbrance and, if required by national supervisors at the jurisdictional level, on capital distribution constraints. The implementation deadline for the disclosure requirements related to Basel III is 1 January 2022. The effective date for the disclosure requirements for asset encumbrance, capital distribution constraints and the prudential treatment of problem assets is the end of 2020. Basel Committee developments on the leverage ratio The BCBS consulted on a targeted and limited revision of the leverage ratio’s treatment of client-cleared derivatives, outlining three options, two of which would recognize initial margin offset and could lead to a reduction of the Group leverage ratio denominator compared with Basel III requirements. The BCBS is also consulting on additional leverage ratio disclosure requirements to address leverage ratio window-dressing concerns, with proposed implementation no later than 1 January 2022. EU Risk Reduction Measures package The EU institutions reached political agreement on the Risk Reduction Measure legislative package, which will incorporate a number of Basel III reforms as well as the FSB TLAC standard into EU law. The agreement remains subject to final technical adjustments. The package includes an internal TLAC requirement calibrated at 90% of the full Pillar 1 level for material subsidiaries of non- EU global systemically important banks. UBS Europe SE is likely to fall within this definition and is therefore expected to attract an internal TLAC requirement. The measures also include a requirement for third-country banking groups with more than EUR 40 billion of assets to establish an intermediate EU parent undertaking (IPU). This will be subject to a three-year implementation period. We therefore expect implementation to be required by the first half of 2024. UBS expects to be within the scope of this requirement and to implement the necessary measures to comply with it. The European Commission (EC) is expected to introduce new legislation by mid-2020 to turn these reporting requirements into binding capital requirements following finalization of the market risk standard. We therefore expect the EU to introduce binding capital requirements later than the effective date of the revised Basel III standards. Finally, the measures introduce a new two-business-day pre- resolution moratorium tool, in addition to the existing tool established in the EU Bank Recovery and Resolution Directive. However, the rules as proposed will not permit the two tools to be used in combination, meaning the maximum length of a stay will remain two business days. While a pre-resolution tool diverges from international standards, the retention of the two- business-day maximum limits the effect of this change. The legislative package is expected to receive final approval in the second quarter of 2019, with the majority of the measures being phased in from the first half of 2021.Our strategy, business model and environment 48 Our strategy, business model and environment Regulatory and legal developments Developments related to EU cross-border business We expect finalization of the EU Investment Firm Review (IFR) during the first half of 2019. In addition to amending EU prudential rules for investment firms, the IFR is expected to update the Markets in Financial Instruments Directive II (MiFID II) equivalence framework. The final rules, once agreed, are likely to introduce further reporting obligations for third-country headquartered firms such as UBS on services provided within the EU alongside a more granular focus on the equivalence of third- country rules by EU regulators. Depending on final legislative discussions, it is possible that further restrictions on cross-border market access may be introduced. We are monitoring these developments closely to determine potential effects on our business activities. We also expect finalization of revisions to the European Market Infrastructure Regulation in the first half of 2019, which would allow the EU to derecognize systemic third-country central clearing counterparties (CCPs) under certain conditions. Our EU-based entities, principally UBS Europe SE, can only hold exposures against those third-country CCPs that are recognized by the EU. While the EU is putting in place arrangements to ensure that, in the event of a no-deal Brexit, EU firms can continue to access UK CCPs for one year, we have developed contingency plans to ensure continuity of service for our EU clients should these arrangements lapse after 12 months. UK withdrawal from the EU We continue to prepare for the UK withdrawal from the EU in the expectation that the UK will leave the EU on 29 March 2019. Our plans are intended to ensure that we can continue to serve our clients in any scenario (including a scenario in which the UK leaves the EU without a binding withdrawal agreement). As the effective date of the UK’s withdrawal approaches, and given the political challenges of the UK ratification process, it appears increasingly likely that any transition arrangements may be significantly limited in scope, since the withdrawal agreement may only be agreed close to the exit date, if at all. Equally, it remains possible that the exit date may change. On 1 March 2019, the previously announced combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE took place. Former clients and other counterparties of UBS Limited who can be serviced by UBS AG’s London Branch were migrated to UBS AG’s London Branch prior to the merger. As a result of this action, we expect no material effect on our ability to serve our clients as a result of the UK’s withdrawal from the EU. The EC has adopted an equivalence decision that permits the European Securities and Markets Authority (ESMA) to recognize UK-authorized CCPs such that they may continue to provide clearing services in the EU for one year in a no-deal scenario, effective from 30 March 2019. ESMA has announced that it aims to adopt the recognition decisions ahead of 29 March 2019. Once in place, these decisions would allow us to maintain derivatives exposures to UK CCPs in UBS Europe SE after the UK’s withdrawal from the EU. Developments related to the transition away from IBOR The Swiss National Working Group on Swiss Franc Reference Rates (NWG) suggested a fallback clause (defining how the client interest rate is calculated under Swiss law in case the London Interbank Offered Rate (LIBOR) is discontinued permanently), to be used in retail and corporate loans. As of 1 November 2018, all of our new three-year LIBOR mortgages include a fallback clause. Regarding term rate, the Swiss NWG recommends using a compounded Swiss average rate overnight (SARON), wherever possible. In December 2018, FINMA issued guidance on risks related to a potential replacement of the interbank offered rates (IBORs), outlining legal and valuation risks as well as risks related to operational readiness for supervised institutions. In response to a request from UK regulators PRA and FCA in September 2018, we submitted a board-approved summary of our assessment of key risks relating to IBOR discontinuation and details of actions to mitigate those risks. We have a substantial number of contracts linked to IBORs. The new risk-free alternative reference rates do not currently provide a term structure and will therefore require a change in the contractual terms of products currently indexed on terms other than overnight. We have established a cross-divisional, cross-regional governance structure and change program to address the scale and complexity of the transition. EU Sustainable Finance Action Plan In March 2018, the EC launched a Sustainable Finance Action Plan as the basis for a “greener” financial system in the form of 10 action points. In May 2018, the EC adopted the first set of measures implementing several key points announced in its action plan. This included a proposal for a taxonomy on sustainable finance, which introduces disclosure obligations on how institutional investors and asset managers integrate environmental, social and governance (ESG) factors in their risk processes, and a proposal to create a new category of benchmarks comprising low carbon and positive carbon impact benchmarks, which would provide investors with better information on the carbon footprint of their investments. Other initiatives include seeking feedback on inclusions of ESG considerations into the advice that investment firms and insurance distributors offer to individual clients. We are committed to creating long-term positive effects for our clients, employees, investors and society. In 2015, we established a cross-divisional organization, UBS in society, to help drive capital toward investments that support the achievement of the Sustainable Development Goals and the transition to a low-carbon economy. →Refer to “Society” in the “How we create value for our stakeholders” section of this report for more information on UBS in society 49 USA Proposed BEAT regulations issued In December 2018, the US Department of Treasury issued proposed regulations in connection with the base erosion and anti-abuse tax (BEAT), which was introduced into law as part of the Tax Cuts and Jobs Act in December 2017. BEAT is calculated on the basis of modified taxable income that includes an add back of otherwise tax-deductible payments made by a US taxpayer to non-US-related parties. BEAT applies in a given year to the extent that it is higher than the regular federal corporate tax for that same year. The proposed regulations clarify that payments made by a US entity to a non-US-related party are not subject to BEAT, provided the income from such payments is either taxable in the hands of the non-US-related party as US effectively connected income or the payment relates to the US minimum mandatory amount of TLAC instruments. Consistent with our previous guidance, and taking the proposed regulations into account, we do not expect to incur material BEAT expenses for the foreseeable future. US Fed on tailoring of enhanced prudential standards With the passage of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA) in May 2018, the US banking agencies were required to implement a series of reforms relative to Section 165 of the Dodd-Frank Act that most notably dealt with resolution planning and enhanced prudential standards. While EGRRCPA was targeted at US bank holding companies and their subsidiary banks, the US regulators have begun efforts that may extend similar reforms to foreign banks’ intermediate holding companies operating in the US. Of these reforms, the tailoring of enhanced prudential standards is the more important aspect. Such tailoring is expected to better align regulatory requirements such as capital and liquidity risk management and stress testing processes with the risk profile of our US-based activities, and would permit a more efficient allocation of capital and funding resources to our US operations. Proposal to introduce stress capital buffer In April 2018, the Federal Reserve Board issued a proposal to introduce a bank-specific stress capital buffer (SCB), which would replace the existing capital conservation buffer of 2.5% applicable to firms subject to the Comprehensive Capital Analysis and Review (CCAR) and would be applied to a firm’s common equity tier 1 (CET1) and tier 1 leverage ratios based on the higher of 2.5% or the difference between the starting and minimum projected capital ratio levels over the nine-quarter projection period using the Federal Reserve Board’s severely adverse scenario. Additionally, the Federal Reserve Board would no longer separately make quantitative objections to a covered firm’s capital plans. While Federal Reserve Board principals have publicly expressed views that certain elements of the proposal would be delayed, the Federal Reserve Board has not re-issued a formal communication expressing such. Absent any further clarification on the proposal and planned tailoring of prudential standards for foreign banks, we expect UBS Americas Holding LLC, our US intermediate holding company, to be subject to the SCB and to remain a covered firm under the Federal Reserve Board’s CCAR program. Duties to customers in the US In April 2018, the US Securities and Exchange Commission (SEC) proposed a new regulation and interpretation intended to enhance and clarify the duties of brokers and investment advisors to retail customers. The proposals would require broker- dealers and investment advisors to provide a new relationship summary to customers describing the relationship with the customers, the services offered, standards of conduct, fees and costs, conflicts of interest and disciplinary information. The new regulation would apply to broker-dealers and would require they act in a customer’s best interest when making an investment or investment strategy recommendation to a retail investor. The proposed interpretation clarifies certain obligations of investment advisors relating to acting in the best interest of clients, obtaining best execution of transactions, providing ongoing advice and monitoring, and disclosing and mitigating conflicts of interest. The proposed requirements, if adopted, would apply to a large portion of Global Wealth Management’s businesses in the US. The proposals overlap with the US Department of Labor’s (DOL) fiduciary rule, which would have applied to retirement accounts, and would have been phased in through 2019. The DOL fiduciary rule was invalidated by a US court of appeals in March 2018. Single-counterparty credit limits In June 2018, the Federal Reserve Board finalized the single- counterparty credit limit (SCCL) rule to mitigate the concentrations of risk between large banking organizations and their counterparties from undermining financial stability. The rule will become effective in 2020. Under the rule, foreign banks with US banking operations and USD 250 billion or more in total global assets would be subject to the SCCL framework relative to their combined US operations and their intermediate holding companies (IHC) greater than USD 50 billion. With respect to UBS’s combined US operations, the rule allows for compliance with the SCCL rule with respect to its combined US operations by certifying to the Federal Reserve Board that it complies with a comparable home country regime, which for UBS would be the FINMA Circular “Risk diversification – banks,” which entered into force on 1 January 2019. For its IHC, UBS would be subject to a limit of aggregate net credit exposure to a counterparty of 25% of the IHC’s total regulatory capital plus the balance of its loan loss reserves not included in tier 2 capital. The IHC currently does not have any counterparty exposures that would exceed the required threshold. Our strategy, business model and environment 50 Our strategy, business model and environment Risk factors Risk factors Certain risks, including those described below, may affect our ability to execute our strategy or our business activities, financial condition, results of operations and prospects. We are inherently exposed to multiple risks, many of which may become apparent only with the benefit of hindsight. As a result, risks that we do not consider to be material or of which we are not currently aware could also adversely affect us. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the potential magnitude of their consequences. Market and macroeconomic risks Performance in the financial services industry is affected by market conditions and the macroeconomic climate Our businesses are materially affected by market and macroeconomic conditions. Adverse changes in interest rates, credit spreads, securities prices, market volatility and liquidity, foreign exchange rates, commodity prices, and other market fluctuations, as well as changes in investor sentiment, can affect our earnings and ultimately our financial and capital positions. A market downturn and weak macroeconomic conditions can be precipitated by a number of factors, including geopolitical events, changes in monetary or fiscal policy, trade imbalances, natural disasters, pandemics, civil unrest, acts of violence, war or terrorism. Macroeconomic and political developments can have unpredictable and destabilizing effects and, because financial markets are global and highly interconnected, even local and regional events can have widespread effects well beyond the countries in which they occur. Moreover, if individual countries impose restrictions on cross-border payments or other exchange or capital controls, or change their currency (for example, if one or more countries should leave the eurozone), we could suffer losses from enforced default by counterparties, be unable to access our own assets, or be unable to effectively manage our risks. We could be materially affected if a crisis develops, regionally or globally, as a result of disruptions in markets as a result of macroeconomic or political developments, or as a result of the failure of a major market participant. Over time, our strategic plans have become more heavily dependent on our ability to generate growth and revenue in emerging markets, including China, causing us to be more exposed to the risks associated with such markets. We have material exposures to a number of markets, and our businesses have regional exposures and concentrations that differ from certain of our peers. Global Wealth Management derives revenues from all the principal regions, but has a greater concentration in Asia than many peers and a substantial presence in the US, unlike many European peers. The Investment Bank’s Equities business is more heavily weighted to Europe and Asia than our peers, and within this business its derivatives business is more heavily weighted to structured products for wealth management clients, in particular with European and Asian underlyings. Our performance may therefore be more affected by political, economic and market developments in these regions and businesses than some other financial service providers. A decrease in business and client activity and market volumes, for example, as a result of significant market volatility, adversely affects transaction fees, commissions and margins, particularly in Global Wealth Management and the Investment Bank, as we experienced in the fourth quarter of 2018 and in 2016. A market downturn is likely to reduce the volume and valuations of assets that we manage on behalf of clients, which would reduce recurring fee income that is charged based on invested asset and performance-based fees in Asset Management. Such a downturn may also cause a decline in the value of assets that we own and account for as investments or trading positions. On the other hand, reduced market liquidity or volatility may limit trading opportunities and may therefore reduce transaction- based fees and may also impede our ability to manage risks. In addition, the implementation of the expected credit loss (ECL) regime, as required by IFRS 9, is intended to result in fewer pro-cyclical charges for credit impairment by ensuring that impairment charges would be recognized earlier through anticipating a downturn using appropriate forward-looking measures and, conversely, an expected positive development once the trough of a downturn has been reached. There is a material risk that these expectations will not materialize, and that ECL under IFRS 9 will prove to be pro-cyclical. Provision requirements under IFRS 9 may in practice increase rapidly at the onset of an economic downturn as a result of higher levels of credit impairment (stage 3) as well as higher ECL from stages 1 and 2, only gradually diminishing once the economic outlook improves. Substantial increases in ECL could exceed expected loss for regulatory capital purposes and adversely affect our common equity tier 1 (CET1) capital and regulatory capital ratios. The effect of pro-cyclical ECL requirements will be assessed in our stress testing outputs. 51 We are exposed to the credit risk of our clients, trading counterparties and other financial institutions Credit risk is an integral part of many of our activities, including lending, underwriting and derivatives activities. Failure to properly assess and manage credit risk or adverse economic or market conditions may lead to impairments and defaults on credit exposures. Losses may be exacerbated by declines in the value of collateral securing loans and other exposures. In our prime brokerage, securities finance and Lombard lending businesses we extend substantial amounts of credit against securities collateral, the value or liquidity of which may decline rapidly. Our Swiss mortgage and corporate lending portfolios are a large part of our overall lending. We are therefore exposed to the risk of adverse economic developments in Switzerland, including the strength of the Swiss franc and its effect on Swiss exports, prevailing negative interest rates by the Swiss National Bank, economic conditions within the eurozone or the EU, and the evolution of agreements between Switzerland and the EU and European Economic Area, which represent Switzerland’s largest export market. The aforementioned developments have in the past affected, and going forward could materially affect, our overall financial performance and the financial performance of our individual businesses. Market conditions and fluctuations may have a detrimental effect on our profitability, capital strength, liquidity and funding position Low and negative interest rates in Switzerland and the eurozone have negatively affected our net interest income A continuing low or negative interest rate environment may further erode interest margins and adversely affect the net interest income generated by the Personal & Corporate Banking and Global Wealth Management businesses. Our performance is also affected by the cost of maintaining the high-quality liquid assets required to cover regulatory outflow assumptions embedded in the liquidity coverage ratio. The Swiss National Bank permits Swiss banks to make deposits up to a threshold at zero interest. Any reduction in or limitations on the use of this exemption from the otherwise applicable negative interest rates could exacerbate the effect of negative interest rates in Switzerland. Low and negative interest rates may also affect customer behavior and hence our overall balance sheet structure. Mitigating actions that we have taken, or may take in the future, such as the introduction of selective deposit fees or minimum lending rates, have resulted and may further result in the loss of customer deposits (a key source of funding for us), net new money outflows and a declining market share in our Swiss lending business. Our shareholders’ equity and capital are also affected by changes in interest rates. In particular, the calculation of our Swiss pension plan’s net defined benefit assets and liabilities is sensitive to the discount rate applied and to fluctuations in the value of pension plan assets. Any further reduction in interest rates may lower the discount rates and result in pension plan deficits as a result of the long duration of corresponding liabilities. This could lead to a corresponding reduction in our equity and common equity tier 1 capital. Currency fluctuation We are subject to currency fluctuation risks. Effective 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland has changed from Swiss francs to US dollars and the functional currency of UBS AG’s London Branch operations has changed from British pounds to US dollars. In line with these changes, we have changed the presentation currency of UBS Group AG’s and UBS AG’s consolidated financial statements from Swiss francs to US dollars effective from our fourth quarter 2018 reporting. Although this change reduces our exposure to currency fluctuation risks against Swiss francs, a substantial portion of our assets and liabilities are denominated in currencies other than the US dollar. Accordingly, changes in foreign exchange rates may continue to adversely affect our profits, balance sheet and capital leverage and liquidity coverage ratios. In order to hedge our CET1 capital ratio, our CET1 capital must have foreign currency exposure, which leads to currency sensitivity. As a consequence, it is not possible to simultaneously fully hedge both the amount of capital and the capital ratio. Our change to the US dollar as our presentation currency has reduced, but not eliminated the exposure of our CET1 capital and capital ratios to currency fluctuations. Regulatory and legal risks Substantial changes in the regulation may adversely affect our businesses and our ability to execute our strategic plans Fundamental changes in the laws and regulations affecting financial institutions can have a material and adverse effect on our business. Following the 2007–2009 financial crisis, regulators and legislators have adopted a wide range of changes to the laws, regulations and supervisory frameworks applicable to banks. The changes are intended to address the perceived causes of the crisis and to limit the systemic risks posed by major financial institutions. They have caused us to make significant changes in our businesses, strategy and legal structure. We have moved significant operations into subsidiaries to improve resolvability and meet other regulatory requirements, and this has resulted in substantial implementation costs, increased our capital and funding costs and reduced operational flexibility. Although many of the regulatory changes have been completed, some continue to be phased in over time or require further rulemaking or guidance for implementation, and other changes are still under consideration. Our strategy, business model and environment 52 Our strategy, business model and environment Risk factors Notwithstanding attempts by regulators to align their efforts, the measures adopted or proposed differ significantly across the major jurisdictions, making it increasingly difficult to manage a global institution. Swiss regulatory changes with regard to such matters as capital and liquidity have often proceeded more quickly than those in other major jurisdictions, and Switzerland’s requirements for major international banks are among the strictest of the major financial centers. This could put Swiss banks such as UBS at a disadvantage when competing with peer financial institutions subject to more lenient regulation or with unregulated non-bank competitors. Banking structure and activity limitations: We have made significant changes to our legal and operational structure to meet legal and regulatory requirements and expectations. For example, we have transferred all of our US subsidiaries under a US intermediate holding company to meet US regulatory requirements, and have transferred substantially all the operations of Personal & Corporate Banking and Global Wealth Management booked in Switzerland to UBS Switzerland AG, to improve resolvability. These changes, particularly the transfer of operations to subsidiaries, require significant time and resources to implement, and create operational, capital, liquidity, funding and tax inefficiencies. In addition, they may increase our aggregate credit exposure to counterparties as they transact with multiple entities within the Group. Further, our operations in subsidiaries are subject to local capital, liquidity, stable funding, capital planning and stress testing requirements. These requirements have resulted in increased capital and liquidity requirements in affected subsidiaries, which limit our operational flexibility and negatively affects our ability to benefit from synergies between business units and to distribute earnings to the Group. We have incurred substantial costs in implementing a compliance and monitoring framework in connection with the Volcker Rule under the Dodd-Frank Act and have modified our business activities both inside and outside the US to conform to the Volcker Rule’s activity limitations. We may incur additional costs in the short term if aspects of the Volcker Rule are modified in ways that would require changes to the operation of our Volcker compliance program, even if those changes may reduce the long-term burden on our operations. We may also become subject to other similar regulations substantively limiting the types of activities in which we may engage or the way we conduct our operations. Higher capital and total loss-absorbing capacity requirements increase our costs: As an internationally active Swiss systemically relevant bank (SRB), we are subject to capital and total loss- absorbing capacity (TLAC) requirements that are among the most stringent in the world. We expect our risk-weighted assets (RWA) to increase in 2019 as a result of changes in methodology and add-ons in the calculation of RWA, as well as implementation of new accounting standards. Changes to international capital standards for banks recently adopted by the Basel Committee on Banking Supervision are expected to further increase our RWA when the standards are scheduled to become effective in 2022. Resolvability and resolution and recovery planning: Under the Swiss too big to fail (TBTF) framework, we are required to put in place viable emergency plans to preserve the operation of systemically important functions in the event of a failure. Moreover, under this framework and similar regulations in the US, the UK, the EU and other jurisdictions in which we operate, we are required to prepare credible recovery and resolution plans detailing the measures that would be taken to recover in the event of a significant adverse event or to wind down the Group or the operations in a host country through resolution or insolvency proceedings. If a recovery or resolution plan we produce is determined by the relevant authority to be inadequate or not credible, relevant regulation may permit the authority to place limitations on the scope or size of our business in that jurisdiction, or oblige us to hold higher amounts of capital or liquidity or to change our legal structure or business in order to remove the relevant impediments to resolution. The Swiss Banking Act and implementing ordinances provide the Swiss Financial Market Supervisory Authority (FINMA) with significant powers to intervene in order to prevent a failure of, or to resolve, a failing financial institution. FINMA has considerable discretion in determining whether, when, or in what manner to exercise such powers. In case of a threatened insolvency, FINMA may impose more onerous requirements on us, including restrictions on the payment of dividends and interest. FINMA could also directly or indirectly require us, for example, to alter our legal structure, including by separating lines of business into dedicated entities, with limitations on intra- Group funding and certain guarantees, or to further reduce business risk levels in some manner. FINMA also has the ability to write down or convert into common equity the capital instruments and other liabilities of UBS Group AG, UBS AG and UBS Switzerland AG in connection with a resolution. Substantial changes in market regulation have affected and will continue to affect how we conduct our business: The revised Markets in Financial Instruments Directive (MiFID II) became effective in 2018. MiFID II, among other things, introduces substantial new regulation of exchanges and trading venues, including new pre-trade and post-trade transparency requirements, a ban on the practice of using commissions on transactions to compensate for research services and substantial new conduct requirements for financial services firms when dealing with clients. Implementation by the G20 countries of the commitment to require all standardized over-the-counter (OTC) derivative contracts to be traded on exchanges or trading facilities and cleared through central counterparties has had and will continue to have a significant effect on our OTC derivatives business, which is conducted primarily in the Investment Bank. These market changes are likely to reduce the revenue potential of certain lines of business for market participants generally, including UBS. For example, the changes introduced by MiFID II appear to have reduced commission rates and trading margins; these reductions may not be fully offset by charges for research services. Also, these changes may have a material effect on the market infrastructure that we use and the way we interact with clients, and may result in additional material implementation costs. 53 Some of the regulations applicable to UBS AG as a registered swap dealer with the Commodity Futures Trading Commission (CFTC) in the US, and certain regulations that will be applicable when UBS AG registers as a security-based swap dealer with the US Securities and Exchange Commission (SEC), apply to UBS AG globally, including those relating to swap data reporting, record- keeping, compliance and supervision. As a result, in some cases US rules duplicate or may conflict with legal requirements applicable to us elsewhere, including in Switzerland, and may place us at a competitive disadvantage to firms that are not required to register in the US with the SEC or CFTC. In many instances, we provide services on a cross-border basis, and we are therefore sensitive to barriers restricting market access for third-country firms. In particular, efforts in the EU to harmonize the regime for third-country firms to access the European market may have the effect of creating new barriers that adversely affect our ability to conduct business in these jurisdictions from Switzerland. In addition, a number of jurisdictions are increasingly regulating cross-border activities based on determinations of equivalence of home country regulation, substituted compliance or similar principles of comity. A negative determination could limit our access to the market in those jurisdictions and may negatively influence our ability to act as a global firm. For example, the EU has provided only a temporary equivalence determination for Swiss exchanges, which has caused Switzerland to adopt regulations that may result in limitations on trading Swiss listed securities on EU markets. In addition, as such determinations are typically applied on a jurisdictional level rather than on an entity level, we will generally need to rely on jurisdictions’ willingness to collaborate. Material legal and regulatory risks arise in the conduct of our business As a global financial services firm operating in more than 50 countries, we are subject to many different legal, tax and regulatory regimes, including extensive regulatory oversight, and exposed to significant liability risk. We are subject to a large number of claims, disputes, legal proceedings and government investigations, and we expect that our ongoing business activities will continue to give rise to such matters in the future. The extent of our financial exposure to these and other matters is material and could substantially exceed the level of provisions that we have established. We are not able to predict the financial and non-financial consequences these matters may have when resolved. We may be subject to adverse preliminary determinations or court decisions that may negatively affect public perception and our reputation, result in prudential actions from regulators, and cause us to record additional provisions for the matter even when we believe we have substantial defenses and expect to ultimately achieve a more favorable outcome. This risk is illustrated by the award of aggregate penalties and damages of EUR 4.5 billion by the court in France. Resolution of regulatory proceedings may require us to obtain waivers of regulatory disqualifications to maintain certain operations; may entitle regulatory authorities to limit, suspend or terminate licenses and regulatory authorizations; and may permit financial market utilities to limit, suspend or terminate our participation in them. Failure to obtain such waivers, or any limitation, suspension or termination of licenses, authorizations or participations, could have material adverse consequences for us. Our settlements with governmental authorities in connection with foreign exchange, London Interbank Offered Rates (LIBOR) and other benchmark interest rates starkly illustrate the significantly increased level of financial and reputational risk now associated with regulatory matters in major jurisdictions. In connection with investigations related to LIBOR and other benchmark rates and to foreign exchange and precious metals, very large fines and disgorgement amounts were assessed against us, and we were required to enter guilty pleas despite our full cooperation with the authorities in the investigations, and despite our receipt of conditional leniency or conditional immunity from antitrust authorities in a number of jurisdictions, including the US and Switzerland. Ever since our material losses arising from the 2007–2009 financial crisis, we have been subject to a very high level of regulatory scrutiny and to certain regulatory measures that constrain our strategic flexibility. While we believe we have remediated the deficiencies that led to those losses as well as to the unauthorized trading incident announced in September 2011, the effects on our reputation, as well as on relationships with regulatory authorities of the LIBOR-related settlements of 2012 and settlements with some regulators of matters related to our foreign exchange and precious metals business, have resulted in continued scrutiny. We are also subject to significant new regulatory requirements, including recovery and resolution planning, US enhanced prudential standards and Comprehensive Capital Analysis and Review. Our implementation of additional regulatory requirements and changes in supervisory standards, as well as our compliance with existing laws and regulations, continue to receive heightened scrutiny from supervisors. If we do not meet supervisory expectations in relation to these or other matters, or if additional supervisory or regulatory issues arise, we would likely be subject to further regulatory scrutiny as well as measures that might further constrain our strategic flexibility. We are in active dialog with regulators concerning the actions we are taking to improve our operational risk management, control, anti-money laundering, data management and other frameworks, and otherwise seek to meet supervisory expectations, but there can be no assurance that our efforts will have the desired effects. As a result of this history, our level of risk with respect to regulatory enforcement may be greater than that of some of our peers. Our strategy, business model and environment 54 Our strategy, business model and environment Risk factors The effect of taxes on our financial results is significantly influenced by tax law changes and reassessments of our deferred tax assets Our effective tax rate is highly sensitive to our performance, our expectation of future profitability and statutory tax rates. Based on prior years’ tax losses, we have recognized deferred tax assets (DTAs) reflecting the probable recoverable level based on future taxable profit as informed by our business plans. If our performance is expected to produce diminished taxable profit in future years, particularly in the US, we may be required to write down all or a portion of the currently recognized DTAs through the income statement in excess of anticipated amortization. This would have the effect of increasing our effective tax rate in the year in which any write-downs are taken. Conversely, if we expect the performance of entities in which we have unrecognized tax losses to improve, particularly in the US or the UK, we could potentially recognize additional DTAs. The effect of doing so would be to reduce our effective tax rate in years in which additional DTAs are recognized and to increase our effective tax rate in future years. Our effective tax rate is also sensitive to any future reductions in statutory tax rates, particularly in the US and Switzerland, which would cause the expected future tax benefit from items such as tax loss carry- forwards in the affected locations to diminish in value. This in turn would cause a write-down of the associated DTAs. For example, the reduction in the US federal corporate tax rate to 21% from 35% introduced by the US Tax Cuts and Jobs Act (TCJA) resulted in a USD 2.9 billion net write-down in the Group’s DTAs in the fourth quarter of 2017. We generally revalue our DTAs in the fourth quarter of the financial year based on a reassessment of future profitability taking into account our updated business plans. We consider the performance of our businesses and the accuracy of historical forecasts, tax rates and other factors in evaluating the recoverability of our DTAs, including the remaining tax loss carry-forward period and our assessment of expected future taxable profits over the life of DTAs. Estimating future profitability is inherently subjective and is particularly sensitive to future economic, market and other conditions, which are difficult to predict. Our results in recent periods have demonstrated that changes in the recognition of DTAs can have a very significant effect on our reported results. Any future change in the manner in which UBS remeasures DTAs could affect UBS’s effective tax rate, particularly in the year in which the change is made. Our full-year effective tax rate could change if aggregate tax expenses in respect of profits from branches and subsidiaries without loss coverage differ from what is expected. In particular, losses at entities that cannot be offset for tax purposes by net operating losses may increase our effective tax rate. Moreover, tax laws or the tax authorities in countries where we have undertaken legal structure changes may prevent the transfer of tax losses incurred in one legal entity to newly organized or reorganized subsidiaries or affiliates or may impose limitations on the utilization of tax losses that relate to businesses formerly conducted by the transferor. Were this to occur in situations where there were also limited planning opportunities to utilize the tax losses in the originating entity, the DTAs associated with such tax losses may be required to be written down through the income statement. Changes in tax law may materially affect our effective tax rate and in some cases may substantially affect the profitability of certain activities. In addition, statutory and regulatory changes, as well as changes to the way in which courts and tax authorities interpret tax laws including assertions that we are required to pay taxes in a jurisdiction as a result of activities connected to that jurisdiction constituting a permanent establishment or similar theory, and changes in our assessment of uncertain tax positions, could cause the amount of taxes we ultimately pay to materially differ from the amount accrued. Discontinuance of, or changes to, benchmark rates may require adjustments to our agreements with clients and other market participants, as well as to our systems and processes Since April 2013, the UK Financial Conduct Authority (FCA) has regulated LIBOR and regulators in other jurisdictions have increased oversight of other interbank offered rates (IBORs) and similar benchmark rates. Efforts to transition from IBORs to alternative benchmark rates are underway in several jurisdictions. The FCA announced in July 2017 that it will not continue beyond 2021 to regulate LIBOR or take other actions to sustain LIBOR, and urged users to plan the transition to alternative reference rates. As a result, there can be no guarantee that LIBOR will be determined after 2021 on the same basis as at present, if at all. In the third quarter of 2018, the private-sector working group on euro risk-free rates recommended ESTER (euro short-term rate) as the replacement for EONIA (Euro OverNight Index Average), which will be prohibited by the EU Benchmark Regulation after 1 January 2020. Futures contracts referenced to the Secured Overnight Financing Rate (SOFR), the recommended successor to US dollar LIBOR, have begun trading on the Chicago Mercantile Exchange. The Bank of England consulted on the development of Term SONIA (Sterling Overnight Index Average) Reference Rates, which are expected to become available in the second half of 2019. The International Swaps and Derivatives Association, as part of a Financial Conduct Authority (FCA) mandate, consulted on preferred options for LIBOR transition fallbacks for derivatives. The FCA and the Prudential Regulation Authority have written to the CEOs of banks and insurance companies in the UK, including us, seeking assurance that senior managers and boards understand the risks associated with the transition away from IBORs and are taking appropriate preparatory action to transition to alternative rates before the end of 2021. In July 2018, the International Swaps and Derivatives Association launched a market-wide consultation on technical issues related to new benchmark fallbacks for derivatives contracts that reference certain IBORs. 55 We have a substantial number of contracts linked to IBORs. The new risk-free alternative reference rates do not provide a term structure and will therefore require a change in the contractual terms of products currently indexed on terms other than overnight. In some cases contracts may contain provisions intended to provide a fall-back interest rate in the event of a brief unavailability of the relevant IBOR. These provisions may not be effective or may produce arbitrary results in the event of a permanent cessation of the relevant IBOR. In addition, numerous of our internal systems, limits and processes make use of IBORs as reference rates. Transition to replacement reference rates will require significant effort. UK withdrawal from the EU We have planned our response to the UK withdrawal from the EU assuming that the UK will leave the EU in March 2019 and that any transition arrangements will only become legally binding close to the exit date. Given the continuing uncertainty on transition arrangements and the potential future restrictions on providing financial services into the EU from the UK, we have completed the merger of UBS Limited, our UK-based subsidiary, into UBS Europe SE, a German-headquartered European subsidiary. As a result, we expect that UBS Europe SE will become subject to direct supervision by the European Central Bank. Clients and counterparties of UBS Limited who can be serviced by UBS AG, London Branch following the exit of the UK from the EU have generally been migrated to that branch. The remaining clients and other counterparties of UBS Limited were transferred to UBS Europe SE upon completion of a UK business transfer proceeding on 1 March 2019 and the merger of the two entities. In connection with the merger, a small number of roles are being relocated from the UK to other European locations. We also expect to increase the loss-absorbing capacity of UBS Europe SE to reflect the additional activities it would acquire. If we experience financial difficulties, FINMA has the power to open restructuring or liquidation proceedings or impose protective measures in relation to UBS Group AG, UBS AG or UBS Switzerland AG, and such proceedings or measures may have a material adverse effect on our shareholders and creditors Under the Swiss Banking Act, FINMA is able to exercise broad statutory powers with respect to Swiss banks and Swiss parent companies of financial groups, such as UBS Group AG, UBS AG and UBS Switzerland AG, if there is justified concern that the entity is over-indebted, has serious liquidity problems or, after the expiration of any relevant deadline, no longer fulfils capital adequacy requirements. Such powers include ordering protective measures, instituting restructuring proceedings (and exercising any Swiss resolution powers in connection therewith), and instituting liquidation proceedings, all of which may have a material adverse effect on our shareholders and creditors or may prevent UBS Group AG, UBS AG or UBS Switzerland AG from paying dividends or making payments on debt obligations. Protective measures may include, but are not limited to, certain measures that could require or result in a moratorium on, or the deferment of, payments. We would have limited ability to challenge any such protective measures, and creditors and shareholders would have no right under Swiss law or in Swiss courts to reject them, seek their suspension, or challenge their imposition, including measures that require or result in the deferment of payments. If restructuring proceedings are opened with respect to UBS Group AG, UBS AG or UBS Switzerland AG, the resolution powers that FINMA may exercise include the power to (i) transfer all or some of the assets, debt and other liabilities, and contracts of the entity subject to proceedings to another entity, (ii) stay for a maximum of two business days a. the termination of, or the exercise of rights to terminate, netting rights, b. rights to enforce or dispose of certain types of collateral or c. rights to transfer claims, liabilities or certain collateral, under contracts to which the entity subject to proceedings is a party, and / or (iii) partially or fully write down the equity capital and, if such equity capital is fully written down, convert into equity or write down the capital and other debt instruments of the entity subject to proceedings. Shareholders and creditors would have no right to reject, or to seek the suspension of, any restructuring plan pursuant to which such resolution powers are exercised. They would have only limited rights to challenge any decision to exercise resolution powers or to have that decision reviewed by a judicial or administrative process or otherwise. Upon full or partial write-down of the equity and debt of the entity subject to restructuring proceedings, the relevant shareholders and creditors would receive no payment in respect of the equity and debt that is written down, the write-down would be permanent, and the investors would not, at such time or at any time thereafter, receive any shares or other participation rights, or be entitled to any write-up or any other compensation in the event of a potential recovery of the debtor. If FINMA orders the conversion of debt of the entity subject to restructuring proceedings into equity, the securities received by the investors may be worth significantly less than the original debt and may have a significantly different risk profile, and such conversion would also dilute the ownership of existing shareholders. In addition, creditors receiving equity would be effectively subordinated to all creditors of the restructured entity in the event of a subsequent winding up, liquidation or dissolution of the restructured entity, which would increase the risk that investors would lose all or some of their investment. Our strategy, business model and environment 56 Our strategy, business model and environment Risk factors FINMA has significant discretion in the exercise of its powers in connection with restructuring proceedings. Furthermore, certain categories of debt obligations, such as certain types of deposits, are subject to preferential treatment. As a result, holders of obligations of an entity subject to a Swiss restructuring proceeding may have their obligations written down or converted into equity even though obligations ranking on par with or junior to such obligations are not written down or converted. FINMA has expressed its preference for a single-point-of-entry resolution strategy for global systemically important financial groups, led by the bank’s home supervisory and resolution authorities and focused on the top-level group company. This would mean that, if UBS AG or one of UBS Group AG’s other subsidiaries faces substantial losses, FINMA could open restructuring proceedings with respect to UBS Group AG only and order a bail-in of its liabilities if there is a justified concern that in the near future such losses could affect UBS Group AG. In that case, it is possible that the obligations of UBS AG or any other subsidiary of UBS Group AG would remain unaffected and outstanding, while the equity capital and the capital and other debt instruments of UBS Group AG would be written down and / or converted into equity of UBS Group AG in order to recapitalize UBS AG or such other subsidiary. Liquidity risks Liquidity and funding management are critical to our ongoing performance The viability of our business depends on the availability of funding sources, and our success depends on our ability to obtain funding at times, in amounts, for tenors and at rates that enable us to efficiently support our asset base in all market conditions. Our funding sources have generally been stable, but could change in the future because of, among other things, general market disruptions or widening credit spreads, which could also influence the cost of funding. A substantial part of our liquidity and funding requirements are met using short-term unsecured funding sources, including retail and wholesale deposits and the regular issuance of money market securities. A change in the availability of short- term funding could occur quickly. Moreover, more stringent capital and liquidity and funding requirements will likely lead to increased competition for both secured funding and deposits as a stable source of funding, and to higher funding costs. The addition of loss-absorbing debt as a component of capital requirements, the regulatory requirements to maintain minimum TLAC at our holding company and at subsidiaries, as well as the power of resolution authorities to bail in TLAC and other debt obligations, and uncertainty as to how such powers will be exercised, will increase our cost of funding and could potentially increase the total amount of funding required, in the absence of other changes in our business. Reductions in our credit ratings may adversely affect the market value of the securities and other obligations and increase our funding costs, in particular with regard to funding from wholesale unsecured sources, and could affect the availability of certain kinds of funding. In addition, as we experienced in connection with Moody’s downgrade of our long-term debt rating in June 2012, rating downgrades can require us to post additional collateral or make additional cash payments under trading agreements. Our credit ratings, together with our capital strength and reputation, also contribute to maintaining client and counterparty confidence, and it is possible that rating changes could influence the performance of some of our businesses. Liquidity and funding: The requirement to maintain a liquidity coverage ratio of high-quality liquid assets to estimated stressed short-term net cash outflows, the proposed requirement to maintain a net stable funding ratio, and other similar liquidity and funding requirements, oblige us to maintain high levels of overall liquidity, limit our ability to optimize interest income and expense, make certain lines of business less attractive and reduce our overall ability to generate profits. The liquidity coverage ratio and net stable funding ratio requirements are intended to ensure that we are not overly reliant on short-term funding and that we have sufficient long-term funding for illiquid assets. The relevant calculations make assumptions about the relative likelihood and amount of outflows of funding and available sources of additional funding in market-wide and firm- specific stress situations. There can be no assurance that in an actual stress situation our funding outflows would not exceed the assumed amounts. Moreover, many of our subsidiaries must comply with minimum capital, liquidity and similar requirements and as a result UBS Group AG and UBS AG have contributed a significant portion of their capital and provide substantial liquidity to these subsidiaries. These funds are available to meet funding and collateral needs in the relevant entities, but are generally not readily available for use by the Group as a whole. Strategy, management and operations risks We may not be successful in the ongoing execution of our strategic plans Over the last seven years, we have transformed our business to focus on our Global Wealth Management business and our universal bank in Switzerland, complemented by Asset Management and a significantly smaller and more capital efficient Investment Bank; we have substantially reduced the risk-weighted assets and leverage ratio denominator usage in Corporate Center – Non-core and Legacy Portfolio; and made significant cost reductions. We have recently provided an update on the execution of our strategy, updated our performance targets and provided guidance on capital and resources. Risk remains that we may not succeed in executing our strategy or achieving our performance targets, or may be delayed in doing so. Market events or other factors may adversely affect our ability to achieve our objectives. Macroeconomic conditions, geopolitical uncertainty, changes to regulatory requirements and the continuing costs of meeting these requirements have prompted us to adapt our targets and ambitions in the past and we may need to do so again in the future. 57 To achieve our strategic plans, we expect to continue to make significant expenditures on technology and infrastructure to improve client experience, improve and further enable digital offerings and increase efficiency. Our investments in new technology may not fully achieve our objectives or improve our ability to attract and retain customers. In addition, we will likely face competition in providing digitally enabled offerings from both existing competitors and new financial service providers in various portions of the value chain. Our ability to develop and implement competitive digitally enabled offerings and processes will be an important factor in our ability to compete. As part of our strategy, we seek to improve our operating efficiency, in part by controlling our costs. We may not be able to identify feasible cost reduction opportunities that are consistent with our business goals and cost reductions may be realized later or may be smaller than we anticipate. Higher temporary and permanent regulatory costs and higher business demand than anticipated have partly offset cost reductions and delayed the achievement of our past cost reduction targets, and we could continue to be challenged in the execution of our ongoing efforts to improve operating efficiency. Changes in our workforce as a result of outsourcing, nearshoring, offshoring, insourcing or staff reductions may introduce new operational risks that, if not effectively addressed, could affect our ability to achieve cost and other benefits from such changes, or could result in operational losses. Such changes can also lead to expenses recognized in the income statement well in advance of the cost savings intended to be achieved through such workforce strategy; for example, if provisions for real estate lease contracts need to be recognized, or when, in connection with the closure or disposal of non-profitable operations, foreign currency translation losses previously recorded in other comprehensive income are reclassified to the income statement. As we implement effectiveness and efficiency programs, we may also experience unintended consequences, such as the unintended loss or degradation of capabilities that we need in order to maintain our competitive position, achieve our targeted returns or meet existing or new regulatory requirements and expectations. Operational risks affect our business Our businesses depend on our ability to process a large number of transactions, many of which are complex, across multiple and diverse markets in different currencies, to comply with requirements of many different legal and regulatory regimes to which we are subject and to prevent, or promptly detect and stop, unauthorized, fictitious or fraudulent transactions. We also rely on access to, and on the functioning of, systems maintained by third parties, including clearing systems, exchanges, information processors and central counterparties. Any failure of our or third-party systems could have an adverse effect on us. Our operational risk management and control systems and processes are designed to help ensure that the risks associated with our activities - including those arising from process error, failed execution, misconduct, unauthorized trading, fraud, system failures, financial crime, cyberattacks, breaches of information security, inadequate or ineffective access controls and failure of security and physical protection - are appropriately controlled. If our internal controls fail or prove ineffective in identifying and remedying these risks, we could suffer operational failures that might result in material losses, such as the substantial loss we incurred from the unauthorized trading incident announced in September 2011. We and other financial services firms have been subject to breaches of security and to cyber- and other forms of attack, some of which are sophisticated and targeted attacks intended to gain access to confidential information or systems, disrupt service or destroy data. These attacks may be attempted through the introduction of viruses or malware, phishing and other forms of social engineering, distributed denial of service attacks and other means. These attempts may occur directly, or using equipment or security passwords of our employees, third party service providers or other users. In addition to external attacks, we have experienced loss of client data from failure by employees and others to follow internal policies and procedures and from misappropriation of our data by employees and others. We may not be able to anticipate, detect or recognize threats to our systems or data and our preventative measures may not be effective to prevent an attack or a security breach. In the event of a security breach notwithstanding our preventative measures, we may not immediately detect a particular breach or attack. Once a particular attack is detected, time may be required to investigate and assess the nature and extent of the attack. A successful breach or circumvention of security of our systems or data could have significant negative consequences for us, including disruption of our operations, misappropriation of confidential information concerning us or our customers, damage to our systems, financial losses for us or our customers, violations of data privacy and similar laws, litigation exposure and damage to our reputation. We are subject to complex and frequently changing laws and regulations governing the protection of client and personal data, such as the EU General Data Privacy Regulation. Ensuring that we comply with applicable laws and regulations when we collect, use and transfer personal information requires substantial resources and may affect the ways in which we conduct our business. In the event that we fail to comply with applicable laws, we may be exposed to regulatory fines and penalties and other sanctions. We may also incur such penalties if our vendors or other service providers or clients or counterparties fail to comply with these laws or to maintain appropriate controls over protected data. In addition, any loss or exposure of client or other data, may adversely damage our reputation and adversely affect our business.Our strategy, business model and environment 58 Our strategy, business model and environment Risk factors A major focus of US and other countries’ governmental policies relating to financial institutions in recent years has been on fighting money laundering and terrorist financing. We are required to maintain effective policies, procedures and controls to detect, prevent and report money laundering and terrorist financing, and to verify the identity of our clients under the laws of many of the countries in which we operate. We are also subject to laws and regulations related to corrupt and illegal payments to government officials by others, such as the US Foreign Corrupt Practices Act and the UK Bribery Act. We have implemented policies, procedures and internal controls that are designed to comply with such laws and regulations. Notwithstanding this, US regulators have found deficiencies in the design and operation of anti-money laundering programs in our US operations. We have undertaken a significant program to address these regulatory findings with the objective of fully meeting regulatory expectations for our programs. Failure to maintain and implement adequate programs to combat money laundering, terrorist financing or corruption, or any failure of our programs in these areas, could have serious consequences both from legal enforcement action and from damage to our reputation. Frequent changes in sanctions imposed and increasingly complex sanctions imposed on countries, entities and individuals increase our cost of monitoring and complying with sanctions requirements and increase the risk that we will not timely identify previously permissible client activity that is subject to a sanction. As a result of new and changed regulatory requirements and the changes we have made in our legal structure, the volume, frequency and complexity of our regulatory and other reporting has significantly increased. Regulators have also significantly increased expectations for our internal reporting and data aggregation, as well as management reporting. We have incurred and continue to incur significant costs to implement infrastructure to meet these requirements. Failure to timely and accurately meet external reporting requirements or to meet regulatory expectations for internal reporting, data aggregation and management reporting could result in enforcement action or other adverse consequences for us. Certain types of operational control weaknesses and failures could also adversely affect our ability to prepare and publish accurate and timely financial reports. In addition, despite the contingency plans we have in place, our ability to conduct business may be adversely affected by a disruption in the infrastructure that supports our businesses and the communities in which we operate. This may include a disruption due to natural disasters, pandemics, civil unrest, war or terrorism and involve electrical, communications, transportation or other services we use or used by third parties with whom we conduct business. We may not be successful in implementing changes in our wealth management businesses to meet changing market, regulatory and other conditions Our wealth and asset management businesses operate in an environment of increasing regulatory scrutiny and changing standards with respect to fiduciary and other standards of care and the focus on mitigating or eliminating conflicts of interest between a manager or advisor and the client, which require effective implementation across the global systems and processes of investment managers and other industry participants. For example, the SEC proposed a new regulation and interpretation intended to enhance and clarify the duties of brokers and investment advisers to retail customers. The proposed requirements, if adopted, would apply to a large portion of Global Wealth Management’s business in the US, and we will likely be required to materially change business processes, policies and the terms on which we interact with these clients in order to comply with these rules, if and when they become fully effective. In addition, MiFID II imposes new requirements on us when providing advisory services to clients in the EU, including new requirements for agreements with clients. UBS experienced cross-border outflows over a number of years as a result of heightened focus by fiscal authorities on cross- border investment and fiscal amnesty programs, in anticipation of the implementation in Switzerland of the global automatic exchange of tax information, and as a result of the measures UBS has implemented in response to these changes. Further changes in local tax laws or regulations and their enforcement, the implementation of cross-border tax information exchange regimes, national tax amnesty or enforcement programs or similar actions may affect our clients’ ability or willingness to do business with us and result in additional cross-border outflows. In recent years, Global Wealth Management’s net new money inflows have come predominantly from clients in Asia Pacific and in the ultra high net worth segment globally. Over time, inflows from these lower-margin segments and markets have been replacing outflows from higher-margin segments and markets, in particular cross-border clients. This dynamic, combined with changes in client product preferences as a result of which low- margin products account for a larger share of our revenues than in the past, has put downward pressure on Global Wealth Management’s margins. As the discussion above indicates, we are exposed to possible outflows of client assets in our asset-gathering businesses and to changes affecting the profitability of Global Wealth Management, in particular. Initiatives that we may implement to overcome the effects of changes in the business environment on our profitability, balance sheet and capital positions may not succeed in counteracting those effects and may cause net new money outflows and reductions in client deposits, as happened with our balance sheet and capital optimization program in 2015. There is no assurance that we will be successful in our efforts to offset the adverse effect of these or similar trends and developments. 59 Our stated capital returns objective is based, in part, on capital ratios that are subject to regulatory change and may fluctuate significantly We plan to operate with a CET1 capital ratio of around 13% and a CET1 leverage ratio of around 3.7%. Our ability to maintain these ratios is subject to numerous risks, including the financial results of our businesses, the effect of changes to capital standards, methodologies and interpretation that may adversely affect the calculation of our CET1 ratios, the imposition of risk add-ons or capital buffers, and the application of additional capital, liquidity and similar requirements to subsidiaries. The results of our businesses may be adversely affected by events arising from other factors described herein. In some cases, such as litigation and regulatory risk and operational risk events, losses may be sudden and large. These risks could reduce the amount of capital available for return to shareholders and hinder our ability to achieve our capital returns target of a progressive cash dividend coupled with a share repurchase program. Failure to maintain our capital strength may adversely affect our ability to execute our strategy, our client franchise and our competitive position Our capital strength is a key component of our strategy. Capital strength enables us to grow our businesses, and absorb increases in regulatory and capital requirements. It reassures our clients and stakeholders, forms the basis for our capital return policy and contributes to our credit ratings. Our capital ratios are driven primarily by RWA, leverage ratio denominator and eligible capital, all of which may fluctuate based on a number of factors, some of which are outside our control. Our eligible capital may be reduced by losses recognized within net profit or other comprehensive income. Eligible capital may also be reduced for other reasons, including certain reductions in the ratings of securitization exposures, acquisitions and divestments changing the level of goodwill, adverse currency movements affecting the value of equity, prudential adjustments that may be required due to the valuation uncertainty associated with certain types of positions, and changes in the value of certain pension fund assets and liabilities or in the interest rate and other assumptions used to calculate the changes in our net defined benefit obligation recognized in other comprehensive income. RWA are driven by our business activities, by changes in the risk profile of our exposures, by changes in our foreign currency exposures and foreign exchange rates and by regulation. For instance, substantial market volatility, a widening of credit spreads, adverse currency movements, increased counterparty risk, deterioration in the economic environment or increased operational risk could result in an increase in RWA. We have significantly reduced our market risk and credit risk RWA in recent years. However, increases in operational risk RWA, particularly those arising from litigation, regulatory and similar matters, and regulatory changes in the calculation of RWA and regulatory add-ons to RWA have offset a substantial portion of this reduction. Changes in the calculation of RWA or, as discussed above, the imposition of additional supplemental RWA charges or multipliers applied to certain exposures and other methodology changes, as well as the implementation of the recently adopted changes to international capital standards for banks, could substantially increase our RWA. The leverage ratio is a balance sheet-driven measure and therefore limits balance sheet-intensive activities, such as lending, more than activities that are less balance sheet intensive, and it may constrain our business even if we satisfy other risk-based capital requirements. Our leverage ratio denominator is driven by, among other things, the level of client activity, including deposits and loans, foreign exchange rates, interest rates and other market factors. Many of these factors are wholly or partially outside of our control. We may be unable to identify or capture revenue or competitive opportunities, or retain and attract qualified employees The financial services industry is characterized by intense competition, continuous innovation, restrictive, detailed, and sometimes fragmented regulation and ongoing consolidation. We face competition at the level of local markets and individual business lines, and from global financial institutions that are comparable to us in their size and breadth. Barriers to entry in individual markets and pricing levels are being eroded by new technology. We expect these trends to continue and competition to increase. Our competitive strength and market position could be eroded if we are unable to identify market trends and developments, do not respond to such trends and developments by devising and implementing adequate business strategies, do not adequately develop or update our technology including our digital channels and tools, or are unable to attract or retain the qualified people needed. The amount and structure of our employee compensation is affected not only by our business results but also by competitive factors and regulatory considerations. In recent years, in response to the demands of various stakeholders, including regulatory authorities and shareholders, and in order to better align the interests of our staff with other stakeholders, we have increased average deferral periods for stock awards, expanded forfeiture provisions and, to a more limited extent, introduced clawback provisions for certain awards linked to business performance. We have also introduced individual caps on the proportion of fixed to variable pay for the Group Executive Board (GEB) members, as well as certain other employees. Constraints on the amount or structure of employee compensation, higher levels of deferral, performance conditions and other circumstances triggering the forfeiture of unvested awards may adversely affect our ability to retain and attract key employees. The loss of key staff and the inability to attract qualified replacements could seriously compromise our ability to execute our strategy and to successfully improve our operating and control environment, and could affect our business performance. Swiss law requires that shareholders approve the compensation of the Board of Directors (BoD) and the GEB each year. If our shareholders fail to approve the compensation for the GEB or the BoD, this could have an adverse effect on our ability to retain experienced directors and our senior management.Our strategy, business model and environment 60 Our strategy, business model and environment Risk factors We depend on our risk management and control processes to avoid or limit potential losses in our businesses Controlled risk-taking is a major part of the business of a financial services firm. Some losses from risk-taking activities are inevitable, but to be successful over time, we must balance the risks we take against the returns generated. Therefore we must diligently identify, assess, manage and control our risks, not only in normal market conditions but also as they might develop under more extreme, stressed conditions, when concentrations of exposures can lead to severe losses. As seen during the financial crisis of 2007–2009, we have not always been able to prevent serious losses arising from extreme or sudden market events that are not anticipated by our risk measures and systems. Our risk measures, concentration controls and the dimensions in which we aggregated risk to identify correlated exposures proved inadequate in a historically severe deterioration in financial markets. As a result, we recorded substantial losses on fixed income trading positions, particularly in 2008 and 2009. We have substantially revised and strengthened our risk management and control framework and increased the capital we hold relative to the risks we take. Nonetheless, we could suffer further losses in the future if, for example: – we do not fully identify the risks in our portfolio, in particular risk concentrations and correlated risks; – our assessment of the risks identified, or our response to negative trends, proves to be untimely, inadequate, insufficient or incorrect; – markets move in ways that we do not expect – in terms of their speed, direction, severity or correlation – and our ability to manage risks in the resulting environment is, therefore, affected; – third parties to whom we have credit exposure or whose securities we hold are severely affected by events and we suffer defaults and impairments beyond the level implied by our risk assessment; or – collateral or other security provided by our counterparties proves inadequate to cover their obligations at the time of default. We have exposures related to real estate in various countries, including a substantial Swiss mortgage portfolio. Although we believe this portfolio is prudently managed, we could nevertheless be exposed to losses if a substantial deterioration in the Swiss real estate market were to occur. We also hold legacy risk positions, primarily in Corporate Center, that, in many cases, are illiquid and may again deteriorate in value. We also manage risk on behalf of our clients. The performance of assets we hold for our clients may be adversely affected by the same factors mentioned above. If clients suffer losses or the performance of their assets held with us is not in line with relevant benchmarks against which clients assess investment performance, we may suffer reduced fee income and a decline in assets under management, or withdrawal of mandates. Investment positions, such as equity investments made as part of strategic initiatives and seed investments made at the inception of funds that we manage, may also be affected by market risk factors. These investments are often not liquid and generally are intended or required to be held beyond a normal trading horizon. Deteriorations in the fair value of these positions would have a negative effect on our earnings. As UBS Group AG is a holding company, its operating results, financial condition and ability to pay dividends and other distributions and / or to pay its obligations in the future depend on funding, dividends and other distributions received directly or indirectly from its subsidiaries, which may be subject to restrictions UBS Group AG’s ability to pay dividends and other distributions and to pay its obligations in the future will depend on the level of funding, dividends and other distributions, if any, received from UBS AG and other subsidiaries. The ability of such subsidiaries to make loans or distributions, directly or indirectly, to UBS Group AG may be restricted as a result of several factors, including restrictions in financing agreements and the requirements of applicable law and regulatory, fiscal or other restrictions. In particular, UBS Group AG’s direct and indirect subsidiaries, including UBS AG, UBS Switzerland AG, UBS Limited and UBS Americas Holding LLC, are subject to laws and regulations that restrict dividend payments, authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to UBS Group AG, or could affect their ability to repay any loans made to, or other investments in, such subsidiary by UBS Group AG or another member of the Group. For example, the US Comprehensive Capital Analysis and Review process requires that our US intermediate holding company demonstrate that it can continue to meet minimum capital standards over a hypothetical nine-quarter severely adverse economic scenario. If it fails to meet the quantitative capital requirements, or the Federal Reserve Board’s qualitative assessment of the capital planning process is adverse, our US intermediate holding company would be prohibited from paying dividends or making distributions. Restrictions and regulatory actions of this kind could impede access to funds that UBS Group AG may need to meet its obligations or to pay dividends to shareholders. In addition, UBS Group AG’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to all prior claims of the subsidiary’s creditors. 61 Our capital instruments may contractually prevent UBS Group AG from proposing the distribution of dividends to shareholders, other than in the form of shares, if we do not pay interest on these instruments. Furthermore, UBS Group AG may guarantee some of the payment obligations of certain of the Group’s subsidiaries from time to time. These guarantees may require UBS Group AG to provide substantial funds or assets to subsidiaries or their creditors or counterparties at a time when UBS Group AG is in need of liquidity to fund its own obligations. The credit ratings of UBS Group AG or its subsidiaries used for funding purposes could be lower than the ratings of the Group’s operating subsidiaries, which may adversely affect the market value of the securities and other obligations of UBS Group AG or those subsidiaries on a standalone basis. Reputational risk Our reputation is critical to our success Our reputation is critical to the success of our strategic plans, business and prospects. Reputational damage is difficult to reverse, and improvements tend to be slow and difficult to measure. Our reputation has been adversely affected by our losses during the financial crisis, investigations into our cross- border private banking services, criminal resolutions of LIBOR- related and foreign exchange matters, as well as other matters. We believe that reputational damage as a result of these events was an important factor in our loss of clients and client assets across our asset-gathering businesses. New events that cause reputational damage could have a material adverse effect on our results of operation and financial condition, as well as our ability to achieve our strategic goals and financial targets. Estimation and valuation risk Our financial results may be negatively affected by changes to assumptions and valuations, as well as changes to accounting standards We prepare our consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The application of these accounting standards requires the use of judgment based on estimates and assumptions that may involve significant uncertainty at the time they are made. This is the case, for example, with respect to the measurement of fair value of financial instruments, the recognition of deferred tax assets, the assessment of the impairment of goodwill and estimation of provisions for contingencies, including litigation, regulatory and similar matters. Such judgments, including the underlying estimates and assumptions, which encompass historical experience, expectations of the future and other factors, are regularly evaluated to determine their continuing relevance based on current conditions. Using different assumptions could cause the reported results to differ. Changes in assumptions, or failure to make the changes necessary to reflect evolving market conditions, may have a significant effect on the financial statements in the periods when changes occur. Estimates of provisions for contingencies may be subject to a wide range of potential outcomes and significant uncertainty. For example, the broad range of potential outcomes in our proceeding in France increases the uncertainty associated with assessing the appropriate provision. If the estimates and assumptions in future periods deviate from the current outlook, our financial results may also be negatively affected. Changes to IFRS or interpretations thereof may cause future reported results and financial position to differ from current expectations, or historical results to differ from those previously reported due to the adoption of accounting standards on a retrospective basis. Such changes may also affect our regulatory capital and ratios. For example, we adopted IFRS 9 effective on 1 January 2018, which required us to change the accounting treatment of financial instruments measured at amortized cost and certain other positions, to record loans from inception net of expected credit losses instead of recording credit losses on an incurred loss basis, and is generally expected to result in an increase in recognized credit loss allowances. In addition, the ECL provisions of IFRS 9 may result in greater volatility in credit loss expense as ECL changes in response to developments in the credit cycle and composition of our loan portfolio. The effect may be more pronounced in a deteriorating economic environment. Our strategy, business model and environment Financial and operating performance Management report 64 Financial and operating performance Critical accounting estimates and judgments Critical accounting estimates and judgments In preparing our financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), we apply judgment and make estimates and assumptions that may involve significant uncertainty at the time they are made. We regularly reassess those estimates and assumptions, which encompass historical experience, expectations of the future and other pertinent factors, to determine their continuing relevance based on current conditions, and we update them as necessary. Changes in estimates and assumptions may have a significant effect on the financial statements. Furthermore, actual results may differ significantly from our estimates, which could result in significant losses to the Group, beyond what we anticipated or provided for. Key areas involving a high degree of judgment and areas where estimates and assumptions are significant to the consolidated financial statements include: – fair value of financial instruments – allowances and provisions for expected credit losses – assessment of the business model and certain contractual features when classifying financial instruments – pension and other post-employment benefit plans – income taxes – goodwill – provisions and contingent liabilities – consolidation of structured entities – determination of the functional currency and assessing the earliest date from which it is practical to perform a restatement following a change in presentation currency We believe that the judgments, estimates and assumptions we have made are appropriate under the circumstances and that our financial statements fairly present, in all material respects, the financial position of UBS as of 31 December 2018 and the results of our operations and cash flows for 2018 in accordance with IFRS. →Refer to “Note 1a Significant accounting policies” in the “Consolidated financial statements” section of this report for more information →Refer to the “Risk factors” section of this report for more information 65 Significant accounting and financial reporting changes Significant accounting and financial reporting changes in 2018 Changes to our functional and presentation currencies As a consequence of many legal entity structural changes over recent years – notably the transfer of our Personal & Corporate Banking and Global Wealth Management businesses booked in Switzerland from UBS AG to UBS Switzerland AG, and the creation of UBS Business Solutions AG, which houses a significant portion of the employees and associated costs that were previously held in UBS AG’s Head Office in Switzerland and UBS AG’s London branch – there is now a concentration of US dollar-influenced and -managed business activities in UBS AG’s Head Office in Switzerland and UBS AG’s London Branch. In addition, from the fourth quarter of 2018, for risk management purposes we adopted the US dollar as our risk- neutral currency and have adjusted our structural risk positions accordingly. As a result of these changes, effective from 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland changed from Swiss francs to US dollars and that of UBS AG’s London Branch from British pounds to US dollars, in compliance with the requirements of International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. The presentation currency of UBS Group AG’s consolidated financial statements has changed from Swiss francs to US dollars to align with the functional currency changes of significant Group entities. Prior periods have been restated for this presentation currency change. Assets, liabilities and total equity were translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses were translated at the respective average rates prevailing for the relevant periods. Additionally, Other income was restated to reflect releases of foreign currency translation (FCT) gains or losses from Other comprehensive income (OCI) to the income statement when calculated under US dollars as the presentation currency. The retrospective application of the presentation currency change did not affect total equity, but resulted in changes to the accumulated FCT OCI and other components of equity, in particular share premium and retained earnings. We have not restated our Basel III capital information due to immateriality. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the effects of restating to a US dollar presentation currency We will continue to publish selected financial and regulatory information in Swiss francs as part of our quarterly and annual reporting at www.ubs.com/investors. Business division results of Personal & Corporate Banking are presented in both Swiss francs and US dollars, and its management’s discussion and analysis is provided in Swiss francs, as its business activities are mainly managed in Swiss francs. We expect that these functional and presentation currency changes, together with the related changes to our risk management framework and certain hedging programs, should increase our reported Group operating income by approximately USD 0.3 billion in 2019 based on market-implied forwards. IFRS 9, Financial Instruments Effective 1 January 2018, we adopted IFRS 9, Financial Instruments, which replaces IAS 39, Financial Instruments: Recognition and Measurement, and substantially changed the classification, measurement and impairment of financial assets, income statement and balance sheet presentation and disclosure of financial instruments and other arrangements in scope. As permitted by IFRS 9, we elected not to restate prior- period information. The adoption of IFRS 9 has resulted in a USD 0.6 billion reduction in our IFRS consolidated equity, net of tax, as well as a USD 0.3 billion reduction in our common equity tier 1 capital as of 1 January 2018, with no material effect on our capital ratios. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information IFRS 15, Revenue from Contracts with Customers Effective 1 January 2018, we adopted IFRS 15, Revenue from Contracts with Customers, which replaces IAS 18, Revenue, and establishes principles for revenue recognition that apply to all contracts with customers other than those relating solely to financial instruments, leases and insurance contracts. IFRS 15 requires an entity to recognize revenue as performance obligations are satisfied. As permitted by IFRS 15, we elected not to restate prior-period information. The adoption of IFRS 15 has resulted in a reduction in our IFRS consolidated equity of USD 25 million, net of tax, as of 1 January 2018, with no material effect on our capital ratios. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information Financial and operating performance 66 Financial and operating performance Significant accounting and financial reporting changes Changes to segment reporting effective first quarter 2018 Effective 1 February 2018, we integrated our Wealth Management and Wealth Management Americas business divisions into a single Global Wealth Management business division, which is managed on an integrated basis, with a single set of performance measures, performance targets, operating plan and management structure. Consistent with this, the operating results of Global Wealth Management are presented and assessed on an integrated basis in internal management reports to the Group Executive Board, which is considered the “chief operating decision maker” in accordance with IFRS 8, Operating Segments. Consequently, from the first quarter of 2018, Global Wealth Management qualifies as an operating and reportable segment for the purpose of segment reporting and is presented in these financial statements alongside Personal & Corporate Banking, Asset Management, the Investment Bank and Corporate Center. Following the change in the composition of our operating segments and corresponding reportable segments, previously reported segment information has been restated. The change has no effect on the recognized goodwill of either of the former segments. Changes to Pillar 3 disclosure requirements During 2018, we implemented several changes related to the “Pillar 3 disclosure requirement – consolidated and enhanced framework” as issued by the Basel Committee on Banking Supervision (BCBS) in March 2018, which represents the second phase of the BCBS review of the Pillar 3 disclosure framework and builds on the revisions to the Pillar 3 disclosure requirements published in January 2015. In addition, we implemented changes related to the revised Basel III securitization framework for securitization exposures in the banking book. On 16 July 2018, FINMA issued a revised Circular 2016 / 1 “Disclosure – banks,” including the aforementioned second- phase revisions, which requires banks to gradually implement the requirements from 31 December 2018 onward. In addition, further disclosure requirements will be adopted in the first half of 2019, according to the applicable effective dates. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors, for more information on the changes to Pillar 3 disclosure requirements Significant accounting and financial reporting changes in 2019 IFRS 16, Leases We have adopted IFRS 16, Leases, as of 1 January 2019, fundamentally changing how we account for operating leases when acting as a lessee. Upon adoption, assets and liabilities increased by approximately USD 3.5 billion, with a corresponding increase in risk-weighted assets (RWA) and leverage ratio denominator (LRD). As permitted by IFRS 16, we elected not to restate prior-period information. →Refer to “Note 1d International Financial Reporting Standards and Interpretations to be adopted in 2019 and later and other changes” in the “Consolidated financial statements” section of this report for more information Changes in Corporate Center cost and resource allocation to business divisions In order to further align Group and divisional performance, we are adjusting our methodology for the allocation of Corporate Center – Services funding costs and expenses to the business divisions. At the same time, we are updating our funds transfer pricing framework to better reflect the sources and usage of funding. All of these changes are effective as of 1 January 2019 and we will provide restated prior-period information in advance of our first quarter 2019 results. Together, these changes will decrease the business divisions’ operating results and thereby increase their adjusted cost / income ratios by approximately 1–2 percentage points, with an offsetting effect of approximately USD 0.7 billion in Corporate Center’s operating profit / (loss) before tax. We will retain in Corporate Center funding costs for deferred tax assets, costs relating to our legal entity transformation program and other costs not attributable to or representative of the performance of the business divisions. 67 Alongside the updates to cost allocations and to our funds transfer pricing framework, we are increasing the allocation of balance sheet resources from Corporate Center to the business divisions. For 2018, the restatement will result in approximately USD 26 billion of additional RWA and approximately USD 93 billion of additional LRD allocated from Corporate Center to the business divisions, consisting of: – approximately USD 9 billion of additional RWA and LRD associated with property, equipment and software previously retained in Corporate Center – Services; – approximately USD 14 billion of operational risk RWA previously allocated to Corporate Center – Services and Corporate Center – Group Asset and Liability Management (Group ALM); – approximately USD 3 billion of additional RWA and approximately USD 90 billion of additional LRD previously retained in Corporate Center – Group ALM. This reflects a higher allocation of high-quality liquid assets (HQLA) to the business divisions, in line with the HQLA levels we expect to maintain, as well as the allocation of certain other assets centrally managed on behalf of the business divisions; and – a reduction of approximately USD 7 billion in the LRD allocation related to an offset for common equity tier 1 (CET1) deduction items previously held in Corporate Center – Services, which is now allocated to the business divisions. We have adopted IFRS 16, Leases, as of 1 January 2019, and allocated approximately USD 3.5 billion each of additional RWA and LRD to the business divisions. Changes in equity attribution The aforementioned changes in resource allocation from Corporate Center to the business divisions will be reflected in the equity attribution to the business divisions. Furthermore, we are updating our equity attribution framework, revising the capital ratio for RWA from 11% to 12.5% and incrementally allocating to business divisions approximately USD 2 billion of attributed equity that is related to certain common equity tier 1 (CET1) deduction items previously held centrally. In aggregate, we expect to allocate approximately USD 7 billion of additional attributed equity to the business divisions, of which approximately USD 3 billion will be allocated to the Investment Bank. The remaining attributed equity retained in Corporate Center will primarily relate to deferred tax assets, dividend accruals and Corporate Center – Non-core and Legacy Portfolio. All of these changes are effective as of 1 January 2019 and we will provide restated prior-period information in advance of our first quarter results. →Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information on the equity attributed to the business divisions Changes in Corporate Center segment reporting As announced in our third quarter 2018 report, as of 1 January 2019, we no longer separately assess the performance of Corporate Center – Non-core and Legacy Portfolio, given its substantially reduced size and resource consumption. In addition, following the aforementioned changes to our methodology for allocating funding costs and expenses from Corporate Center – Services and Corporate Center – Group ALM to the business divisions, the operating loss retained in Corporate Center – Services and Corporate Center – Group ALM will be significantly reduced. As a consequence and in compliance with IFRS 8, Operating Segments, beginning with our first quarter 2019 report, we will provide results for total Corporate Center only and will not separately report Corporate Center – Services, Group ALM and Non-core and Legacy Portfolio. Furthermore, we will operationally combine Group Treasury with Group ALM and call this combined function Group Treasury. Commentary on the performance of this function will be included in the Corporate Center management discussion and analysis in our quarterly and annual reporting. Former Group ALM total risk management net income after allocations will continue to be disclosed as a separate line item. Prior-period information will be restated. IFRS 9 and our significant regulated subsidiaries and sub-groups FINMA’s plan to implement expected credit losses under Swiss GAAP has been deferred. We will continue to apply the incurred loss model in the UBS AG standalone and UBS Switzerland AG standalone financial statements, which are prepared in accordance with Swiss GAAP (FINMA Circular 2015 / 1 and Banking Ordinance). UBS Americas Holding LLC expects to early adopt Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments, on 1 January 2020, in order for its consolidated financial statements to align with the mandatory effective date for some of its subsidiaries. Financial and operating performance 68 Financial and operating performance Group performance Group performance Income statement For the year ended % change from USD million 331.12.18 31.12.17 31.12.16 31.12.17 Net interest income 6,025 6,656 6,487 (9) Other net income from fair value changes on financial instruments 5,984 5,065 5,023 18 Credit loss (expense) / recovery (118) (131) (38) (10) Fee and commission income 19,598 19,362 18,374 1 Fee and commission expense (1,703) (1,840) (1,781) (7) Net fee and commission income 17,895 17,522 16,593 2 Other income 427 511 663 (16) Total operating income 30,213 29,622 28,729 2 of which: net interest income and other net income from fair value changes on financial instruments 12,008 11,721 11,510 2 Personnel expenses 16,132 16,199 15,913 0 General and administrative expenses 6,797 6,949 7,517 (2) Depreciation and impairment of property, equipment and software 1,228 1,053 997 17 Amortization and impairment of intangible assets 65 71 93 (8) Total operating expenses 24,222 24,272 24,519 0 Operating profit / (loss) before tax 5,991 5,351 4,209 12 Tax expense / (benefit) 1,468 4,305 777 (66) Net profit / (loss) 4,522 1,046 3,432 332 Net profit / (loss) attributable to non-controlling interests 7 77 84 (91) NNet profit / (loss) attributable to shareholders 4,516 969 3,348 366 Comprehensive income Total comprehensive income 4,231 2,113 1,251 100 Total comprehensive income attributable to non-controlling interests 5 326 62 (98) TTotal comprehensive income attributable to shareholders 4,225 1,787 1,189 136 69 Performance by business division and Corporate Center unit – reported and adjusted1,2 FFor the year ended 31.12.18 USD million GGlobal Wealth Management PPersonal & Corporate Banking AAsset Manage- ment IInvestment Bank CCC – Services3 CCC – Group ALM CCC – Non- core and Legacy Portfolio UUBS Operating income as reported 16,941 4,222 1,857 8,150 (513) (609) 165 30,213 of which: gains related to investments in associates 4 101 359 460 of which: gains on sale of real estate 31 31 of which: gains on sale of subsidiaries and businesses 25 25 of which: remeasurement loss related to UBS Securities China 5 (270) (270) Operating income (adjusted) 16,840 3,863 1,857 8,150 (300) (609) 165 29,966 Operating expenses as reported 13,313 2,310 1,406 6,501 293 84 315 24,222 of which: personnel-related restructuring expenses 6 34 4 23 16 208 0 0 286 of which: non-personnel-related restructuring expenses 6 16 0 10 11 238 0 0 275 of which: restructuring expenses allocated from CC Services 6 209 43 33 166 (456) 3 3 0 of which: gain related to changes to the Swiss pension plan (66) (38) (10) (5) (122) (241) Operating expenses (adjusted) 13,120 2,300 1,350 6,313 425 81 312 23,903 of which: net expenses for litigation, regulatory and similar matters 7 619 41 0 (64) (7) 0 69 657 OOperating profit / (loss) before tax as reported 3,628 1,912 451 1,649 (806) (693) (150) 5,991 OOperating profit / (loss) before tax (adjusted) 3,720 1,563 508 1,836 (725) (690) (148) 6,063 For the year ended 31.12.17 USD million Global Wealth Management Personal & Corporate Banking Asset Manage- ment Investment Bank CC – Services3 CC – Group ALM CC – Non- core and Legacy Portfolio UBS Operating income as reported 16,287 3,925 2,083 7,794 (157) (288) (22) 29,622 of which: gains on sale of subsidiaries and businesses 153 153 of which: gains on sale of financial assets at fair value through OCI 8 137 137 of which: net foreign currency translation losses 9 (16) (16) Operating income (adjusted) 16,287 3,925 1,929 7,658 (157) (271) (22) 29,349 Operating expenses as reported 12,717 2,317 1,495 6,527 779 48 388 24,272 of which: personnel-related restructuring expenses 6 39 7 17 39 442 1 0 545 of which: non-personnel-related restructuring expenses 6 75 0 22 18 532 0 0 647 of which: restructuring expenses allocated from CC Services 6 474 98 63 310 (954) 3 6 0 of which: expenses from modification of terms for certain DCCP awards 10 26 26 Operating expenses (adjusted) 12,129 2,212 1,393 6,135 759 44 382 23,054 of which: net expenses for litigation, regulatory and similar matters 7 174 2 (4) (42) 252 0 52 434 OOperating profit / (loss) before tax as reported 3,571 1,607 587 1,267 (935) (336) (411) 5,351 OOperating profit / (loss) before tax (adjusted) 4,159 1,713 536 1,523 (915) (315) (405) 6,295 Financial and operating performance 70 Financial and operating performance Group performance Performance by business division and Corporate Center unit – reported and adjusted (continued)1,2 For the year ended 31.12.16 USD million Global Wealth Management Personal & Corporate Banking Asset Manage- ment Investment Bank CC – Services3 CC – Group ALM CC – Non- core and Legacy Portfolio UBS Operating income as reported 15,249 4,035 1,955 7,779 (103) (155) (32) 28,729 of which: gains on sale of financial assets at fair value through OCI 8 31 105 77 213 of which: gains on sale of real estate 123 123 of which: gains related to investments in associates 21 21 of which: net foreign currency translation losses 9 (84) (84) of which: losses on sale of subsidiaries and businesses (24) (24) Operating income (adjusted) 15,242 3,909 1,955 7,702 (226) (71) (32) 28,480 Operating expenses as reported 12,159 2,250 1,498 6,765 753 (1) 1,094 24,519 of which: personnel-related restructuring expenses 6 61 4 15 156 526 0 1 763 of which: non-personnel-related restructuring expenses 6 55 0 15 14 631 0 0 715 of which: restructuring expenses allocated from CC Services 6 478 115 72 416 (1,101) 0 21 0 Operating expenses (adjusted) 11,564 2,132 1,397 6,179 697 (1) 1,073 23,041 of which: net expenses for litigation, regulatory and similar matters 7 164 3 (2) 42 2 0 595 805 OOperating profit / (loss) before tax as reported 3,090 1,785 457 1,014 (856) (154) (1,126) 4,209 OOperating profit / (loss) before tax (adjusted) 3,678 1,778 558 1,524 (923) (70) (1,105) 5,439 11 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 2 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 3 Corporate Center Services operating expenses presented in this table are after service allocations to business divisions and other Corporate Center units. 4 Reflects a valuation gain on our equity ownership in SIX related to the sale of SIX Payment Services to Worldline. 5 Related to the increase of stake in and consolidation of UBS Securities China. Refer to “Note 32 Changes in organization and acquisitions and disposals of subsidiaries and businesses” in the “Consolidated financial statements” section of this report for more information. 6 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives for Global Wealth Management and Asset Management in 2018. 7 Reflects the net increase in / (release of) provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to ”Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information. Also includes recoveries from third parties of USD 29 million, USD 55 million and USD 13 million for the years ended 31 December 2018, 31 December 2017 and 31 December 2016, respectively. 8 Includes a gain on the sale of our investment in the London Clearing House in the Investment Bank in 2017, gains on sales of our investment in IHS Markit in the Investment Bank in 2017 and 2016, and a gain on the sale of our investment in Visa Europe in Global Wealth Management and Personal & Corporate Banking in 2016. Figures presented for periods prior to 2018 relate to financial assets available for sale. 9 Related to the disposal of foreign branches and subsidiaries. 10 Relates to the removal of the service period requirement for DCCP awards granted for the performance years 2012 and 2013. 71 2018 compared with 2017 Results We recorded net profit attributable to shareholders of USD 4,516 million in 2018, which included a net tax expense of USD 1,468 million. In 2017, net profit attributable to shareholders was USD 969 million, which included a net tax expense of USD 4,305 million, including a USD 2,939 million net write-down of deferred tax assets following the reduction in the US federal corporate tax rate after the enactment of the Tax Cuts and Jobs Act (TCJA) in the US during the fourth quarter of 2017. Profit before tax increased by USD 640 million, or 12%, to USD 5,991 million, mainly reflecting higher operating income. Operating income increased by USD 591 million, or 2%, reflecting a USD 373 million increase in net fee and commission income as well as USD 287 million higher net interest income and other net income from fair value changes on financial instruments. Operating expenses were broadly unchanged, mainly as USD 169 million higher expenses for depreciation, amortization and impairment of property, equipment, software and intangible assets were offset by USD 152 million lower general and administrative expenses. In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report adjusted results that exclude items that management believes are not representative of the underlying performance of our businesses. Such adjusted results are non-GAAP financial measures as defined by SEC regulations. These adjustments include restructuring expenses related to our CHF 2.1 billion cost reduction program, completed at the end of 2017 (referred to as our “legacy cost programs” in this report). We incurred restructuring expenses in connection with such legacy cost programs, as well as expenses relating to new restructuring initiatives, of USD 561 million and expect such amounts to be approximately USD 0.2 billion for the full year 2019. For the purpose of determining adjusted results for 2018, we excluded a gain of USD 460 million related to investments in associates, gains of USD 31 million on sale of real estate, gains of USD 25 million on sale of subsidiaries and businesses, a remeasurement loss of USD 270 million related to the increase of our shareholding in UBS Securities China, a gain of USD 241 million related to changes to the Swiss pension plan, and net restructuring expenses of USD 561 million. For 2017, we excluded gains of USD 153 million on sale of subsidiaries and businesses, gains of USD 137 million on sale of financial assets at fair value through OCI, net foreign currency translation losses of USD 16 million, expenses of USD 26 million related to the modification of terms for Deferred Contingent Capital Plan (DCCP) awards granted for the performance years 2012 and 2013, and net restructuring expenses of USD 1,192 million. On this adjusted basis, profit before tax decreased by USD 232 million, or 4%, to USD 6,063 million, reflecting USD 849 million higher adjusted operating expenses, partly offset by USD 617 million higher adjusted operating income. Operating income Total operating income was USD 30,213 million compared with USD 29,622 million. On an adjusted basis, total operating income increased by USD 617 million, or 2%, to USD 29,966 million, mainly due to a USD 373 million increase in net fee and commission income as well as USD 287 million higher net interest income and other net income from fair value changes on financial instruments. Net interest income and other net income from fair value changes on financial instruments For the year ended % change from USD million 331.12.18 31.12.17 31.12.16 31.12.17 Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income (AC / FVOCI) 3,710 5,018 5,403 (26) Net interest income from financial instruments measured at fair value through profit or loss (FVTPL) 2,315 1,638 1,084 41 Other net income from fair value changes on financial instruments 5,984 5,065 5,023 18 TTotal 12,008 11,721 11,510 2 Global Wealth Management 5,254 5,149 4,893 2 of which: net interest income 4,310 4,103 3,843 5 of which: transaction-based income from foreign exchange and other intermediary activity 1 944 1,046 1,050 (10) Personal & Corporate Banking 2,514 2,510 2,563 0 of which: net interest income 2,106 2,127 2,225 (1) of which: transaction-based income from foreign exchange and other intermediary activity 1 408 383 337 6 Asset Management (30) (24) (29) 23 Investment Bank2 4,812 4,363 4,330 10 Corporate Client Solutions 1,056 1,087 830 (3) Investor Client Services 3,756 3,276 3,500 15 Corporate Center2 (541) (278) (246) 95 CC – Services (159) (43) (90) 268 CC – Group ALM (554) (162) (96) 241 CC – Non-core and Legacy Portfolio 173 (72) (60) 11 Mainly includes spread-related income in connection with client-driven transactions, foreign currency translation effects and income and expenses from precious metals, which are included in the income statement line Other net income from fair value changes on financial instruments. The amounts reported on this line are one component of Transaction-based income in the management discussion and analysis of Global Wealth Management and Personal & Corporate Banking in the “Global Wealth Management” and “Personal & Corporate Banking” sections of this report. 2 Investment Bank and Corporate Center information is provided at the business line level rather than by financial statement reporting line in order to reflect the underlying business activities, which is consistent with the structure of their management discussion and analysis in the “Investment Bank” and “Corporate Center” sections of this report.Financial and operating performance 72 Financial and operating performance Group performance Net interest income and other net income from fair value changes on financial instruments Total combined net interest income and other net income from fair value changes on financial instruments increased by USD 287 million to USD 12,008 million. This was mainly driven by increases in the Investment Bank and Global Wealth Management, partly offset by a decrease in Corporate Center. Global Wealth Management In Global Wealth Management, net interest income increased by USD 207 million to USD 4,310 million, reflecting an increase in average margin on deposits and higher loan volumes, partly offset by the expiration of an interest rate hedge portfolio at the end of 2017, lower net income from Group structural risk management activities and higher funding costs for long-term debt that contributes to total loss-absorbing capacity. Transaction-based income from foreign exchange and other intermediary activity decreased by USD 102 million to USD 944 million, mainly due to lower client activity. Personal & Corporate Banking In Personal & Corporate Banking, net interest income decreased by USD 21 million to USD 2,106 million, primarily related to the expiration of an interest rate hedge portfolio at the end of 2017, as well as higher funding costs for long-term debt that contributes to total loss-absorbing capacity and lower banking book interest income. This was partly offset by higher deposit revenues. Transaction-based income from foreign exchange and other intermediary activity increased by USD 25 million to USD 408 million, mainly due to higher net income from foreign exchange transactions. Investment Bank In the Investment Bank, net interest income and other net income from fair value changes on financial instruments increased by USD 449 million to USD 4,812 million. This was driven by a USD 480 million increase in Investor Client Services, primarily in Foreign Exchange, Rates and Credit, mainly due to higher client activity levels and improved trading performance across the majority of products. 2018 also included the recognition of net income of around USD 100 million, comprised mainly of previously deferred day-1 profits, due to enhanced observability and revised valuations in the funding curve used to value UBS interest-linked notes. In addition, there was an increase in Equities, primarily in Financing Services and Derivatives, driven by increased client activity. In Corporate Client Solutions, net interest income and other net income from fair value changes on financial instruments was broadly stable at USD 1,056 million. Corporate Center In Corporate Center, net interest income and other net income from fair value changes on financial instruments decreased by USD 263 million, primarily reflecting a USD 392 million decrease in Corporate Center – Group Asset and Liability Management (Group ALM), mainly due to higher net interest expense in Group ALM’s unsecured funding portfolio. In addition, there was a USD 116 million decrease in Corporate Center – Services, primarily driven by higher funding costs relating to Corporate Center – Services’ balance sheet assets. These decreases were partly offset by a USD 245 million increase in Corporate Center – Non-core and Legacy Portfolio, primarily because 2018 included valuation gains on auction rate securities, which were measured at amortized cost in 2017 and are now measured at fair value through profit or loss effective 1 January 2018 upon adoption of IFRS 9. →Refer to “Note 3 Net interest income and other net income from fair value changes on financial instruments” in the “Consolidated financial statements” section of this report for more information Credit loss expense / recovery We adopted IFRS 9, Financial Instruments, effective 1 January 2018. IFRS 9 introduces a forward-looking expected credit loss (ECL) approach, which is intended to result in an earlier recognition of credit losses based on an ECL impairment approach compared with the incurred-loss impairment approach for financial instruments under IAS 39, Financial Instruments: Recognition and Measurement, and the loss-provisioning approach for financial guarantees and loan commitments under IAS 37, Provisions, Contingent Liabilities and Contingent Assets. Total net credit loss expenses were USD 118 million in 2018, reflecting net losses of USD 95 million related to credit-impaired (stage 3) positions, mainly in Personal & Corporate Banking and to a lesser extent in the Investment Bank, as well as net expected credit losses of USD 23 million related to stage 1 and 2 positions. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the adoption of IFRS 9 →Refer to “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on credit loss expense / recovery →Refer to the “Risk factors” section of this report for more information Credit loss (expense) / recovery For the year ended % change from USD million 331.12.18 31.12.17 31.12.16 31.12.17 Global Wealth Management (15) (8) (8) 89 Personal & Corporate Banking (56) (20) (6) 180 Investment Bank (38) (92) (11) (58) Corporate Center (8) (11) (12) (27) of which: Non-core and Legacy Portfolio (8) (11) (12) (33) TTotal (118) (131) (38) (10) 73 Net fee and commission income Net fee and commission income was USD 17,895 million compared with USD 17,522 million. Investment fund fees and fees for portfolio management and related services increased by USD 722 million to USD 12,710 million, mainly in Global Wealth Management, predominantly driven by higher average invested assets and an increase in mandate penetration during the year. M&A and corporate finance fees increased by USD 70 million to USD 768 million, primarily reflecting an increase in the Investment Bank due to higher revenues from both private transactions and merger and acquisition transactions. Other fee and commission expense increased by USD 220 million to USD 1,387 million, primarily in Asset Management, mainly due to the inclusion of fund administration expenses, which were reported as operating expenses prior to the sale of Asset Management’s fund administration business in October 2017. Underwriting fees decreased by USD 192 million to USD 811 million, mainly reflecting lower equity underwriting revenues in the Investment Bank. →Refer to “Note 4 Net fee and commission income” in the “Consolidated financial statements” section of this report for more information Other income Other income was USD 427 million compared with USD 511 million. Excluding the aforementioned adjusting items, which consist of gains related to investments in associates, gains on sales of subsidiaries and businesses, gains on sale of financial assets at fair value through OCI and real estate, a remeasurement loss related to UBS Securities China and net foreign currency translation losses, adjusted other income decreased by USD 56 million. This decrease was mainly due to higher gains on sale of financial assets at fair value through OCI in 2017, which were not treated as adjusting items. →Refer to “Note 5 Other income” in the “Consolidated financial statements” section of this report for more information →Refer to “Note 32 Changes in organization and acquisitions, sales and disposals of subsidiaries and businesses” in the “Consolidated financial statements” section of this report for more information on the increase of stake in and consolidation of UBS Securities China Operating expenses Total operating expenses were broadly unchanged at USD 24,222 million. Excluding net restructuring expenses of USD 561 million (2017: USD 1,192 million) and a gain of USD 241 million in 2018 related to changes to the Swiss pension plan, as well as expenses of USD 26 million in 2017 in the Investment Bank related to the modification of terms for DCCP awards granted for the performance years 2012 and 2013, adjusted total operating expenses increased by USD 849 million, or 4%, to USD 23,903 million. Personnel expenses Personnel expenses decreased by USD 67 million to USD 16,132 million, mainly reflecting a USD 259 million decrease in net restructuring expenses and a gain of USD 241 million in 2018 related to changes to the Swiss pension plan, largely offset by higher salary expenses. On an adjusted basis, personnel expenses increased by USD 459 million. Adjusted expenses for salaries increased by USD 472 million to USD 6,273 million, mainly in Corporate Center – Services, primarily driven by continued insourcing of certain activities and staff from third-party vendors to our Business Solutions Centers. This increase in salaries was partly offset by lower general and administrative expenses. Salary expenses also increased in Global Wealth Management. Adjusted expenses for total variable compensation decreased by USD 75 million, reflecting a decrease of USD 112 million in expenses for awards related to prior years, partly offset by USD 38 million higher expenses for current-year awards. Financial advisor variable compensation was broadly stable at USD 4,054 million, reflecting lower expenses for compensation commitments to recruited financial advisors, almost entirely offset by an increase in expenses due to higher compensable revenues. Adjusted other personnel expenses increased by USD 72 million, primarily due to an increase in costs for salary-related add-ons, recruitment and contractors, partly offset by lower expenses for pension and other post-employment benefit plans. →Refer to the “Compensation” section of this report for more information →Refer to “Note 6 Personnel expenses,” ”Note 29 Pension and other post-employment benefit plans” and “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information General and administrative expenses General and administrative expenses decreased by USD 152 million to USD 6,797 million. This was mainly due to USD 415 million lower net restructuring expenses, partly offset by USD 223 million higher net expenses for litigation, regulatory and similar matters. Net expenses for the UK and German bank levy were USD 58 million in 2018 and included a USD 45 million credit related to prior years. In 2017, net expenses for the UK and German bank levy were USD 20 million and included an USD 85 million credit related to prior years. On an adjusted basis, general and administrative expenses increased by USD 263 million, primarily due to the aforementioned increase in net expenses for litigation, regulatory and similar matters and USD 147 million higher expenses for rent and maintenance of IT and other equipment. This was partly offset by USD 66 million lower professional fees and a USD 52 million decrease in marketing and public relations costs.Financial and operating performance 74 Financial and operating performance Group performance Operating expenses For the year ended % change from USD million 331.12.18 31.12.17 31.12.16 31.12.17 Operating expenses as reported Personnel expenses 16,132 16,199 15,913 0 General and administrative expenses 6,797 6,949 7,517 (2) Depreciation and impairment of property, equipment and software 1,228 1,053 997 17 Amortization and impairment of intangible assets 65 71 93 (8) TTotal operating expenses as reported 24,222 24,272 24,519 0 Adjusting items Personnel expenses 45 570 763 of which: restructuring expenses 1 286 545 763 of which: a gain related to changes to the Swiss pension plan 2 (241) of which: expenses from modification of terms for certain DCCP awards 3 26 General and administrative expenses1 225 640 705 Depreciation and impairment of property, equipment and software1 50 7 11 TTotal adjusting items 319 1,217 1,479 Operating expenses (adjusted)4 Personnel expenses 16,087 15,628 15,150 3 of which: salaries 6,273 5,801 5,864 8 of which: total variable compensation 3,167 3,242 3,123 (2) of which: relating to current year 5 2,576 2,538 2,281 1 of which: relating to prior years 6 592 704 842 (16) of which: financial advisor variable compensation 7 4,054 4,064 3,740 0 of which: other personnel expenses 8 2,593 2,521 2,423 3 General and administrative expenses 6,572 6,309 6,812 4 of which: net expenses for litigation, regulatory and similar matters 657 434 805 51 of which: other general and administrative expenses 5,916 5,875 6,007 1 Depreciation and impairment of property, equipment and software 1,178 1,046 986 13 Amortization and impairment of intangible assets 65 71 93 (8) TTotal operating expenses (adjusted) 23,903 23,054 23,041 4 11 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives for Global Wealth Management and Asset Management in 2018. 2 Refer to “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of this report for more information. 3 Relates to the removal of the service period requirement for DCCP awards granted for the performance years 2012 and 2013. 4 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 5 Includes expenses relating to performance awards and other variable compensation for the respective performance year. 6 Consists of amortization of prior years’ awards relating to performance awards and other variable compensation. 7 Financial advisor variable compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, new assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 8 Consists of expenses related to contractors, social security, pension and other post-employment benefit plans and other personnel expenses. Refer to “Note 6 Personnel expenses” in the “Consolidated financial statements” section of this report for more information. We believe that the industry continues to operate in an environment in which expenses associated with litigation, regulatory and similar matters will remain elevated for the foreseeable future and we continue to be exposed to a number of significant claims and regulatory matters. The outcome of many of these matters, the timing of a resolution, and the potential effects of resolutions on our future business, financial results or financial condition are extremely difficult to predict. →Refer to “Note 7 General and administrative expenses” and “Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information Depreciation, amortization and impairment Depreciation, amortization and impairment of property, equipment, software and intangible assets was USD 1,293 million compared with USD 1,124 million, mainly resulting from higher expenses for internally generated capitalized software, driven by newly developed software that has been placed in service over the last 12 months, and higher impairment costs. On an adjusted basis, depreciation, amortization and impairment of property, equipment, software and intangible assets increased by USD 126 million, primarily due to the aforementioned increase in expenses for internally generated capitalized software. →Refer to “Note 15 Property, equipment and software” and “Note 16 Goodwill and intangible assets” in the “Consolidated financial statements” section of this report for more information 75 Tax We recognized an income tax expense of USD 1,468 million for 2018, compared with an income tax expense of USD 4,305 million for 2017. The 2018 income tax expense reflects current tax expenses of USD 884 million, which primarily relate to taxable profits of UBS Switzerland AG and other entities. It also includes a net deferred tax expense of USD 859 million, which primarily relates to the amortization of deferred tax assets (DTAs) previously recognized in relation to tax losses carried forward and deductible temporary differences to reflect their offset against profits for the year. In addition, following the corporate tax reform in the US at the end of 2017 and the reduction in timeframe between the end of our seven-year profit forecast period and the expiry of our brought-forward US tax losses, we have reviewed our approach to the remeasurement of our US DTAs. This review resulted in the recognition of a net tax benefit during the year of USD 275 million, comprised of as follows: – The write-off of a Swiss temporary difference DTA of USD 1,617 million relating to UBS AG’s investment in our US intermediate holding company (US IHC), UBS Americas Holding LLC. The write-off occurred because the temporary difference between the tax and accounting values in respect of UBS AG’s investment in the US IHC is no longer expected to reverse in the foreseeable future, reflecting the expected repatriation of a significant portion of future US earnings. – A net increase in DTAs of USD 1,180 million, which is the sum of two related items. We recognized new US temporary difference DTAs of USD 2,134 million as a result of tax elections made in the fourth quarter of 2018 to capitalize certain historic real estate costs for US tax purposes that will be amortized over a period of up to 39 years. These elections also resulted in a reduction in recognized US tax loss DTAs of USD 954 million, because expected future taxable profits otherwise available against which to utilize brought-forward tax losses were reduced by the expected future amount of capitalized real estate cost amortization. – A current US state and local tax expense of USD 160 million resulting from the real estate capitalization elections. – An increase in recognized US DTAs recorded at the level of UBS Americas Inc. of USD 1,367 million, reflecting the elimination of the seven-year profit forecast period limit for US tax loss DTAs as well as the transfer by UBS AG of US shareholdings in certain profitable subsidiaries to UBS Americas Inc. – A decrease in recognized US DTAs for UBS AG of USD 495 million, which mainly relates to the transfer of the shareholdings referred to above. The 2017 income tax expense of USD 4,305 million included a deferred tax expense of USD 3,415 million, which primarily related to a net write-down of DTAs in respect of the US federal corporate tax rate reduction included in the TCJA enacted in the fourth quarter of 2017. It also included a current tax expense of USD 890 million, which related to taxable profits of UBS Switzerland AG and other entities. Tax loss DTAs at the level of UBS Americas Inc. will begin to be amortized with effect from 1 January 2019. For 2019, we expect a full-year tax rate of approximately 25%, of which 14% relates to current tax expenses. →Refer to “Note 8 Income taxes” in the “Consolidated financial statements” section of this report for more information →Refer to the “Risk factors” section of this report for more information Total comprehensive income attributable to shareholders In 2018, total comprehensive income attributable to shareholders was USD 4,225 million, reflecting net profit of USD 4,516 million, partly offset by negative other comprehensive income (OCI), net of tax, of USD 290 million. Foreign currency translation OCI was negative USD 541 million in 2018, mainly resulting from the weakening of the Swiss franc, the euro and the British pound against the US dollar. In 2017, OCI related to foreign currency translation was positive USD 1,564 million. OCI related to cash flow hedges was negative USD 269 million, mainly reflecting a decrease in net unrealized gains on hedging derivatives resulting from increases in the relevant long- term interest rates. In 2017, OCI related to cash flow hedges was negative USD 635 million. OCI associated with financial assets measured at fair value through OCI was negative USD 45 million, compared with negative USD 91 million, reflecting net unrealized losses following increases in the relevant US dollar long-term interest rates in 2018. OCI related to own credit on financial liabilities designated at fair value was positive USD 509 million and primarily reflected a widening of credit spreads. In 2017, OCI related to own credit on financial liabilities designated at fair value was negative USD 317 million, primarily reflecting a tightening of credit spreads. Defined benefit plan OCI was USD 56 million compared with USD 296 million. Total pre-tax OCI related to the Swiss defined benefit plan was negative USD 352 million. This reflected a net gain of USD 242 million from the remeasurement of the defined benefit obligation (DBO) which was more than offset by a loss of USD 523 million due to a negative return on plan assets and a loss of USD 71 million related to an increase in the effect of the IFRS asset ceiling. The net gain of USD 242 million related to the DBO remeasurement was mainly driven by a gain of USD 776 million due to an increase in the applicable discount rate, partly offset by an experience loss of USD 397 million (reflecting the effects of differences between the previous actuarial assumptions and what actually occurred) and a loss of USD 124 million due to an increase in the rate of interest credit on retirement savings. Total pre-tax OCI related to UK defined benefit plans was positive USD 132 million, reflecting OCI gains of USD 269 million from the remeasurement of the DBO, primarily driven by a gain of USD 220 million due to an increase in the applicable discount rate. This was partly offset by OCI losses of USD 136 million due to a negative return on plan assets.Financial and operating performance 76 Financial and operating performance Group performance The total pre-tax OCI loss of USD 220 million was more than offset by a net tax benefit of USD 276 million, mainly due to the recognition of temporary difference DTAs in the US in the fourth quarter of 2018, following our review of the approach used to remeasure our US DTAs and the timing for recognizing deferred taxes. →Refer to “Statement of comprehensive income” in the “Consolidated financial statements” section of this report for more information →Refer to ”Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of this report for more information on defined benefit plans Sensitivity to interest rate movements As of 31 December 2018, we estimate that a parallel shift in yield curves by +100 basis points could lead to a combined increase in annual net interest income of approximately USD 0.7 billion in Global Wealth Management and Personal & Corporate Banking. Of this increase, approximately USD 0.3 billion and USD 0.2 billion would result from changes in US dollar and euro interest rates, respectively. The immediate effect on shareholders’ equity of such a shift in yield curves would be a decrease of approximately USD 2.0 billion recognized in OCI, of which approximately USD 1.5 billion would result from changes in US dollar interest rates. The immediate effect on regulatory capital would be immaterial as OCI from cash flow hedges is not recognized in capital and the effect from debt instruments measured at fair value through OCI would be offset by a positive effect from pension fund assets and liabilities. The aforementioned estimates are based on a hypothetical scenario of an immediate increase in interest rates, equal across all currencies and relative to implied forward rates applied to our banking book and financial assets measured at fair value through OCI. These estimates further assume no change to balance sheet size and structure, constant foreign exchange rates and no specific management action. Net profit attributable to non-controlling interests Net profit attributable to non-controlling interests was USD 7 million in 2018, compared with USD 77 million in the prior year, mainly because a EUR 600 million non-Basel III-compliant hybrid tier 1 capital instrument was redeemed in the fourth quarter of 2017. For 2019, we currently expect net profit attributable to non- controlling interests to be less than USD 10 million. Key figures Return on tangible equity The return on tangible equity (RoTE) was 10.0% compared with 2.2%, mainly because the fourth quarter of 2017 included a USD 2,939 million net write-down of DTAs following a reduction in the US federal corporate tax rate after the enactment of the TCJA in the US. The adjusted RoTE excluding deferred tax expense / benefit and DTAs was 12.9% compared with 13.7%, and was below our 2018 target of approximately 15%. Return on common equity tier 1 (CET1) capital The return on CET1 capital (RoCET1) was 13.1% compared with 3.0%, mainly because the fourth quarter of 2017 included the aforementioned net write-down of DTAs. Excluding this net DTA write-down from net profit attributable to shareholders, the RoCET1 would have been 12.0% in 2017. Cost / income ratio The cost / income ratio was 79.9% compared with 81.6%. On an adjusted basis, the cost / income ratio was 79.5% compared with 78.2%, and was above our over-the-cycle target of below 75%. Common equity tier 1 capital ratio / risk-weighted assets Our CET1 capital ratio was 12.9%, a decrease of 0.8 percentage points compared with 31 December 2017, in line with our capital guidance, reflecting a USD 0.6 billion increase in CET1 capital and a USD 20.1 billion increase in risk-weighted assets (RWA). RWA increased by USD 20.1 billion to USD 263.7 billion as of 31 December 2018, primarily due to a USD 19.1 billion increase in methodology, policy changes and model updates. →Refer to the “Investment Bank,” “Corporate Center” and “Capital management” sections of this report for more information Common equity tier 1 leverage ratio / leverage ratio denominator Our CET1 leverage ratio was 3.77%, an increase of 0.08 percentage points compared with 31 December 2017, slightly above our guidance of approximately 3.7%, reflecting the aforementioned increase in CET1 capital and a USD 4.4 billion decrease in the leverage ratio denominator (LRD). The LRD decreased by USD 4.4 billion to USD 904.6 billion as of 31 December 2018, primarily driven by decreases from currency effects of USD 12.1 billion and incremental netting and collateral mitigation as well as policy changes of USD 1.5 billion, partly offset by a USD 9.1 billion increase in asset size and other. →Refer to the “Investment Bank,” “Corporate Center” and “Capital management” sections of this report for more information Going concern leverage ratio Our going concern leverage ratio was 5.1%, an increase of 0.4 percentage points compared with 31 December 2017, reflecting a USD 3.3 billion increase in going concern capital, partly offset by the aforementioned decrease in LRD. →Refer to the “Capital management” section of this report for more information 77 Net new money and invested assets Management’s discussion and analysis on net new money and invested assets is provided in the “Global Wealth Management” and “Asset Management” sections of this report. Seasonal characteristics Our revenues may show seasonal patterns, notably in the Investment Bank and Global Wealth Management. These business divisions typically show the highest client activity levels in the first quarter, with lower levels throughout the rest of the year, especially during the summer months and end-of-year holiday season. Other seasonal factors that may affect our businesses include annual tax payments (which are concentrated in the second quarter in the US) and asset withdrawals, which tend to occur in the fourth quarter. Return on equity As of or for the year ended USD million, except where indicated 331.12.18 31.12.17 31.12.16 Net profit Net profit attributable to shareholders 4,516 969 3,348 Amortization and impairment of intangible assets 65 71 93 Pre-tax adjusting items1,2 73 944 1,230 Tax effect on adjusting items3 (16) (208) (271) Adjusted net profit attributable to shareholders 4,638 1,776 4,400 of which: deferred tax (expense) / benefit 4 (425) (3,414) 43 Adjusted net profit attributable to shareholders excluding deferred tax expense / benefit 5,062 5,190 4,357 Equity Equity attributable to shareholders 52,928 52,495 52,916 Less: goodwill and intangible assets 6,647 6,563 6,442 Tangible equity attributable to shareholders 46,281 45,932 46,474 of which: DTAs not eligible as common equity tier 1 capital 5 6,693 6,826 10,059 Tangible equity attributable to shareholders excluding DTAs 39,588 39,106 36,415 Common equity tier 1 capital 34,119 33,516 30,156 Return on equity Return on equity (%) 8.6 1.8 6.1 Return on tangible equity (%) 10.0 2.2 7.1 Adjusted return on tangible equity (%)1 10.1 3.7 9.1 Adjusted return on tangible equity excluding deferred tax expense / benefit and DTAs (%)1,6 12.9 13.7 11.3 Return on common equity tier 1 capital (%)7 13.1 3.0 10.9 11 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 2 Refer to the “Performance by business division and Corporate Center unit reported and adjusted” table in this section for more information. 3 Generally reflects an indicative tax rate of 22% on pre-tax adjusting items. 4 Deferred tax expense / benefit in respect to taxable profits and any remeasurements of DTAs, such as the net write-down due to the Tax Cuts and Jobs Act enacted in the fourth quarter of 2017. 5 DTAs that do not qualify as common equity tier 1 (CET1) capital, reflecting DTAs recognized for tax loss carry-forwards of USD 6,107 million as of 31 December 2018 (31 December 2017: USD 5,947 million; 31 December 2016: USD 8,256 million) as well as DTAs on temporary differences, excess over threshold of USD 586 million as of 31 December 2018 (31 December 2017: USD 879 million; 31 December 2016: USD 1,803 million), in accordance with Swiss SRB rules. Refer to the “Capital management” section of this report for more information. 6 Calculated as adjusted net profit / loss attributable to shareholders excluding deferred tax expense / benefit, such as the net write-down due to the Tax Cuts and Jobs Act enacted in the fourth quarter of 2017, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. 7 Calculated as net profit / loss attributable to shareholders divided by average CET1 capital.Financial and operating performance 78 Financial and operating performance Group performance Net new money1 For the year ended USD billion 331.12.18 31.12.17 31.12.16 GGlobal Wealth Management 24.7 44.8 43.0 AAsset Management 32.2 59.5 (16.2) of which: excluding money market flows 24.8 48.7 (23.0) of which: money market flows 7.5 10.8 6.8 1 Net new money excludes interest and dividend income. Invested assets As of % change from USD billion 31.12.18 31.12.17 31.12.16 31.12.17 Global Wealth Management 2,260 2,403 2,060 (6) Asset Management 781 796 645 (2) of which: excluding money market funds 696 719 580 (3) of which: money market funds 85 78 65 9 79 2017 compared with 2016 Results We recorded net profit attributable to shareholders of USD 969 million in 2017, which included a net tax expense of USD 4,305 million, mainly driven by a deferred tax expense of USD 3,414 million, primarily related to a net write-down of DTAs in respect of the US federal corporate tax reduction included in the TCJA enacted in the fourth quarter of 2017. In 2016, net profit attributable to shareholders was USD 3,348 million, which included a net tax expense of USD 777 million. Profit before tax increased by USD 1,142 million, or 27%, to USD 5,351 million, reflecting higher operating income and a reduction in operating expenses. Operating income increased by USD 893 million, or 3%, mainly due to USD 929 million higher net fee and commission income, primarily in Global Wealth Management. Operating expenses decreased by USD 247 million, or 1%, mainly due to USD 568 million lower general and administrative expenses, primarily reflecting USD 371 million lower net expenses for provisions for litigation, regulatory and similar matters. In addition to reporting our results in accordance with International Financial Reporting Standards (IFRS), we report adjusted results that exclude items that management believes are not representative of the underlying performance of our businesses. Such adjusted results are non-GAAP financial measures as defined by SEC regulations. For the purpose of determining adjusted results for 2017, we excluded gains of USD 153 million on sale of subsidiaries and businesses, gains of USD 137 million on sale of financial assets at fair value through OCI, net foreign currency translation losses of USD 16 million, expenses of USD 26 million related to the modification of terms for DCCP awards granted for the performance years 2012 and 2013, and net restructuring expenses of USD 1,192 million. For 2016, we excluded gains of USD 213 million on sale of financial assets at fair value through OCI, gains of USD 123 million on sale of real estate, gains of USD 21 million related to investments in associates, net foreign currency translation losses of USD 84 million, losses of USD 24 million on sales of subsidiaries and businesses, and net restructuring expenses of USD 1,479 million. On this adjusted basis, profit before tax increased by USD 856 million, or 16%, to USD 6,295 million, reflecting USD 869 million higher adjusted operating income and USD 13 million higher adjusted operating expenses. Operating income Total operating income was USD 29,622 million, compared with USD 28,729 million. On an adjusted basis, total operating income increased by USD 869 million, or 3%, to USD 29,349 million, mainly reflecting an increase of USD 929 million in net fee and commission income. Net interest income and other net income from fair value changes on financial instruments Total combined net interest income and other net income from fair value changes on financial instruments increased by USD 211 million to USD 11,721 million. Global Wealth Management In Global Wealth Management, net interest income increased by USD 260 million to USD 4,103 million, primarily due to an increase in average margin on deposits as well as higher loan volumes, partly offset by higher funding costs for long-term debt that contributes to total loss-absorbing capacity and lower banking book interest income. Transaction-based income from foreign exchange and other intermediary activity was broadly stable. Personal & Corporate Banking Personal & Corporate Banking net interest income decreased by USD 98 million to USD 2,127 million, mainly due to higher funding costs for long-term debt that contributes to total loss- absorbing capacity and lower banking book interest income. This was partly offset by higher deposit revenues. Transaction-based income from foreign exchange and other intermediary activity increased by USD 46 million to USD 383 million, mainly due to higher revenues from foreign exchange transactions. Investment Bank In the Investment Bank, net interest income and other net income from fair value changes on financial instruments was broadly stable at USD 4,363 million, reflecting a USD 257 million increase in Corporate Client Solutions, mainly in Equity Capital Markets and Risk Management, which was almost entirely offset by a USD 224 million decrease in Investor Client Services. This decrease reflected lower revenues in Foreign Exchange, Rates and Credit, partly offset by higher revenues in Equities. Corporate Center In Corporate Center, net interest income and other net income from fair value changes on financial instruments decreased by USD 32 million to negative USD 278 million, mainly due to a USD 66 million decrease in Corporate Center – Group ALM. This was largely offset by an increase of USD 47 million in Corporate Center – Services, mainly reflecting higher treasury-related income from Corporate Center – Group ALM. Credit loss expense / recovery The net credit loss expense was USD 131 million compared with USD 38 million, mainly reflecting USD 81 million higher expenses in the Investment Bank, primarily resulting from a margin loan to a single client following a significant decrease in the value of the collateral.Financial and operating performance 80 Financial and operating performance Group performance Net fee and commission income Net fee and commission income increased by USD 929 million to USD 17,522 million. Fees for portfolio management and related services increased by USD 597 million to USD 7,666 million, primarily driven by Global Wealth Management, mainly related to higher invested assets. Underwriting fees increased by USD 264 million to USD 1,003 million, largely due to higher equity underwriting revenues, mainly in the Investment Bank. Other income Other income was USD 511 million compared with USD 663 million. Excluding the aforementioned adjusting items, which consist of gains on sales of subsidiaries and businesses, gains on sales of financial assets at fair value through OCI, gains related to investments in associates and net foreign currency translation losses, adjusted other income decreased by USD 178 million. This decrease was mainly due to lower gains on sale of financial assets at fair value through OCI and a decrease in other sundry income. Operating expenses Total operating expenses decreased by USD 247 million, or 1%, to USD 24,272 million. Excluding net restructuring expenses of USD 1,192 million, compared with USD 1,479 million in 2016, and expenses of USD 26 million in 2017 in the Investment Bank related to the modification of terms for DCCP awards granted for the performance years 2012 and 2013, adjusted total operating expenses were broadly stable at USD 23,054 million. Personnel expenses Personnel expenses increased by USD 286 million to USD 16,199 million and included net restructuring expenses of USD 545 million in 2017, mainly related to our transitioning activities to nearshore and offshore locations, compared with USD 763 million in 2016. In addition, 2017 included expenses of USD 26 million in the Investment Bank related to the modification of terms for DCCP awards granted for the performance years 2012 and 2013. On an adjusted basis, personnel expenses increased by USD 478 million to USD 15,628 million. Adjusted expenses for salaries decreased by USD 63 million to USD 5,801 million, mainly reflecting our nearshoring and offshoring initiatives and cost reduction programs. Adjusted expenses for total variable compensation increased by USD 119 million, reflecting an increase of USD 257 million in expenses for current-year awards, partly offset by USD 138 million lower expenses for awards related to prior years. Adjusted other personnel expenses increased by USD 98 million, primarily due to USD 58 million higher social security expenses. Financial advisor variable compensation increased by USD 324 million to USD 4,064 million, mainly reflecting higher compensable revenues and changes we announced in 2016 to our financial advisor compensation model. General and administrative expenses General and administrative expenses decreased by USD 568 million to USD 6,949 million. Excluding net restructuring expenses of USD 640 million compared with USD 705 million, adjusted general and administrative expenses decreased by USD 503 million, primarily reflecting USD 371 million lower net expenses for provisions for litigation, regulatory and similar matters, a decrease in expenses for marketing and public relations, and lower professional fees. In addition, the net expense for the UK and German bank levy was USD 20 million in 2017, compared with USD 124 million, primarily because 2017 included an USD 85 million credit related to prior years. Tax We recognized an income tax expense of USD 4,305 million for 2017, which included a net Swiss tax expense of USD 562 million and a net non-Swiss tax expense of USD 3,743 million. The Swiss tax expense included a current tax expense of USD 455 million related to taxable profits earned by Swiss subsidiaries, against which no losses were available to offset. In addition, it included a deferred tax expense of USD 107 million, which reflected a net decrease in DTAs previously recognized in relation to tax losses carried forward and temporary differences. 81 The non-Swiss tax expense included a current tax expense of USD 435 million related to taxable profits earned by non-Swiss subsidiaries and branches, against which no losses were available to offset. In addition, it included a deferred tax expense of USD 3,308 million, which reflected a net decrease in DTAs previously recognized in relation to tax losses carried forward and temporary differences and mainly related to the write-down of US DTAs resulting from the reduction in the federal corporate tax rate to 21% from 35% after the enactment of the TCJA during the fourth quarter of 2017. The tax expense of USD 4,305 million for 2017 was higher than the tax expense of USD 777 million in 2016, mainly because 2017 included a net write-down of DTAs of USD 2,939 million resulting from the aforementioned reduction in the US federal corporate tax rate. Total comprehensive income attributable to shareholders In 2017, total comprehensive income attributable to shareholders was positive USD 1,787 million, reflecting net profit of USD 969 million and positive OCI of USD 818 million. Foreign currency translation OCI was USD 1,564 million, mainly resulting from the strengthening of the Swiss franc, euro and British pound against the US dollar. In 2016, foreign currency translation OCI was negative USD 458 million. Defined benefit plan OCI was positive USD 296 million compared with negative USD 829 million. Total pre-tax OCI related to UK defined benefit plans was positive USD 305 million, reflecting OCI gains of USD 215 million from the return on plan assets and an OCI gain of USD 90 million due to a net decrease in the DBO. The OCI gain of USD 90 million from the net DBO decrease reflected gains of USD 82 million related to changes in life expectancy assumptions, a gain of USD 60 million due to a decline in the rate of pension increase and an OCI experience gain of USD 50 million (reflecting the effects of differences between the previous actuarial assumptions and what actually occurred), partly offset by a loss of USD 102 million from a decrease in the applicable discount rate. Total pre-tax OCI related to the Swiss defined benefit plan was negative USD 79 million. This reflected an OCI gain of USD 1,640 million from the return on plan assets, which was more than offset by an OCI loss of USD 1,417 million, representing an increase in the excess of the pension surplus over the estimated future economic benefit, and an OCI loss of USD 301 million due to the DBO remeasurement. The OCI loss of USD 301 million related to the DBO remeasurement mainly reflected a loss of USD 165 million from a decrease in the applicable discount rate and an OCI experience loss of USD 154 million, reflecting the effects of differences between the previous actuarial assumptions and what actually occurred. OCI related to cash flow hedges was negative USD 635 million, primarily reflecting a decrease in unrealized gains on hedging derivatives that resulted from increases in long-term interest rates. In 2016, OCI related to cash flow hedges was negative USD 684 million. OCI related to own credit on financial liabilities designated at fair value was negative USD 317 million compared with negative USD 130 million, and mainly reflected a tightening of credit spreads in 2017. OCI associated with financial assets measured at fair value through OCI was negative USD 91 million compared with negative USD 58 million and primarily reflected the reclassification of net gains from OCI to the income statement upon sale of assets, partly offset by net unrealized gains following decreases in the relevant long-term interest rates. Net profit attributable to non-controlling interests Net profit attributable to non-controlling interests was USD 77 million in 2017 compared with USD 84 million in the prior year. Financial and operating performance 82 Financial and operating performance Global Wealth Management Global Wealth Management Global Wealth Management1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Net interest income 4,310 4,103 3,843 5 Recurring net fee income2 9,585 8,968 8,472 7 Transaction-based income3 2,911 3,159 2,887 (8) Other income 151 65 55 133 Income 16,956 16,295 15,257 4 Credit loss (expense) / recovery4 (15) (8) (8) 89 TTotal operating income 16,941 16,287 15,249 4 Personnel expenses 7,683 7,674 7,254 0 Salaries and other personnel costs 3,628 3,610 3,514 1 Financial advisor variable compensation5,6 3,470 3,310 2,931 5 Compensation commitments with recruited financial advisors5,7 584 754 808 (23) General and administrative expenses 1,724 1,263 1,221 36 Services (to) / from Corporate Center and other business divisions 3,852 3,726 3,627 3 of which: services from CC – Services 3,740 3,626 3,520 3 Depreciation and impairment of property, equipment and software 4 4 4 (2) Amortization and impairment of intangible assets 50 49 54 2 TTotal operating expenses 13,313 12,717 12,159 5 BBusiness division operating profit / (loss) before tax 3,628 3,571 3,090 2 Adjusted results8 TTotal operating income as reported 16,941 16,287 15,249 4 of which: gain / (loss) on sale of financial assets at fair value through OCI 9 31 of which: gain / (loss) on sale of subsidiaries and businesses (24) of which: gains related to investments in associates 101 TTotal operating income (adjusted) 16,840 16,287 15,242 3 TTotal operating expenses as reported 13,313 12,717 12,159 5 of which: personnel-related restructuring expenses 10 34 39 61 of which: non-personnel-related restructuring expenses 10 16 75 55 of which: restructuring expenses allocated from CC – Services 10 209 474 478 of which: gain related to changes to the Swiss pension plan (66) TTotal operating expenses (adjusted) 13,120 12,129 11,564 8 BBusiness division operating profit / (loss) before tax as reported 3,628 3,571 3,090 2 BBusiness division operating profit / (loss) before tax (adjusted) 3,720 4,159 3,678 (11) Performance measures11 Pre-tax profit growth (%) 1.6 15.5 (13.4) Cost / income ratio (%) 78.5 78.0 79.7 Net new money growth (%) 1.0 2.2 2.2 Net margin on invested assets (bps)12 15 16 15 (5) Adjusted performance measures8,11 Pre-tax profit growth (%) (10.6) 13.1 (3.8) Cost / income ratio (%) 77.8 74.4 75.8 Net new money growth (%) 1.0 2.2 2.2 Net margin on invested assets (bps)13 16 19 18 (16) 83 Global Wealth Management (continued)1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Additional information Recurring income14 13,894 13,072 12,315 6 Recurring income as a percentage of income (%) 81.9 80.2 80.7 Average attributed equity (USD billion)15 13.4 13.0 6.1 3 Return on attributed equity (%)15 27.0 27.5 50.7 Return on attributed tangible equity (%)15 44.0 45.5 Risk-weighted assets (USD billion)15 60.5 58.1 48.7 4 of which: held by Global Wealth Management (USD billion) 58.2 55.9 48.7 4 of which: held by CC – Group ALM on behalf of Global Wealth Management (USD billion) 16 2.3 2.3 2 Leverage ratio denominator (USD billion)15 270.6 268.7 180.4 1 of which: held by Global Wealth Management (USD billion) 207.4 205.0 180.4 1 of which: held by CC – Group ALM on behalf of Global Wealth Management (USD billion) 16 63.2 63.7 (1) Goodwill and intangible assets (USD billion) 5.2 5.1 5.0 2 Net new money (USD billion) 24.7 44.8 43.0 Invested assets (USD billion) 2,260 2,403 2,060 (6) Gross margin on invested assets (bps) 71 73 75 (3) Adjusted gross margin on invested assets (bps) 70 73 75 (3) Client assets (USD billion) 2,519 2,661 2,297 (5) Loans, gross (USD billion)17 174.7 172.5 151.7 1 Due to customers (USD billion)17 271.8 278.0 278.1 (2) Recruitment loans to financial advisors5 2,296 2,619 3,033 (12) Other loans to financial advisors5 994 580 462 71 Personnel (full-time equivalents) 23,618 23,177 23,247 2 Advisors (full-time equivalents) 10,677 10,616 10,884 1 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Recurring net fee income consists of fees for services provided on an ongoing basis such as portfolio management fees, asset-based investment fund fees, custody fees and account-keeping fees, which are generated on client assets. 3 Transaction-based income consists of the non-recurring portion of net fee and commission income, mainly consisting of brokerage and transaction-based investment fund fees as well as credit card fees and fees for payment transactions, together with Other net income from fair value changes on financial instruments. 4 Upon adoption of IFRS 9 effective 1 January 2018, credit loss expenses include credit losses on recruitment loans to financial advisors previously recognized in personnel expenses. Prior periods were not restated for this change. 5 Relates to licensed professionals with the ability to provide investment advice to clients in the Americas. 6 Financial advisor variable compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated on the basis of financial advisor productivity, firm tenure, new assets and other variables. 7 Compensation commitments with recruited financial advisors represent expenses related to compensation commitments granted to financial advisors at the time of recruitment that are subject to vesting requirements. 8 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 9 Includes a gain on the sale of our investment in Visa Europe in 2016. Figures presented for periods prior to 2018 relate to financial assets available for sale. 10 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives in 2018. 11 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 12 Calculated as operating profit before tax / average invested assets. 13 Calculated as adjusted operating profit before tax / average invested assets. 14 Recurring income consists of net interest income and recurring net fee income. 15 Refer to the “Capital management” section of this report for more information. 16 Represents risk-weighted assets and leverage ratio denominator held by Corporate Center − Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 17 Loans and Due to customers in this table include customer brokerage receivables and payables, respectively, which with the adoption of IFRS 9 effective 1 January 2018 have been reclassified to a separate reporting line on the balance sheet. Regional breakdown of performance measures1 As of or for the year ended 31.12.18 USD billion, except where indicated Americas EMEA Asia Pacific Switzerland Total of regions2 of which: ultra high net worth (UHNW) Net new money (4.1) 10.4 17.3 3.2 26.7 24.8 Net new money growth (%) (0.3) 1.9 4.5 1.5 1.1 2.1 Invested assets 1,200 500 357 200 2,257 1,127 Loans, gross 59.53 37.5 42.3 35.0 174.2 Client advisors (full-time equivalents) 6,850 1,837 1,138 737 10,561 1,043 4 1 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 2 Excluding minor functions with 116 advisors, USD 3 billion of invested assets, USD 0.5 billion of loans and USD 2 billion of net new money outflows in 2018. 3 Loans include customer brokerage receivables, which with the adoption of IFRS 9 effective 1 January 2018 have been reclassified to a separate reporting line on the balance sheet. 4 Represents advisors who exclusively serve ultra high net worth clients in a globally managed unit.Financial and operating performance 84 Financial and operating performance Global Wealth Management 2018 compared with 2017 Results Profit before tax increased by USD 57 million, or 2%, to USD 3,628 million, including a USD 101 million valuation gain on our equity ownership in SIX related to the sale of SIX Payment Services to Worldline and a credit of USD 66 million related to our Swiss pension plan. Adjusted profit before tax decreased by USD 439 million, or 11%, to USD 3,720 million, reflecting higher operating expenses, partly offset by higher operating income. Operating income Total operating income increased by USD 654 million, or 4%, to USD 16,941 million. Excluding the aforementioned valuation gain, adjusted total operating income increased by USD 553 million, or 3%, to USD 16,840 million, mainly driven by higher recurring net fee income and net interest income, partly offset by lower transaction-based income. Net interest income increased by USD 207 million to USD 4,310 million, due to an increase in average margin on deposits, as well as higher loan volumes, partly offset by the expiration of an interest rate hedge portfolio at the end of 2017, lower net income from Group structural risk management activities and higher funding costs for long-term debt that contributes to total loss-absorbing capacity. →Refer to “Corporate Center – Group Asset and Liability Management” in this section of the report for more information on net income from Group structural risk management Recurring net fee income increased by USD 617 million to USD 9,585 million, predominantly driven by higher average invested assets and an increase in mandate penetration during the year. Transaction-based income decreased by USD 248 million to USD 2,911 million, mainly due to lower client activity in the Americas and in Asia Pacific. Other income increased by USD 86 million to USD 151 million. Excluding the aforementioned valuation gain, adjusted other income decreased by USD 15 million to USD 50 million. Operating expenses Total operating expenses increased by USD 596 million, or 5%, to USD 13,313 million and adjusted total operating expenses by USD 991 million, or 8%, to USD 13,120 million. Personnel expenses increased by USD 9 million to USD 7,683 million and, excluding the aforementioned credit related to changes to our Swiss pension plan, adjusted personnel expenses increased by USD 79 million to USD 7,714 million. This increase was mainly due to higher salaries and staff levels, partly offset by lower variable compensation not related to financial advisors. In the Americas, higher financial advisor variable compensation was offset by lower expenses for compensation commitments to recruited financial advisors. General and administrative expenses increased by USD 461 million to USD 1,724 million and adjusted general and administrative expenses increased by USD 520 million to USD 1,708 million, predominantly driven by higher provisions for litigation matters and higher regulatory-related expenses. Net expenses for services from Corporate Center and other business divisions increased by USD 126 million to USD 3,852 million and adjusted net expenses for services increased by USD 392 million to USD 3,643 million, mainly reflecting higher expenses from Group Technology and Group Risk Control. Cost / income ratio The cost / income ratio increased to 78.5% from 78.0%. On an adjusted basis, the ratio increased to 77.8% from 74.4% and was above our 2018 target range of 65–75%. Net new money Net new money inflows were USD 24.7 billion compared with inflows of USD 44.8 billion. The net new money growth rate was 1.0% compared with 2.2%, and was below our 2018 target range of 2–4%. Net new money was predominantly driven by inflows in Asia Pacific and EMEA, partly offset by outflows in the Americas, which included a single outflow of USD 4.5 billion from a corporate employee share program. Invested assets Invested assets decreased by USD 143 billion to USD 2,260 billion, due to negative market performance of USD 144 billion, negative currency effects of USD 19 billion and reclassifications of USD 12 billion. This was partly offset by net new money inflows of USD 25 billion and an increase of USD 7 billion related to the acquisition of subsidiaries and businesses. Mandate penetration increased to 33.6% from 32.9%. Personnel Global Wealth Management employed 23,618 personnel as of 31 December 2018, an increase of 441 compared with 23,177 personnel as of 31 December 2017. The number of advisors increased by 61 to 10,677. 85 2017 compared with 2016 Results Profit before tax increased by USD 481 million, or 16%, to USD 3,571 million and adjusted profit before tax increased by USD 481 million, or 13%, to USD 4,159 million, reflecting higher operating income, partly offset by higher operating expenses. Operating income Total operating income increased by USD 1,038 million, or 7%, to USD 16,287 million and adjusted total operating income increased by USD 1,045 million, or 7%, to USD 16,287 million, driven by increases across all income lines. Net interest income increased by USD 260 million to USD 4,103 million, primarily due to an increase in average margin on deposits as well as higher loan volumes, partly offset by higher funding costs for long-term debt that contributes to total loss-absorbing capacity and lower banking book interest income. →Refer to “Corporate Center – Group Asset and Liability Management” in this section of the report for more information on net income from Group structural risk management Recurring net fee income increased by USD 496 million to USD 8,968 million, predominantly driven by higher average invested assets and an increase in mandate penetration. This was partly offset by the effects of cross-border outflows and shifts into retrocession-free products. Transaction-based income increased by USD 272 million to USD 3,159 million, across all regions, mainly due to increased client activity, most notably in Asia Pacific and in the Americas. Other income increased by USD 10 million to USD 65 million. Operating expenses Total operating expenses increased by USD 558 million, or 5%, to USD 12,717 million, and adjusted total operating expenses increased by USD 565 million or 5%, to USD 12,129 million. Personnel expenses increased by USD 420 million to USD 7,674 million and adjusted personnel expenses increased by USD 442 million to USD 7,635 million. This increase was mainly due to higher variable compensation, partly offset by lower expenses for compensation commitments to recruited financial advisors in the Americas. The increase of financial advisor variable compensation reflects higher compensable revenues as well as changes we announced in 2016 to our financial advisor compensation model. General and administrative expenses increased by USD 42 million to USD 1,263 million and adjusted general and administrative expenses increased by USD 23 million to USD 1,189 million, predominantly driven by higher provisions for litigation matters. Net expenses for services from Corporate Center and other business divisions increased by USD 99 million to USD 3,726 million and adjusted net expenses for services increased by USD 103 million to USD 3,251 million, mainly reflecting higher costs for strategic and regulatory initiatives and higher expenses from control functions. Cost / income ratio The cost / income ratio decreased to 78.0% from 79.7%. On an adjusted basis, the ratio decreased to 74.4% from 75.8% and was within our 2017 target range of 65–75%. Net new money Net new money inflows were USD 44.8 billion compared with inflows of USD 43.0 billion. The net new money growth rate remained stable at 2.2% and was within our 2017 target range of 2–4%. Net new money was predominantly driven by inflows in Asia Pacific and Europe, Middle East and Africa (EMEA), partly offset by outflows in the Americas. Cross-border-related net outflows were USD 12 billion compared with USD 14 billion, mainly driven by outflows in EMEA. In addition, we incurred net outflows of USD 8 billion related to the introduction of fees on euro deposit concentrations in EMEA and Switzerland. Invested assets Invested assets increased by USD 343 billion to USD 2,403 billion, mainly due to positive market performance of USD 251 billion, positive currency effects of USD 48 billion and net new money inflows of USD 45 billion. Mandate penetration increased to 32.9% from 31.1%. Personnel Global Wealth Management employed 23,177 personnel as of 31 December 2017, a decrease of 70 compared with 23,247 personnel as of 31 December 2016. The number of advisors decreased by 268 to 10,616. Financial and operating performance 86 Financial and operating performance Personal & Corporate Banking Personal & Corporate Banking Personal & Corporate Banking – in Swiss francs1 As of or for the year ended % change from CHF million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Net interest income 2,058 2,086 2,199 (1) Recurring net fee income2 625 593 553 5 Transaction-based income3 1,086 1,104 1,028 (2) Other income 419 86 211 386 Income 4,187 3,869 3,990 8 Credit loss (expense) / recovery (55) (19) (6) 186 TTotal operating income 4,133 3,850 3,984 7 Personnel expenses 786 836 845 (6) General and administrative expenses 279 290 285 (4) Services (to) / from Corporate Center and other business divisions 1,181 1,133 1,080 4 of which: services from CC – Services 1,255 1,227 1,186 2 Depreciation and impairment of property, equipment and software 14 13 15 8 Amortization and impairment of intangible assets 0 0 0 TTotal operating expenses 2,260 2,272 2,224 (1) BBusiness division operating profit / (loss) before tax 1,873 1,578 1,760 19 Adjusted results4 TTotal operating income as reported 4,133 3,850 3,984 7 of which: gains related to investments in associates 359 21 of which: gain on sale of financial assets at fair value through OCI 5 102 TTotal operating income (adjusted) 3,774 3,850 3,861 (2) TTotal operating expenses as reported 2,260 2,272 2,224 (1) of which: personnel-related restructuring expenses 6 4 7 4 of which: non-personnel-related restructuring expenses 6 0 0 0 of which: restructuring expenses allocated from CC – Services 6 42 96 113 of which: gain related to changes to the Swiss pension plan (35) TTotal operating expenses (adjusted) 2,248 2,169 2,107 4 BBusiness division operating profit / (loss) before tax as reported 1,873 1,578 1,760 19 BBusiness division operating profit / (loss) before tax (adjusted) 1,526 1,681 1,754 (9) Performance measures7 Pre-tax profit growth (%) 18.7 (10.3) 6.9 Cost / income ratio (%) 54.0 58.7 55.7 Net interest margin (bps) 157 157 163 0 Net new business volume growth for Personal Banking (%)8 4.2 4.0 3.1 Adjusted performance measures4,7 Pre-tax profit growth (%) (9.2) (4.2) 4.3 Cost / income ratio (%) 58.7 56.1 54.5 Net interest margin (bps) 157 157 163 0 Net new business volume growth for Personal Banking (%)8 4.2 4.0 3.1 87 Personal & Corporate Banking – in Swiss francs (continued)1 As of or for the year ended % change from CHF million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Additional information Average attributed equity (CHF billion)9 6.4 6.1 4.1 5 Return on attributed equity (%)9 29.1 25.8 43.2 Return on attributed tangible equity (%)9 29.1 25.8 Risk-weighted assets (CHF billion)9 57.0 49.1 41.6 16 of which: held by Personal & Corporate Banking (CHF billion) 55.9 48.0 41.6 16 of which: held by CC – Group ALM on behalf of Personal & Corporate Banking (CHF billion) 10 1.1 1.0 4 Leverage ratio denominator (CHF billion)9 190.1 186.9 152.2 2 of which: held by Personal & Corporate Banking (CHF billion) 149.6 148.0 152.2 1 of which: held by CC – Group ALM on behalf of Personal & Corporate Banking (CHF billion) 10 40.5 38.9 4 Business volume for Personal Banking (CHF billion) 156 155 149 1 Net new business volume for Personal Banking (CHF billion) 6.6 6.0 4.6 Client assets (CHF billion)11 638 667 630 (4) Loans, gross (CHF billion) 131.0 131.4 133.9 0 Due to customers (CHF billion) 141.7 135.9 135.9 4 Secured loan portfolio as a percentage of total loan portfolio, gross (%) 92.0 92.7 92.9 Impaired loan portfolio as a percentage of total loan portfolio, gross (%)12 1.3 0.6 0.6 Personnel (full-time equivalents) 5,183 5,102 5,143 2 11 Comparative figures in this table may differ from those originally published in quarterly and annual reports due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Recurring net fee income consists of fees for services provided on an ongoing basis such as portfolio management fees, asset-based investment fund fees, custody fees and account-keeping fees, which are generated on client assets. 3 Transaction-based income comprises the non-recurring portion of net fee and commission income, mainly consisting of brokerage and transaction-based investment fund fees as well as credit card fees and fees for payment transactions, together with net income from fair value changes on financial instruments. 4 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 5 Includes a gain on the sale of our investment in Visa Europe in 2016. Figures presented for periods prior to 2018 relate to financial assets available for sale. 6 Reflects restructuring expenses related to legacy cost programs. 7 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 8 Calculated as net new business volume for the period / business volume at the beginning of the period. 9 Refer to the “Capital management” section of this report for more information. 10 Represents risk-weighted assets and leverage ratio denominator held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 11 Client assets are comprised of invested assets and other assets held purely for transactional purposes or custody only. We do not measure net new money for Personal & Corporate Banking. 12 Refer to the “Risk management and control” section of this report for more information on (credit-)impaired exposures.Financial and operating performance 88 Financial and operating performance Personal & Corporate Banking 2018 compared with 2017 Results Profit before tax increased by CHF 295 million, or 19%, to CHF 1,873 million, predominantly reflecting a CHF 359 million valuation gain on our equity ownership in SIX related to the sale of SIX Payment Services to Worldline. Adjusted profit before tax decreased by CHF 155 million, or 9%, to CHF 1,526 million, due to lower operating income and higher operating expenses. Effective from 1 January 2018, we have reclassified certain expenses for clearing, credit card add-on services and the client loyalty program, which are incremental and incidental to revenues on a prospective basis, to better align these expenses with their associated revenues within operating income. This resulted in a CHF 66 million reduction in total operating income, mainly related to transaction-based income. Total operating expenses decreased by a broadly corresponding amount, primarily reflecting a reduction in general and administrative expenses. Operating income Total operating income increased by CHF 283 million, or 7%, to CHF 4,133 million, mainly reflecting the aforementioned valuation gain. Excluding this item, adjusted total operating income decreased by CHF 76 million to CHF 3,774 million, mainly reflecting lower net interest and transaction-based income as well as higher credit loss expenses, partly offset by higher recurring net fee income. Net interest income decreased by CHF 28 million to CHF 2,058 million, mainly due to the expiration of an interest rate hedge portfolio at the end of 2017, as well as higher funding costs for long-term debt that contributes to total loss- absorbing capacity and lower banking book interest income. This was partly offset by higher deposit revenues. Recurring net fee income increased by CHF 32 million to CHF 625 million, mainly reflecting higher custody and mandate revenues as well as higher fees from bundled products. Transaction-based income decreased by CHF 18 million to CHF 1,086 million, mainly due to the aforementioned reclassification from expenses to revenues. The reclassification effect was partly offset by higher revenues from foreign exchange transactions, as well as higher fees received from Global Wealth Management, reflecting increased shift and referral volumes. Other income increased by CHF 333 million to CHF 419 million, mainly due to the aforementioned valuation gain. We recorded a net credit loss expense of CHF 55 million compared with CHF 19 million, reflecting higher expenses for newly credit-impaired positions, as well as lower net recoveries on existing credit-impaired positions, both predominantly in the Corporate Clients area. The adoption of IFRS 9 on 1 January 2018 had no material effect on net credit losses as stage 1 and 2 expected credit losses amounted to net CHF 0 million for 2018. →Refer to “Credit risk” in the “Risk management and control” section of this report for more information on expected credit losses →Refer to “Note 1c Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9, Financial Instruments” in the “Consolidated financial statements” section of this report for more information on the adoption of IFRS 9 Operating expenses Operating expenses were broadly unchanged at CHF 2,260 million, reflecting CHF 57 million lower restructuring expenses and a credit of CHF 35 million related to changes to our Swiss pension plan, partly offset by CHF 38 million higher expenses for provisions for litigation, regulatory and similar matters. Adjusted total operating expenses increased by CHF 79 million to CHF 2,248 million. Personnel expenses decreased by CHF 50 million to CHF 786 million, mostly due to the aforementioned pension plan credit, and adjusted personnel expenses decreased by CHF 11 million to CHF 817 million, mainly reflecting lower variable compensation. General and administrative expenses decreased by CHF 11 million to CHF 279 million, primarily reflecting the aforementioned reclassification from expenses to revenues, partly offset by higher expenses for provisions for litigation, regulatory and similar matters. Net expenses for services from Corporate Center and other business divisions increased by CHF 48 million to CHF 1,181 million. Adjusted net expenses for services increased by CHF 101 million to CHF 1,138 million, mainly reflecting higher expenses from Group Technology as well as for strategic and regulatory initiatives. Cost / income ratio The cost / income ratio decreased to 54.0% from 58.7%, mainly due to the aforementioned valuation gain. On an adjusted basis, the ratio increased to 58.7% compared with 56.1% and remained within our 2018 target range of 50–60%. Net interest margin The net interest margin remained stable at 157 basis points on both a reported and adjusted basis as lower net interest income was offset by lower average loan volume, and remained within our 2018 target range of 150–165 basis points. Net new business volume growth for personal banking The net new business volume growth rate for our personal banking business was our best on record at 4.2% compared with 4.0%, above our 2018 target range of 1–4%. Net new client assets and, to a lesser extent, net new loans were positive. Personnel Personal & Corporate Banking employed 5,183 personnel as of 31 December 2018, an increase of 81 compared with 5,102 personnel as of 31 December 2017. 89 2017 compared with 2016 Results Profit before tax decreased by CHF 182 million, or 10%, to CHF 1,578 million. Adjusted profit before tax decreased by CHF 73 million, or 4%, to CHF 1,681 million, due to slightly lower operating income and higher operating expenses. Operating income Total operating income decreased by CHF 134 million, or 3%, to CHF 3,850 million. 2016 included a gain on the sale of our investment in Visa Europe of CHF 102 million, as well as gains related to investments in associates of CHF 21 million. Excluding these items, adjusted total operating income decreased by CHF 11 million to CHF 3,850 million, mainly reflecting lower net interest income, partly offset by higher transaction-based income. Net interest income decreased by CHF 113 million to CHF 2,086 million, mainly due to higher funding costs for long- term debt that contributes to total loss-absorbing capacity and lower banking book interest income. This was partly offset by higher deposit revenues. Recurring net fee income increased by CHF 40 million to CHF 593 million, mainly reflecting higher custody and mandates revenues. Transaction-based income increased by CHF 76 million to CHF 1,104 million, mainly reflecting higher revenues from foreign exchange and credit card transactions. Other income decreased by CHF 125 million to CHF 86 million, mainly due to the aforementioned gains on the sale of our investment in Visa Europe and investments in associates. We recorded a net credit loss expense of CHF 19 million compared with CHF 6 million, reflecting higher expenses for newly impaired positions, as well as lower net recoveries on existing impaired positions. →Refer to “Credit risk” in the “Risk management and control” section of this report for more information on expected credit losses Operating expenses Total operating expenses increased by CHF 48 million to CHF 2,272 million and adjusted total operating expenses increased by CHF 62 million to CHF 2,169 million. Personnel expenses decreased by CHF 9 million to CHF 836 million and adjusted personnel expenses decreased by CHF 12 million to CHF 829 million, mainly reflecting lower salary costs due to a decrease in the number of employees and other cost saving initiatives. General and administrative expenses slightly increased by CHF 5 million to CHF 290 million. Net expenses for services from Corporate Center and other business divisions increased by CHF 53 million to CHF 1,133 million. Adjusted net expenses for services increased by CHF 70 million to CHF 1,037 million, mainly reflecting higher expenses for strategic and regulatory initiatives and from Group Operations. Cost / income ratio The cost / income ratio increased to 58.7% from 55.7%. On an adjusted basis, the ratio increased to 56.1% compared with 54.5% and remained within our 2017 target range of 50–60%. Net interest margin The net interest margin decreased 6 basis points to 157 basis points on both a reported and adjusted basis, and remained within our 2017 target range of 140–180 basis points. Net new business volume growth for personal banking The net new business volume growth rate for our personal banking business was 4.0% compared with 3.1% and remained within the upper level of our 2017 target range of 1–4%. Net new client assets and, to a lesser extent, net new loans were positive. Personnel Personal & Corporate Banking employed 5,102 personnel as of 31 December 2017, a decrease of 41 compared with 5,143 personnel as of 31 December 2016.Financial and operating performance 90 Financial and operating performance Personal & Corporate Banking Personal & Corporate Banking – in US dollars1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Net interest income 2,106 2,127 2,225 (1) Recurring net fee income2 640 605 560 6 Transaction-based income3 1,112 1,125 1,041 (1) Other income 420 87 215 381 Income 4,278 3,945 4,042 8 Credit loss (expense) / recovery (56) (20) (6) 180 TTotal operating income 4,222 3,925 4,035 8 Personnel expenses 803 852 855 (6) General and administrative expenses 285 296 287 (4) Services (to) / from Corporate Center and other business divisions 1,208 1,156 1,093 5 of which: services from CC – Services 1,285 1,251 1,201 3 Depreciation and impairment of property, equipment and software 14 13 15 8 Amortization and impairment of intangible assets 0 0 0 TTotal operating expenses 2,310 2,317 2,250 0 BBusiness division operating profit / (loss) before tax 1,912 1,607 1,785 19 Adjusted results4 TTotal operating income as reported 4,222 3,925 4,035 8 of which: gains related to investments in associates 359 21 of which: gain on sale of financial assets at fair value through OCI 5 105 TTotal operating income (adjusted) 3,863 3,925 3,909 (2) TTotal operating expenses as reported 2,310 2,317 2,250 0 of which: personnel-related restructuring expenses 6 4 7 4 of which: non-personnel-related restructuring expenses 6 0 0 0 of which: restructuring expenses allocated from CC – Services 6 43 98 115 of which: gain related to changes to the Swiss pension plan (38) TTotal operating expenses (adjusted) 2,300 2,212 2,132 4 BBusiness division operating profit / (loss) before tax as reported 1,912 1,607 1,785 19 BBusiness division operating profit / (loss) before tax (adjusted) 1,563 1,713 1,778 (9) Performance measures7 Pre-tax profit growth (%) 18.9 (10.0) 4.4 Cost / income ratio (%) 54.0 58.7 55.7 Net interest margin (bps) 157 157 162 0 Net new business volume growth for Personal Banking (%)8 4.2 4.2 3.2 Adjusted performance measures4,7 Pre-tax profit growth (%) (8.8) (3.7) 1.8 Cost / income ratio (%) 58.7 56.1 54.4 Net interest margin (bps) 157 157 162 0 Net new business volume growth for Personal Banking (%)8 4.2 4.2 3.2 91 Personal & Corporate Banking – in US dollars (continued)1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Additional information Average attributed equity (USD billion)9 6.6 6.2 4.1 6 Return on attributed equity (%)9 29.1 25.8 43.3 Return on attributed tangible equity (%)9 29.1 25.8 Risk-weighted assets (USD billion)9 57.9 50.4 40.9 15 of which: held by Personal & Corporate Banking (USD billion) 56.8 49.3 40.9 15 of which: held by CC – Group ALM on behalf of Personal & Corporate Banking (USD billion) 10 1.1 1.1 3 Leverage ratio denominator (USD billion)9 193.4 191.8 149.6 1 of which: held by Personal & Corporate Banking (USD billion) 152.2 151.9 149.6 0 of which: held by CC – Group ALM on behalf of Personal & Corporate Banking (USD billion) 10 41.2 39.9 3 Business volume for Personal Banking (USD billion) 158 159 147 0 Net new business volume for Personal Banking (USD billion) 6.7 6.1 4.7 Client assets (USD billion)11 648 684 619 (5) Loans, gross (USD billion) 133.3 134.8 131.5 (1) Due to customers (USD billion) 144.1 139.5 133.6 3 Secured loan portfolio as a percentage of total loan portfolio, gross (%) 92.0 92.7 92.9 Impaired loan portfolio as a percentage of total loan portfolio, gross (%)12 1.3 0.6 0.6 Personnel (full-time equivalents) 5,183 5,102 5,143 2 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Recurring net fee income consists of fees for services provided on an ongoing basis such as portfolio management fees, asset-based investment fund fees, custody fees and account-keeping fees, which are generated on client assets. 3 Transaction-based income comprises the non-recurring portion of net fee and commission income, mainly consisting of brokerage and transaction-based investment fund fees as well as credit card fees and fees for payment transactions, together with net income from fair value changes on financial instruments. 4 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 5 Includes a gain on the sale of our investment in Visa Europe in 2016. Figures presented for periods prior to 2018 relate to financial assets available for sale. 6 Reflects restructuring expenses related to legacy cost programs. 7 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 8 Calculated as net new business volume for the period / business volume at the beginning of the period. 9 Refer to the “Capital management” section of this report for more information. 10 Represents risk-weighted assets and leverage ratio denominator held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 11 Client assets are comprised of invested assets and other assets held purely for transactional purposes or custody only. We do not measure net new money for Personal & Corporate Banking. 12 Refer to the “Risk management and control” section of this report for more information on (credit-)impaired exposures.Financial and operating performance 92 Financial and operating performance Asset Management Asset Management Asset Management1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Net management fees2 1,778 1,800 1,831 (1) Performance fees 80 130 124 (38) Gain / (loss) on sale of subsidiaries and businesses 153 TTotal operating income 1,857 2,083 1,955 (11) Personnel expenses 703 731 736 (4) General and administrative expenses 202 235 244 (14) Services (to) / from Corporate Center and other business divisions 498 524 512 (5) of which: services from CC – Services 541 562 537 (4) Depreciation and impairment of property, equipment and software 2 1 1 100 Amortization and impairment of intangible assets 1 3 5 (67) TTotal operating expenses 1,406 1,495 1,498 (6) BBusiness division operating profit / (loss) before tax 451 587 457 (23) Adjusted results3 TTotal operating income as reported 1,857 2,083 1,955 (11) of which: gain / (loss) on sale of subsidiaries and businesses 153 TTotal operating income (adjusted) 1,857 1,929 1,955 (4) TTotal operating expenses as reported 1,406 1,495 1,498 (6) of which: personnel-related restructuring expenses 4 23 17 15 of which: non-personnel-related restructuring expenses 4 10 22 15 of which: restructuring expenses allocated from CC – Services 4 33 63 72 of which: gain related to changes to the Swiss pension plan (10) TTotal operating expenses (adjusted) 1,350 1,393 1,397 (3) BBusiness division operating profit / (loss) before tax as reported 451 587 457 (23) BBusiness division operating profit / (loss) before tax (adjusted) 508 536 558 (5) Performance measures5 Pre-tax profit growth (%) (23.2) 28.6 (24.4) Cost / income ratio (%) 75.7 71.8 76.6 Net new money growth excluding money market flows (%) 3.4 8.4 (3.9) Net margin on invested assets (bps)6 6 8 7 (25) Adjusted performance measures3,5 Pre-tax profit growth (%)7 (0.6) (2.1) (8.7) Cost / income ratio (%) 72.7 72.2 71.4 Net new money growth excluding money market flows (%) 3.4 8.4 (3.9) Net margin on invested assets (bps)8 6 7 9 (14) Information by business line / asset class NNet new money (USD billion) Equities 20.7 18.7 (10.1) Fixed Income 8.3 28.6 (3.4) of which: money markets 7.5 10.8 6.8 Multi Assets & Solutions 1.9 4.9 (4.3) Hedge Fund Businesses 0.4 2.2 (0.3) Real Estate & Private Markets 1.0 5.1 1.8 TTotal net new money 32.2 59.5 (16.2) of which: net new money excluding money markets 24.8 48.7 (23.0) 93 Asset Management (continued)1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 IInvested assets (USD billion) Equities 285 300 216 (5) Fixed Income 253 248 206 2 of which: money market 85 78 65 9 Multi Assets & Solutions 120 130 119 (8) Hedge Fund Businesses 42 42 38 0 Real Estate & Private Markets 81 76 66 7 TTotal invested assets 781 796 645 (2) of which: passive strategies 298 293 203 2 Information by region IInvested assets (USD billion) Americas 192 187 157 3 Asia Pacific 141 163 127 (13) Europe, Middle East and Africa 189 178 141 6 Switzerland 259 268 221 (3) TTotal invested assets 781 796 645 (2) Information by channel IInvested assets (USD billion) Third-party institutional 484 498 388 (3) Third-party wholesale 78 82 74 (5) UBS’s wealth management businesses 219 216 183 1 TTotal invested assets 781 796 645 (2) Assets under administration9 Assets under administration (USD billion)10 413 Net new assets under administration (USD billion)11 0.6 Gross margin on assets under administration (bps) 3 Additional information Average attributed equity (USD billion)12 1.7 1.7 1.4 0 Return on attributed equity (%)12 26.5 34.0 32.2 Return on attributed tangible equity (%)12 139.4 186.2 Risk-weighted assets (USD billion)12 4.2 4.1 3.8 2 of which: held by Asset Management (USD billion) 4.1 4.0 3.8 2 of which: held by CC – Group ALM on behalf of Asset Management (USD billion) 13 0.1 0.1 0 Leverage ratio denominator (USD billion)12 5.1 4.9 2.6 4 of which: held by Asset Management (USD billion) 2.7 2.8 2.6 (4) of which: held by CC – Group ALM on behalf of Asset Management (USD billion) 13 2.5 2.1 19 Goodwill and intangible assets (USD billion) 1.4 1.4 1.4 0 Gross margin on invested assets (bps) 23 29 30 (21) Adjusted gross margin on invested assets (bps) 23 26 30 (12) Personnel (full-time equivalents) 2,301 2,335 2,308 (1) 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Net management fees include transaction fees, fund administration revenues (including net interest and trading income from lending activities and foreign exchange hedging as part of the fund services offering), gains or losses from seed money and co-investments, funding costs, and other items that are not performance fees. Beginning 1 January 2018, net management fees additionally include fund and custody expenses recognized as contra revenues and previously included in operating expenses. Prior periods were not restated for this change. 3 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 4 Reflects restructuring expenses related to legacy cost programs as well as expenses for new restructuring initiatives in 2018. 5 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 6 Calculated as operating profit before tax / average invested assets. 7 Excluding the effect of business exits. Prior-period information for the periods ending before 1 January 2018 has been restated. 8 Calculated as adjusted operating profit before tax / average invested assets. 9 Following the sale of our fund administration business in Luxembourg and Switzerland to Northern Trust on 1 October 2017, we no longer report assets under administration. 10 This includes UBS and third-party fund assets for which the fund services unit provided professional services, including fund set-up, accounting and reporting for traditional investment funds and alternative funds. 11 Inflows of assets under administration from new and existing funds less outflows from existing funds or fund exits. 12 Refer to the “Capital management” section of this report for more information. 13 Represents risk-weighted assets and leverage ratio denominator held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information.Financial and operating performance 94 Financial and operating performance Asset Management 2018 compared with 2017 Results Profit before tax decreased by USD 136 million, or 23%, to USD 451 million, mainly as 2017 included a gain of USD 153 million on the sale of our fund administration business. Excluding this gain, adjusted profit before tax decreased by USD 28 million, or 5%, to USD 508 million, mainly driven by lower operating income, partly offset by lower operating expenses. Operating income Total operating income decreased by USD 226 million, or 11%, to USD 1,857 million. Excluding the aforementioned gain on the sale of our fund administration business, adjusted total operating income decreased by USD 72 million or 4%. Net management fees decreased by USD 22 million to USD 1,778 million as higher income from higher average invested assets was more than offset by the absence of administration fees following the sale of our fund administration business, the reclassification of fund and custody expenses from operating expenses to operating income to better align these costs with their associated revenues within operating income, and continued pressure on margins. In addition, 2017 included an impairment loss of USD 12 million on a co-investment in an infrastructure fund. Performance fees decreased by USD 50 million to USD 80 million, mainly driven by declines in Equities and Hedge Fund Businesses. Operating expenses Total operating expenses decreased by USD 89 million, or 6%, to USD 1,406 million and adjusted total operating expenses decreased by USD 43 million, or 3%, to USD 1,350 million. Personnel expenses decreased by USD 28 million to USD 703 million. Excluding a credit of USD 10 million related to our Swiss pension plan, recognized in the first quarter of 2018, adjusted personnel expenses decreased by USD 24 million to USD 690 million, driven primarily by reduced expenses for variable compensation. General and administrative expenses decreased by USD 33 million to USD 202 million. Adjusted general and administrative expenses decreased by USD 21 million to USD 192 million, primarily due to the aforementioned reclassification of fund and custody expenses to operating income, the exclusion of expenses associated with the fund administration business that we disposed of in October 2017, reduced marketing costs and lower professional fees, partly offset by higher research expenses. Net expenses for services from Corporate Center and other business divisions decreased by USD 26 million to USD 498 million. Adjusted net expenses for services from Corporate Center and other business divisions increased by USD 4 million, primarily reflecting higher expenses from Group Technology, which were partly offset by reduced expenses from Group Operations following the sale of our fund administration business as well as the aforementioned reclassification of custody expenses to operating income. Cost / income ratio The cost / income ratio was 75.7% compared with 71.8%. On an adjusted basis, the ratio was 72.7% compared with 72.2%, and was above our 2018 target range of 60–70%. Net new money Excluding money market flows, net new money was USD 24.8 billion compared with inflows of USD 48.7 billion, primarily driven by our third-party institutional channel. The net new money growth rate, excluding money market flows, was positive 3.4% compared with positive 8.4%, and was within our 2018 target range of 3–5%. Net inflows were mainly driven by Europe, Middle East and Africa. Invested assets Invested assets decreased to USD 781 billion from USD 796 billion, mainly due to negative market performance of USD 33 billion and negative foreign currency translation effects of USD 15 billion, partly offset by inflows of USD 32 billion, including money market flows. Personnel Asset Management employed 2,301 personnel as of 31 December 2018, a decrease of 34 compared with 2,335 personnel as of 31 December 2017. 95 Investment performance 2018 was a challenging year for investments with a record low number of asset classes providing a positive annual return. Signs of slowing economic growth and tighter financial conditions led to a sharp drop across asset values, particularly in corporate bonds and equities. In 2018, 60% of our active traditional funds outperformed their benchmark and 64% outperformed peer averages. Long- term performance remains strong despite a challenging 2018, with 86% outperforming their benchmark and 81% outperforming peer averages over five years. Investment performance as of 31 December 2018 Annualized Active funds versus benchmark 1 year 3 years 5 years Percentage of fund assets exceeding benchmark Equities1 62 70 80 Fixed income1 70 92 92 Multi-asset1 10 76 73 TTotal traditional investments 60 81 86 Active funds versus peers Percentage of fund assets ranking in first or second quartile / exceeding peer index Equities1 64 78 94 Fixed income1 80 84 86 Multi-asset1 44 69 61 TTotal traditional investments 64 78 81 Passive funds tracking accuracy Percentage of passive fund assets within applicable tracking tolerance All asset classes2 91 94 93 11 Percentage of active fund assets above benchmark (gross of fees) / peer median. Based on the universe of European domiciled active wholesale funds available to UBS’s wealth management businesses and other wholesale intermediaries as of 31 December 2018. Source of comparison versus peers: Thomson Reuters LIM (Lipper Investment Management). Source of comparison versus benchmark: UBS. Universe represents approximately 60% of all active fund assets and 16% of all actively managed assets (including segregated accounts) in these asset classes globally as of 31 December 2018. 2 Percentage of passive fund assets within applicable tracking tolerance on a gross of fees basis. Tracking accuracy information represents a universe of European domiciled institutional and wholesale funds representing approximately 37% of our total passive invested assets as of 31 December 2018. Source: UBS.Financial and operating performance 96 Financial and operating performance Asset Management 2017 compared with 2016 Results Profit before tax increased by USD 130 million, or 29%, to USD 587 million, primarily driven by a gain of USD 153 million related to the sale of our fund administration business in Luxembourg and Switzerland to Northern Trust. Excluding this gain, adjusted profit before tax decreased by USD 22 million, or 4%, to USD 536 million, primarily reflecting lower operating income. Operating income Total operating income increased by USD 128 million, or 7%, to USD 2,083 million. Excluding the aforementioned gain on the sale of our fund administration business, adjusted total operating income decreased by USD 26 million or 1%. Net management fees decreased by USD 31 million to USD 1,800 million, reflecting lower revenues following the aforementioned sale of our fund administration business, the positive effect of fee true-ups of USD 17 million in 2016 as well as an impairment loss of USD 12 million on a co-investment in an infrastructure fund, partly offset by the effect of higher average invested assets. Performance fees increased by USD 6 million to USD 130 million, with a decline in Real Estate & Private Markets being more than offset by Equities and Hedge Fund Businesses. Operating expenses Total operating expenses decreased by USD 3 million to USD 1,495 million and adjusted total operating expenses decreased by USD 4 million to USD 1,393 million. Personnel expenses decreased by USD 5 million to USD 731 million and adjusted personnel expenses decreased by USD 7 million to USD 715 million, mainly driven by lower salary expenses. General and administrative expenses decreased by USD 9 million to USD 235 million. Adjusted general and administrative expenses decreased by USD 16 million to USD 213 million, mainly driven by lower professional fees. Net expenses for services from Corporate Center and other business divisions increased by USD 12 million to USD 524 million. Adjusted net expenses for services from Corporate Center and other business divisions increased by USD 20 million, mainly driven by higher expenses from Group Risk Control as well as increased costs for occupancy and strategic and regulatory initiatives. Cost / income ratio The cost / income ratio was 71.8% compared with 76.6%. On an adjusted basis, the cost / income ratio was 72.2% compared with 71.4%, and was above our 2017 target range of 60–70%. Net new money Excluding money market flows, net new money was USD 48.7 billion compared with net outflows of USD 23.0 billion, primarily driven by our third-party institutional channel. The net new money growth rate, excluding money market flows, was positive 8.4% compared with negative 3.9%, and was above our 2017 target range of 3–5%. Net inflows were mainly driven by Switzerland and Asia Pacific. Invested assets Invested assets increased to USD 796 billion from USD 645 billion, mainly due to positive market performance of USD 66 billion, and net new money inflows of USD 60 billion, including money market flows, and positive foreign currency translation effects of USD 29 billion. Assets under administration The aforementioned sale of our fund administration business concluded our exit from this line of business. Personnel Asset Management employed 2,335 personnel as of 31 December 2017, an increase of 27 compared with 2,308 personnel as of 31 December 2016. 97 Investment Bank Investment Bank1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results CCorporate Client Solutions 2,626 2,870 2,410 (8) Advisory 717 650 699 10 Equity Capital Markets 786 1,075 680 (27) Debt Capital Markets 770 797 752 (3) Financing Solutions 279 312 365 (11) Risk Management 75 36 (86) 111 IInvestor Client Services 5,562 5,016 5,381 11 Equities 3,936 3,612 3,525 9 Foreign Exchange, Rates and Credit 1,626 1,405 1,856 16 Income 8,188 7,886 7,790 4 Credit loss (expense) / recovery (38) (92) (11) (58) TTotal operating income 8,150 7,794 7,779 5 Personnel expenses 2,941 3,006 3,122 (2) General and administrative expenses 651 675 812 (4) Services (to) / from Corporate Center and other business divisions 2,889 2,824 2,798 2 of which: services from CC – Services 2,811 2,729 2,707 3 Depreciation and impairment of property, equipment and software 8 10 22 (17) Amortization and impairment of intangible assets 12 12 12 5 TTotal operating expenses 6,501 6,527 6,765 0 BBusiness division operating profit / (loss) before tax 1,649 1,267 1,014 30 Adjusted results2 TTotal operating income as reported 8,150 7,794 7,779 5 of which: gains on sale of financial assets at fair value through OCI 3 137 77 TTotal operating income (adjusted) 8,150 7,658 7,702 6 TTotal operating expenses as reported 6,501 6,527 6,765 0 of which: personnel-related restructuring expenses 4 16 39 156 of which: non-personnel-related restructuring expenses 4 11 18 14 of which: restructuring expenses allocated from CC – Services 4 166 310 416 of which: gain related to changes to the Swiss pension plan (5) of which: expenses from modification of terms for certain DCCP awards 5 26 TTotal operating expenses (adjusted) 6,313 6,135 6,179 3 BBusiness division operating profit / (loss) before tax as reported 1,649 1,267 1,014 30 BBusiness division operating profit / (loss) before tax (adjusted) 1,836 1,523 1,524 21 Financial and operating performance 98 Financial and operating performance Investment Bank Investment Bank (continued)1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Performance measures6 Pre-tax profit growth (%) 30.1 25.0 (49.1) Cost / income ratio (%) 79.4 82.8 86.8 Return on attributed equity (%)7 16.1 13.3 13.1 Adjusted performance measures2,6 Pre-tax profit growth (%) 20.6 (0.1) (36.5) Cost / income ratio (%) 77.1 79.2 80.1 Return on attributed equity (%)7 17.9 16.0 19.7 Additional information Average attributed equity (USD billion)7 10.2 9.5 7.7 8 Return on attributed tangible equity (%)7 16.3 13.6 Risk-weighted assets (USD billion)7 87.3 77.0 69.2 13 of which: held by the Investment Bank (USD billion) 86.9 76.5 69.2 14 of which: held by CC – Group ALM on behalf of the Investment Bank (USD billion) 8 0.4 0.5 (16) Return on risk-weighted assets, gross (%)9 9.7 10.6 11.8 Leverage ratio denominator (USD billion)7 256.2 290.9 227.2 (12) of which: held by the Investment Bank (USD billion) 240.1 271.0 227.2 (11) of which: held by CC – Group ALM on behalf of the Investment Bank (USD billion) 8 16.1 19.9 (19) Return on leverage ratio denominator, gross (%)9 2.9 2.8 2.9 Goodwill and intangible assets (USD billion) 0.1 0.1 0.1 91 Compensation ratio (%) 35.9 38.1 40.1 Average VaR (1-day, 95% confidence, 5 years of historical data) 11 10 9 15 Impaired loan portfolio as a percentage of total loan portfolio, gross (%)10 1.5 1.0 0.9 Personnel (full-time equivalents) 5,205 4,822 4,734 8 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 3 Reflects a gain on the sale of our investment in London Clearing House in 2017 and gains on sales of our investment in IHS Markit in 2017 and 2016. Figures presented for periods prior to 2018 relate to financial assets available for sale. 4 Reflects restructuring expenses related to legacy cost programs. 5 Relates to the removal of the service period requirement for DCCP awards granted for the performance years 2012 and 2013. 6 Refer to the “Performance targets and measurement” section of this report for the definitions of our performance measures. 7 Refer to the “Capital management” section of this report for more information. 8 Represents risk-weighted assets (RWA) and leverage ratio denominator (LRD) held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 9 Based on total RWA and LRD. 10 Refer to the “Risk management and control” section of this report for more information on (credit-)impaired loan exposures. 99 2018 compared with 2017 Results Profit before tax increased by USD 382 million, or 30%, to USD 1,649 million, mainly as a result of higher revenues in Investor Client Services, partly offset by lower revenues in Corporate Client Solutions. Adjusted profit before tax increased by USD 313 million or 21% to USD 1,836 million, reflecting higher operating income, partly offset by higher operating expenses. Operating income Total operating income increased by USD 356 million, or 5%, to USD 8,150 million. Excluding a gain of USD 108 million in 2017 related to the sale of our investment in IHS Markit and a gain of USD 29 million in 2017 related to the sale of our investment in London Clearing House, adjusted total operating income increased by USD 492 million, or 6%, to USD 8,150 million from USD 7,658 million. This mainly reflected USD 682 million higher revenues in Investor Client Services, partly offset by USD 244 million lower revenues in Corporate Client Services. Net credit loss expense was USD 38 million compared with USD 92 million. The prior year included an expense related to a margin loan to a single client following a significant decrease in the value of the collateral. →Refer to the “Risk management and control” section of this report for more information on credit loss expenses Operating income by business unit Corporate Client Solutions Corporate Client Solutions revenues decreased by USD 244 million, or 8%, to USD 2,626 million, predominantly reflecting lower revenues in Equity Capital Markets. Advisory revenues increased by USD 67 million to USD 717 million, primarily due to higher revenues from merger and acquisition transactions, where the global fee pool increased 8%. Equity Capital Markets revenues decreased by USD 289 million to USD 786 million, reflecting a decrease in revenues from public offerings, where the global fee pool decreased 14%, as well as lower revenues from private transactions. Debt Capital Markets revenues decreased by USD 27 million to USD 770 million, mainly due to lower investment grade revenues, where the global fee pool decreased 10%, partly offset by higher leveraged finance revenues, against a global fee pool decrease of 7%. Financing Solutions revenues decreased by USD 33 million to USD 279 million, mainly due to lower real estate finance revenues. Risk Management revenues were USD 75 million compared with USD 36 million, mainly reflecting reduced hedging costs and valuation gains on a restructured debt position. Investor Client Services Investor Client Services revenues increased by USD 546 million, or 11%, to USD 5,562 million. Excluding the aforementioned gains totaling USD 137 million in 2017, adjusted revenues increased by USD 682 million, or 14%, to USD 5,562 million, reflecting higher revenues in both the Equities and Foreign Exchange, Rates and Credit businesses. Equities Equities revenues increased by USD 324 million, or 9%, to USD 3,936 million, driven by increases across all product lines. Excluding a gain of USD 27 million in 2017 related to the sale of our investment in IHS Markit and a gain of USD 29 million in 2017 related to the sale of our investment in London Clearing House, adjusted revenues increased by USD 381 million, or 11%, to USD 3,936 million. Adjusted Cash revenues increased by USD 73 million to USD 1,294 million, reflecting increased client activity. Derivatives revenues increased by USD 154 million to USD 1,038 million, driven by improved client activity as market volatility increased. Adjusted Financing Services revenues increased by USD 188 million to USD 1,663 million, mainly due to higher trading revenues in Equity Finance reflecting increased client activity. Foreign Exchange, Rates and Credit Foreign Exchange, Rates and Credit revenues increased by USD 221 million, or 16%, to USD 1,626 million and, excluding a gain of USD 81 million in 2017 related to the sale of our investment in IHS Markit increased by USD 302 million from USD 1,324 million on an adjusted basis. This increase was due to higher client activity levels and improved trading performance across the majority of products, as well as to the recognition of net income of around USD 100 million (comprised mainly of previously deferred day-1 profits), due to enhanced observability and revised valuations in the funding curve used to value UBS interest rate-linked notes. In addition, 2018 included revenues of USD 53 million from Corporate Center – Group Asset and Liability Management (Group ALM) for the rebalancing of the Group’s currency exposures in connection with the change in functional and presentation currencies to US dollars. Operating expenses Total operating expenses were broadly unchanged at USD 6,501 million, and adjusted total operating expenses increased by USD 178 million, or 3%, to USD 6,313 million. Personnel expenses decreased to USD 2,941 million from USD 3,006 million, and adjusted personnel expenses decreased to USD 2,930 million from USD 2,941 million, mainly driven by lower variable compensation expenses. General and administrative expenses decreased by USD 24 million to USD 651 million and on an adjusted basis by USD 17 million to USD 640 million, driven by lower professional fees, partly offset by higher net expenses for the UK bank levy. Financial and operating performance 100 Financial and operating performance Investment Bank Net expenses for services from Corporate Center and other business divisions increased by USD 65 million to USD 2,889 million, and on an adjusted basis to USD 2,723 million from USD 2,515 million, driven mainly by higher net expenses from Group Technology and Group Risk Control. Cost / income ratio The cost / income ratio decreased to 79.4% from 82.8%. On an adjusted basis, the cost / income ratio decreased to 77.1% from 79.2% and was within our 2018 target range of 70–80%. Return on attributed equity Return on attributed equity for 2018 was 16.1%, and 17.9% on an adjusted basis, above our 2018 target of over 15%. →Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information Risk-weighted assets Risk-weighted assets (RWA), including RWA held by Corporate Center – Group ALM on behalf of the Investment Bank, increased by USD 10 billion to USD 87 billion as of 31 December 2018. This was driven by an increase in credit and counterparty credit risk RWA, mostly related to model updates as well as regulatory add-ons, and an increase in market risk RWA, reflecting higher average regulatory and stressed value-at-risk levels. RWA were within our 2018 guidance of around one-third of the Group RWA. →Refer to the “Capital management” section of this report for more information Leverage ratio denominator The leverage ratio denominator (LRD), including LRD held by Corporate Center – Group ALM on behalf of the Investment Bank, decreased by USD 35 billion to USD 256 billion as of 31 December 2018, mainly due to a decrease in trading portfolio assets, reflecting client-driven reductions and trade unwinds, lower prime brokerage receivables, as well as currency effects. The LRD was within our 2018 guidance of around one- third of the Group LRD. →Refer to the “Capital management” section of this report for more information Personnel The Investment Bank employed 5,205 personnel as of 31 December 2018, an increase of 383 compared with 4,822 personnel as of 31 December 2017, primarily as a result of the consolidation of UBS Securities China in December 2018. 101 2017 compared with 2016 Results Profit before tax increased by USD 253 million, or 25%, to USD 1,267 million, as a result of lower operating expenses. Adjusted profit before tax was broadly unchanged at USD 1,523 million, as lower operating income was almost entirely offset by lower operating expenses. Operating income Total operating income increased by USD 15 million to USD 7,794 million. Excluding gains of USD 77 million in 2016 and USD 108 million in 2017 related to sales of our investment in IHS Markit and a gain of USD 29 million in 2017 related to the sale of our investment in London Clearing House, adjusted total operating income decreased by USD 44 million, or 1%, to USD 7,658 million from USD 7,702 million. An increase in Corporate Client Solutions revenues of USD 460 million was partly offset by a decrease in Investor Client Services revenues of USD 424 million. Net credit loss expense was USD 92 million compared with USD 11 million, mainly related to a margin loan to a single client following a significant decrease in the value of the collateral. Operating income by business unit Corporate Client Solutions Corporate Client Solutions revenues increased by USD 460 million, or 19%, to USD 2,870 million, largely driven by higher revenues in Equity Capital Markets. Advisory revenues decreased by USD 49 million to USD 650 million, reflecting lower revenues from private transactions, and lower revenues from merger and acquisition transactions against a global fee pool decline of 2%. Equity Capital Markets revenues increased by USD 395 million to USD 1,075 million, mainly as a result of higher revenues from public offerings as the global fee pool increased 26%, as well as higher revenues from private transactions. Debt Capital Markets revenues increased by USD 45 million to USD 797 million, largely reflecting higher revenues from leveraged finance against a global fee pool increase of 11%. This increase was partly offset by lower investment grade revenues. Financing Solutions revenues decreased by USD 53 million to USD 312 million, reflecting lower client activity across all products. Risk Management revenues were positive USD 36 million compared with negative USD 86 million, mainly related to lower costs related to portfolio hedges. Investor Client Services Investor Client Services revenues decreased by USD 365 million, or 7%, to USD 5,016 million. Excluding the aforementioned gains totaling USD 137 million in 2017 and USD 77 million in 2016, adjusted revenues decreased by USD 424 million, or 8%, to USD 4,880 million, reflecting lower revenues in Foreign Exchange, Rates and Credit. Equities Equities revenues increased by USD 87 million to USD 3,612 million. Excluding a gain of USD 27 million in 2017 related to the sale of our investment in IHS Markit and a gain of USD 29 million in 2017 related to the sale of our investment in London Clearing House, adjusted revenues increased by USD 31 million to USD 3,555 million. Adjusted Cash revenues decreased by USD 21 million to USD 1,220 million, resulting from lower trading revenues. Derivatives revenues increased by USD 159 million to USD 884 million, reflecting increased client activity levels and stronger trading revenues. Adjusted Financing Services revenues decreased by USD 72 million to USD 1,476 million, as a result of weaker trading revenues in Equity Finance. Foreign Exchange, Rates and Credit Foreign Exchange, Rates and Credit revenues decreased by USD 451 million to USD 1,405 million. Excluding gains of USD 81 million in 2017 and USD 77 million in 2016, related to sales of our investment in IHS Markit, adjusted revenues decreased to USD 1,324 million from USD 1,779 million, mainly reflecting reduced client activity across the majority of products reflecting persistent low market volatility. Operating expenses Total operating expenses decreased by USD 238 million, or 4%, to USD 6,527 million, and adjusted total operating expenses decreased by USD 44 million, or 1%, to USD 6,135 million. Personnel expenses decreased to USD 3,006 million from USD 3,122 million, and adjusted personnel expenses decreased to USD 2,941 million from USD 2,965 million, mainly related to lower salary expenses as a result of our cost reduction programs, which were partly offset by higher variable compensation expenses. In addition, 2017 included an expense of USD 26 million related to the modification of terms of Deferred Contingent Capital Plan awards granted for the performance years 2012 and 2013. This was treated as an adjusting item. General and administrative expenses decreased to USD 675 million from USD 812 million, and to USD 657 million from USD 798 million on an adjusted basis, mainly driven by an USD 83 million decrease in expenses for provisions for litigation, regulatory and similar matters. In addition, the net expense for the UK bank levy was USD 34 million compared with a net expense of USD 78 million, primarily as 2017 included a USD 43 million credit related to prior years.Financial and operating performance 102 Financial and operating performance Investment Bank Net expenses for services from Corporate Center and other business divisions increased to USD 2,824 million from USD 2,798 million and on an adjusted basis to USD 2,515 million from USD 2,381 million, mainly related to higher costs for strategic and regulatory initiatives and higher net expenses from Group Technology and Group Risk Control. Cost / income ratio The cost / income ratio decreased to 82.8% from 86.8%. On an adjusted basis, the cost / income ratio decreased to 79.2% from 80.1% and was within our 2017 target range of 70–80%. Return on attributed equity Return on attributed equity for 2017 was 13.3%, and 16.0% on an adjusted basis, above our 2017 target of over 15%. Risk-weighted assets RWA held by the Investment Bank increased by USD 7.3 billion to USD 76.5 billion as of 31 December 2017, driven by an increase in credit and counterparty credit risk RWA. This was mostly due to model updates and regulatory add-ons, partly offset by a decrease in market risk RWA. Total RWA, including RWA held by Corporate Center – Group ALM on behalf of the Investment Bank, were USD 77.0 billion as of 31 December 2017, below our 2017 short- to medium-term expectation of around USD 85 billion. Leverage ratio denominator LRD held by the Investment Bank increased by USD 44 billion to USD 271 billion as of 31 December 2017, mainly as a result of higher trading portfolio assets, reflecting client-driven increases and higher equity markets, and an increase in financial assets designated at fair value, available for sale and held to maturity. These increases were partly offset by lower off-balance sheet and net derivative exposures. Total LRD, including LRD held by Corporate Center – Group ALM on behalf of the Investment Bank, was USD 291 billion as of 31 December 2017 and remained below our 2017 short- to medium-term expectation of around USD 325 billion. Personnel The Investment Bank employed 4,822 personnel as of 31 December 2017, an increase of 88 compared with 4,734 personnel as of 31 December 2016. This was primarily related to the transfer of business-aligned personnel in our Business Solutions Centers from Corporate Center to the Investment Bank, partly offset by a decrease as a result of our cost reduction programs. 103 Corporate Center Corporate Center1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results TTotal operating income (957) (467) (290) 105 Personnel expenses 4,002 3,935 3,946 2 General and administrative expenses 3,935 4,479 4,953 (12) Services (to) / from business divisions (8,447) (8,230) (8,029) 3 Depreciation and impairment of property, equipment and software 1,199 1,024 955 17 Amortization and impairment of intangible assets 2 7 21 (71) TTotal operating expenses 692 1,215 1,846 (43) OOperating profit / (loss) before tax (1,649) (1,682) (2,136) (2) Adjusted results2 TTotal operating income as reported (957) (467) (290) 105 of which: gains on sales of real estate 31 123 of which: gain / (loss) on sale of subsidiaries and businesses 25 of which: remeasurement loss related to UBS Securities China (270) of which: net foreign currency translation gains / (losses) 3 (16) (84) TTotal operating income (adjusted) (744) (450) (328) 65 TTotal operating expenses as reported 692 1,215 1,846 (43) of which: personnel-related restructuring expenses 4 208 443 527 of which: non-personnel-related restructuring expenses 4 238 532 631 of which: restructuring expenses allocated from CC – Services 4 (450) (945) (1,081) of which: gain related to changes to the Swiss pension plan (122) TTotal operating expenses (adjusted) 819 1,185 1,769 (31) OOperating profit / (loss) before tax as reported (1,649) (1,682) (2,136) (2) OOperating profit / (loss) before tax (adjusted) (1,562) (1,635) (2,098) (4) Additional information Average attributed equity (USD billion)5 20.5 23.5 29.4 (13) Risk-weighted assets (USD billion)5,6 57.7 58.0 56.1 (1) Leverage ratio denominator (USD billion)5,6 302.3 278.5 295.4 9 Personnel (full-time equivalents) 30,581 25,817 23,955 18 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 3 Related to the disposal of foreign subsidiaries and branches. 4 Reflects restructuring expenses related to legacy cost programs. 5 Refer to the “Capital management” section of this report for more information. 6 Prior to attributions to business divisions and other Corporate Center units for the purpose of attributing equity.Financial and operating performance 104 Financial and operating performance Corporate Center Corporate Center – Services Corporate Center – Services1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results TTotal operating income (513) (157) (103) 228 Personnel expenses 3,927 3,857 3,847 2 General and administrative expenses 3,789 4,336 4,192 (13) Depreciation and impairment of property, equipment and software 1,199 1,024 955 17 Amortization and impairment of intangible assets 2 7 21 (72) TTotal operating expenses before allocations to BDs and other CC units 8,917 9,224 9,016 (3) Services (to) / from business divisions and other CC units (8,624) (8,445) (8,263) 2 of which: services to Global Wealth Management (3,740) (3,626) (3,520) 3 of which: services to Personal & Corporate Banking (1,285) (1,251) (1,201) 3 of which: services to Asset Management (541) (562) (537) (4) of which: services to Investment Bank (2,811) (2,729) (2,707) 3 of which: services to CC – Group ALM (169) (145) (112) 16 of which: services to CC – Non-core and Legacy Portfolio (153) (198) (227) (23) TTotal operating expenses 293 779 753 (62) OOperating profit / (loss) before tax (806) (935) (856) (14) Adjusted results2 TTotal operating income as reported (513) (157) (103) 228 of which: gains on sales of real estate 31 123 of which: gain / (loss) on sale of subsidiaries and businesses 25 of which: remeasurement loss related to UBS Securities China (270) TTotal operating income (adjusted) (300) (157) (226) 92 TTotal operating expenses as reported before allocations 8,917 9,224 9,016 (3) of which: personnel-related restructuring expenses 3 208 442 526 (53) of which: non-personnel-related restructuring expenses 3 238 532 631 (55) TTotal operating expenses (adjusted) before allocations 8,593 8,250 7,859 4 Services (to) / from BDs and other CC units (8,624) (8,445) (8,263) 2 of which: restructuring expenses allocated to BDs and other CC units 3 (456) (954) (1,101) (52) of which: gain related to changes to the Swiss pension plan (122) TTotal operating expenses as reported after allocations 293 779 753 (62) TTotal operating expenses (adjusted) after allocations 425 759 697 (44) OOperating profit / (loss) before tax as reported (806) (935) (856) (14) OOperating profit / (loss) before tax (adjusted) (725) (915) (923) (21) Additional information Average attributed equity (USD billion)4 16.1 19.4 23.0 (16) Risk-weighted assets (USD billion)4 31.8 29.9 27.1 6 of which: held by CC – Services (USD billion) 31.8 29.9 27.1 6 Leverage ratio denominator (USD billion)4 8.2 7.0 5.7 17 of which: held by CC – Services (USD billion) 7.9 6.9 5.7 15 of which: held by CC – Group ALM on behalf of CC – Services (USD billion) 5 0.3 0.1 157 Personnel (full-time equivalents) 30,364 25,623 23,750 19 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 3 Reflects restructuring expenses related to legacy cost programs. 4 Refer to the “Capital management” section of this report for more information. 5 Represents leverage ratio denominator held by Corporate Center – Group ALM that is directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 105 2018 compared with 2017 Corporate Center – Services recorded a loss before tax of USD 806 million compared with USD 935 million, and USD 725 million on an adjusted basis compared with USD 915 million. Operating income Operating income was negative USD 513 million compared with negative USD 157 million. Excluding the remeasurement loss of USD 270 million related to the increase of our shareholding in UBS Securities China and the gain on the sale of Widder Hotel of USD 56 million in 2018, adjusted operating income was negative USD 300 million compared with negative USD 157 million, mainly driven by higher funding costs relating to Corporate Center – Services’ balance sheet assets. Operating expenses Operating expenses before service allocations to business divisions and other Corporate Center units Before service allocations to business divisions and other Corporate Center units, total operating expenses decreased by USD 307 million, or 3%, to USD 8,917 million, including lower restructuring costs and a credit of USD 122 million related to changes to our Swiss pension plan. Adjusted total operating expenses before allocations increased by USD 343 million, or 4%, to USD 8,593 million, mainly due to higher Group Technology investment as well as increased depreciation and impairment costs, partly offset by USD 259 million lower net expenses for provisions for litigation, regulatory and similar matters. Personnel expenses increased by USD 70 million to USD 3,927 million including the aforementioned credit of USD 122 million related to changes to our Swiss pension plan. On an adjusted basis, personnel expenses increased by USD 426 million to USD 3,841 million mainly driven by continued insourcing of certain activities and staff from third-party vendors to our Business Solutions Centers. General and administrative expenses decreased by USD 547 million to USD 3,789 million and adjusted general and administrative expenses decreased by USD 209 million, mainly due to USD 259 million lower net expenses for provisions for litigation, regulatory and similar matters, lower expenses for outsourcing and decreased professional fees. These reductions were partly offset by higher expenses from Group Technology. Depreciation and impairment of property, equipment and software increased to USD 1,199 million from USD 1,024 million, reflecting increased depreciation expenses related to internally generated capitalized software and asset impairment costs. Services to / from business divisions and other Corporate Center units Corporate Center – Services allocated expenses of USD 8,624 million to the business divisions and other Corporate Center units compared with USD 8,445 million. Adjusted allocated expenses were USD 8,168 million compared with USD 7,491 million. Operating expenses after service allocations to / from business divisions and other Corporate Center units Corporate Center – Services retains costs related to Group governance functions and other corporate activities, certain strategic and regulatory projects and certain restructuring expenses. Total operating expenses remaining in Corporate Center – Services after allocations decreased to USD 293 million from USD 779 million and to USD 425 million from USD 759 million on an adjusted basis, mainly reflecting a USD 259 million reduction in expenses for provisions for litigation, regulatory and similar matters.Financial and operating performance 106 Financial and operating performance Corporate Center 2017 compared with 2016 Corporate Center – Services recorded a loss before tax of USD 935 million compared with USD 856 million, and USD 915 million on an adjusted basis compared with USD 923 million. Operating income Operating income was negative USD 157 million compared with negative USD 103 million, partly as 2016 included gains on sales of real estate of USD 123 million. On an adjusted basis, operating income was negative USD 157 million compared with negative USD 226 million, mainly due to higher treasury-related income from Corporate Center – Group Asset and Liability Management (Group ALM), resulting from a change made in the first quarter of 2017 to the methodology used to allocate revenues from the investment of equity and the funding costs for long-term debt that contributes to total loss-absorbing capacity. This was partly offset by higher funding costs relating to Corporate Center – Services’ balance sheet assets. Operating expenses Operating expenses before service allocations to business divisions and other Corporate Center units Before service allocations to business divisions and other Corporate Center units, total operating expenses increased by USD 207 million, or 2%, to USD 9,224 million. Restructuring expenses were USD 974 million compared with USD 1,157 million and mainly related to our transitioning activities to nearshore and offshore locations, as well as outsourcing of IT and other services. Adjusted total operating expenses before allocations increased by USD 391 million, or 5%, to USD 8,250 million. Personnel expenses increased by USD 10 million to USD 3,857 million. Excluding restructuring expenses, adjusted personnel expenses increased by USD 94 million to USD 3,415 million, mainly driven by increased staffing levels and insourcing of certain activities from third-party vendors to our Business Solutions Centers. General and administrative expenses increased by USD 144 million to USD 4,336 million and adjusted general and administrative expenses increased by USD 238 million, mainly due to USD 250 million higher net expenses for provisions for litigation, regulatory and similar matters, partly offset by lower marketing costs. Depreciation and impairment of property, equipment and software increased to USD 1,024 million from USD 955 million, reflecting increased depreciation expenses related to internally generated capitalized software. Services to / from business divisions and other Corporate Center units Corporate Center – Services allocated expenses of USD 8,445 million to the business divisions and other Corporate Center units compared with USD 8,263 million. Adjusted allocated expenses for services to the business divisions and other Corporate Center units were USD 7,491 million compared with USD 7,162 million, mainly as the costs allocated to business divisions and other Corporate Center units in 2016 were lower than the actual costs incurred by Corporate Center – Services on their behalf. Since 2017, costs have been allocated to the business divisions and other Corporate Center units based on actual costs incurred by Corporate Center – Services. Operating expenses after service allocations to / from business divisions and other Corporate Center units Corporate Center – Services retains costs related to Group governance functions and other corporate activities, certain strategic and regulatory projects and certain restructuring expenses. Total operating expenses remaining in Corporate Center – Services after allocations increased to USD 779 million from USD 753 million and to USD 759 million from USD 697 million on an adjusted basis, driven by the aforementioned higher net expenses for provisions for litigation, regulatory and similar matters, largely offset by lower retained expenses as the costs allocated to the business divisions and other Corporate Center units in 2016 were lower than the actual costs incurred by Corporate Center – Services on their behalf. 107 Corporate Center – Group Asset and Liability Management Corporate Center – Group ALM1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Business division-aligned risk management net income 378 726 856 (48) Capital investment and issuance net income (302) (121) 45 150 Group structural risk management net income (919) (522) (553) 76 TTotal risk management net income before allocations (844) 83 348 Allocations to business divisions and other CC units 295 (268) (517) of which: Global Wealth Management (90) (377) (512) (76) of which: Personal & Corporate Banking (56) (184) (336) (70) of which: Asset Management (15) (19) (7) (22) of which: Investment Bank 391 351 264 11 of which: CC – Services (43) (123) (37) (65) of which: CC – Non-core and Legacy Portfolio 108 84 112 29 TTotal risk management net income after allocations (549) (185) (167) 197 Accounting asymmetries related to economic hedges (105) (62) 38 69 Hedge accounting ineffectiveness2 13 (13) 5 Net foreign currency translation gains / (losses)3 (16) (84) Other 33 (11) 54 TTotal operating income as reported (609) (288) (155) 112 TTotal operating income (adjusted)4 (609) (271) (71) 125 Personnel expenses 41 34 31 18 General and administrative expenses 42 27 17 58 Depreciation and impairment of property, equipment and software 0 0 0 Amortization and impairment of intangible assets 0 0 0 Services (to) / from business divisions and other CC units 1 (13) (49) TTotal operating expenses as reported 84 48 (1) 75 of which: personnel-related restructuring expenses 5 0 1 0 of which: non-personnel-related restructuring expenses 5 0 0 0 of which: restructuring expenses allocated from CC – Services 5 3 3 0 TTotal operating expenses (adjusted) 81 44 (1) 87 OOperating profit / (loss) before tax as reported (693) (336) (154) 106 OOperating profit / (loss) before tax (adjusted)4 (690) (315) (70) 119 Additional information Average attributed equity (USD billion)6 3.2 2.8 4.3 14 Risk-weighted assets (USD billion)6 12.0 11.5 10.4 4 of which: held by CC – Group ALM on behalf of BDs and other CC units (USD billion) 7 4.0 4.0 0 Leverage ratio denominator (USD billion)6 283.5 256.3 267.7 11 of which: held by CC – Group ALM on behalf of BDs and other CC units (USD billion) 7 124.9 127.6 (2) Personnel (full-time equivalents) 173 143 142 21 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Excludes ineffectiveness of hedges of net investments in foreign operations. 3 Related to the disposal of foreign subsidiaries and branches. 4 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 5 Reflects restructuring expenses related to legacy cost programs. 6 Refer to the “Capital management” section of this report for more information. 7 Represents risk-weighted assets and leverage ratio denominator held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information.Financial and operating performance 108 Financial and operating performance Corporate Center 2018 compared with 2017 Corporate Center – Group Asset and Liability Management (Group ALM) recorded a loss before tax of USD 693 million compared with a loss of USD 336 million. On an adjusted basis, the loss before tax was USD 690 million compared with a loss of USD 315 million, driven by lower Group structural risk management net income and higher retained operating expenses. Operating income Total operating income was negative USD 609 million compared with negative USD 288 million. Adjusted total operating income retained by Group ALM was negative USD 609 million compared with negative USD 271 million. Total risk management net income before allocations Total risk management net income before allocations to business divisions and other Corporate Center units was negative USD 844 million compared with USD 83 million, mainly reflecting lower net income from business division- aligned risk management activities and Group structural risk management, in addition to negative net income from capital investment and issuance. Business division-aligned risk management net income Net income from business division-aligned risk management activities was USD 378 million compared with USD 726 million, mainly driven by the ongoing effect of negative Swiss franc and euro interest rates and the expiration of an interest rate hedge portfolio in November 2017. In addition, during the third quarter of 2018, Group ALM’s interest rate risk management capability was extended to the management of Global Wealth Management’s interest rate risk in the US. This resulted in lower business division-aligned risk management net income. Previously, this income was realized in Group ALM and fully allocated to Global Wealth Management. The change did not have an effect on Global Wealth Management’s net interest income. Capital investment and issuance net income Net income from capital investment and issuance activities was negative USD 302 million compared with negative USD 121 million. This decrease was due to higher net interest expense as a result of an increase in total outstanding long-term debt that is eligible for total loss-absorbing capital and changes we made to our internal funds transfer pricing rates on these instruments. Group structural risk management net income Net income from Group structural risk management activities was negative USD 919 million compared with negative USD 522 million. This decline was due to increased net interest expense from the management of Group ALM’s portfolio of internal funding as a result of higher London Interbank Offered Rate (LIBOR) rates on floating-rate liabilities and the inclusion of the interest expense on a portfolio of long-dated cross-currency swaps, following a change in accounting policy in the first quarter of 2018. The interest expense of that portfolio was previously recognized in Other net income from fair value changes on financial instruments (prior to 1 January 2018: Net trading income) and reported in Accounting asymmetries related to economic hedges. These effects were partly offset by the aforementioned changes made to our internal funds transfer pricing rates. Allocations to business divisions and other Corporate Center units Combined allocations from risk management activities to business divisions and other Corporate Center units were negative USD 295 million compared with positive USD 268 million. This decrease primarily reflects the aforementioned lower net income from capital investment and issuance activities, which is fully allocated to the business divisions and other Corporate Center units in proportion to their attributed equity, and lower net income from business division-aligned risk management activities, which is allocated to the business divisions, predominantly Global Wealth Management and Personal & Corporate Banking. Total risk management net income after allocations Group ALM retained negative USD 549 million from its risk management activities after allocations compared with negative USD 185 million. Retained income from risk management activities is entirely related to Group structural risk management and is mainly the net result of costs from buffers that are maintained by Group ALM at levels above the total consumption of the business divisions and the revenues generated by Group ALM from the management of the Group’s high-quality liquid assets (HQLA) portfolio relative to the benchmark rates used to allocate the costs. 109 Accounting asymmetries related to economic hedges Net income retained by Group ALM due to accounting asymmetries related to economic hedges was negative USD 105 million compared with negative USD 62 million, primarily due to a loss of USD 35 million compared with a gain of USD 71 million on certain internal funding transactions due to the widening of own credit funding spreads. This was partly offset by reduced expense from the aforementioned change in accounting policy in the first quarter of 2018 on a portfolio of long-dated cross- currency swaps, now reported in Group structural risk management net income. Hedge accounting ineffectiveness Net income related to hedge accounting ineffectiveness was positive USD 13 million compared with negative USD 13 million. This ineffectiveness primarily arises from changes in the spread between LIBOR and the overnight index swap (OIS) rate due to differences in the way these affect the valuation of the hedged items and hedging instruments through either the benchmark rate determining cash flows or the discount rate. Other Other net income was positive USD 33 million compared with negative USD 11 million, mainly reflecting higher mark-to- market effects from hedging activity not designated in hedge accounting relationships. Operating expenses Total operating expenses were USD 84 million compared with USD 48 million, mainly due to higher temporary regulatory costs. In addition, from June 2017, Group ALM retained costs related to Group structural risk management net income to the extent that such income is not allocated to the business divisions and other Corporate Center units. Prior to this, Group ALM allocated all costs to business divisions and other Corporate Center units. Balance sheet assets Balance sheet assets increased by USD 28 billion to USD 280 billion as of 31 December 2018, reflecting decreased net funding consumption by the business divisions. Funding available in excess of the business divisions’ requirements is transferred to Group ALM’s balance sheet to be reinvested, or to be reduced over time if business needs remain lower. As a result, Group ALM’s balance sheet is mainly driven by the volume of liabilities created across the Group rather than centrally managed asset requirements. →Refer to the “Treasury management” section of this report for more information Risk-weighted assets Risk-weighted assets (RWA) remained stable at USD 12 billion. →Refer to the “Capital management” section of this report for more information Leverage ratio denominator The leverage ratio denominator (LRD) increased to USD 284 billion from USD 256 billion, consistent with the increase in balance sheet assets. →Refer to the “Capital management” section of this report for more information Financial and operating performance 110 Financial and operating performance Corporate Center 2017 compared with 2016 Group ALM recorded a loss before tax of USD 336 million compared with a loss of USD 154 million. On an adjusted basis, the loss before tax was USD 315 million compared with a loss of USD 70 million, driven by lower net income on accounting asymmetries related to economic hedges and higher retained operating expenses. Operating income Total operating income was negative USD 288 million compared with negative USD 155 million. Adjusted total operating income retained by Group ALM was negative USD 271 million compared with negative USD 71 million. Total risk management net income before allocations Total risk management net income before allocations to business divisions and other Corporate Center units was USD 83 million compared with USD 348 million, mainly reflecting lower net income from business division-aligned risk management activities and negative net income from capital investment and issuance. Business division-aligned risk management net income Net income from business division-aligned risk management activities was USD 726 million compared with USD 856 million, mainly reflecting reduced interest rate risk management revenues in the banking book for Global Wealth Management and Personal & Corporate Banking. This decrease was mainly due to lower interest income from managing euro- and Swiss franc-denominated deposits in the current negative interest rate environment. Capital investment and issuance net income Net income from capital investment and issuance activities was negative USD 121 million compared with positive USD 45 million. This decrease was due to USD 89 million higher net interest expense as a result of an increase in total outstanding long-term debt that is eligible for total loss-absorbing capital and USD 78 million lower interest income from the investment of the Group’s equity due to maturing positions being replaced at lower long-term interest rates. Group structural risk management net income Net income from Group structural risk management activities was negative USD 522 million compared with negative USD 553 million. An increase in income of USD 130 million from the management of the Group’s HQLA, mainly due to wider spreads between certain HQLA and internal funding liabilities, was largely offset by an increase in net interest expense of USD 109 million due to issuances of long-term debt during 2017. Allocations to business divisions and other Corporate Center units Combined allocations from risk management activities to business divisions and other Corporate Center units were USD 268 million compared with USD 517 million. This decrease primarily reflects the aforementioned lower net income from capital investment and issuance activities, which is fully allocated to the business divisions and other Corporate Center units in proportion to their attributed equity, and lower net income from business division-aligned risk management activities, which is allocated to the business divisions, predominantly Global Wealth Management and Personal & Corporate Banking. Total risk management net income after allocations Group ALM retained negative USD 185 million from its risk management activities after allocations compared with negative USD 167 million. Retained income from risk management activities is entirely related to Group structural risk management and is mainly the net result of costs from buffers that are maintained by Group ALM at levels above the total consumption of the business divisions and the revenues generated by Group ALM from the management of the Group’s HQLA portfolio relative to the benchmark rates used to allocate the costs. 111 Accounting asymmetries related to economic hedges Net income retained by Group ALM due to accounting asymmetries related to economic hedges was negative USD 62 million compared with positive USD 38 million, primarily due to a loss of USD 172 million compared with a loss of USD 38 million on Group ALM’s cross-currency and interest rate derivatives hedges related to its portfolio of internal funding as well as lower fair value gains of USD 71 million compared with USD 179 million on certain internal funding transactions due to the tightening of own credit funding spreads. This was partly offset by a gain of USD 39 million compared with a loss of USD 36 million related to HQLA classified as available for sale. Hedge accounting ineffectiveness Net income related to hedge accounting ineffectiveness was negative USD 13 million compared with positive USD 5 million. This ineffectiveness primarily arises from changes in the spread between LIBOR and the OIS rate due to differences in the way these affect the valuation of the hedged items and hedging instruments through either the benchmark rate determining cash flows or the discount rate. Other Other net income was negative USD 11 million compared with positive USD 54 million, mainly reflecting lower interest income retained by Group ALM on behalf of non-controlling interests. Operating expenses Total operating expenses were USD 48 million compared with negative USD 1 million. From June 2017, Group ALM retained costs related to Group structural risk management income to the extent that such income was not allocated to the business divisions and other Corporate Center units. Previously, Group ALM allocated all costs to business divisions and other Corporate Center units. Balance sheet assets Balance sheet assets decreased by USD 10 billion to USD 252 billion as of 31 December 2017, reflecting increased net funding consumption by the business divisions. Group ALM is responsible for investing any funding generated that is surplus to the requirements of the business divisions. As a result, Group ALM’s balance sheet is mainly driven by the volume of liabilities created across the Group rather than centrally managed asset requirements. Risk-weighted assets RWA increased by USD 1 billion to USD 12 billion as of 31 December 2017 mainly due to higher credit risk in the Group’s HQLA portfolio. Leverage ratio denominator LRD decreased to USD 256 billion from USD 268 billion, consistent with the decrease in balance sheet assets. Financial and operating performance 112 Financial and operating performance Corporate Center Corporate Center – Non-core and Legacy Portfolio Corporate Center – Non-core and Legacy Portfolio1 As of or for the year ended % change from USD million, except where indicated 331.12.18 31.12.17 31.12.16 31.12.17 Results Income 172 (11) (20) Credit loss (expense) / recovery (8) (11) (12) (33) TTotal operating income 165 (22) (32) Personnel expenses 35 44 67 (20) General and administrative expenses 104 117 744 (11) Services (to) / from business divisions and other CC units 176 228 283 (23) of which: services from CC – Services 153 198 227 (23) Depreciation and impairment of property, equipment and software 0 0 0 (31) Amortization and impairment of intangible assets 0 0 0 (100) TTotal operating expenses 315 388 1,094 (19) OOperating profit / (loss) before tax (150) (411) (1,126) (63) Adjusted results2 TTotal operating income as reported 165 (22) (32) TTotal operating income (adjusted) 165 (22) (32) TTotal operating expenses as reported 315 388 1,094 (19) of which: personnel-related restructuring expenses 3 0 0 1 of which: non-personnel-related restructuring expenses 3 0 0 0 of which: restructuring expenses allocated from CC – Services 3 3 6 21 TTotal operating expenses (adjusted) 312 382 1,073 (18) OOperating profit / (loss) before tax as reported (150) (411) (1,126) (63) OOperating profit / (loss) before tax (adjusted) (148) (405) (1,105) (64) Additional information Average attributed equity (USD billion)4 1.2 1.4 2.1 (15) Risk-weighted assets (USD billion)4 13.9 16.6 18.6 (16) of which: held by CC – Non-core and Legacy Portfolio (USD billion) 13.9 16.5 18.6 (16) Leverage ratio denominator (USD billion)4 12.5 17.1 22.0 (27) of which: held by CC – Non-core and Legacy Portfolio (USD billion) 10.8 15.3 22.0 (29) of which: held by CC – Group ALM on behalf of CC – Non-core and Legacy Portfolio (USD billion) 5 1.7 1.8 (7) Personnel (full-time equivalents) 44 52 63 (15) 11 Comparative figures in this table have been restated for the change of the presentation currency from Swiss francs to US dollars with assets, liabilities and total equity translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses translated at the respective average rates prevailing for the relevant periods. Comparatives may additionally differ due to adjustments following organizational changes, restatements due to the retrospective adoption of new accounting standards or changes in accounting policies, and events after the reporting period. 2 Adjusted results are non-GAAP financial measures as defined by SEC regulations. 3 Reflects restructuring expenses related to legacy cost programs. 4 Refer to the “Capital management” section of this report for more information. 5 Represents leverage ratio denominator held by Corporate Center – Group ALM that is directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity” in the “Capital management” section of this report for more information. 113 Composition of Non-core and Legacy Portfolio An overview of the composition of Non-core and Legacy Portfolio is presented in the table below. The groupings of positions by category and the order in which these are listed are not necessarily representative of the magnitude of the risks associated with them, nor do the metrics shown in the table necessarily represent the risk measures used to manage and control these positions. RWA Total assets²LRD³Exposure category¹Description 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Linear rates 1.1 1.3 22.1 29.3 4.2 6.4 Non-linear rates Consists of linear OTC products (primarily vanilla interest rate, inflation, basis and cross-currency swaps for all major currencies and some emerging markets) and non- linear OTC products (vanilla and structured options). More than 95% of gross positive replacement values (PRVs) are collateralized and more than 99% of uncollateralized exposures are rated investment grade. 30% of gross PRVs are due to mature by the end of 2021. 0.5 0.2 5.8 8.6 1.3 1.2 Credit Remaining positions include an equity investment and residual loan population with minimal risk exposures.0.1 0.3 0.0 0.7 0.1 0.9 Securitizations Consists primarily of a portfolio of CDS positions referencing ABS assets with related cash and synthetic hedges to mitigate the effect of directional movements. The majority of the remaining positions are expected to settle by 2020. 1.2 1.9 0.6 0.9 0.6 0.8 Auction preferred stocks (APSs) and auction rate securities (ARSs) Portfolio of long-dated APSs and municipal ARSs. All APSs were rated A or above and all ARS exposures were rated Baa2 or above as of 31 December 2018.0.4 0.6 1.7 2.2 1.7 2.2 Municipal swaps and options Swaps and options with US state and local governments. More than 99% of the PRVs are with counterparties that were rated investment grade as of 31 December 2018.0.4 0.5 1.6 2.2 1.0 1.5 Other Diverse portfolio of smaller positions.1.0 1.0 2.9 3.5 1.9 2.3 Operational risk Operational risk risk-weighted assets allocated to Non- core and Legacy Portfolio.9.2 10.6 Total 13.9 16.5 34.7 47.4 10.8 15.3 1 The groupings of positions by category and the order in which these are listed are not necessarily representative of the magnitude of the risks associated with them, nor do the metrics shown in the table necessarily represent the risk measures used to manage and control these positions. 2 Total assets of USD 34.7 billion as of 31 December 2018 (USD 47.4 billion as of 31 December 2017) include positive replacement values (gross exposure excluding the effect of any counterparty netting) of USD 29.3 billion (USD 39.0 billion as of 31 December 2017). 3 Swiss SRB leverage ratio denominator.Financial and operating performance 114 Financial and operating performance Corporate Center 2018 compared with 2017 Corporate Center – Non-core and Legacy Portfolio recorded a loss before tax of USD 150 million compared with USD 411 million. Operating income Operating income was positive USD 165 million compared with negative USD 22 million. The improved result was mainly due to valuation gains on auction rate securities, which were measured at amortized cost in 2017 and are now measured at fair value through profit or loss effective 1 January 2018 upon adoption of IFRS 9. Operating expenses Total operating expenses decreased by USD 73 million, or 19%, to USD 315 million. Net expenses for services from business divisions and other Corporate Center units decreased by USD 52 million and professional fees declined by USD 28 million. Furthermore, 2018 included USD 69 million net expenses for provisions for litigation, regulatory and similar matters compared with USD 52 million. Balance sheet assets Non-core and Legacy Portfolio total assets decreased by USD 13 billion to USD 35 billion, mainly due to a reduction in derivatives and cash collateral receivables on derivative instruments, primarily reflecting maturities and trade terminations. Total assets excluding derivatives and cash collateral receivables on derivative instruments decreased by USD 1 billion to USD 4 billion. Risk-weighted assets Risk-weighted assets (RWA) decreased by USD 3 billion to USD 14 billion, mainly as a result of lower operational risk RWA. →Refer to the “Capital management” section of this report for more information Leverage ratio denominator The leverage ratio denominator (LRD), including LRD held by Corporate Center – Group Asset and Liability Management (Group ALM) on behalf of Non-core and Legacy Portfolio, decreased to USD 13 billion from USD 17 billion, mainly due to a reduction in the derivatives portfolio and associated cash collateral. →Refer to the “Capital management” section of this report for more information 115 2017 compared with 2016 Corporate Center – Non-core and Legacy Portfolio recorded a loss before tax of USD 411 million compared with USD 1,126 million. Operating income Operating income was negative USD 22 million compared with negative USD 32 million. The improved result was mainly due to income related to a claim on a defaulted counterparty position, largely allocated from Group ALM, and lower losses from novation and unwind activities. Operating expenses Total operating expenses decreased by USD 706 million, or 64%, to USD 388 million. 2017 included USD 52 million net expenses for provisions for litigation, regulatory and similar matters compared with USD 595 million. Net expenses for services from business divisions and other Corporate Center units decreased by USD 55 million as a result of reduced consumption of shared services. Furthermore, professional fees declined by USD 42 million and personnel expenses decreased by USD 23 million due to lower staff levels. In addition, 2017 reflected a net credit for the UK bank levy of USD 12 million compared with a net expense of USD 31 million, primarily as 2017 included a USD 23 million credit related to prior years. Balance sheet assets During 2017, total assets decreased by USD 20 billion to USD 47 billion, mainly due to a USD 16 billion reduction in positive replacement values (PRVs), primarily reflecting trade terminations and maturities, mainly related to interest rate and foreign exchange contracts. Total assets excluding PRVs decreased by USD 4 billion to USD 8 billion, mainly due to a reduction in cash collateral receivables on derivative instruments. Assets classified as Level 3 in the fair value hierarchy totaled USD 1.7 billion as of 31 December 2017. Risk-weighted assets RWA decreased by USD 2 billion to USD 17 billion. →Refer to the “Capital management” section of this report for more information Leverage ratio denominator LRD, including LRD held by Group ALM on behalf of Non-core and Legacy Portfolio, decreased to USD 17 billion from USD 22 billion, consistent with the reduction in balance sheet assets. →Refer to the “Capital management” section of this report for more information Financial and operating performance Risk, treasury and capital management Management report Audited information according to IFRS 7 and IAS 1 Risk and capital disclosures provided in line with the requirements of International Financial Reporting Standard 7 (IFRS 7), Financial Instruments: Disclosures, and International Accounting Standard 1 (IAS 1), Presentation of Financial Statements, form part of the financial statements included in the ”Consolidated financial statements” section of this report and audited by the independent registered public accounting firm Ernst & Young Ltd, Basel. This information is marked as “Audited” within this section of the report. The risk profile of UBS AG consolidated does not differ materially from that of UBS Group AG consolidated. Audited information provided in the “Risk management and control” and “Treasury management” sections applies to both UBS Group AG consolidated and UBS AG consolidated. Signposts The Audited | signpost that is displayed at the beginning of a section, table or chart indicates that those items have been audited. A triangle symbol – – indicates the end of the audited section, table or chart. 118 Table of contents 119 Risk management and control 119 Overview of risks arising from our business activities 121 Risk categories 122 Top and emerging risks 123 Risk governance 125 Risk appetite framework 129 Internal risk reporting 130 Risk measurement 133 Credit risk 154 Market risk 165 Country risk 170 Operational risk 173 Treasury management 173 Balance sheet, liquidity and funding management 189 Off-balance sheet 192 Currency management 193 Cash flows 194 Capital management 194 Capital management objectives, planning and activities 196 Swiss SRB total loss-absorbing capacity framework 199 Total loss-absorbing capacity 204 Risk-weighted assets 207 Leverage ratio denominator 209 Equity attribution and return on attributed equity 212 UBS shares 119 Risk management and control Overview of risks arising from our business activities The scale of our business activities is dependent on the capital we have available to cover the risks in our business, the size of our on- and off-balance sheet assets through their contribution to our capital, leverage and liquidity ratios, and our risk appetite. Our overall credit risk profile remained stable over the year and we continued to manage market risks at generally low levels. Operational resilience, conduct and prevention of financial crime remain key focus topics. The table on the next page shows risk-weighted assets (RWA), the leverage ratio denominator (LRD) and risk-based capital (RBC), as well as attributed tangible equity, total assets and operating profit before tax on both a reported and adjusted basis, for our business divisions and Corporate Center units. This illustrates how the activities in our business divisions and Corporate Center units are captured in the risk measures mentioned above the table, and it illustrates their financial performance in the context of these measures. →Refer to the “Capital management” section of this report for more information on risk-weighted assets, leverage ratio denominator and our equity attribution framework →Refer to “Statistical measures” in this section for more information on risk-based capital →Refer to the “Performance by business division and Corporate Center unit – reported and adjusted” table in the “Group performance” section of this report for more information Risk, treasury and capital management 120 Risk, treasury and capital management Risk management and control Key risks, risk measures and performance by business division and Corporate Center unit Risk measures and performance 31.12.18 USD billion, as of or for the year ended Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank CC – Services CC – Group ALM CC – Non-core and Legacy Portfolio Group Risk-weighted assets1 58.2 56.8 4.1 86.9 31.8 12.0 13.9 263.7 of which: credit and counterparty credit risk 29.3 52.7 1.6 49.8 1.9 9.2 3.4 147.9 of which: market risk 1.3 0.0 0.0 16.8 2 0.0 0.6 1.3 20.0 of which: operational risk 27.5 4.0 2.4 20.2 11.9 2.3 9.2 77.6 Leverage ratio denominator1 207.4 152.2 2.7 240.1 7.9 283.5 10.8 904.6 Risk-based capital3 5.0 4.5 0.4 6.6 10.6 4.5 1.7 33.3 Average attributed tangible equity4 8.4 6.6 0.3 10.2 16.1 3.2 1.2 45.9 Total assets 200.0 138.8 24.4 258.7 21.7 280.1 34.7 958.5 Operating profit / (loss) before tax (as reported) 3.6 1.9 0.5 1.6 (0.8) (0.7) (0.2) 6.0 Operating profit / (loss) before tax (adjusted)5 3.7 1.6 0.5 1.8 (0.7) (0.7) (0.1) 6.1 31.12.17 USD billion, as of or for the year ended Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank CC – Services CC – Group ALM CC – Non-core and Legacy Portfolio Group Risk-weighted assets1 55.9 49.3 4.0 76.5 29.9 11.5 16.5 243.6 of which: credit and counterparty credit risk 26.4 45.1 1.5 44.0 1.8 8.2 4.6 131.8 of which: market risk 1.7 0.0 0.0 12.0 (3.2) 2 0.7 1.3 12.6 of which: operational risk 27.7 4.1 2.5 20.4 13.7 2.6 10.6 81.5 Leverage ratio denominator1 205.0 151.9 2.8 271.0 6.9 256.3 15.3 909.0 Risk-based capital3 4.9 3.3 0.4 7.0 11.3 5.8 2.1 34.8 Average attributed tangible equity4 8.0 6.2 0.3 9.4 19.4 2.8 1.4 47.4 Total assets 195.0 139.1 14.6 269.7 21.4 252.1 47.4 939.3 Operating profit / (loss) before tax (as reported) 3.6 1.6 0.6 1.3 (0.9) (0.3) (0.4) 5.4 Operating profit / (loss) before tax (adjusted)5 4.2 1.7 0.5 1.5 (0.9) (0.3) (0.4) 6.3 1 Represents RWA and LRD prior to allocation of RWA and LRD held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Calculated in accordance with Swiss systemically relevant bank rules. Refer to the “Capital management” section of this report for more information. 2 As of 31 December 2018, the effect of portfolio diversification across businesses, which was previously reflected in Corporate Center – Services market risk RWA, was included in the Investment Bank market risk RWA. 3 Refer to “Statistical measures” in this section for more information on risk-based capital. 4 Attributed tangible equity equals attributed equity less goodwill and intangible assets. Refer to the “Capital management” section of this report for more information on our equity attribution framework. 5 Adjusted results are non-GAAP financial measures as defined by SEC regulations. Refer to the “Performance by business division and Corporate Center unit – reported and adjusted” table in the “Group performance” section of this report for more information. Business divisions and Corporate Center units Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank CC – Services CC – Group ALM CC – Non-core and Legacy Portfolio Key risks arising from business activities Credit risk from lending against securities collateral and mortgages, and a small amount of derivatives trading activity Market risk from municipal securities and taxable fixed- income securities Credit risk from retail business, mortgages, secured and unsecured corporate lending, and a small amount of derivatives trading activity Minimal contribution to market risk Small amounts of credit and market risk Credit risk from lending (including temporary loan underwriting activities), derivatives trading and securities financing Market risk from primary under- writing activities and secondary trading No material risk exposures Credit and mmarket risk arising from management of the Group’s balance sheet, capital, profit or loss and liquidity portfolios Credit risk from remaining lending and derivative exposures Market risk is materially hedged Operational risk is an inevitable consequence of being in business, as losses can result from inadequate or failed internal processes, people and systems, or from external events. It can arise as a result of our past and current business activities across all business divisions and Corporate Center units. 121 Risk categories We categorize the risk exposures of our business divisions and Corporate Center units as outlined in the table below. Risk definitions Risk managed by Independent oversight by Captured in our risk appetite framework Primary risks: the risks that our businesses may take to generate a return Audited | Credit risk: the risk of loss resulting from the failure of a client or counterparty to meet its contractual obliga- tions toward UBS. This includes settlement risk and loan underwriting risk: Settlement risk: the risk of loss resulting from transactions that involve exchange of value (e.g., security versus cash) where we must deliver without first being able to determine with certainty that we will receive the countervalue Loan underwriting risk: the risk of loss arising during the holding period of financing transactions that are intended for further distribution p Business management Risk Control Audited | Market risk (traded and non-traded): the risk of loss resulting from adverse movements in market variables. Market variables include observable variables, such as interest rates, foreign exchange rates, equity prices, credit spreads and commodity (including precious metal) prices, and variables that may be unobservable or only indirectly observable, such as volatilities and correlations. Market risk includes issuer risk and investment risk: Issuer risk: the risk of loss from changes in fair value resulting from credit-related events affecting an issuer to which we|are exposed through tradable securities or derivatives referencing the issuer Investment risk: issuer risk associated with positions held as financial investments p Business management Group Treasury Risk Control Country risk: the risk of losses resulting from country-specific events. It includes transfer risk, whereby a|country’s authorities prevent or restrict the payment of an obligation, as well as systemic risk events arising from country-specific political or macroeconomic developments Business management Risk Control Consequential risks: the risks to which our businesses are exposed as a consequence of being in business Audited | Liquidity risk: the risk of being unable to generate sufficient funds from assets to meet payment obligations when they fall due, including in times of stress p Group Treasury Risk Control Audited | Funding risk: the risk of higher-than-expected funding costs due to wider-than-expected UBS credit spreads when existing funding positions mature and need to be rolled over or replaced by other, more expensive funding sources. If|a shortage of available funding sources is expected in a stress event, funding risk also covers potential additional losses from forced asset sales p Structural foreign exchange risk: the risk of decreases in our capital due to changes in foreign exchange rates with an adverse translation effect on capital held in currencies other than US dollars Group Treasury Risk Control Operational risk: the risk resulting from inadequate or failed internal processes, people and systems, or from external causes (deliberate, accidental or natural) that have an impact (either financial or non-financial) on UBS, its clients or the markets in which it operates. Events may be direct financial losses or indirect in the form of revenue forgone as a result of business suspension. They may also result in damage to our reputation and to our franchise that have longer-term financial consequences: Legal risk: the financial or reputational implications resulting from the risk of (i) being held liable for a breach of applica- ble laws, rules or regulations; (ii) being held liable for a breach of contractual or other legal obligations; (iii) an inability or failure to enforce or protect contractual rights or non-contractual rights sufficiently to protect UBS’s interests, including the risk of being party to a claim in respect of any of the above (and the risk of loss of attorney-client privilege in the context of any such claim); (iv) a failure to adequately develop, supervise and resource legal teams or adequately super- vise external legal counsel advising on business legal risk and other matters; and (v) failure to adequately manage any potential, threatened and commenced litigation and legal proceedings, including civil, criminal, arbitration and regulatory proceedings and / or litigation risk or any dispute or investigation that may lead to litigation or threat of any litigation Conduct risk: the risk that the conduct of the firm or its individuals unfairly impacts clients or counterparties, undermines the integrity of the financial system or impairs effective competition to the detriment of consumers Compliance risk: the risk incurred by the firm by not adhering to the applicable laws, rules and regulations, and our own internal standards Cyber and information security risk: the risk of a material impact from an external or internal attack on our information systems with the purpose of data theft, fraud or denial of service. Cyberattacks are manifestations of a cyber threat into an act of aggression or criminal activity causing financial, regulatory or reputational harm or loss Financial crime risk: the risk that UBS fails to detect criminal activities, including internal and external theft and fraud, money laundering, bribery and corruption, fails to comply with sanctions and embargoes, or fails to report or respond to requests from relevant authorities related to these matters Business management Group Compliance, Regulatory & Governance (GCRG) Legal GCRG GCRG Risk Control GCRG Pension risk: the risk of a negative impact on our capital as a result of deteriorating funded status from decreases in the fair|value of assets held in the defined benefit pension funds and / or changes in the value of defined benefit pension obligations due to changes in actuarial assumptions (e.g., discount rate, life expectancy, rate of pension increase) and / or changes to|plan designs Human Resources Risk Control and Finance Environmental and social risk: the possibility of UBS suffering reputational or financial harm from transactions, products, services or activities that involve a party associated with environmentally or socially sensitive activities ➔Refer to “Society” in the “How we create value for our stakeholders” section of this report for more information Business management Risk Control Model risk: Model risk is the risk of adverse consequences via financial loss or non-financial impact (e.g., poor business and / or strategic decision making, or damage to the firm’s reputation) resulting from decisions based on incorrect or misused model outputs and reports. Model risk may result from a number of sources: inputs, methodology, implementation, or use Model owner Risk Control Business risks: the risks arising from the commercial, strategic and economic environment in which our businesses operate Business risks: the potential negative impact on earnings from lower-than-expected business volumes and / or margins, to the extent they are not offset by a decrease in expenses Business management Finance Reputational risks Reputational risk: the risk of damage to our reputation from the point of view of our stakeholders, such as clients, shareholders, staff and the general public All businesses and functions All control functions Risk, treasury and capital management 122 Risk, treasury and capital management Risk management and control Top and emerging risks The top and emerging risks disclosed below reflect those that we currently think have the potential to materialize within one year and that could significantly affect the Group. Investors should also carefully consider all information set out in the “Risk factors” section of this report, where we discuss these and other material risks we consider could have an effect on our ability to execute our strategy and may affect our business activities, financial condition, results of operations and prospects. – We are exposed to a number of macroeconomic issues as well as general market conditions. As noted in “Market and macroeconomic risks” in the “Risk factors” section of this report, these external pressures may have a significant adverse effect on our business activities and related financial results, primarily through reduced margins and revenues, asset impairments and other valuation adjustments. Accordingly, these macroeconomic factors are considered in the development of stress testing scenarios for our ongoing risk management activities. – We are exposed to substantial changes in the regulation of our businesses that could have a material adverse effect on our business, as discussed in the “Regulatory and legal developments” section of this report and in “Regulatory and legal risks” in the “Risk factors” section of this report. – As a global financial services firm we are subject to many different legal, tax and regulatory regimes and extensive regulatory oversight. We are exposed to significant liability risk and we are subject to various claims, disputes, legal proceedings and government investigations, as noted in “Regulatory and legal risks” in the “Risk factors” section of this report. Information on litigation, regulatory and similar matters we consider significant is disclosed in “Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report. – One of the most critical risks facing the broader industry is the threat of cyberattacks, which continue to evolve. Along with the rest of the industry, we face ongoing threats, such as data theft, disruption of service and cyber fraud, all of which have the potential to significantly affect our business. Additionally, as a result of the operational complexity of all our businesses, we are continually exposed to operational risks such as process error, failed execution, system failures and fraud. Conduct risks are inherent in our businesses. Financial crime, including money laundering, terrorist financing, sanctions violation, fraud, bribery and corruption, presents significant risk. Heightened regulatory expectations and attention require investment in people and systems, while emerging technologies and changing geopolitical risks further increase the complexity of identifying and preventing financial crime. Refer to “Operational risk” in this section and “Strategy, management and operations risks” in the “Risk factors” section of this report for more information. 123 Risk governance Our risk governance framework operates along three lines of defense. Our first line of defense, business management, owns its risk exposures and is required to maintain effective processes and systems to manage its risks, including robust and comprehensive internal controls and documented procedures. Business management has appropriate supervisory controls and review processes in place designed to identify control weaknesses and inadequate processes. Our second line of defense is formed by the control functions, which are separate from the business and report directly to the Group CEO. Control functions provide independent oversight of risks, including setting risk appetite and protecting against non- compliance with applicable laws and regulations. Our third line of defense, Group Internal Audit, reports to the Audit Committee of the Board of Directors and evaluates the overall effectiveness of governance, risk management and the control environment, including the assessment of how the first and second lines of defense meet their objectives. The key roles and responsibilities for risk management and control are illustrated in the following chart and described on the following pages. #WFKVGF^4KUMIQXGTPCPEG )TQWR%QORNKCPEG 4GIWNCVQT[)QXGTPCPEG )TQWR(KPCPEG )TQWR.GICN )TQWR%JKGH'ZGEWVKXG1HƂEGT )TQWR'ZGEWVKXG$QCTF CEVKPICUTKUMEQWPEKN )TQWR%JKGH%QORNKCPEG CPF)QXGTPCPEG1HƂEGT )TQWR%JKGH (KPCPEKCN1HƂEGT )TQWR)GPGTCN%QWPUGN 4GIKQPCNNGICNGPVKV[ JGCFU%14% 4GIKQPCNNGICNGPVKV[ %(1U 4GIKQPCNNGICNGPVKV[ )GPGTCN%QWPUGNU %GPVTCN)%4)HWPEVKQPU %GPVTCN(KPCPEGHWPEVKQPU %GPVTCN.GICNHWPEVKQPU V )TQWR4KUM%QPVTQN )TQWR%JKGH4KUM1HƂ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isk, treasury and capital management 124 Risk, treasury and capital management Risk management and control Audited | The Board of Directors (BoD) is responsible for determining the risk principles, risk appetite and related risk limits of the Group, including their allocation to the business divisions and Corporate Center units. The BoD is supported by the BoD Risk Committee, which monitors and oversees the Group’s risk profile and the implementation of the risk framework as approved by the BoD, and approves the Group’s risk appetite methodology. The Corporate Culture and Responsibility Committee supports the BoD in fulfilling its duty to safeguard and advance the Group’s reputation for responsible and sustainable conduct. It reviews and assesses stakeholder concerns and expectations pertaining to UBS’s societal performance and corporate culture, and recommends appropriate actions to the BoD. The Group Executive Board (GEB) has overall responsibility for establishing and implementing risk management and control in the Group. It manages the risk profile of the Group as a whole. The Group Chief Executive Officer (Group CEO) has responsibility and accountability for the management and performance of the Group, has risk authority over transactions, positions and exposures, and allocates risk limits approved by the BoD within the business divisions and Corporate Center units. The business division Presidents are accountable for the success, risks, results and value of their business division. This includes actively managing their risk exposures and balancing profit potential, risk, balance sheet and capital usage. The regional Presidents facilitate the implementation of UBS’s strategy in their region, and have the mandate to inform the GEB of any activities and issues that may give rise to actual or potentially material regulatory or reputational concerns. The Group Chief Risk Officer (Group CRO) is responsible for independent oversight of credit, market, country, liquidity, funding, cyber and information security risks as well as model and environmental and social risk. This includes establishing methodologies to measure and assess risk, setting risk limits, and approving credit and market risk transactions and exposures. Risk Control is also the central function for model risk management for all models used in the firm. The risk control process is supported by a framework of policies and authorities. Business division and regional Chief Risk Officers have delegated authority for their respective divisions and regions. Moreover, authorities are delegated to risk officers according to their expertise, experience and responsibilities. The Group Chief Compliance and Governance Officer is responsible for ensuring that all operational risks, including compliance and conduct risk, are identified, owned and managed in alignment with the firm’s risk appetite, supported by an effective control framework, including appropriate measuring and aggregating processes, as well as appropriate reporting. The Group Chief Financial Officer (Group CFO) is responsible for transparency in, appraisal of, and presentation of the financial performance of the Group and the business divisions, and for the Group’s financial reporting, forecasting, planning and controlling processes in line with regulatory and financial reporting requirements, corporate governance standards and global best practice to maintain high quality and timeliness. Further responsibilities include managing UBS’s tax affairs, as well as treasury and capital management, including the management of funding and liquidity risk and UBS’s regulatory capital ratios. The Group General Counsel (Group GC) is responsible for managing and reporting all litigation matters and proceedings of the Group, and for reviewing incidents of materialized legal risk as well as areas of emerging legal risk. Group Internal Audit (GIA) independently assesses the adherence to our strategy, the effectiveness of governance, risk management and control processes at Group, business division and regional levels, including compliance with legal, regulatory and statutory requirements, as well as with internal policies and contracts. The Head GIA reports to the Chairman of the BoD and, in addition, GIA has a functional reporting line to the BoD Audit Committee. Some of the above roles and responsibilities are replicated for certain significant legal entities of the Group. The legal entity risk officers are responsible for independent oversight and control of primary and consequential risks for certain significant legal entities of the Group as part of the legal entity control framework, which complements the Group’s risk governance framework. 125 Risk appetite framework Our risk appetite is defined at the aggregate Group level and reflects the types of risk that we are willing to accept or intend to avoid. It is established via a complementary set of qualitative and quantitative risk appetite statements defined on a Group- wide level and is embedded throughout our business divisions and legal entities by means of Group, business division and legal entity policies, limits and authorities. The risk appetite statements are a critical foundation to maintaining a robust risk culture throughout our organization. The “Risk appetite framework” chart below shows the key elements of the framework. These elements are described in more detail in this section. Qualitative statements aim to ensure we maintain the desired risk culture. Quantitative risk appetite objectives are designed to enhance the Group’s resilience against the effect of potential severe adverse economic or geopolitical events. These risk appetite objectives cover the Group’s minimum capital and leverage ratios, its solvency, earnings, liquidity and funding, and are subject to periodic review, including as part of the annual business planning process. These objectives are complemented by operational risk appetite objectives, which are established for each of our operational risk categories, such as market conduct, theft, fraud, data confidentiality and technology risks. Operational risk events that exceed predetermined risk tolerances, expressed as percentages of the Group’s operating income, must be escalated to the respective business division President or higher, as appropriate. The quantitative risk appetite objectives are supported by a comprehensive suite of risk limits set at portfolio level. These may apply across the Group, within a business division or business unit, at legal entity level, or to an asset class. These additional quantitative controls are typically bottom-up and are designed to monitor specific portfolios and to identify potential risk concentrations. 4KUMCRRGVKVGHTCOGYQTM 4KUMCRRGVKVGHTCOGYQTM 4KUMCRRGVKVGUVCVGOGPVU 4KUMRTKPEKRNGUIQXGTPCPEGCPFTQNGUTGURQPUKDKNKVKGU 4KUMQDLGEVKXGUOGCUWTGUCPFEQPVTQNU s4KUMOCPCIGOGPVCPFEQPVTQNRTKPEKRNGU s%QFGQH%QPFWEVCPF'VJKEU s6QVCN4GYCTF2TKPEKRNGU s1TICPK\CVKQP4GIWNCVKQPURQNKEKGU s4QNGUCPFTGURQPUKDKNKVKGU s)TQWRYKFGTKUMCRRGVKVGQDLGEVKXGU s1RGTCVKQPCNTKUMCRRGVKVGQDLGEVKXGU s4KUMOGCUWTGOGPVHTCOGYQTMU s#WVJQTKVKGUCPFNKOKVU 4KUMTGRQTVKPICPFFKUENQUWTGKPENWFKPIKPVGTPCNTGIWNCVQT[CPFGZVGTPCNTGRQTVKPI Risk reports aggregating measures of risk across products and businesses provide insight into the amounts, types, and sensitivities of the various risks in our portfolios and are intended to ensure compliance with defined limits. Risk officers, senior management and the BoD use this information to understand our risk profile and the performance of the portfolios. The status of risk appetite objectives is evaluated each month and reported to the BoD and the GEB. Our risk appetite may change over time. Therefore, portfolio limits and associated approval authorities are subject to periodic reviews and changes, particularly in the context of our annual business planning process. Our risk appetite framework is governed by a single overarching policy and conforms to the Financial Stability Board’s Principles for an Effective Risk Appetite Framework published in 2013. Risk principles and risk culture We focus on maintaining a strong risk culture, which is a prerequisite for success in today’s highly complex operating environment and a source of sustainable competitive advantage. By placing prudent and disciplined risk-taking at the center of every decision, we want to achieve our goals of delivering unrivaled client satisfaction, creating long-term value for stakeholders, and making UBS one of the most attractive companies to work for in the world.Risk, treasury and capital management 126 Risk, treasury and capital management Risk management and control Our risk appetite framework combines all the important elements of our risk culture, expressed in our Pillars, Principles and Behaviors, our risk management and control principles, our Code of Conduct and Ethics and our Total Reward Principles. Together, these aim to align the decisions we make with the Group’s strategy, principles and risk appetite. They help provide a solid foundation for promoting risk awareness, leading to appropriate risk-taking and the establishment of robust risk management and control processes. These principles are supported by a range of initiatives covering employees at all levels. This includes the UBS House View on Leadership, which is a set of explicit expectations for leaders that establishes consistent leadership standards across UBS. These initiatives also include our principles of good supervision, which establish clear expectations of managers and employees with respect to supervisory responsibilities, specifically: to take responsibility, to know and organize their business, to know their employees and what they do, to create a good risk culture and to respond to and resolve issues. →Refer to the “How we create value for our stakeholders” section of this report for more information on our Pillars, Principles and Behaviors →Refer to the Code of Conduct and Ethics of UBS at www.ubs.com/code for more information Risk management and control principles Protection of financial strength Protection of reputation Business management accountability Independent controls Risk disclosure Protecting UBS’s financial strength by controlling our risk exposure and avoiding potential risk concentrations at individual exposure levels, at specific portfolio levels and at an aggregate firm-wide level across all risk types Protecting our reputation through a sound risk culture characterized by a holistic and integrated view of risk, performance and reward, and through full compliance with our standards and principles, particularly our Code of Conduct and Ethics Maintaining management accountability, whereby business management, as opposed to Risk Control, owns all risks assumed throughout the Group and is responsible for the continuous and active management of all risk exposures to provide for balanced risk and return Independent control functions that monitor the effectiveness of the businesses’ risk management and oversee risk-taking activities Disclosure of risks to senior management, the BoD, investors, regulators, credit rating agencies and other stakeholders with an appropriate level of comprehensiveness and transparency To maintain an environment where staff are comfortable in raising concerns, we have whistleblowing policies and procedures in place. These offer multiple channels through which individuals may, either openly or anonymously, escalate suspected breaches of laws, regulations, rules and other legal requirements, our Code of Conduct and Ethics, policies, or relevant professional standards. Our program is designed to ensure that whistleblowing concerns are investigated and that appropriate and consistent action is taken. We are committed to ongoing awareness training and communication to all staff. We also have a mandatory training program in place for all employees. The program covers a range of compliance and risk- related topics, including anti-money laundering and operational risk. In addition, specialized training is provided for employees depending on their specific roles and responsibilities, such as credit risk and market risk training for those working in trading areas. Failure to satisfactorily complete mandatory training sessions within the given deadline results in consequences, including disciplinary action. Our operational risk framework, incorporating the conduct risk framework, aims to identify and manage financial, regulatory, and reputational risks, together with risks to clients and to markets. Quantitative risk appetite objectives Through a set of quantitative risk appetite objectives, we aim to ensure that our aggregate risk exposure remains within our desired risk capacity, based on our capital and business plans. The specific definition of risk capacity for each objective seeks to ensure that we have sufficient capital, earnings, funding and liquidity to protect our business franchises and exceed minimum regulatory requirements under a severe stress event. The risk appetite objectives are evaluated as part of the annual business planning process, and are approved by the BoD. The comparison of risk exposure with risk capacity is a key consideration in management decisions on potential adjustments to the business strategy and the risk profile of the Group. We make use of both scenario-based stress tests and statistical risk measurement techniques to assess the effect of a severe stress event at a Group-wide level. These complementary frameworks capture exposures to all material primary and consequential risks, as well as business risks across our business divisions and Corporate Center units. →Refer to “Risk measurement” in this section for more information on our stress testing and statistical frameworks 127 In determining our risk capacity in case of a severe stress event, we adjust projected earnings from the strategic plan for business risk to reflect lower expected earnings and lower expenses, such as the reversal of variable compensation accruals. We also adjust our capital to take into account the effect of stress on deferred tax assets, pension plan assets and liabilities, and accruals for capital returns to shareholders. The chart on this page provides an overview of our quantitative risk appetite objectives during 2018. As compared with previous years, we have removed the going concern minimum capital and leverage ratio objectives as they would be satisfied when the corresponding common equity tier 1 (CET1) objective is met, given the amount of additional tier 1 (AT1) instruments that have been issued. Our earnings objectives consider the entire Group and potential losses under a stress event are compared with historical earnings. Risk appetite statements at the business division level are derived from the Group-wide objectives. They may also comprise objectives specific to the division, related to the specific activities and risks in that division. Risk appetite objectives are also set for certain legal entities. These must be consistent with the Group- wide risk appetite framework and approved in accordance with the legal entity’s and the Group’s regulations. Differences may exist that reflect the specific nature, size, complexity and regulations applicable to the relevant legal entity. SWCPVKVCVKXGTKUMCRRGVKVGQDLGEVKXGU )TQWRYKFGSWCPVKVCVKXGTKUMCRRGVKVGQDLGEVKXGU /KPKOWOECRKVCN QDLGEVKXGU %CRKVCNKUUWHƂEKGPVVQ OCKPVCKPCRQUVUVTGUU HWNN[CRRNKGF%'6ECRKVCN TCVKQQHCVNGCUV 2TQLGEVGFGCTPKPIU #FLWUVGFVQTGƃGEVDWUKPGUUTKUM /KPKOWONGXGTCIG TCVKQQDLGEVKXGU %CRKVCNKUUWHƂEKGPVVQ OCKPVCKPCNGXGTCIGTCVKQ QHCVNGCUVDCUGFQP %'6ECRKVCNGXGPKHC UGXGTGUVTGUUGXGPVYGTG VQQEEWT 5QNXGPE[ QDLGEVKXGU %'6ECRKVCNRNWUEQPVKPIGPV ECRKVCNKUUWHƂEKGPVVQGPUWTG VJCVVJGRTQDCDKNKV[QHNQUU HQTVJGDCPMoUFGDVJQNFGTU KUEQPUKUVGPVYKVJVJGDCPMoU VCTIGVETGFKVTCVKPI 'CTPKPIU QDLGEVKXGU 0GICVKXGGCTPKPIUWPFGT UVTGUUQXGTCQPG[GCT JQTK\QPFQPQVGZEGGF KP CDUQNWVGXCNWG CXGTCIG TGRQTVGFGCTPKPIUFWTKPIVJG RCUVVJTGG[GCTU+PCFFKVKQP VJGNQUUUJQWNFPQVDGCDQXG QHVJTGG[GCTCXGTCIG GCTPKPIUKP[GCTVYQCPF GCTPKPIUUJQWNFDGRQUKVKXG KP[GCTVJTGG .KSWKFKV[ QDLGEVKXGU 'PUWTGVJCVVJGƂTOJCU UWHƂEKGPVHWPFKPIUQWTEGUVQ UWTXKXGCUGXGTGOQPVJ KFKQU[PETCVKECPFOCTMGV YKFGNKSWKFKV[UVTGUUGXGPV YKVJQWVUKIPKƂECPVN[ KORCEVKPIQWTDWUKPGUU HTCPEJKUGU (WPFKPI QDLGEVKXGU 'PUWTGVJCVVJGƂTOJCU UWHƂEKGPVNQPIVGTOHWPFKPI VQOCKPVCKPHTCPEJKUGCUUGVU CVCEQPUVCPVNGXGNWPFGT UVTGUUGFOCTMGVEQPFKVKQPU HQTWRVQQPG[GCT 4KUMECRCEKV[ %CRKVCN #FLWUVGFVQTGƃGEVUVTGUUKORCEVQP ECRKVCNTGNGXCPVGNGOGPVU 5VCVKUVKECNOGCUWTGU GCTPKPIUCVTKUMECRKVCNCVTKUMTKUMDCUGFECRKVCN 4KUMGZRQUWTG )TCPWNCTNKOKVHTCOGYQTM 2TKOCT[TKUMU %QPUGSWGPVKCNTKUMU %TGFKVTKUM KPENWFKPIUGVVNGOGPVTKUM CPFNQCPWPFGTYTKVKPITKUM | /CTMGVTKUM KPENWFKPIKUUWGTTKUMCPF KPXGUVOGPVTKUM %QWPVT[TKUM 1RGTCVKQPCNTKUM 5VTWEVWTCN(:TKUM .KSWKFKV[CPF HWPFKPITKUM 2GPUKQPTKUM 6JG)TQWRYKFGUVTGUUCPFUVCVKUVKECNOGVTKEUCTGEQORNGOGPVGFYKVJCITCPWNCTHTCOGYQTMVJCVGUVCDNKUJGUNKOKVUCPFVJTGUJQNFUCVCRQTVHQNKQCPFRQUKVKQPNGXGN 5VTGUUOGCUWTGU EQODKPGFUVTGUUVGUVRisk, treasury and capital management 128 Risk, treasury and capital management Risk management and control Risk appetite following adoption of IFRS 9 The introduction of the expected credit loss (ECL) model under IFRS 9 has fundamentally changed how credit risk arising from loans, loan commitments, guarantees and certain revocable facilities is accounted for. Allowances and provisions (referred to as provisions in this section) are determined for every asset that is subject to amortized cost accounting and for financial assets that are measured at fair value through other comprehensive income (FVOCI), irrespective of whether the asset is considered to be credit-impaired. The amount of the provisions varies depending on changes in the risk perception of individual instruments, which is particularly relevant once an asset has been identified as carrying a significantly increased credit risk compared with the assessment at origination. In this case, the ECL provisions would have to cover ECL resulting from default events that are possible over the remaining lifetime of the financial instrument and not only a maximum period of 12 months after the reporting date, which would be the case if there were no significant deterioration in credit risk. The ECL provisions may result in greater volatility in credit loss expense as ECL changes in response to developments in the credit cycle and composition of our loan portfolio. The effect may be more pronounced in a deteriorating economic environment. The effect that the requirement for accelerated recognition of credit losses has on our risk exposure in stressed conditions has been accounted for in our estimations. We expect to gain more insights into the behavior of these provisions once IFRS 9 has been in place for a longer period and under changing economic conditions, and may adjust our risk exposure further in the future. Based on the current information and the effect IFRS 9 ECL provisions have on our solvency objectives, we have neither changed our risk appetite and management practices nor our strategy toward pricing and structuring of transactions following the adoption of IFRS 9. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the requirements of the ECL methodology under IFRS 9 →Refer to “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on ECL →Refer to “Credit risk” in this section for more information on the ECL methodology under IFRS 9 129 Internal risk reporting Comprehensive and transparent reporting of risks is central to the control and oversight responsibilities set out in our risk governance framework and is a requirement of our risk management and control principles. Accordingly, risks are reported at a frequency and to a level of detail commensurate with the extent and variability of the risk and the needs of the various governance bodies, regulators and risk authority holders. On a monthly basis, the Group Risk Report provides a detailed qualitative and quantitative overview of developments in primary and consequential risks for the business divisions and Corporate Center units, along with aggregate views of risks at the Group- wide level, including the status of our risk appetite objectives and results of Group-wide stress testing. The Group Risk Report is distributed internally to the BoD Risk Committee and the GEB, and to senior members of Group Risk Control, Group Internal Audit, Finance and Legal. Key extracts from the Group Risk Report, along with extracts from the monthly Group Finance Report and Group Treasury Report, are included in the Monthly Performance Update provided to the GEB and BoD. Risk reports are also produced for our significant Group entities (entities that are subject to enhanced standards of corporate governance). Granular divisional risk reports are provided to the respective business division Chief Risk Officers and the business division Presidents. This monthly reporting is supplemented with a suite of daily or weekly reports at various levels of granularity, covering market and credit risks for the business divisions and Corporate Center units to enable risk officers and senior management to monitor and control the Group’s risk profile. Our internal risk reporting, which covers primary and consequential risks, is supported by risk data and measurement systems that are also used for external disclosure and regulatory reporting. Dedicated units within Risk Control assume responsibility for measurement, analysis and reporting of risk and for overseeing the quality and integrity of risk-related data. Our risk data and measurement systems are subject to periodic review by Group Internal Audit following a risk-based audit approach.Risk, treasury and capital management 130 Risk, treasury and capital management Risk management and control Risk measurement Audited | We apply a variety of methodologies and measurements to quantify the risks of our portfolios and potential risk concentrations. Risks that are not fully reflected within standard measures are subject to additional controls, which may include preapproval of specific transactions and the application of specific restrictions. Models to quantify risk are generally developed by dedicated units within control functions and are subject to independent validation. Models must be approved and are regularly reviewed in accordance with regulatory requirements as well as internal policies to test that they perform as expected, produce results comparable with actual events and values, and reflect best-in- practice approaches and recent academic developments. Our reviews assess whether models are performing satisfactorily, whether additional analysis is required and whether models need to be recalibrated or redeveloped. Results and conclusions are presented to the relevant governance body and, as required, to regulators. The ongoing process of assessing model quality and performance in the production environment comprises two components: model validation, in which Model Risk Management & Control (MRMC) independently assesses a model’s fitness for purpose, and model confirmation, the regular process of confirming the accuracy and appropriateness of the model output and its application, carried out by the model developers and reviewed by MRMC. →Refer to “Credit risk,” “Market risk” and “Operational risk” in this section for more information on model confirmation procedures Stress testing We perform stress testing to estimate the loss that could result from extreme, yet plausible macroeconomic and geopolitical stress events. This enables us to identify, better understand and manage our potential vulnerabilities and risk concentrations. Stress testing plays a key role in our limits framework at Group- wide, business division, legal entity and portfolio levels. Stress test results are regularly reported to the BoD, the Risk Committee and the GEB. As described in “Risk appetite framework” above, stress testing, along with statistical loss measures, plays a central role in our risk appetite and business planning processes. Our stress testing framework incorporates three pillars: (i) combined stress tests, (ii) a comprehensive range of portfolio- and risk type-specific stress tests and (iii) reverse stress testing. Our combined stress test (CST) framework is scenario-based and aims to quantify overall Group-wide losses that could result from a number of potential global systemic events. The framework captures all material primary and consequential risks, as well as business risks, as indicated in “Risk categories” above. Scenarios are forward-looking and encompass macroeconomic and geopolitical stress events calibrated to different levels of severity. We implement each scenario through the expected evolution of market indicators and economic variables under that scenario. We then assess the resulting effect on our primary, consequential and business risks to estimate the overall loss and capital implications were the scenario to occur. At least once a year, the BoD Risk Committee approves the most relevant scenario, known as the binding scenario, to be used as the main scenario for regular CST reporting and for monitoring risk exposure against our minimum capital, earnings and leverage ratio objectives in our risk appetite framework. Results are reported to the Risk Committee, the BoD, the GEB and FINMA on a monthly basis. We provide detailed stress loss analyses to FINMA and the regulators of our legal entities in accordance with their requirements. For example, in addition to CST, we perform Loss Potential Analysis (LPA) and Comprehensive Capital Analysis and Review (CCAR) as prescribed by FINMA and the US Board of Governors of the Federal Reserve System for the legal entities regulated by these respective agencies. The Enterprise-wide Stress Committee (ESC) is responsible for ensuring the consistency and adequacy of the assumptions and scenarios used for our Group-wide stress measures. As part of these responsibilities, the ESC seeks to ensure that the suite of stress scenarios adequately reflects current and potential developments in the macroeconomic and geopolitical environment, our current and planned business activities, and actual or potential risk concentrations and vulnerabilities in our portfolios. The ESC meets at least quarterly and is comprised of Group, business division and legal entity representatives of Risk Control. In executing its responsibilities, the ESC considers input from the Think Tank, a panel of senior representatives from the business divisions, Risk Control and economic research, which meets quarterly to review the current and possible future market environment in order to identify potential stress scenarios that could materially affect the Group’s profitability. This results in a range of internal stress scenarios that are developed and evolve over time, separate from the scenarios mandated by FINMA. 131 Each scenario captures a wide range of macroeconomic variables. These include gross domestic product (GDP), equity prices, interest rates, foreign exchange rates, commodity prices, property prices and unemployment. We use assumed changes in these macroeconomic and market variables in each scenario to stress the key risk drivers of our portfolios. For example, lower GDP growth and rising interest rates may reduce the income of clients to whom we have lent money, which leads to changes in the credit risk parameters for probability of default, loss given default and exposure at default, and results in higher predicted credit losses within the stress scenario. We also capture the business risk resulting from lower fee, interest and trading income net of lower expenses. These effects are measured across all material risk types and all businesses to calculate the aggregate estimated effect of the scenario on profit or loss, other comprehensive income, RWA, LRD and, ultimately, our capital and leverage ratios. The assumed changes in macroeconomic variables are updated periodically to account for changes in the current and possible future market environment. Through 2018, the binding scenario for CST was the internal Severe Eurozone Crisis scenario. This scenario is characterized by a crisis in the eurozone; a lack of confidence in the trajectory of several peripheral European economies leads to a sudden spike in their bond yields, eventually resulting in their loss of market access. As Greece leaves the eurozone, emergency measures, including capital controls, bailouts and debt restructurings are required. In the ensuing global slowdown and market turbulence, China suffers a hard landing, which further weighs on global growth. Central banks in major developed economies with policy room cut rates back to zero in an attempt to stimulate growth and restore market confidence; however, this fails to avert a severe global recession. The CST risk exposure was broadly stable over the year with most of the month-on-month variability arising primarily from temporary loan underwriting exposure in the Investment Bank. As part of the CST framework, we routinely monitored four additional stress scenarios throughout 2018. –Failure of a Major Financial Institution scenario represents renewed financial market turmoil reflecting the failure of a major global financial institution, leading to prolonged financial deleveraging and dramatically plunging activity around the globe. –US Monetary Crisis scenario represents a loss of confidence in the US, which leads to international portfolio repositioning out of US dollar-denominated assets, sparking an abrupt and substantial US dollar sell-off. The US is pushed back into recession, other industrialized countries replicate this pattern and inflationary concerns lead to an overall higher interest rate level. –Global Depression scenario represents a severe and prolonged eurozone crisis in which several peripheral countries default and exit the eurozone, and advanced economies are pulled into a prolonged period of economic stagnation. –Global Interest Rate Steepening scenario represents a sudden shift in market sentiment causing a disorderly sell-off in long- dated bonds and a rapid steepening of the yield curve, exacerbated by a lack of liquidity in financial markets. This in turn triggers a sovereign crisis in Japan and a global recession. We have updated the Severe Eurozone Crisis scenario to be used as the binding stress scenario in our CST framework for 2019. In line with the 2018 version of the scenario, the updated version remains a global scenario with a eurozone crisis at its core, but with fiscal concerns in Italy now acting as the trigger of the crisis. In addition, headwinds from global trade protectionism weigh on the recovery. A China hard landing remains a feature of the scenario. Portfolio-specific stress tests are measures that are tailored to the risks of specific portfolios. Our portfolio stress loss measures are derived from data on past events, but also include forward- looking elements. For example, we derive the expected market movements within our liquidity-adjusted stress metric using a combination of historical market behavior, based on an analysis of historical events, and forward-looking analysis including consideration of defined scenarios that have never occurred. Results of portfolio-specific stress tests may be subject to limits to explicitly control risk-taking, or may be monitored without limits to identify vulnerabilities. Reverse stress testing starts from a defined stress outcome (e.g., a specified loss amount, reputational damage, a liquidity shortfall or a breach of regulatory capital ratios) and works backward to identify the economic or financial scenarios that could result in such an outcome. As such, reverse stress testing is intended to complement scenario-based stress tests by assuming “what if” outcomes that could extend beyond the range normally considered, and thereby potentially challenge assumptions regarding severity and plausibility. Additionally, we routinely analyze the effect of increases or decreases in interest rates and changes in the structure of yield curves. Moreover, Group Treasury performs stress testing to determine the optimum asset and liability structure that allows us to maintain an appropriately balanced liquidity and funding position under various scenarios. These scenarios differ from those outlined above, because they are focused on specific situations that could generate liquidity and funding stress, as opposed to the scenarios used in the CST framework, which focus on the effect on profit or loss and capital. →Refer to “Credit risk” and “Market risk” in this section for more information on stress loss measures →Refer to the “Treasury management” section of this report for more information on stress testing →Refer to “Our stated capital returns objective is based, in part, on capital ratios that are subject to regulatory change and may fluctuate significantly” in the “Risk factors” section of this report for more information Risk, treasury and capital management 132 Risk, treasury and capital management Risk management and control Statistical measures In addition to our scenario-based CST measures, we employ a statistical stress framework that allows us to calculate and aggregate risks using statistical techniques to derive stress events at chosen confidence levels. We use this framework to derive a distribution of potential earnings based on historically observed market changes in combination with the firm’s actual risk exposures, considering effects on both income and expenses. From this, we determine earnings-at-risk (EaR), which measures the potential shortfall in earnings (i.e., the deviation from forecast earnings) at a 95% confidence level and is evaluated over a one-year horizon. EaR is used for the assessment of the earnings objectives in our risk appetite framework. We extend the EaR measure by incorporating the effects of gains and losses recognized through other comprehensive income, to derive a distribution of potential effects of stress events on CET1 capital. From this distribution, we derive our capital-at-risk (CaR) buffer measure at a 95% confidence level for the assessment of our capital and leverage ratio risk appetite objectives, and we derive our CaR solvency measure at a 99.9% confidence level for the assessment of our solvency risk appetite objective. We also use the CaR solvency measure as the basis to derive the contributions of business divisions and Corporate Center units to risk-based capital (RBC), which is a component of our equity attribution framework. RBC measures the potential capital impairment from an extreme stress event at a 99.9% confidence level to estimate the capital required to absorb unexpected loss while remaining able to fully repay creditors. →Refer to the “Capital management” section of this report for more information on the equity attribution framework Portfolio and position limits The Group-wide stress and statistical metrics are complemented by more granular portfolio and position limits, triggers and targets. The combination of these measures provides a comprehensive, granular control framework that is applied to our business divisions and Corporate Center units, as well as the significant legal entities, as relevant to the key risks arising from their business models. We apply limits to a variety of exposures at the portfolio level, using statistical and stress-based measures, such as value-at-risk, liquidity-adjusted stress, loan underwriting limits, economic value sensitivity and portfolio default simulations for our loan books. These are complemented with a set of controls for net interest income sensitivity, mark-to-market losses on available- for-sale portfolios, and the effect of foreign exchange movements on capital and capital ratios. Portfolio measures are supplemented with position-level controls. Risk measures for position controls are based on market risk sensitivities and counterparty-level credit risk exposures. Market risk sensitivities include sensitivities to changes in general market risk factors, such as equity indices, foreign exchange rates and interest rates, and sensitivities to issuer-specific factors, such as changes in an issuer’s credit spread or default risk. We monitor a significant number of market risk controls for the Investment Bank and Corporate Center – Group Asset and Liability Management and Corporate Center – Non-core and Legacy Portfolio on a daily basis. Counterparty measures capture the current and potential future exposure to an individual counterparty, taking into account collateral and legally enforceable netting agreements. →Refer to “Credit risk” in this section for more information on counterparty limits Risk concentrations Audited | A risk concentration exists where (i) a position is affected by changes in a group of correlated factors, or a group of positions are affected by changes in the same risk factor or a group of correlated factors, and (ii) the exposure could, in the event of large but plausible adverse developments, result in significant losses. The categories in which risk concentrations may occur include counterparties, industries, legal entities, countries or geographical regions, products and businesses. The identification of risk concentrations requires judgment, as potential future developments cannot be accurately predicted and may vary from period to period. In determining whether we have a risk concentration, we consider a number of elements, both individually and collectively. These elements include the shared characteristics of the positions and our counterparties, the size of the position or group of positions, the sensitivity of the position or group of positions to changes in risk factors and the volatility and correlations of those factors. Also important in our assessment is the liquidity of the markets where the positions are traded, and the availability and effectiveness of hedges or other potential risk-mitigating factors. The value of a hedging instrument may not always move in line with the position being hedged, and this mismatch is referred to as basis risk. In addition, operational risk concentrations may result from a single issue that is large on its own (i.e., has the potential to produce a single high-impact loss or a number of losses that aggregated together are high-impact) or related issues that may link together to create a high impact. Risk concentrations are subject to increased oversight by Risk Control and are assessed to determine whether they should be reduced or mitigated, depending on the available means to do so. It is possible that material losses could occur on asset classes, positions and hedges, particularly if the correlations that emerge in a stressed environment differ markedly from those envisaged by our risk models. →Refer to “Credit risk” and “Market risk” in this section for more information on the compositions of our portfolios →Refer to the “Risk factors” section of this report for more information 133 Credit risk Key developments We have adopted IFRS 9, Financial Instruments, effective as of 1 January 2018. IFRS 9 introduces a forward-looking expected credit loss (ECL) approach, which is intended to result in an earlier recognition of credit losses compared with the incurred- loss impairment approach for financial instruments under IAS 39, Financial Instruments: Recognition and Measurement, and the loss-provisioning approach for financial guarantees and loan commitments under IAS 37, Provisions, Contingent Liabilities and Contingent Assets. Total net credit loss expenses were USD 118 million in 2018, reflecting net credit losses of USD 95 million related to credit- impaired (stage 3) positions, mainly in Personal & Corporate Banking and to a lesser extent in the Investment Bank, as well as net expected credit losses of USD 23 million related to stage 1 and 2 positions. →Refer to “Note 1 Summary of significant accounting policies,” “Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 23 Expected credit loss measurement“ in the “Consolidated financial statements” section of this report for more information on IFRS 9 and ECL Our Swiss lending portfolios, which account for approximately half of our loan exposure, continued to perform well, although we remain watchful for any signs of deterioration in the Swiss economy that could affect our counterparties and lead to an increase in credit loss expenses from the low levels recently observed. Within the loan underwriting business in the Investment Bank, we continued to see a steady flow of transactions as leveraged loan markets remained relatively strong, although volatility and credit market weakness led to a general slowdown toward the year-end. Audited | Main sources of credit risk – A substantial portion of our lending exposure arises from our Swiss domestic business, which offers corporate loans and mortgage loans secured mainly against residential properties and income-producing real estate, and therefore depends on the performance of the Swiss economy. – Within the Investment Bank, our credit exposure arises mainly from lending, derivatives trading and securities financing and is predominantly investment grade. Loan underwriting activity can be lower rated and gives rise to concentrated exposure of a temporary nature. – Our wealth management businesses predominantly conduct securities-based lending and mortgage lending. – Credit risk within Non-core and Legacy Portfolio relates to derivative transactions, predominantly carried out on a cash- collateralized basis, and securitized positions. Audited | Overview of measurement, monitoring and management techniques – Credit risk arising from transactions with individual counterparties is measured based on our estimates of probability of default, exposure at default and loss given default. Limits are established for individual counterparties and groups of related counterparties covering banking and traded products as well as settlement amounts. Risk control authorities are approved by the Board of Directors and are delegated to the Group Chief Executive Officer, Group Chief Risk Officer and divisional Chief Risk Officers based on risk exposure amounts, internal credit rating and potential loss. – Limits apply not only to the current outstanding amount, but also to contingent commitments and the potential future exposure of traded products. – For the Investment Bank, our monitoring, measurement and limit framework distinguishes between exposures intended to be held to maturity (take-and-hold exposures) and those that are intended to be held for a short term, pending distribution or risk transfer (temporary exposures). – We also use models to derive portfolio credit risk measures of expected loss, statistical loss and stress loss at the Group-wide and business division levels and establish portfolio limits at these levels. – Credit risk concentrations can arise if clients are engaged in similar activities, are located in the same geographical region or have comparable economic characteristics; for example, if their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. To avoid credit risk concentrations, we establish limits and / or operational controls that constrain risk concentrations at portfolio and sub-portfolio levels with regard to sector exposure, country risk and specific product exposures. Risk, treasury and capital management 134 Risk, treasury and capital management Risk management and control Credit risk profile of the Group The exposures detailed in this section are based on our internal management view of credit risk, which differs in certain respects from the measurement requirements of IFRS. Internally, we categorize credit risk exposures into two broad categories: banking products and traded products. Banking products comprise drawn loans, undrawn guarantees and loan commitments, amounts due from banks, balances at central banks and other financial assets at amortized cost. Traded products comprise over-the-counter derivatives, exchange- traded derivatives and securities financing transactions, comprised of securities borrowing and lending, as well as repurchase and reverse repurchase agreements. Banking products The breakdowns of our banking products exposures are shown gross before allowances and provisions for expected credit losses and related single-name credit hedges. The effect of portfolio hedges, such as index credit default swaps, is not reflected. Guarantees and loan commitments are shown on a notional basis, without applying credit conversion factors. The gross exposure for banking products of USD 518 billion corresponds to the IFRS 9 gross exposure of USD 685 billion, including other financial assets measured at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments, financial assets at fair value through other comprehensive income (FVOCI), irrevocable committed prolongation of existing loans, unconditionally revocable committed credit lines and forward starting reverse repurchase and securities borrowing agreements. The “Banking and traded products exposure by business division and Corporate Center unit” table below and on the next page was enhanced to reflect the total exposures (stages 1–3) in scope of ECL (adding Other financial assets measured at amortized cost with an amount of USD 23 billion, which were previously not included) and to report allowances and provisions by ECL stages and separately credit-impaired exposures, gross (stage 3). Total gross banking products exposure was USD 518 billion as of 31 December 2018, compared with USD 481 billion at the end of the prior year. The net change relates mainly to the addition of other financial assets measured at amortized cost mentioned above and to an increase in balances at central banks. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the requirements of the expected credit loss methodology under IFRS 9 →Refer to “Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on the expected credit loss measurement under IFRS 9 →Refer to “Note 17a) Other financial assets measured at amortized cost” in the “Consolidated financial statements” section of this report for more details Banking and traded products exposure by business division and Corporate Center unit 331.12.18 USD million GGlobal Wealth Management PPersonal & Corporate Banking AAsset Management IInvestment Bank CCC – Services CCC – Group ALM CCC – Non-core and Legacy Portfolio GGroup BBanking products1, 2 Gross exposure (IFRS 9) 186,302 157,178 1,150 39,869 1,156 131,548 522 517,725 of which: loans and advances to customers (on-balance sheet) 170,413 133,253 7 9,090 85 8,222 55 321,125 of which: guarantees and loan commitments (off-balance sheet) 6,111 20,609 0 22,290 77 271 0 49,358 TTraded products3, 4 Gross exposure 10,606 873 0 30,771 42,250 of which: over-the-counter derivatives 5,960 762 0 9,441 16,163 of which: securities financing transactions 153 0 0 16,004 16,157 of which: exchange-traded derivatives 4,494 111 0 5,325 9,930 OOther credit lines, gross2, 5 10,345 22,994 0 3,202 88 6 0 36,634 Total credit-impaired exposure, gross (stage 3)1, 2 625 1,974 0 140 0 26 389 3,154 Total allowances and provisions for expected credit losses (stages 1 to 3)2 223 697 0 108 0 3 23 1,054 of which: stage 1 62 78 0 34 0 3 0 176 of which: stage 2 34 146 0 3 0 0 0 183 of which: stage 3 (allowances and provisions for credit-impaired exposures) 127 474 0 71 0 0 23 695 11 IFRS 9 gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments, financial assets at FVOCI, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines and forward starting reverse repurchase and securities borrowing agreements. 2 Refer to “Note 1 Summary of significant accounting policies” and “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on the adoption of IFRS 9 ECL. 3 Internal management view of credit risk, which differs in certain respects from IFRS. 4 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank, Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM is provided. 5 Unconditionally revocable committed credit lines. 135 Banking and traded products exposure by business division and Corporate Center unit (continued) 31.12.17 USD million Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank CC – Services CC – Group ALM CC – Non-core and Legacy Portfolio Group BBanking products1,2,3,4 Gross exposure (IAS 39, IAS 37, internal risk view) 177,854 155,496 585 47,633 509 99,083 92 481,254 of which: loans and advances to customers (on-balance sheet) 167,811 133,681 1 12,327 35 7,413 90 321,357 of which: guarantees and loan commitments (off-balance sheet) 4,770 19,195 0 26,323 109 2 2 50,401 TTraded products1,5 Gross exposure 8,708 1,344 0 35,627 45,679 of which: over-the-counter derivatives 5,717 1,266 0 11,740 18,722 of which: securities financing transactions 228 0 0 18,303 18,531 of which: exchange-traded derivatives 2,763 78 0 5,585 8,425 Total credit-impaired exposure, gross 187 929 0 143 0 0 49 1,308 of which: impaired loan exposure, gross 187 752 0 113 0 0 49 1,102 Total allowances and provisions for credit losses 134 6 484 0 63 6 0 2 30 6 7126 11 Internal management view of credit risk, which differs in certain respects from IFRS. 2 Excludes reclassified securities and similar acquired securities held by Corporate Center – Non-core and Legacy Portfolio and loans designated at fair value. 3 Upon adoption of IFRS 9 on 1 January 2018, certain Global Wealth Management customer brokerage receivable balances were reclassified from Loans and advances to customers to a separately reported Brokerage receivables line and are therefore no longer included in this table. For comparability, the corresponding customer brokerage receivable balances as of 31 December 2017, totaling USD 4.7 billion, have also been excluded from this table. In addition, as a result of certain balance sheet presentation changes, USD 1.1 billion of leasing receivables in Personal & Corporate Banking are no longer reported within Loans and advances to customers as of 31 December 2017. 4 As of 31 December 2017, Loans and advances to customers reported under IFRS for the Investment Bank and Corporate Center – Non-core and Legacy Portfolio were USD 11,454 million and USD 2,284 million, respectively. For all other business divisions and Corporate Center units, IFRS Loans and advances to customers exposure was the same as the internal management view. 5 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank, Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM is provided. 6 Does not include allowances for Other assets of USD 19 million, of which USD 14 million were in Corporate Center – Non-core and Legacy Portfolio and USD 5 million were in the Investment Bank, as well as allowances of USD 84 million on loans to financial advisors in Global Wealth Management. Risk, treasury and capital management 136 Risk, treasury and capital management Risk management and control Global Wealth Management Gross banking products exposure within Global Wealth Management increased to USD 186 billion from USD 178 billion. The net change relates mainly to the addition of other financial assets measured at amortized cost, as previously mentioned, and increases in mortgage loans. Our Global Wealth Management loan portfolio is mainly secured by securities (Lombard loans) and by residential property. Most of the Lombard loans were of high quality, with 96% rated investment grade based on our internal ratings, and they are typically short term in nature, with an average duration of three to six months. Moreover, Lombard loans can be canceled immediately if the collateral quality deteriorates or margin calls are not met. The portfolio of mortgage loans secured by properties outside Switzerland, excluding Global Wealth Management Region Americas, increased to USD 6.5 billion from USD 6.3 billion, driven mainly by the inclusion of mortgage loans resulting from acquisitions. The overall quality of this portfolio remained high over the year. In Global Wealth Management Region Americas, the portfolio of loans secured by residential property consists primarily of residential mortgage loans offered in the US. Gross exposure increased to USD 14.9 billion from USD 11.7 billion. The overall quality of this portfolio remained high, with an average loan-to- value ratio (LTV) of 56%, compared with 58% as of 31 December 2017, and we have experienced negligible credit losses since the inception of the mortgage program in 2009. The five largest geographic concentrations in the portfolio were in California (28%), New York (14%), Florida (9%), Texas (4%) and New Jersey (4%). Global Wealth Management and Personal & Corporate Banking loans and advances to customers, gross1 Global Wealth Management Personal & Corporate Banking USD million 331.12.18 31.12.17 331.12.18 31.12.17 Secured by residential property 51,251 47,201 96,841 97,848 Secured by commercial / industrial property 2,233 2,125 16,887 17,049 Secured by cash 15,529 14,904 1,467 1,496 Secured by securities 90,946 93,950 1,647 1,917 Secured by guarantees and other collateral 9,469 8,893 5,754 5,512 Unsecured loans and advances to customers 986 739 10,657 9,860 TTotal loans and advances to customers, gross 170,413 167,811 133,253 133,681 AAllowances2 (102) (133) (594) (442) TTotal loans and advances to customers, net of allowances 170,312 167,678 132,659 133,239 11 Balances as of 31 December 2018 are comprised of the balance sheet line “Loans and advances to customers.” Upon adoption of IFRS 9 on 1 January 2018, certain Global Wealth Management customer brokerage receivable balances were reclassified from “Loans and advances to customers” to a separately reported “Brokerage receivables” line and are therefore no longer included in this table. For comparability, the corresponding customer brokerage receivable balances as of 31 December 2017, totaling USD 4.7 billion, have also been excluded from this table. In addition, as a result of certain balance sheet presentation changes, USD 1.1 billion of finance lease receivables in Personal & Corporate Banking are no longer reported within “Loans and advances to customers” as of 31 December 2017. 2 Allowances as of 31 December 2018 were calculated in accordance with the expected credit loss requirements of IFRS 9 (stages 1-3) for the balance sheet line “Loans and advances to customers.” Allowances as of 31 December 2017 were calculated in accordance with IAS 39 and have been adjusted to exclude allowances related to certain customer brokerage receivables and finance lease receivables as described in the previous footnote. Refer to “Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9, Financial Instruments” in the “Consolidated financial statements” section of this report for more information on IFRS 9. 137 Personal & Corporate Banking Gross banking products exposure within Personal & Corporate Banking increased to USD 157 billion from USD 155 billion. Net banking products exposure was USD 157 billion, compared with USD 155 billion, of which approximately 63% was classified as investment grade compared with 60% in the prior year. Around 50% of the exposure is categorized in the lowest loss given default (LGD) bucket of 0–25%, compared with 53% in 2017. The size of Personal & Corporate Banking’s gross loan portfolio decreased slightly to USD 133 billion. As of 31 December 2018, 92% of this portfolio was secured by collateral, mainly residential and commercial property. Of the total unsecured amount, 79% related to cash flow-based lending to corporate counterparties and 7% related to lending to public authorities. Based on our internal ratings, 47% of the unsecured loan portfolio was rated investment grade, compared with 51% in 2017. Credit loss expense for banking products remained low in 2018. Our Swiss corporate banking products portfolio, which remained at USD 27 billion, consists of loans, guarantees and loan commitments to multinational and domestic counterparties. The small and medium-sized enterprises portfolio, especially, is well diversified across industries. However, such companies are reliant on the domestic economy and the economies to which they export, in particular the EU and the US. In addition, the development of the EUR / CHF exchange rate is an important risk factor for Swiss corporates. The delinquency ratio was 0.3% for the corporate loan portfolio, compared with 0.6% at the end of 2017. The reduction is caused by the change in the definition of the delinquency ratio from “ratio of past due but not impaired loans to total loans” under IAS 39 to “ratio of past due but not credit- impaired loans to total loans” under IFRS 9. →Refer to “Credit risk models” in this section for more information on loss given default, rating grades and rating agency mappings Swiss mortgage loan portfolio Our Swiss mortgage loan portfolio secured by residential and commercial real estate in Switzerland continues to be our largest loan portfolio. These mortgage loans totaling USD 141 billion mainly originate from Personal & Corporate Banking, but also from Global Wealth Management Region Switzerland. USD 129 billion of these mortgage loans related to residential properties that the borrower was either occupying or renting out, with full recourse to the borrower. Of this USD 129 billion, USD 94 billion is related to properties occupied by the borrower, with an average LTV ratio of 56%, unchanged from the prior period. The average LTV for newly originated loans for this portion was 66%, compared with 65% in 2017. The remaining USD 35 billion of the Swiss residential mortgage loan portfolio relates to properties rented out by the borrower and the average LTV of this portfolio was 55%, compared with 57% as of 31 December 2017. The average LTV for newly originated Swiss residential mortgage loans for properties rented out by the borrower was 57%, compared with 60% in 2017. As illustrated in the “Swiss mortgages: distribution of net exposure at default (EAD) across exposure segments and loan- to-value (LTV) buckets” table on the next page, over 99% of the aggregate amount of Swiss residential mortgage loans would continue to be covered by the real estate collateral even if the value assigned to that collateral were to decrease by 20%, and 98% would remain covered by the real estate collateral even if the value assigned to that collateral were to decrease by 30%. In this table, the amount of each mortgage loan is allocated across the LTV buckets to indicate the portion at risk at the various value levels shown. For example, a loan of 75 with an LTV ratio of 75% (collateral value of 100) would result in allocations of 30 in the less-than-30% LTV bucket, 20 in the 31–50% bucket, 10 in the 51–60% bucket, 10 in the 61–70% bucket and 5 in the 71–80% bucket. Risk, treasury and capital management 138 Risk, treasury and capital management Risk management and control Personal & Corporate Banking: distribution of banking products exposure across internal UBS ratings and loss given default (LGD) buckets USD million, except where indicated 331.12.18 31.12.17 LLGD buckets Internal UBS rating1 EExposure 00–25%226–50%551–75%776–100% WWeighted average LGD (%)Exposure Weighted average LGD (%) Investment grade 97,922 54,255 32,275 9,455 1,937 27 92,302 26 Sub-investment grade 59,256 22,369 23,786 11,063 2,039 35 63,195 32 of which: 6−9 53,143 20,716 20,524 10,127 1,777 34 57,171 32 of which: 10−12 4,067 1,598 1,467 748 254 35 4,144 32 of which: 13 and defaulted 2,046 55 1,795 187 8 40 1,879 39 Total exposure before deduction of allowances and provisions 157,178 76,624 56,062 20,518 3,975 30 155,496 28 Less: allowances and provisions (663) (484) NNet banking products exposure 156,515 155,013 11 The ratings of the major credit rating agencies, and their mapping to our internal rating scale, are shown in the “Internal UBS rating scale and mapping of external ratings” table in this section. Personal & Corporate Banking: unsecured loans by industry sector 31.12.18 31.12.17 USD million %USD million % Construction 133 1.2 130 1.3 Financial institutions 2,139 20.1 1,192 12.1 Hotels and restaurants 79 0.7 85 0.9 Manufacturing 1,632 15.3 1,825 18.5 Private households 1,489 14.0 1,402 14.2 Public authorities 709 6.7 900 9.1 Real estate and rentals 170 1.6 186 1.9 Retail and wholesale 2,274 21.3 2,029 20.6 Services 1,774 16.6 1,868 18.9 Other 257 2.4 242 2.5 Exposure, gross 10,657 100.0 9,860 100.0 Swiss mortgages: distribution of net exposure at default (EAD) across exposure segments and loan-to-value (LTV) buckets USD billion, except where indicated 31.12.18 31.12.17 LTV buckets Exposure segment ≤30%31–50%51–60%61–70%71–80%81–100%>100%Total Total Net EAD 72.4 33.5 9.9 5.3 2.0 0.3 0.0 123.4 118.4Residential mortgages as a % of row total 59 27 8 4 2 0 0 100 Net EAD 11.4 4.7 1.1 0.5 0.2 0.0 0.0 17.9 18.4Income-producing real estate as a % of row total 64 26 6 3 1 0 0 100 Net EAD 5.7 2.2 0.6 0.3 0.1 0.1 0.0 9.0 9.1Corporates as a % of row total 63 24 6 3 2 1 0 100 Net EAD 0.5 0.1 0.0 0.0 0.0 0.0 0.0 0.7 0.9Other segments as a % of row total 66 21 6 4 2 0 0 100 Net EAD 89.9 40.6 11.6 6.1 2.3 0.4 0.0 151.0 146.7Mortgage-covered exposure as a % of total 60 27 8 4 2 0 0 100 Net EAD 86.2 39.7 11.6 6.3 2.4 0.5 0.1 146.7 Mortgage-covered exposure 31.12.17 as a % of total 59 27 8 4 2 0 0 100 139 Asset Management Gross banking products exposure within Asset Management was USD 1.2 billion as of 31 December 2018, compared with USD 0.6 billion as of 31 December 2017. The change related mainly to the inclusion of other financial assets measured at amortized cost mentioned above. Banking products relate primarily to cash at banks held by individual Asset Management legal entities, liquid assets and receivables. Investment Bank The Investment Bank’s lending activities are largely associated with corporate and non-bank financial institutions. The business is broadly diversified across industry sectors, but concentrated in North America. The gross banking products exposure as of 31 December 2018 was USD 40 billion, compared with USD 48 billion as of 31 December 2017. This change relates mainly to the alignment of the internal risk management view to the IFRS 9 exposure view, as previously mentioned. Based on our internal ratings, 61% of the Investment Bank’s gross banking products exposure was classified as investment grade. The vast majority of the Investment Bank’s gross banking products exposure had an estimated LGD of between 0% and 50%. The Investment Bank actively manages the credit risk of this portfolio and, as of 31 December 2018, held USD 0.6 billion of single-name credit default swap hedges against its exposures to corporates and other non-banks, a decrease of USD 1.2 billion year on year. Within the loan underwriting business, we continued to see a steady flow of transactions as leveraged loan markets remained relatively strong. However, volatility and credit market weakness led to a general slowdown toward the end of the year. Total temporary loan underwriting exposure ended 2018 at USD 2.3 billion, USD 0.5 billion lower than the previous year. Overall, our ability to distribute remained sound. Loan underwriting exposures are classified as held for trading, with fair values reflecting market conditions at the end of 2018. →Refer to “Credit risk models” in this section for more information on loss given default, rating grades and rating agency mappings Risk, treasury and capital management 140 Risk, treasury and capital management Risk management and control Investment Bank: distribution of banking products exposure across internal UBS ratings and loss given default (LGD) buckets USD million, except where indicated 331.12.18 31.12.17 LLGD buckets Internal UBS rating1 EExposure 00–25%226–50%551–75%776–100% WWeighted average LGD (%)Exposure Weighted average LGD (%) Investment grade 24,239 6,243 14,364 2,482 1,150 39 21,239 49 Sub-investment grade 15,630 4,953 4,001 6,595 81 15 16,351 22 of which: 6−9 12,169 3,681 2,009 6,407 72 11 10,644 17 of which: 10−12 3,204 1,075 1,992 138 0 30 5,419 33 of which: 13 and defaulted 256 197 0 51 9 24 288 19 BBanking products exposure 39,8692 11,196 18,365 9,077 1,231 30 37,5913 37 11 The ratings of the major credit rating agencies, and their mapping to our internal rating scale, are shown in the “Internal UBS rating scale and mapping of external ratings“ table in this section. 2 IFRS 9 banking products subject to ECL, includes USD 0.1 billion of balances at central banks, USD 7.1 billion of loans and advances to banks and USD 1.3 billion of other financial assets measured at amortized cost. 3 Prior-year net internal risk view, which excluded balances at central banks, internal risk adjustments and the vast majority of due from banks exposures, after credit protection bought of USD 1.8 billion. Investment Bank: banking products exposure by geographical region 31.12.18 31.12.17 USD million %USD million % Asia Pacific 6,123 15.4 1,461 3.9 Latin America 1,170 2.9 168 0.4 Middle East and Africa 471 1.2 75 0.2 North America 18,865 47.3 27,788 73.9 Switzerland 2,588 6.5 138 0.4 Rest of Europe 10,652 26.7 7,962 21.2 Exposure 39,8691 100.0 37,5912 100.0 1 IFRS 9 banking products subject to ECL, includes USD 0.1 billion of balances at central banks, USD 7.1 billion of loans and advances to banks and USD 1.3 billion of other financial assets measured at amortized cost. 2 Prior-year net internal risk view, which excluded balances at central banks, internal risk adjustments and the vast majority of due from banks exposures, after credit protection bought of USD 1.8 billion. Investment Bank: Banking products exposure by industry sector 31.12.18 31.12.17 USD million %USD million % Banks 6,779 17.0 1,435 6.2 Chemicals 711 1.8 865 8.2 Electricity, gas, water supply 1,765 4.4 2,488 5.0 Financial institutions, excluding banks 14,488 36.3 13,549 40.1 Manufacturing1 2,342 5.9 4,230 8.4 Mining1 1,759 4.4 2,826 5.7 Public authorities 706 1.8 988 3.2 Real estate and construction 1,553 3.9 3,426 7.2 Retail and wholesale 2,488 6.2 996 1.7 Technology and communications 2,372 5.9 2,756 6.3 Transport and storage1 719 1.8 2,870 6.3 Other 4,188 10.5 1,160 1.5 Exposure1 39,8692 100.0 37,5913 100.0 of which: oil and gas 1 1,582 4.0 4,401 10.2 1 As of 31 December 2018, the USD 1.6 billion Investment Bank banking products exposure to the oil and gas sector comprised USD 1.5 billion related to mining, USD 0.0 billion related to transport and storage and USD 0.1 billion related to manufacturing. As of 31 December 2017, the USD 4.4 billion Investment Bank banking products exposure to the oil and gas sector comprised USD 2.4 billion related to mining, USD 1.5 billion related to transport and storage and USD 0.4 billion related to manufacturing. 2 IFRS 9 banking products subject to ECL, includes USD 0.1 billion of balances at central banks, USD 7.1 billion of loans and advances to banks and USD 1.3 billion of other financial assets measured at amortized cost. 3 Prior-year net internal risk view, which excluded balances at central banks, internal risk adjustments and the vast majority of due from banks exposures, after credit protection bought of USD 1.8 billion. 141 Corporate Center – Group Asset and Liability Management Gross banking products exposure within Corporate Center – Group Asset and Liability Management (Group ALM), which arises primarily in connection with treasury activities, increased by USD 32 billion to USD 132 billion. This was driven by an increase in balances at central banks of USD 20 billion, mainly resulting from lower client-driven activity, which reduced business division consumption. →Refer to “Balance sheet assets” in the “Treasury management” section of this report for more information Corporate Center – Non-core and Legacy Portfolio →Refer to the “Corporate Center – Non-core and Legacy Portfolio” section under “Financial and operating performance” of this report for more information Traded products Audited | Counterparty credit risk arising from traded products, which include over-the-counter (OTC) derivatives, exchange- traded derivatives (ETD) exposures and securities financing transactions (SFTs) originating in the Investment Bank, Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM, is generally managed on a close-out basis. This takes into account the possible effect of market movements on the exposure and any associated collateral over the time it would take to close out our positions. In the Investment Bank, limits are applied to the potential future exposure per counterparty, with the size of the limit driven by the view of the creditworthiness of the counterparty as determined by Credit Risk Control. Limit frameworks are also applied to control overall exposure to specific classes or categories of collateral on a portfolio level. Such portfolio limits are monitored and reported to senior management. Trading in OTC derivatives is conducted through central counterparties (CCPs) where practicable. Where CCPs are not used, we have clearly defined policies and processes for trading on a bilateral basis. Trading is typically conducted under bilateral International Swaps and Derivatives Association (ISDA) or similar master netting agreements, which generally allow for the close- out and netting of transactions in the event of default subject to applicable law. For most major market participant counterparties, we employ two-way collateral agreements under which either party can be required to provide collateral in the form of cash or marketable securities when the exposure exceeds specified levels. This collateral typically consists of well-rated government debt or other collateral permitted by applicable regulations. For certain counterparties, initial margin is taken to cover some or all of the calculated close-out exposure. This is in addition to the variation margin taken to settle changes in the market value of transactions. Regulations governing the margining of uncleared OTC derivatives continue to evolve. These generally expand the scope of bilateral derivatives activity subject to margining. In addition, they will result in greater amounts of initial margin received from, and posted to, certain bilateral trading counterparties than had been required in the past. These changes should result in lower close-out risk over time. →Refer to “Note 11 Derivative instruments” in the “Consolidated financial statements” section of this report for more information on our over-the-counter derivatives settled through central counterparties →Refer to “Note 25 Offsetting financial assets and financial liabilities” in the “Consolidated financial statements” section of this report for more information on the effect of netting and collateral arrangements on our derivative exposures Credit risk arising from traded products, after the effects of master netting agreements but excluding credit valuation adjustments and hedges, decreased by USD 3 billion to USD 42 billion as of 31 December 2018. OTC derivatives accounted for USD 16 billion, exposures from SFTs were USD 16 billion, and ETD exposures amounted to USD 10 billion. OTC derivatives exposures are generally measured as net positive replacement values after the application of legally enforceable netting agreements and the deduction of cash and marketable securities held as collateral. SFT exposures are reported taking into account collateral received, and ETD exposures take into account collateral margin calls. The majority of the gross traded products exposures were within the Investment Bank, Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM, totaling USD 31 billion compared with USD 36 billion as of 31 December 2017. As counterparty risk for traded products is managed at counterparty level, no further split is provided between exposures in the Investment Bank and those in Corporate Center – Non-core and Legacy Portfolio and Corporate Center – Group ALM. The traded products exposure includes OTC derivatives exposures of USD 9 billion in the Investment Bank and Corporate Center – Non-core and Legacy Portfolio, a decrease of USD 2 billion from the prior year. During 2018, SFT exposures decreased by USD 2 billion to USD 16 billion and ETD exposures decreased slightly to USD 5 billion. The tables on the following page provide more information on the OTC derivatives, SFT and ETD exposures of the Investment Bank, Corporate Center – Non- core and Legacy Portfolio and Corporate Center – Group ALM. Risk, treasury and capital management 142 Risk, treasury and capital management Risk management and control Investment Bank, Non-core and Legacy Portfolio and Group ALM: traded products exposure USD million OOTC derivatives SSFTs EETD TTotal TTotal 331.12.18 31.12.17 Total exposure, before deduction of credit valuation adjustments and hedges 9,440 16,004 5,325 30,769 35,593 Less: credit valuation adjustments and allowances (136) 0 0 (136) (305) Less: credit protection bought (credit default swaps, notional) (288) 0 0 (288) (447) NNet exposure after credit valuation adjustments, allowances and hedges 9,016 16,004 5,325 30,346 34,842 Investment Bank, Non-core and Legacy Portfolio and Group ALM: distribution of net OTC derivatives and SFT exposure across internal UBS ratings and loss given default (LGD) buckets USD million, except where indicated 31.12.18 31.12.17 LGD buckets Internal UBS rating1 Exposure 0–25%26–50%51–75%76–100% Weighted average LGD (%)Exposure Weighted average LGD (%) Net OTC derivatives exposure Investment grade 8,737 220 7,199 1,081 236 46 10,337 45 Sub-investment grade 280 88 65 30 96 54 649 41 of which: 6−9 242 69 62 25 86 56 232 62 of which: 10−12 19 8 3 5 3 45 61 41 of which: 13 and defaulted 19 11 0 0 7 37 358 27 Total net OTC derivatives exposure, after credit valuation adjustments and hedges 9,016 308 7,265 1,111 332 47 10,987 45 Net SFT exposure Investment grade 15,668 3 13,870 1,534 262 41 17,749 44 Sub-investment grade 336 8 191 2 135 63 521 72 Total net SFT exposure 16,004 11 14,060 1,536 396 41 18,271 44 1 The ratings of the major credit rating agencies, and their mapping to our internal rating scale, are shown in the “Internal UBS rating scale and mapping of external ratings“ table in this section. Investment Bank, Non-core and Legacy Portfolio and Group ALM: net OTC derivatives and SFT exposure by geographical region Net OTC derivatives Net SFT exposure 31.12.18 31.12.17 31.12.18 31.12.17 USD million %USD million %USD million %USD million % Asia Pacific 1,309 14.5 1,184 10.8 3,408 21.3 3,718 20.3 Latin America 104 1.2 61 0.5 62 0.4 148 0.8 Middle East and Africa 109 1.2 147 1.3 549 3.4 638 3.5 North America 2,621 29.1 3,508 31.9 3,014 18.8 4,351 23.8 Switzerland 276 3.1 300 2.7 1,375 8.6 791 4.3 Rest of Europe 4,597 51.0 5,788 52.7 7,597 47.5 8,624 47.2 Exposure 9,016 100.0 10,987 100.0 16,004 100.0 18,271 100.0 Investment Bank, Non-core and Legacy Portfolio and Group ALM: net OTC derivatives and SFT exposure by industry sector Net OTC derivatives Net SFT exposure 31.12.18 31.12.17 31.12.18 31.12.17 USD million %USD million %USD million %USD million % Banks 3,813 42.3 4,677 42.6 3,495 21.8 5,425 29.7 Chemicals 5 0.1 11 0.1 0 0.0 0 Electricity, gas, water supply 87 1.0 170 1.5 0 0.0 0 Financial institutions, excluding banks 3,425 38.0 3,693 33.6 11,404 71.3 11,267 61.7 Manufacturing 89 1.0 143 1.3 0 0.0 0 Mining 12 0.1 7 0.1 0 0.0 0 Public authorities 1,198 13.3 1,552 14.1 1,102 6.9 1,539 8.4 Retail and wholesale 10 0.1 9 0.1 0 0.0 3 0.0 Transport, storage and communication 284 3.1 296 2.7 0 0.0 0 Other 92 1.0 428 3.9 3 0.0 36 0.2 Exposure 9,016 100.0 10,987 100.0 16,004 100.0 18,271 100.0 143 Credit risk mitigation Audited | We actively manage the credit risk in our portfolios by taking collateral against exposures and by utilizing credit hedging. Lending secured by real estate Audited | We use a scoring model as part of a standardized front- to-back process to support credit decisions for the origination or modification of Swiss mortgage loans. The two key factors within this model are an affordability calculation relative to gross income and the loan-to-value (LTV) ratio. The calculation of affordability takes into account interest payments, minimum amortization requirements, potential property maintenance costs and, in the case of properties expected to be rented out, the level of rental income. Interest payments are estimated using a predefined framework, which takes into account the potential for significant increases in interest rates during the lifetime of the loan. The interest rate is set at 5% per annum. For residential properties occupied by the borrower, the maximum LTV allowed within the standard approval process is 80%. This is reduced to 60% in the case of vacation properties and luxury real estate. For other properties, the maximum LTV allowed within the standard approval process ranges from 30% to 80%, depending on the type of property, the age of the property and the amount of renovation work required. Audited | The value assigned by UBS to each property is based on the lowest value determined from internally calculated valuations, the purchase price and, in some cases, an additional external valuation. We use two separate models provided by a market-leading external vendor to derive property valuations for owner- occupied residential properties (ORP) and income-producing real estate. For ORP, we estimate the current value of properties by using a regression model (hedonic model) to compare detailed characteristics for each property against a database of property transactions. In addition to the model-derived values, valuations for ORP are updated quarterly throughout the lifetime of the loan by using region-specific real estate price indices. The price indices are sourced from an external vendor and are subject to internal validation and benchmarking against two other external vendors. On a quarterly basis, we use these valuations to compute indexed LTV for all ORP and consider these together with other risk measures (e.g., rating migration and behavioral information) to identify higher-risk loans, which are then reviewed individually by client advisors and credit officers, with actions taken where they are considered necessary.Risk, treasury and capital management 144 Risk, treasury and capital management Risk management and control For income-producing real estate, the capitalization model is used to determine the property valuation by discounting estimated sustainable future income using a capitalization rate based on various attributes. These attributes consider regional as well as specific property characteristics, such as market and location data (e.g., vacancy rates), benchmarks (e.g., for running costs) and certain other standardized input parameters (e.g., property condition). Rental income from properties is reviewed at a minimum once every three years, but indications of significant changes in the amount of rental income or in the vacancy rate can trigger an interim reappraisal. To take market developments into account for these models, the external vendor regularly updates the parameters and / or refines the architecture for each model. Model changes and parameter updates are subject to the same validation procedures as for our internally developed models. Audited | We similarly apply underwriting guidelines for our Global Wealth Management Region Americas mortgage loan portfolio, taking into account affordability of the loans and sufficiency of collateral. The maximum LTV within the standard approval process for any type of mortgage is 80%. A stratification of LTVs exists for the various mortgage types, such as residential mortgage or investment property, based on associated risk factors, such as property types, loan size and loan purpose. Maximum LTVs go as low as 45%. Additionally, other credit risk metrics are applied, based upon property and borrower characteristics, such as debt-to-income ratios, FICO credit scores and required client reserves. A risk limit framework is applied to the Global Wealth Management Region Americas mortgage portfolio. Limits have been established to govern exposures within LTV categories, geographic concentrations, portfolio growth and high-risk mortgage segments such as interest-only loans. These limits are monitored by a specialized credit risk monitoring team and reported to senior management. Supplementing this limit framework is a real estate lending policy and procedures framework, established to govern the real estate lending activities. Quality assurance and quality control programs are in place to monitor compliance with mortgage underwriting and documentation requirements. →Refer to “Swiss mortgage loan portfolio” in this section for more information on loan-to-value in our Swiss mortgage portfolio →Refer to “Global Wealth Management” in this section for more information on loan-to-value in our Global Wealth Management Region Americas mortgage portfolio Lombard lending Audited | Lombard loans are secured by a pledge of marketable securities, guarantees and other forms of collateral. Eligible financial securities primarily include transferable securities (such as bonds and equities) that are liquid and actively traded, and other transferable securities such as approved structured products for which regular prices are available and for which the issuer of the security provides a market. To a lesser degree, less liquid collateral is also financed. We apply discounts (haircuts) to reflect the collateral’s risk and to derive the lending value. Haircuts for marketable securities are calculated to cover the possible change in the market value over a given close-out period and confidence level. The haircut applied will vary, depending on the view of the counterparty’s creditworthiness. Less liquid or more volatile collateral will typically attract larger haircuts. For less liquid instruments, such as structured products, some bonds and products with long redemption periods, the assumed close-out period may be much longer than that for highly liquid instruments, or an assessment is made as to the expected recovery on the asset in the event of the counterparty’s default, resulting in a larger haircut. For cash, life insurance policies, guarantees and letters of credit, haircuts are determined on a product- or client-specific basis. We also consider concentration and correlation risks across collateral posted on a counterparty level as well as at a divisional level across counterparties. Additionally, we perform targeted Group-wide reviews of concentrations. A concentration of collateral in single securities, issuers or issuer groups, industry sectors, countries, regions or currencies may result in higher risk and reduced liquidity. In such cases, the lending value of the collateral, margin call and close-out levels are adjusted accordingly. Exposures and collateral values are monitored on a daily basis with the intention of ensuring that the credit exposure continues to be within the established risk appetite. A shortfall occurs when the lending value drops below the exposure. If a shortfall exceeds a defined trigger level, a margin call is initiated, requiring the client to provide additional collateral, reduce the exposure or take other action to bring the exposure in line with the agreed lending value of the collateral. If the extent of the shortfall increases and exceeds a further trigger level, or is not corrected within the required period, a close-out is initiated, through which collateral is liquidated, open derivative positions are closed and guarantees are called. We also conduct stress testing of collateralized exposures to simulate market events that reduce the value of the collateral, increase the exposure of traded products, or both. For certain classes of counterparties, limits on such calculated stress exposures are applied and controlled on a counterparty level. In addition, there are portfolio limits applied across certain businesses or collateral types. →Refer to “Stress loss” in this section for more information on our stress testing 145 Credit hedging Audited | We utilize single-name credit default swaps (CDSs), credit index CDSs, bespoke protection and other instruments to actively manage credit risk in the Investment Bank and Corporate Center – Non-core and Legacy Portfolio. This is aimed at reducing concentrations of risk from specific counterparties, sectors or portfolios and, in the case of counterparty credit risk, the profit or loss effect arising from changes in credit valuation adjustments (CVA). We maintain strict guidelines for taking credit hedges into account for credit risk mitigation purposes. For example, when monitoring exposures against counterparty limits, we do not usually apply certain credit risk mitigants such as proxy hedges (credit protection on a correlated but different name) or credit index CDSs to reduce counterparty exposures. Buying credit protection also creates credit exposure against the protection provider. We monitor and limit our exposures to credit protection providers and the effectiveness of credit hedges as part of our overall credit exposures to the relevant counterparties. Trading with such counterparties is typically collateralized. For credit protection purchased to hedge the lending portfolio, this includes monitoring mismatches between the maturity of the credit protection purchased and the maturity of the associated loan. Such mismatches result in basis risk and may reduce the effectiveness of the credit protection. Mismatches are routinely reported to credit officers and mitigating actions are taken when deemed necessary. →Refer to “Note 11 Derivative instruments” in the “Consolidated financial statements” section of this report for more information Mitigation of settlement risk To mitigate settlement risk, we reduce our actual settlement volumes through the use of multilateral and bilateral agreements with counterparties, including payment netting. Our most significant source of settlement risk is foreign exchange transactions. We are a member of Continuous Linked Settlement (CLS), an industry utility that provides a multilateral framework to settle transactions on a delivery-versus-payment basis, thereby significantly reducing foreign exchange-related settlement risk relative to the volume of business. However, the mitigation of settlement risk through CLS and other means does not fully eliminate our credit risk in foreign exchange transactions resulting from changes in exchange rates prior to settlement, which is managed as part of our overall credit risk management of OTC derivatives. Credit risk models Basel III – A-IRB credit risk models Audited | We have developed tools and models in order to estimate future credit losses that may be implicit in our current portfolio. Exposures to individual counterparties are measured on the basis of three generally accepted parameters: probability of default (PD), loss given default (LGD) and exposure at default (EAD). For a given credit facility, the product of these three parameters results in the expected loss. These parameters are the basis for the majority of our internal measures of credit risk, and are key inputs for the regulatory capital calculation under the advanced internal ratings-based (A-IRB) approach of the Basel III framework governing international convergence of capital measurement and standards. We also use models to derive the portfolio credit risk measures of expected loss, statistical loss and stress loss. The “Key features of our main credit risk models” table on the next page shows the number and key features of the models that we use to derive PD, LGD and EAD for our main portfolios and asset classes, and is followed by more detailed explanations of these models and parameters. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on the regulatory capital calculation under the advanced internal ratings-based approach Risk, treasury and capital management 146 Risk, treasury and capital management Risk management and control Key features of our main credit risk models PPortfolio in scope AAsset class MModel approach NNumber of main models MMain drivers NNumber of years loss data1 PProbability of default Sovereigns and central banks Central governments and central banks Score card 1 Political, institutional and economic indicators 10 Owner-occupied mortgages in Switzerland and the US Retail: residential mortgages Score card 2 Behavioral data, affordability relative to income, property type, loan-to-value. Separate models for mortgages in Switzerland and the US 24 Income-producing real estate mortgages Retail: residential mortgages, Corporates: specialized lending Score card 1 Loan-to-value, debt service coverage, financial data (for large corporates only), behavioral data; Weights of risk drivers differ between corporate and private clients 24 Lombard lending Retail: other Merton type 1 Loan-to-value, historical asset returns, behavioral data 5–10 Small and medium-sized enterprises Corporates: other lending Score card 1 Financial data including balance sheet ratios and profit and loss, behavioral data. Weights of risk drivers differ depending on the corporate client sub- segment 24 Banks Banks and securities dealers Score card 4 Financial data including balance sheet ratios and profit and loss. Separate models for banks – developed markets, banks – emerging markets, broker-dealers and investment banks, private banks 11 Commodity traders Corporates: specialized lending Rating template 1 Financial data including balance sheet ratios and profit and loss, as well as non-financial criteria 20 Aircraft financing Corporates: other lending Rating template 1 Financial structure of the transaction 12 Large corporates Corporates: other lending Score card / market data 4 Financial data including balance sheet ratios and profit and loss, and market data. Separate models for corporates with publicly traded and highly liquid stocks (Market Intelligence Tool), private corporates, leveraged corporates and corporates in construction and real estate business 11 Other portfolios Corporates: other lending, Public-sector entities and multilateral development banks Score card / pooled rating approach / rating template 13 Financial data and/or historical portfolio performance for pooled ratings. Separate models for hedge funds, managed funds, insurance companies, retail aggregators, commercial real estate loans, mortgage originators, Australian protected lending clients, ETD- only clients, sub-sovereigns / public-sector entities and multilateral development banks / supranationals. 11 LLoss given default Owner-occupied mortgages in Switzerland and the US Retail: residential mortgages Statistical model 2 Loan-to-value, time since last valuation. Separate models for mortgages in Switzerland and the US 11 Income-producing real estate mortgages Retail: residential mortgages, Corporates: specialized lending Statistical model 1 Loan-to-value, time since last valuation, property type, location indicator 11 Lombard lending Retail: other Statistical model, simulation 1 Historical observed loss rates 10–15 Small and medium-sized enterprises Corporates: other lending Statistical model 2 Separate models for mortgage and non-mortgage LGDs. Mortgage models: loan-to-value, time since last valuation, property type, location indicator. Non- mortgage models: historical observed loss rates 11–17 Investment Bank – all counterparties Across the asset classes Statistical model 2 Counterparty and facility specific, including industry segment, collateral, seniority, legal environment and bankruptcy procedures. Specific model for sovereign LGDs based on econometric modelling of past default events using GDP per capita, government debt, and other quantitative and qualitative factors such as the share of multilateral debt service, the size of the banking sector and institutional quality. 5–10 EExposure at default Banking products Across the asset classes Statistical model 3 Separate models based on exposure type (committed credit lines, revocable credit lines, contingent products) >10 Traded products Across the asset classes Statistical model 2 Product-specific market drivers, e.g., interest rates. Separate models for OTC derivatives, ETDs and SFTs that generate the simulation of risk factors used for the credit exposure measure n/a 11 For sovereign and Investment Bank PD models, the length of internal portfolio history is shown in Number of years loss data. 147 Audited | Internal UBS rating scale and mapping of external ratings IInternal UBS rating 1-year PD range in % Description Moody’s Investors Service mapping Standard & Poor’s mapping Fitch mapping 00 and 1 0.00–0.02 Investment grade Aaa AAA AAA 22 0.02–0.05 Aa1 to Aa3 AA+ to AA– AA+ to AA– 33 0.05–0.12 A1 to A3 A+ to A– A+ to A– 44 0.12–0.25 Baa1 to Baa2 BBB+ to BBB BBB+ to BBB 55 0.25–0.50 Baa3 BBB– BBB– 66 0.50–0.80 Sub-investment grade Ba1 BB+ BB+ 77 0.80–1.30 Ba2 BB BB 88 1.30–2.10 Ba3 BB– BB– 99 2.10–3.50 B1 B+ B+ 110 3.50–6.00 B2 B B 111 6.00–10.00 B3 B– B– 112 10.00–17.00 Caa CCC CCC 113 >17 Ca to C CC to C CC to C CCounterparty is in default Default Defaulted DD Probability of default The probability of default (PD) is an estimate of the likelihood of a counterparty defaulting on its contractual obligations over the next 12 months. PD ratings are used for credit risk measurement and are an important input for determining credit risk approval authorities. For the calculation of risk weighted assets (RWA), a 3-basis-point PD floor is applied to Banks, Corporates and Retail exposures as required under the Basel III framework. Additionally, for the Swiss owner-occupied mortgages we apply an 8-basis-point PD floor and for the Lombard loans a 4-basis- point PD floor. PD is assessed using rating tools tailored to the various categories of counterparties. Statistically developed score cards, based on key attributes of the obligor, are used to determine PD for many of our corporate clients and for loans secured by real estate. Where available, market data may also be used to derive the PD for large corporate counterparties. For low-default portfolios, where available, we take into account relevant external default data in the rating tool development. For Lombard loans, Merton-type historical return-based model simulations taking into account potential changes in the value of securities collateral are used in our rating approach. These categories are also calibrated to our internal credit rating scale (masterscale), which is designed to ensure a consistent assessment of default probabilities across counterparties. Our masterscale expresses one-year default probabilities that we determine through our various rating tools by means of distinct classes, whereby each class incorporates a range of default probabilities. Counterparties migrate between rating classes as our assessment of their PD changes. The ratings of the major credit rating agencies, and their mapping to our internal rating masterscale and internal PD bands, are shown in the “Internal UBS rating scale and mapping of external ratings” table above. The mapping is based on the long-term average of one-year default rates available from the rating agencies. For each external rating category, the average default rate is compared with our internal PD bands to derive a mapping to our internal rating scale. Our internal rating of a counterparty may therefore diverge from one or more of the correlated external ratings shown in the table. Observed defaults by rating agencies may vary through economic cycles, and we do not necessarily expect the actual number of defaults in our equivalent rating band to equal the rating agencies’ average in any given period. We periodically assess the long-term average default rates of credit rating agencies’ grades, and we adjust their mapping to our masterscale as necessary to reflect any material changes. Loss given default Loss given default (LGD) is the magnitude of the likely loss if there is a default. Our LGD estimates, which consider downturn conditions, include loss of principal, interest and other amounts (such as workout costs, including the cost of carrying an impaired position during the workout process) less recovered amounts. We determine LGD based on the likely recovery rate of claims against defaulted counterparties, which depends on the type of counterparty and any credit mitigation by way of collateral or guarantees. Our estimates are supported by our internal loss data and external information where available. Where we hold collateral, such as marketable securities or a mortgage on a property, loan-to-value ratios typically are a key parameter in determining LGD. For low-default portfolios, where available, we take into account relevant external default data in the rating tool development. In the RWA calculation, the regulatory LGD floor of 10% is applied for exposures secured by residential properties. Additionally, we applied a 30% LGD floor for Lombard loans in Global Wealth Management outside Region Americas and a 25% LGD floor for Lombard loans in Global Wealth Management Region Americas. All other LGDs are subject to a 5% floor.Risk, treasury and capital management 148 Risk, treasury and capital management Risk management and control Exposure at default Exposure at default (EAD) represents the amount we expect to be owed by a counterparty at the time of a possible default. We derive EAD from our current exposure to the counterparty and the possible future development of that exposure. The EAD of a loan is the drawn or face value of the loan. For loan commitments and guarantees, the EAD includes the amount drawn as well as potential future amounts that may be drawn, which are estimated using credit conversion factors (CCFs) based on historical observations. To comply with regulatory guidance, we floor individual observed CCF values at zero in the CCF model; i.e., we assume that the drawn exposure at default will be no less than the drawn amount one year prior to default. For traded products, we derive the EAD by modeling the range of possible exposure outcomes at various points in time using scenario and statistical techniques. We assess the net amount that may be owed to us or that we may owe to others, taking into account the effect of market moves over the potential time it would take to close out our positions. For exchange-traded derivatives, our calculation of EAD takes into account collateral margin calls. When measuring individual counterparty exposure against credit limits, we consider the maximum likely exposure measured to a high level of confidence. However, when aggregating exposures to different counterparties for portfolio risk measurement purposes, we use the expected exposure to each counterparty at a given time period (usually one year) generated by the same model. We assess our exposures where there is a material correlation between the factors driving the credit quality of the counterparty and those driving the potential future value of our traded products exposure (wrong-way risk), and we have established specific controls to mitigate these risks. Expected loss Credit losses are an inherent cost of doing business and the occurrence and amount of credit losses can be erratic. In order to quantify future credit losses that may be implicit in our current portfolio, we use the concept of expected loss. The expected loss for a given credit facility is a product of the three components described above: PD, EAD and LGD. We aggregate the expected loss for individual counterparties to derive our expected portfolio credit losses. Expected loss (EL) for regulatory and internal risk control purposes is a statistical measure used to estimate the average annual costs we expect to experience from positions that become impaired. Expected loss is the basis for quantifying credit risk in all our portfolios. We use a statistical modeling approach to estimate the loss profile of each of our credit portfolios over a one-year period to a specified level of confidence. The mean value of this loss distribution is the expected loss. The loss estimates deviate from the mean value, reflecting statistical uncertainty on the defaulting counterparties and to systematic default relationships among counterparties within and between segments. The statistical measure is sensitive to concentration risks on individual counterparties and groups of counterparties. The outcome provides an indication of the level of risk in our portfolio and the way it may develop over time. Some parameters have to be estimated on a conservative basis in order to meet the regulatory requirements for banks applying the internal ratings-based approach to determine RWA. IFRS 9 – ECL credit risk models With a view to the introduction of IFRS 9, which is based on an expected credit loss (ECL) concept that differs from the other applications in some important aspects, we have developed specific parameters and additional models, which are generally derivations from our standard credit risk models. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the requirements of the expected credit loss methodology under IFRS 9 Probability of default The PD represents the likelihood of a default over a specified time period. A 12-month PD represents the likelihood of default determined for the next 12 months and a lifetime PD represents the probability of default over the remaining lifetime of the instrument. The lifetime PD calculation is based on a series of 12-month point-in-time (PIT) PDs that are derived from through- the-cycle (TTC) PDs and scenario forecasts. This modeling is region-, industry- and client segment-specific and considers both scenario-systematic and client-idiosyncratic information. To derive the cumulative lifetime PD per scenario, the series of 12- month PIT PDs are transformed into marginal PIT PDs, taking any assumed default events from previous periods into account. Loss given default The LGD represents an estimate of the loss at the time of a potential default occurring during the life of a financial instrument. The determination of the LGD takes into account expected future cash flows from collateral and other credit enhancements, or expected payouts from bankruptcy proceedings for unsecured claims and, where applicable, time to realization of collateral and the seniority of claims. The LGD is commonly expressed as a percentage of the EAD. Exposure at default The EAD represents an estimate of the exposure to credit risk at the time of a potential default occurring during the life of a financial instrument. It represents the cash flows outstanding at the time of default, considering expected repayments, interest payments and accruals, discounted at the effective interest rate. Future drawdowns on facilities are considered through a CCF that is reflective of historical drawdown and default patterns and the characteristics of the respective portfolios. IFRS 9-specific CCFs have been modeled to capture client segment- and product-specific patterns after removing Basel standard-specific limitations, i.e., conservatism, and focus on a 12-month period prior to default. 149 Expected credit loss ECL for accounting purposes is an adjustment of the gross carrying value of assets that are accounted for under the amortized cost approach of IFRS 9 and subject to different principles and material differences. Rather than focusing on an average TTC expected annual loss, its purpose is to estimate the amount of losses inherent in a portfolio based on current conditions and future outlook (a PIT measure), whereby such forecast has to include all information that is available without undue cost and effort, and address multiple scenarios where there is a perceived non-linearity between changes in economic conditions and their effect on credit losses. From a credit risk modeling perspective, ECL parameters are generally a derivation of the factors assessed for EL. Comparison of Basel III EL and IFRS 9 ECL Depending on the application, there are a number of key differences in the estimation process and the result. Most notably, regulatory Basel III EL parameters are TTC / downturn estimates, which might include a margin of conservatism, while IFRS 9 ECL parameters are typically PIT, reflecting current economic conditions and future outlook. The main differences are summarized in the table below. The estimation of expected (credit) loss is not a forecast of the annual charge to Credit loss expense resulting from loans and off-balance sheet exposures that become impaired. The Basel III EL is not particularly sensitive to prevailing economic conditions with its TTC / downturn view. ECL, in contrast, is grounded in PIT economic conditions, but measured as an average of different scenarios, and for time periods that are dependent on the maturity profile of the book at reporting date and the particular stage classification required by IFRS 9. They do not cover therefore a PIT credit loss expense expectation measured over a quarter or a calendar year. Further key aspects of credit risk models Stress loss We complement our statistical modeling approach with scenario-based stress loss measures. Stress tests are run on a regular basis to monitor the potential effect of extreme, but nevertheless plausible, events on our portfolios, under which key credit risk parameters are assumed to deteriorate substantially. Where we consider it appropriate, we apply limits on this basis. In the table below we illustrate the main differences between the two expected loss measures: BBasel III EL (advanced internal ratings-based approach)IIFRS 9 ECL SScope The Basel III advanced internal ratings-based (A-IRB) approach applies to most credit risk exposures. It includes transactions measured at amortized cost, at fair value through profit or loss and at fair value through OCI, including loan commitments and financial guarantees. The IFRS 9 expected credit loss (ECL) calculation mainly applies to financial assets measured at amortized cost and debt instruments measured at fair value through OCI, as well as loan commitments and financial guarantee contracts not at fair value through profit or loss. 112-month versus lifetime expected loss The Basel III A-IRB approach takes into account expected losses resulting from expected default events occurring within the next 12 months. In the absence of a significant increase in credit risk (SICR) event, a maximum 12-month ECL is recognized to reflect lifetime cash shortfalls that will result if a default event occurs in the 12 months after the reporting date (or a shorter period if the expected lifetime is less). Once an SICR event has occurred, a lifetime ECL is recognized considering expected default events over the life of the transaction. EExposure at default (EAD) EAD is the amount we expect a counterparty to owe us at the time of a possible default. For banking products, the EAD equals the book value as of the reporting date, whereas for traded products, such as securities financing transactions, the EAD is modeled. The EAD is expected to remain constant over the 12-month period. For loan commitments, a credit conversion factor is applied to model expected future drawdowns over the 12-month period, irrespective of the actual maturity of a particular transaction. The credit conversion factor includes downturn adjustments. EAD is generally calculated on the basis of the cash flows that are expected to be outstanding at the individual points in time during the life of the transaction, discounted to the reporting date using the effective interest rate. For loan commitments, a credit conversion factor is applied to model expected future drawdowns over the life of the transaction without including downturn assumptions. In both cases, the time period is capped at 12 months, unless an SICR has occurred. PProbability of default (PD) PD estimates are determined on a through–the-cycle (TTC) basis. They represent historical average PDs, taking into account observed losses over a prolonged historical period, and are therefore less sensitive to movements in the underlying economy. PD estimates will be determined on a point-in-time (PIT) basis, based on current conditions and incorporating forecasts for future economic conditions at the reporting date. LLoss given default (LGD) LGD includes prudential adjustments, such as downturn LGD assumptions and floors. Similar to PD, LGD is determined on a TTC basis. LGD should reflect the losses that are reasonably expected and prudential adjustments should therefore not be applied. Similar to PD, LGD is determined on the basis of a PIT approach. UUse of scenarios N/A Multiple forward-looking scenarios have to be taken into account to determine a probability-weighted ECL.Risk, treasury and capital management 150 Risk, treasury and capital management Risk management and control Stress scenarios and methodologies are tailored to the nature of the portfolios, ranging from regionally focused to global systemic events, and varying in time horizon. For example, for our loan underwriting portfolio, we apply a global market event under which, simultaneously, the market for loan syndication freezes, market conditions significantly worsen, and credit quality deteriorates. Similarly, for Lombard lending, we apply a range of scenarios representing instantaneous market shocks to all collateral and exposure positions, taking into consideration their liquidity and potential concentrations. The portfolio-specific stress test for our mortgage lending business in Switzerland reflects a multi-year event, and the overarching stress test for global wholesale and counterparty credit risk to corporates uses a one-year global stress event and takes into account exposure concentrations to single counterparties. →Refer to “Stress testing” in this section for more information on our stress testing framework Credit risk model confirmation Our approach to model confirmation involves both quantitative methods, including monitoring compositional changes in the portfolios and the results of backtesting, and qualitative assessments, including feedback from users on the model output as a practical indicator of the performance and reliability of the model. Material changes in a portfolio composition may invalidate the conceptual soundness of the model. We therefore perform regular analysis of the evolution of portfolios to identify such changes in the structure and credit quality of portfolios. This includes analysis of changes in key attributes, changes in portfolio concentration measures, as well as changes in RWA. →Refer to “Risk measurement” in this section for more information on our approach to model confirmation procedures Backtesting We monitor the performance of our models by backtesting and benchmarking them, whereby model outcomes are compared with actual results, based on our internal experience as well as externally observed results. To assess the predictive power of our credit exposure models for traded products such as OTC derivatives and ETD products, we statistically compare the predicted future exposure distributions at different forecast horizons with the realized values. For PD, we use statistical modeling to derive a predicted distribution of the number of defaults. The observed number of defaults is then compared with this distribution, allowing us to derive a statistical level of confidence in the model conservatism. In addition, we derive a lower and upper bound for the average default rate. If the portfolio average PD lies outside the derived interval, the rating tool is, as a general rule, recalibrated. For LGD, the backtesting statistically tests whether the mean difference between the observed and predicted LGD is zero. If the test fails, then there is evidence that our predicted LGD is too low. In such cases, and where these differences are outside expectations, models are recalibrated. Main credit models backtesting by regulatory asset class Actual rates in %Length of time series used for the calibration (in years) Average of last 5 years1 Min. of last 5 years2 Max. of last 5 years2 Estimated average rates at the start of 2018 in % PProbability of default3 Central governments and central banks >10 4 0.00 0.00 0.00 0.20 Banks and securities dealers >10 0.16 0.00 0.53 0.67 Public-sector entities, multilateral development banks >10 0.00 0.00 0.00 0.18 Corporates: specialized lending >10 0.31 0.15 0.60 1.23 Corporates: other lending >10 0.24 0.21 0.29 0.46 Retail: residential mortgages >20 0.19 0.12 0.28 0.53 Retail: other >10 0.00 0.00 0.01 0.31 LLoss given default Central governments and central banks >10 57.48 Banks and securities dealers >10 0.00 50.29 Public-sector entities, multilateral development banks >10 26.23 Corporates: specialized lending >10 4.02 0.00 17.07 21.48 Corporates: other lending >10 19.98 12.90 23.15 37.02 Retail: residential mortgages >20 0.82 0.00 1.48 20.37 Retail: other >10 64.62 65.26 65.26 27.44 CCredit conversion factors Corporates >10 19.05 6.87 44.32 43.13 11 Average of all observations over the last five years. 2 Minimum / maximum annual average of observations in any single year from the last five years. Yearly averages are only calculated where five or more observations occurred during that year. 3 Average PD estimation is based on all rated clients in the portfolio. 4 Sovereign PD model is calibrated to UBS masterscale, length of time series shows span of internal history for this portfolio. 151 Credit conversion factors (CCFs), used for the calculation of EAD for undrawn facilities with corporate counterparties, are dependent on several contractual dimensions of the credit facility. We compare the predicted amount drawn with observed historical utilization of such facilities for defaulted counterparties. If any statistically significant deviation is observed, the relevant CCFs are redefined. The “Main credit models backtesting by regulatory asset class” table on the previous page compares the current model calibration for PD, LGD and CCFs with historical observed values over the last five years. Changes to models and model parameters during the period As part of our continuous efforts to enhance models to reflect market developments and newly available data, we updated several models in the course of 2018. Within Personal & Corporate Banking, we recalibrated the PD and LGD parameters for the aircraft financing portfolio. →Refer to “Risk-weighted assets” in the “Capital management” section of this report for more information on the effect of the changes to models and model parameters on credit risk RWA A new specific model for sovereign LGDs based on econometric modelling and qualitative factors was introduced. The model is also applied in the Group Liquidity Reserve. Within the Investment Bank, besides the introduction of the new sovereign LGD model, there were no material changes of PD / LGD methodologies. With regard to the EAD, we implemented credit conversion factors for Lombard loan facilities that are entirely undrawn in Global Wealth Management, as well as a new set of models to simulate equity, interest rates and exchange rates for OTC derivative exposures in the Investment Bank portfolio. Where required, changes to models and model parameters were approved by the Swiss Financial Market Supervisory Authority (FINMA) prior to implementation. Future credit risk-related regulatory capital developments In December 2017, the Basel Committee on Banking Supervision published the final Basel III framework to be implemented on 1 January 2022. The updated framework has made a number of revisions to the internal ratings-based (IRB) approaches, namely: (i) removing the possibility of using the advanced IRB (A-IRB) approach for certain asset classes (including large and medium- sized corporates, banks and other financial institutions); (ii) placing floors on certain model inputs under the IRB approach, such as for PD and LGD; and (iii) introducing various requirements to reduce RWA variability, for example, for LGD. The published framework has a number of requirements that are subject to national discretion. In addition, revisions to the credit valuation adjustment (CVA) framework were published, including the removal of the advanced CVA (A-CVA) approach. UBS maintains a close dialog with FINMA to discuss in more detail the implementation objectives and to ensure a smooth transition of the capital regime for credit risk. →Refer to “Capital management objectives, planning and activities” in the “Capital management” section of this report for more information on the development of RWA →Refer to “Risk measurement” in this section for more information on our approach to model confirmation procedures →Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information Credit policies for distressed assets We have adopted IFRS 9, Financial Instruments, effective as of 1 January 2018. IFRS 9 introduces a forward-looking expected credit loss (ECL) approach, which is intended to result in an earlier recognition of credit losses compared with the incurred- loss impairment approach for financial instruments under IAS 39, Financial Instruments: Recognition and Measurement, and the loss-provisioning approach for financial guarantees and loan commitments under IAS 37, Provisions, Contingent Liabilities and Contingent Assets. →Refer to “Note 1 Summary of significant accounting policies,” “Note 23 Expected credit loss measurement” and “Note 24d Valuation adjustments” in the “Consolidated financial statements” section of this report for more information The “Exposure categorization” chart on the next page illustrates how we categorize banking products and SFTs as non- performing, defaulted, credit-impaired and purchased or originated credit-impaired. Audited | In line with the regulatory definition, we report a claim as non-performing when (i) it is more than 90 days past due; (ii) it is subject to restructuring proceedings, where preferential conditions concerning interest rates, subordination, tenor etc. have been granted in order to avoid default of the counterparty (forbearance); or (iii) the counterparty is subject to bankruptcy / enforced liquidation proceedings in any form, even if there is sufficient collateral to cover the due payment.Risk, treasury and capital management 152 Risk, treasury and capital management Risk management and control UBS applies a single definition of default for classifying assets and determining the PD of its obligors for risk modeling purposes. The definition of default is based on quantitative and qualitative criteria. A counterparty is classified as defaulted at the latest when material payments of interest, principal or fees are overdue for more than 90 days, or more than 180 days for certain exposures in relation to loans to private and commercial clients in Personal & Corporate Banking, and to private clients of Global Wealth Management Region Switzerland. UBS does not consider the general 90-day presumption for default recognition appropriate for these latter portfolios based on an analysis of the cure rates, which demonstrated that strict application of the 90- day criterion would not accurately reflect the inherent credit risk. Counterparties are also classified as defaulted when bankruptcy, insolvency proceedings or enforced liquidation have commenced; obligations have been restructured on preferential terms (forbearance); or there is other evidence that payment obligations will not be fully met without recourse to collateral. The latter may be the case even if, to date, all contractual payments have been made when due. If a counterparty is defaulted, generally all claims against the counterparty are treated as defaulted. An instrument is classified as credit-impaired if the counterparty is defaulted, and / or the instrument is identified as purchased or originated credit-impaired (POCI). An instrument is POCI if it has been purchased with a material discount to its carrying amount following a risk event of the issuer or originated with a defaulted counterparty. Once a financial asset is classified as defaulted / credit-impaired (except POCI), it is reported as a stage 3 instrument and remains as such unless all past due amounts have been rectified, additional payments have been made on time, the position is not classified as credit- restructured, and there is general evidence of credit recovery. A three-month probation period is applied before a transfer back to stages 1 or 2 can be triggered. However, most instruments remain in stage 3 for a longer period. 'ZRQUWTGECVGIQTK\CVKQP 2GTHQTOKPI 0QPRGTHQTOKPI 5VCIG %TGFKVGZRQUWTGUYKVJPQUKIPKƂECPVKPETGCUGKPVJGTKUM QHFGHCWNVUKPEGKPKVKCNTGEQIPKVKQP 5VCIG %TGFKVKORCKTGF %TGFKVGZRQUWTGUVJCVCTGENCUUKƂGFCUKPFGHCWNV 5VCIG UKIPKƂECPVKPETGCUGKPETGFKVTKUM %TGFKVGZRQUWTGUYKVJCUKIPKƂECPVKPETGCUGKPVJGTKUM QHFGHCWNVUKPEGKPKVKCNTGEQIPKVKQP sFC[URCUVFWG sFC[URCUVFWG sFC[URCUVFWG EGTVCKPGZRQUWTGU (QTDGCTCPEGETGFKVTGUVTWEVWTKPI %TGFKVGZRQUWTGUENCUUKƂ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ƂGFCU21%+CVKPKVKCNTGEQIPKVKQPHQTYJKEJVJGETGFKVUKVWCVKQPJCUUWDUGSWGPVN[KORTQXGF %TGFKVGZRQUWTGUYJGTGHWNNEQNNGEVKQPQHKPKVKCN EQPVTCEVWCNENCKOUJCUDGGPFQWDVHWNUKPEGKPKVKCN TGEQIPKVKQP 153 Forbearance (credit restructuring) Audited | Under imminent payment default or where default has already occurred, we may grant concessions to borrowers in financial difficulties that we would otherwise not consider in the normal course of our business, such as preferential interest rates, extension of maturity, modifying the schedule of repayments, debt / equity swap, subordination, etc. When a forbearance measure takes place, each case is considered individually and the exposure is generally classified in default. Forbearance classification will remain, until the loan is collected or written off, non-preferential conditions are granted that supersede the preferential conditions or until the counterparty has recovered and the preferential conditions no longer exceed our risk appetite. Contractual adjustments when there is no evidence of imminent payment default, or where changes to terms and conditions are within our usual risk appetite, are not considered to be forborne. Loss history statistics Since adopting IFRS 9 on 1 January 2018, an instrument is classified as credit-impaired if the counterparty has defaulted. This also includes credit-impaired exposures for which no loss has occurred or for which no allowance has been recognized (e.g., because they are expected to be fully recoverable through the collateral held). The “Loss history statistics” table below provides a five-year history of our credit loss experience for loans and advances to banks and customers, and ratios of those credit losses relative to our credit-impaired and non-performing loans and advances to banks and customers. For the years 2014 to 2017, the amounts are based on IAS 37 and IAS 39; for 2018 the amounts are based on IFRS 9. Gross credit-impaired loans and advances (including loans and advances to banks) were USD 2.3 billion as of 31 December 2018. As of 31 December 2017, impaired loans were USD 1.1 billion. The change is mainly caused by the adoption of IFRS 9, with the alignment of the term “credit-impaired” as described before. The majority of the credit-impaired exposure relates to loans and advances in our Swiss domestic business. The ratio of credit- impaired loans and advances to banks and customers to total loans and advances to banks and customers was 0.7%. →Refer “Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on the expected credit loss measurement under IFRS 9 →Refer to “Note 17a) Other financial assets measured at amortized cost” in the “Consolidated financial statements” section of this report for more details Loss history statistics USD million, except where indicated 331.12.18 IFRS 9 31.12.17 IAS 37, IAS 39 31.12.16 IAS 37, IAS 39 31.12.15 IAS 37, IAS 39 31.12.14 IAS 37, IAS 39 Loans and advances to banks and customers (gross) 338,000 342,604 314,485 324,059 331,631 Credit-impaired loans and advances to banks and customers 2,300 1,104 958 1,224 1,211 Non-performing loans and advances to banks and customers 2,419 2,149 2,357 1,627 1,611 ECL allowances and provisions for credit losses1,2 1,054 712 642 726 739 of which: allowances for loans and advances to banks and customers 1 780 678 589 691 712 Net write-offs3,4 210 101 121 116 125 of which: net write-offs for loans and advances to banks and customers 4 192 101 121 116 125 Credit loss (expense) / recovery5 (118) (131) (38) (118) (77) RRatios Credit-impaired loans and advances to banks and customers as a percentage of loans and advances to banks and customers (gross) 0.7 0.3 0.3 0.4 0.4 Non-performing loans and advances to banks and customers as a percentage of loans and advances to banks and customers (gross) 0.7 0.6 0.7 0.5 0.5 ECL allowances as a percentage of loans and advances to banks and customers (gross) 0.3 0.2 0.2 0.2 0.2 Net write-offs as a percentage of average loans and advances to banks and customers (gross) outstanding during the period 0.1 0.0 0.0 0.0 0.0 11 Includes collective loan loss allowances (until 31 December 2017). Until 31 December 2017 did not include allowances for other receivables (31 December 2017: USD 19 million; 31 December 2016: USD 0 million; 31 December 2015: USD 0 million; 31 December 2014: USD 0 million). 2 Includes provisions for ECL of guarantees and loan commitments and allowances for securities financing transactions. 3 Includes net write-offs for loan commitments and securities financing transactions. 4 The increase in net write-offs was mainly driven by a margin loan to a single client following a significant decrease in the value of the collateral. 5 Includes credit loss (expense) / recovery for other financial assets at amortized cost, guarantees, loan commitments, and securities financing transactions. Risk, treasury and capital management 154 Risk, treasury and capital management Risk management and control Market risk Key developments We continued to manage market risks at generally low levels of management value-at-risk (VaR). Average management VaR (1-day, 95% confidence level) increased slightly to USD 12 million from USD 11 million in the previous year, despite periods of significant market volatility. The number of negative backtesting exceptions within a 250-business-day window increased from one to two by the end of the year. The FINMA VaR multiplier for market risk RWA remained unchanged at 3.0 as of 31 December 2018. Audited | Main sources of market risk Market risks arise from both our trading and non-trading business activities. – Trading market risks arise mainly in connection with primary debt and equity underwriting, securities and derivatives trading for market-making and client facilitation within our Investment Bank, as well as the remaining positions within Corporate Center – Non-core and Legacy Portfolio and our municipal securities trading business within Global Wealth Management. – Non-trading market risk arises predominantly in the form of interest rate and foreign exchange risks in connection with personal banking and lending in our wealth management businesses, our personal and corporate banking business in Switzerland and the Investment Bank’s lending business, in addition to treasury activities. – Corporate Center – Asset and Liability Management (Group ALM) assumes market risks in the process of managing interest rate risk, structural foreign exchange risk and the liquidity and funding profile (including high-quality liquid assets) of the Group. – Equity and debt investments can also give rise to market risks, as can some aspects of our employee benefits, such as defined benefit pension schemes. Audited | Overview of measurement, monitoring and management techniques – Market risk limits are set for the Group, the business divisions and Corporate Center units and at granular levels within the various business lines, reflecting the nature and magnitude of the market risks. – Management VaR measures exposures under the market risk framework. This includes trading market risks and parts of non-trading market risks. Non-trading market risks not included in VaR are also covered in the risks controlled by Market & Treasury Risk Control as set out further below. – Our primary portfolio measures of market risk are liquidity- adjusted stress (LAS) loss and VaR. Both are common to all our business divisions and subject to limits that are approved by the Board of Directors (BoD). – These measures are complemented by concentration and granular limits for general and specific market risk factors. Our trading businesses are subject to multiple market risk limits. These limits take into account the extent of market liquidity and volatility, available operational capacity, valuation uncertainty and, for our single-name exposures, the credit quality of issuers. – Trading market risks are managed on an integrated basis at a portfolio level. As risk factor sensitivities change due to new transactions, transaction expiries or changes in market levels, risk factors are dynamically rehedged to remain within limits. Accordingly, in the trading portfolio, we do not generally seek to distinguish between specific positions and associated hedges. – Issuer risk is controlled by limits applied at the business division level based on jump-to-zero measures, which estimate our maximum default exposure (the loss in the case of a default event assuming zero recovery). – Non-trading foreign exchange risks are managed under market risk limits, with the exception of Corporate Center – Group ALM’s management of consolidated capital activity. Our Market & Treasury Risk Control function applies a holistic risk framework, which sets the appetite for treasury-related risk- taking activities across the Group. A key element of the framework is an overarching economic value sensitivity limit, set by the BoD. This limit is linked to the level of Basel III common equity tier 1 (CET1) capital and takes into account risks arising from interest rates, foreign exchange and credit spreads. In addition, the sensitivity of net interest income to changes in interest rates is monitored against targets set by the Group Chief Executive Officer, in order to analyze the outlook and volatility of net interest income based on market-expected interest rates. Limits are also set by the BoD to balance the effect of foreign exchange movements on our CET1 capital and CET1 capital ratio. Non-trading interest rate and foreign exchange risks are included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite framework. Equity and debt investments are subject to a range of risk controls, including preapproval of new investments by business management and Risk Control and regular monitoring and reporting. They are also included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite framework. →Refer to “Currency management” in the “Treasury management” section of this report for more information on Corporate Center – Group ALM’s management of foreign exchange risks →Refer to the “Capital management” section of this report for more information on the sensitivity of our CET1 capital and CET1 capital ratio to currency movements 155 Market risk stress loss In addition to VaR, which is discussed below, we measure and manage our market risks through a comprehensive framework of non-statistical measures and related limits. This includes an extensive series of stress tests and scenario analyses, which we continuously evaluate with the intention of ensuring that any losses resulting from an extreme, yet plausible event do not exceed our risk appetite. Liquidity-adjusted stress Our primary measure of stress loss for Group-wide market risk is LAS. The LAS framework is designed to capture the economic losses that could arise under specified stress scenarios. This is in part achieved by replacing the standard one-day and 10-day holding period assumptions used for management and regulatory VaR with liquidity-adjusted holding periods, as explained below. Shocks are then applied to positions based on the expected market movements over the liquidity-adjusted holding periods resulting from the specified scenario. The holding periods used in LAS are calibrated to reflect the amount of time it would take to reduce or hedge the risk of positions in each major risk factor in a stressed environment, assuming maximum utilization of the relevant position limits. We also apply minimum holding periods, regardless of observed liquidity levels, reflecting the fact that identification of and reaction to a crisis may not always be immediate. The expected market movements are derived using a combination of historical market behavior, based on an analysis of historical events, and forward-looking analysis that includes consideration of defined scenarios that have not occurred historically. LAS-based limits are applied at a number of levels: Group, business division and Corporate Center unit, business area and sub-portfolio. In addition, LAS forms the core market risk component of our combined stress test framework and is therefore integral to our overall risk appetite framework. →Refer to “Risk appetite framework” in this section for more information →Refer to “Stress testing” in this section for more information on our stress testing framework Value-at-risk VaR definition Audited | VaR is a statistical measure of market risk, representing the market risk losses that could potentially be realized over a set time horizon (holding period) at an established level of confidence. The measure assumes no change in the Group’s trading positions over the set time horizon. We calculate VaR on a daily basis. The profit or loss distribution from which VaR is derived is generated by our internally developed VaR model. The VaR model simulates returns over the holding period of those risk factors to which our trading positions are sensitive, and subsequently quantifies the profit or loss effect of these risk factor returns on the trading positions. Risk factor returns associated with the risk factor classes of general interest rates, foreign exchange and commodities are based on a pure historical simulation approach, taking into account a five-year look-back window. Risk factor returns for selected issuer-based risk factors, such as equity price and credit spreads, are decomposed into systematic and residual, issuer-specific components using a factor model approach. Systematic returns are based on historical simulation, and residual returns are based on a Monte Carlo simulation. The VaR model profit and loss distribution is derived from the sum of the systematic and residual returns in such a way that we consistently capture systematic and residual risk. Correlations among risk factors are implicitly captured via the historical simulation approach. In modeling the risk factor returns, we consider the stationarity properties of the historical time series of risk factor changes. Depending on the stationarity properties of the risk factors within a given risk factor class, we choose to model the risk factor returns using absolute returns or logarithmic returns. The risk factor return distributions are updated on a fortnightly basis. Although our VaR model does not have full revaluation capability, we source full revaluation grids and sensitivities from our front-office systems, enabling us to capture material non- linear profit or loss effects. We use a single VaR model for both internal management purposes and determining market risk risk-weighted assets (RWA), although we consider different confidence levels and time horizons. For internal management purposes, we establish risk limits and measure exposures using VaR at the 95% confidence level with a one-day holding period, aligned to the way we consider the risks associated with our trading activities. The regulatory measure of market risk used to underpin the market risk capital requirement under Basel III requires a measure equivalent to a 99% confidence level using a 10-day holding period. In the calculation of a 10-day holding period VaR, we employ 10-day risk factor returns, whereby all observations are equally weighted. Additionally, the population of the portfolio within management and regulatory VaR is slightly different. The population within regulatory VaR meets regulatory requirements for inclusion in regulatory VaR. Management VaR includes a broader population of positions. For example, regulatory VaR excludes the credit spread risks from the securitization portfolio, which are treated instead under the securitization approach for regulatory purposes.Risk, treasury and capital management 156 Risk, treasury and capital management Risk management and control We also use stressed VaR (SVaR) for the calculation of market risk RWA. SVaR adopts broadly the same methodology as regulatory VaR and is calculated using the same population, holding period (10-day) and confidence level (99%). However, unlike regulatory VaR, the historical data set for SVaR is not limited to five years, but spans the time period from 1 January 2007 to the present. In deriving SVaR, we search for the largest 10-day holding period VaR for the current Group portfolio across all one-year look-back windows that fall into the interval from 1 January 2007 to the present. SVaR is computed weekly. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on the regulatory capital calculation under the advanced internal ratings-based approach Management VaR for the period The tables below show minimum, maximum, average and period-end management VaR by business division and Corporate Center unit, and by general market risk type. We continued to manage management VaR at low levels with average VaR increasing slightly to USD 12 million from USD 11 million in the previous year. Audited | Management value-at-risk (1-day, 95% confidence, 5 years of historical data) by business division and Corporate Center unit and general market risk type1 FFor the year ended 31.12.18 USD million EEquity IInterest rates CCredit spreads FForeign exchange CCommodities MMin. 3 5 5 1 1 MMax. 22 11 9 13 4 AAverage 8 8 7 3 2 331.12.18 5 7 5 6 2 TTotal management VaR, Group 5 26 12 12 AAverage (per business division and risk type) Global Wealth Management 0 2 1 1 0 1 2 0 0 Personal & Corporate Banking 0 0 0 0 0 0 0 0 0 Asset Management 0 0 0 0 0 0 0 0 0 Investment Bank 4 25 11 10 8 6 6 3 2 CC – Services 0 0 0 0 0 0 0 0 0 CC – Group ALM 3 6 4 6 0 4 1 1 0 CC – Non-core and Legacy Portfolio 2 3 2 2 1 2 1 0 0 Diversification effect2,3 (7) (7) (1) (5) (4) (1) 0 For the year ended 31.12.17 USD million Equity Interest rates Credit spreads Foreign exchange Commodities Min. 1 6 5 1 0 Max. 15 12 8 5 7 Average 6 10 6 3 2 31.12.17 5 9 8 3 2 TTotal management VaR, Group 5 19 11 10 Average (per business division and risk type) Global Wealth Management 0 1 1 1 0 1 1 0 0 Personal & Corporate Banking 0 0 0 0 0 0 0 0 0 Asset Management 0 0 0 0 0 0 0 0 0 Investment Bank 4 18 9 8 6 7 5 2 2 CC – Services 0 0 0 0 0 0 0 0 0 CC – Group ALM 3 8 6 4 0 5 2 1 0 CC – Non-core and Legacy Portfolio 3 6 3 3 1 2 2 0 0 Diversification effect2,3 (8) (6) (1) (6) (4) (1) 0 11 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may well occur on different days, and likewise, the VaR for each business line or risk type, being driven by the extreme loss tail of the corresponding distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical time series, rendering invalid the simple summation of figures to arrive at the aggregate total. 2 Difference between the sum of the standalone VaR for the business divisions and Corporate Center units and the VaR for the Group as a whole. 3 As the minimum and maximum occur on different days for different business divisions and Corporate Center, it is not meaningful to calculate a portfolio diversification effect. 157 VaR limitations Audited | Actual realized market risk losses may differ from those implied by our VaR for a variety of reasons. – The VaR measure is calibrated to a specified level of confidence and may not indicate potential losses beyond this confidence level. – The one-day time horizon used for VaR for internal management purposes, or 10-day in the case of the regulatory VaR measure, may not fully capture the market risk of positions that cannot be closed out or hedged within the specified period. – In certain cases, VaR calculations approximate the effect of changes in risk factors on the values of positions and portfolios. This may happen because the number of risk factors included in the VaR model is necessarily limited. – The effect of extreme market movements is subject to estimation errors, which may result from non-linear risk sensitivities, as well as the potential for actual volatility and correlation levels to differ from assumptions implicit in the VaR calculations. – The use of a five-year window means that sudden increases in market volatility will tend not to increase VaR as quickly as the use of shorter historical observation periods, but the increase will affect our VaR for a longer period of time. Similarly, following a period of increased volatility, as markets stabilize, VaR predictions will remain more conservative for a period of time influenced by the length of the historical observation period. SVaR is subject to the same limitations as noted for VaR above, but the use of one-year data sets avoids the smoothing effect of the five-year data set used for VaR, and the absence of the five-year window provides for a longer history of potential loss events. Therefore, although the significant period of stress during the financial crisis of 2007–2009 is no longer contained in the historical five-year period used for management and regulatory VaR, SVaR will continue to use this data. This approach is intended to reduce the procyclicality of the regulatory capital requirements for market risks. We recognize that no single measure may encompass the entirety of risks associated with a position or portfolio. Consequently, we employ a suite of various metrics with both overlapping and complementary characteristics in order to create a holistic framework that seeks to ensure material completeness of risk identification and measurement. As a statistical aggregate risk measure, VaR supplements our liquidity-adjusted stress and comprehensive stress testing frameworks. We also have a framework to identify and quantify potential risks that are not fully captured by our VaR model. We refer to these risks as risks-not-in-VaR. This framework is used to underpin these potential risks with regulatory capital, calculated as a multiple of regulatory VaR and stressed VaR. Backtesting of VaR VaR backtesting is a performance measurement process in which the 1-day VaR prediction is compared with the realized 1-day profit & loss (P&L). We compute backtesting VaR using a 99% confidence level and one-day holding period for the population included within regulatory VaR. Since 99% VaR at UBS is defined as a risk measure that operates on the lower tail of the P&L distribution, 99% backtesting VaR is a negative number. Backtesting revenues exclude non-trading revenues, such as valuation reserves, fees and commissions and revenues from intraday trading, to provide for a like-for-like comparison. A backtesting exception occurs when backtesting revenues are lower than the previous day’s backtesting VaR. ,(/#/,,#510& -50 -25 0 25 50 75 100 125 150 -50 -25 0 25 50 75 100 125 150 )TQWR FGXGNQROGPVQHTGIWNCVQT[DCEMVGUVKPITGXGPWGUCPFCEVWCNVTCFKPITGXGPWGUCICKPUVDCEMVGUVKPI8C4 FC[EQPƂFGPEG 75&OKNNKQP $CEMVGUVKPI8C4 FC[EQPƂFGPEG PGICVKXGVCKN RQUKVKXGVCKNQHVJGDCEMVGUVKPI8C4FKUVTKDWVKQP$CEMVGUVKPITGXGPWGU #EVWCNVTCFKPITGXGPWGU 'ZENWFGUPQPVTCFKPITGXGPWGUUWEJCUXCNWCVKQPTGUGTXGUEQOOKUUKQPUCPFHGGUCPFTGXGPWGUHTQOKPVTCFC[VTCFKPI+PENWFGUDCEMVGUVKPITGXGPWGUCPFTGXGPWGUHTQOKPVTCFC[VTCFKPI$CUGFQP$CUGN+++TGIWNCVQT[ 8C4GZENWFGU%8#RQUKVKQPUCPFVJGKTGNKIKDNGJGFIGUYJKEJCTGUWDLGEVVQVJGUVCPFCNQPG%8#EJCTIG Risk, treasury and capital management 158 Risk, treasury and capital management Risk management and control Statistically, given the confidence level of 99%, two or three backtesting exceptions per year can be expected. More than four exceptions could indicate that the VaR model is not performing appropriately, as could too few exceptions over a prolonged period of time. However, as noted in the VaR limitations above, a sudden increase or decrease in market volatility relative to the five-year window could lead to a higher or lower number of exceptions, respectively. Accordingly, Group-level backtesting exceptions are investigated, as are exceptional positive backtesting revenues, with results being reported to senior business management, the Group Chief Risk Officer and the Chief Risk Officer Market & Treasury Risk. Backtesting exceptions are also reported to internal and external auditors and to the relevant regulators. The “Group: development of regulatory backtesting revenues and actual trading revenues against backtesting VaR” chart on the previous page shows the 12-month development of backtesting VaR against the Group’s backtesting revenues and actual trading revenues for 2018. The chart shows both the 99% and the 1% backtesting VaR. The asymmetry between the negative and positive tails is due to the long gamma risk profile that has been run historically in the Investment Bank. The actual trading revenues include, in addition to backtesting revenues, intraday revenues. The number of negative backtesting exceptions within a 250-business-day window increased from one to two by the end of the year. The FINMA VaR multiplier for market risk RWA remained unchanged at 3.0 as of 31 December 2018. VaR model confirmation In addition to backtesting performed for regulatory purposes as described above, we also conduct extended backtesting for our internal model confirmation purposes. This includes observing model performance across the entire profit or loss distribution, not just the tails, and at multiple levels within the business division and Corporate Center unit hierarchies. →Refer to “Risk measurement” in this section for more information on our approach to model confirmation procedures VaR model developments in 2018 Audited | We did not make any material changes to the VaR model in 2018. Future market risk-related regulatory capital developments In January 2019, the Basel Committee on Banking Supervision published the final rules on the minimum capital requirements for market risk (the Fundamental Review of the Trading Book). The new accord will come into effect starting 1 January 2022. The extension aligns implementation with the Basel III revisions to credit risk and operational risk and recognizes that some of the market risk-related rules are still being finalized by the Basel Committee. Key elements of the revised market risk framework include: (i) changes to the internal model-based approach, including changes to the model approval and performance measurement process; (ii) changes to the standardized approach with the aim of it being a credible fallback method for an internal model- based approach; and (iii) a revised boundary between trading book and banking book. UBS maintains a close dialog with FINMA to discuss in more detail the implementation objectives and to ensure a smooth transition of the capital regime for market risk. →Refer to “Capital management objectives, planning and activities” in the “Capital management” section of this report for more information on the development of RWA →Refer to “Risk measurement” in this section for more information on our approach to model confirmation procedures →Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information 159 Interest rate risk in the banking book Sources of interest rate risk in the banking book Audited | Interest rate risk in the banking book arises from balance sheet positions such as Loans, Financial assets at fair value not held for trading, Financial assets measured at amortized cost, Financial assets measured at fair value through other comprehensive income (OCI), Customer deposits, Debt issued measured at amortized cost, and derivatives, including those used for cash flow hedge accounting purposes. These positions may affect OCI or the income statement, depending on their accounting treatment. Our largest banking book interest rate exposures arise from client deposits and lending products in Global Wealth Management and Personal & Corporate Banking. For Global Wealth Management and Personal & Corporate Banking, the inherent interest rate risks are transferred either by means of back-to-back transactions or, in the case of products with no contractual maturity date or direct market-linked rate, by replicating portfolios from the originating business into Corporate Center – Group ALM, which manages the risks on an integrated basis, allowing for netting interest rate risks across different sources. Any residual interest rate risks in Global Wealth Management and Personal & Corporate Banking that are not transferred to Corporate Center – Group ALM are managed locally and are subject to independent monitoring and control by local risk control units as well as centrally by Market & Treasury Risk Control. To manage the interest rate risk centrally, Corporate Center – Group ALM uses derivative instruments, most of which are in designated hedge accounting relationships. A significant amount of interest rate risk also arises from Corporate Center – Group ALM financing and investing activities, such as the investment and refinancing of non- monetary corporate balance sheet items with indefinite maturities, including equity, goodwill and real estate. For these items, senior management has defined specific target durations as a basis for our funding and investment activities, as applicable. These targets are defined by replication portfolios, which establish rolling benchmarks to execute against. As of 31 December 2018, the target replication portfolios for equity, goodwill and real estate were defined as follows: in Swiss francs with an average duration of approximately three and a half years and fair value sensitivity of USD 4 million per basis point; in US dollars with an average duration of approximately four and a half years and a sensitivity of USD 13 million per basis point. Corporate Center – Group ALM also maintains a portfolio of debt investments as part of its management of the Group’s liquidity needs. Banking book interest rate exposure in the Investment Bank arises predominantly from the structured financing business within Corporate Client Solutions, where transactions are subject to approval on a case-by-case basis. Corporate Center – Non-core and Legacy Portfolio assets, primarily debt securities classified as Financial assets at fair value not held for trading, also give rise to non-trading interest rate risk. Risk, treasury and capital management 160 Risk, treasury and capital management Risk management and control Effect of interest rate changes on shareholders’ equity and CET1 capital The “Accounting and capital effect of changes in interest rates” table below illustrates the accounting and CET1 capital treatment of gains and losses resulting from changes in interest rates. For instruments held at fair value, a change in interest rates results in an immediate fair value gain or loss recognized either in the income statement or through OCI. For assets and liabilities measured at amortized cost, a change in interest rates does not result in a change in the carrying amount of the instruments, but could affect the amount of interest income or expense recognized over time in the income statement. Typically, increases in interest rates would lead to an immediate reduction in the value of our long-term assets held at fair value, but we would expect this to be offset over time through higher net interest income (NII) on our core banking products. In addition to the differing accounting treatments, our banking book positions have different sensitivities to different points on yield curves. For example, our portfolios of debt securities, whether measured at amortized cost or at fair value, and interest rate swaps, whether designated as cash flow hedges or transacted as economic hedges, on the whole, are more sensitive to changes in longer-duration interest rates, whereas our deposits and a significant portion of our loans contributing to NII are more sensitive to short-term rates. These factors are important as yield curves may not shift on a parallel basis and could, for example, exhibit an initial steepening, followed by a flattening over time. By virtue of the accounting treatment and yield curve sensitivities outlined above, in a rising rate scenario we would expect to recognize an initial decrease in shareholders’ equity as a result of fair value losses recognized in OCI. This would be compensated over time by increased NII as increases in interest rates affect the shorter end of the yield curve in particular. The effect on CET1 capital would be less pronounced, as gains and losses on interest rate swaps measured as cash flow hedges are not recognized for regulatory capital purposes. Fair value losses on instruments designated at fair value are expected to be offset by economic hedges. We subject the interest rate-sensitive banking book exposures to a suite of interest rate scenarios in order to assess the effect on expected NII over a one-year time horizon assuming constant business volumes. The scenario assessment also includes the estimated effect through OCI on shareholders’ equity and CET1 capital from pension fund assets and liabilities. While certain standard scenarios, such as a parallel rise in all yield curves of 100 basis points, are retained and regularly used, other scenarios are adopted as a function of changing market conditions. Accounting and capital effect of changes in interest rates1 RRecognition SShareholders’ equity CCET1 capital TTiming IIncome statement / OCI Gains Losses Gains Losses Financial assets at fair value through other comprehensive income Immediate OCI Derivatives transacted as economic hedges Immediate Income statement Derivatives designated as cash flow hedges Immediate OCI 2 Loans and deposits at amortized cost3 Gradual Income statement Financial assets at fair value through profit or loss Immediate Income statement Other financial assets at amortized cost3 Gradual Income statement 11 Refer to the “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” table in the “Capital management” section of this report for more information on the differences between shareholders’ equity and CET1 capital. 2 Excluding hedge ineffectiveness that is recognized in the income statement in accordance with IFRS. 3 For fixed-rate financial instruments, changes in interest rates affect the income statement when these instruments roll over and reprice. 161 At the end of 2018, the following scenarios were analyzed in detail: – Negative Interest Rates: Yield curves drop 100 basis points in parallel with no zero-floor applied and therefore can become negative, or more negative. – Rates Bull Flattener: Yield curves across all currencies undergo a sharp decrease for long tenors, with a modest decrease in the short end of the curve: -70 basis points for tenors up to 3 months, -100 basis points for the 3-year tenor and -130 basis points for +10-year tenors. – Rates Bull Steepener: Yield curves across all currencies undergo a sharp decrease for short tenors, with a modest decrease in the long end of the curve: -130 basis points for tenors up to 3 months, -100 basis points for the 3-year tenor and -70 basis points for +10-year tenors. – Rates Bear Steepener: Yield curves across all currencies undergo a sharp increase for long tenors, with a modest increase in the short end of the curve: +70 basis points for tenors up to 3 months, +100 basis points for the 3-year tenor and +130 basis points for +10-year tenors. – Rates Bear Flattener: Yield curves across all currencies undergo a sharp increase for short tenors, with a modest increase in the long end of the curve: +130 basis points for tenors up to 3 months, +100 basis points for the 3-year tenor and +70 basis points for +10-year tenors. – Parallel +100 basis points: All yield curves rise 100 basis points in parallel. – Constant Rates: All rates stay at current levels. With the exception of the Constant Rates scenario, immediately after the shock, interest rates evolve according to market-implied forward rates of that scenario. The results are compared with a baseline NII, which is calculated assuming that interest rates in all currencies develop according to their market-implied forward rates and under the assumption of constant business volumes and no specific management actions. Over a one-year horizon, the most adverse scenario is the Rates Bull Steepener, resulting in a deterioration in Baseline NII of approximately 6%, while the most beneficial scenario is the Rates Bear Flattener which would lead to an improvement in Baseline NII of approximately 11%. In addition to the above scenario analysis, we also monitor the sensitivity of the NII to immediate parallel shocks of –200 and +200 basis points against the defined thresholds, under the assumption of a constant balance sheet volume and structure. As of 31 December 2018, the baseline NII would have been approximately 13% lower under a parallel shock of –200 basis points, whereas under a parallel +200-basis-point shock, the baseline NII would have been approximately 24% higher. To shelter the level of our NII from the persistently low and negative interest rate environment in Swiss francs in particular, we rely on the self-funding of our lending businesses through our deposit base in Global Wealth Management and Personal & Corporate Banking, along with appropriate additional adjustments to our interest rate-linked product pricing. Should we lose this equilibrium on the balance sheet, for example, due to unattractive pricing relative to our peers for either our mortgages or deposits, this could lead to a decrease in our NII in a persistently low and negative interest rate environment. As we assume constant business volumes, these risks do not appear in the aforementioned interest rate scenarios. Moreover, should the low and negative interest rate environment persist or worsen, this could lead to additional pressure on our NII and we could face additional costs for holding our Swiss franc high-quality liquid asset portfolio. A reduction of the Swiss National Bank’s deposit exemption threshold for banks would also lead to increased costs that we might not be able to offset, for example, by passing on some of the costs to our depositors. Should euro interest rates also decline significantly further into negative territory, this could likewise increase our liquidity costs and put our NII generated from euro-denominated loans and deposits at risk of volume imbalances. Depending on the overall economic and market environment, sustained and significant negative rates could also lead to our Global Wealth Management and Personal & Corporate Banking clients paying down their loans together with reducing any excess cash they hold with us as deposits. This would reduce the underlying business volume and lower our NII accordingly. A net decrease in deposits would require replacement funding at a potential relative cost increase that would depend on various factors, including the term and nature of the replacement funding, whether such funding is raised in the wholesale markets or from swapping with available funding denominated in another currency. On the other hand, imbalances leading to an excess deposit position could require additional investments at negative yields, which we might not be able to compensate for sufficiently as a result of our excess deposit balance charging mechanisms.Risk, treasury and capital management 162 Risk, treasury and capital management Risk management and control Interest rate risk sensitivity to parallel shifts in yield curves Audited | Interest rate risk in the banking book is not underpinned for capital purposes, but is subject to a regulatory threshold. As of 31 December 2018, the economic-value effect of an adverse parallel shift in interest rates of ±200 basis points on our banking book interest rate risk exposures was significantly below both the current threshold of 20% of eligible capital recommended by regulators and the new threshold of 15% of tier 1 capital applicable as of 2019. The interest rate risk sensitivity figures presented in the “Interest rate sensitivity – banking book” table on the next page represent the effect of +1-, ±100- and ±200-basis-point parallel moves in yield curves on present values of future cash flows, irrespective of accounting treatment. In the prevailing negative interest rate environment for the Swiss franc in particular, and to a lesser extent for the euro and the Japanese yen, interest rates for Global Wealth Management and Personal & Corporate Banking client transactions are generally floored at 0%. Accordingly, for the purpose of this disclosure table, downward moves of 100 / 200 basis points are floored to ensure that the resulting shocked interest rates do not turn negative. The flooring results in non-linear sensitivity behavior. The sensitivity of the banking book to rising rates was positive USD 1.0 million per basis point compared with approximately nil at prior year-end. This was mainly due to changes in the US dollar sensitivity. In the third quarter of 2018, we implemented a transfer process of the interest rate risk from Global Wealth Management Region Americas to Corporate Center – Group ALM, and adopted a replication model for the non-maturing deposits held in the US. This decreased the exposure to rising rates in Global Wealth Management to negative USD 0.1 million per basis point from negative USD 1.8 million per basis point. The sensitivity of the banking book to rising rates includes the interest rate sensitivities arising from debt investments classified as Financial assets measured at fair value through OCI. The sensitivity of these positions to a 1-basis-point parallel increase in the yields of the respective instruments was approximately negative USD 2 million, unchanged from the prior year. The sensitivity of the banking book to rising interest rates also includes interest rate sensitivities arising from interest rate swaps designated in cash flow hedges. Fair value gains or losses associated with the effective portion of these hedges are recognized directly in other comprehensive income within equity. When the hedged forecast cash flows affect profit or loss, the associated gains or losses on the hedging derivatives are reclassified from other comprehensive income (OCI) to profit or loss. These swaps are predominantly denominated in US dollars, euros and Swiss francs. A 1-basis-point parallel increase of underlying LIBOR curves would have decreased OCI by approximately USD 22 million, excluding adjustments for tax. →Refer to “Note 14 Financial assets measured at fair value through other comprehensive income” in the “Consolidated financial statements” section of this report for more information →Refer to the “Group performance” section of this report for more information on sensitivity to interest rate movements 163 Audited | Interest rate sensitivity – banking book1 331.12.18 USD million ––200 bps ––100 bps ++1 bp ++100 bps ++200 bps CHF (8.5) (8.5) 0.8 78.6 158.6 EUR (167.9) (141.3) 0.1 6.9 15.6 GBP (88.2) (56.0) 0.1 11.1 20.5 USD (355.3) (96.5) 0.0 (73.6) (202.3) Other 8.8 3.7 0.1 10.4 21.3 TTotal effect on fair value of interest rate-sensitive banking book positions (611.1) (298.5) 1.0 33.4 13.6 of which: Global Wealth Management 30.5 15.0 (0.1) (14.4) (28.3) of which: Investment Bank 18.1 9.7 (0.1) (8.1) (17.1) of which: CC – Group ALM (573.0) (280.6) 0.9 18.8 (9.9) of which: CC – Non-core and Legacy Portfolio (89.5) (44.1) 0.4 39.6 73.7 31.12.17 USD million –200 bps –100 bps +1 bp +100 bps +200 bps CHF (32.7) (32.7) 1.0 100.2 196.2 EUR (145.8) (92.9) 0.2 15.6 31.9 GBP (59.1) (56.8) 0.1 11.5 21.8 USD 27.3 14.8 (1.4) (138.5) (287.8) Other 4.4 0.8 0.1 5.2 10.7 TTotal effect on fair value of interest rate-sensitive banking book positions (205.8) (166.8) 0.0 (6.1) (27.3) of which: Global Wealth Management 148.4 60.5 (1.8) (179.9) (371.3) of which: Investment Bank 33.8 18.8 (0.2) (15.8) (31.6) of which: CC – Group ALM (279.6) (193.0) 1.5 142.3 287.2 of which: CC – Non-core and Legacy Portfolio (108.9) (53.4) 0.5 47.8 89.6 11 In the prevailing negative interest rate environment for the Swiss franc in particular, and to a lesser extent for the euro, interest rates for Global Wealth Management (excluding Americas) and Personal & Corporate Banking client transactions are generally floored at non-negative levels. Accordingly, for the purpose of this disclosure table, downward moves of 100 / 200 basis points are floored to ensure that the resulting shocked interest rates do not turn negative. The flooring results in non-linear sensitivity behavior. Other market risk exposures Own credit We are exposed to changes in UBS’s own credit that are reflected in the valuation of financial liabilities designated at fair value when UBS’s own credit risk would be considered by market participants. We also estimate debit valuation adjustments (DVA) to incorporate own credit in the valuation of derivatives. →Refer to “Note 24 Fair value measurement” in the “Consolidated financial statements” section of this report for more information on own credit Structural foreign exchange risk Upon consolidation, assets and liabilities held in foreign operations are translated into US dollars at the closing foreign exchange rate on the balance sheet date. Value changes (in US dollars) of non-US dollar assets or liabilities due to foreign exchange movements are recognized in OCI and therefore affect shareholders’ equity and CET1 capital. Corporate Center – Group ALM employs strategies to manage this foreign currency exposure, including matched funding of assets and liabilities and net investment hedging. →Refer to the “Treasury management” section of this report for more information on our exposure to and management of structural foreign exchange risk →Refer to “Note 11 Derivative instruments” in the “Consolidated financial statements” section of this report for more information on our hedges of net investments in foreign operations Equity investments Audited | Under International Financial Reporting Standards (IFRS) effective on 31 December 2018, equity investments not in the trading book may be classified as Financial assets at fair value not held for trading or Investments in associates. We make direct investments in a variety of entities and buy equity holdings in both listed and unlisted companies for a variety of purposes. This includes investments such as exchange and clearing house memberships held to support our business activities. We may also make investments in funds that we manage in order to fund or seed them at inception or to demonstrate that our interests align with those of investors. We also buy, and are sometimes required by agreement to buy, securities and units from funds that we have sold to clients.Risk, treasury and capital management 164 Risk, treasury and capital management Risk management and control The fair value of equity investments tends to be influenced by factors specific to the individual investments. Equity investments are generally intended to be held for the medium or long term and may be subject to lock-up agreements. For these reasons, we generally do not control these exposures by using the market risk measures applied to trading activities. However, such equity investments are subject to a different range of controls, including preapproval of new investments by business management and Risk Control, portfolio and concentration limits, and regular monitoring and reporting to senior management. They are also included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite framework. As of 31 December 2018, we held equity investments totaling USD 2.5 billion, of which USD 1.4 billion were classified as Financial assets at fair value not held for trading and USD 1.1 billion as Investments in associates. This was broadly unchanged from the prior year. →Refer to “Note 24 Fair value measurement” and “Note 31 Interests in subsidiaries and other entities” in the “Consolidated financial statements” section of this report for more information →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the classification of financial instruments Debt investments Audited | Debt investments classified as Financial assets measured at fair value through OCI as of 31 December 2018 were measured at fair value with changes in fair value recorded through Equity, and can broadly be categorized as money market instruments and debt securities primarily held for statutory, regulatory or liquidity reasons. The risk control framework applied to debt instruments classified as Financial assets measured at fair value through OCI depends on the nature of the instruments and the purpose for which we hold them. Our exposures may be included in market risk limits or be subject to specific monitoring and interest rate sensitivity analysis. They are also included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite framework. Debt instruments classified as Financial assets measured at fair value through OCI had a fair value of USD 6.7 billion as of 31 December 2018 compared with USD 8.1 billion as of 31 December 2017. →Refer to “Note 24 Fair value measurement” in the “Consolidated financial statements” section of this report for more information →Refer to “Interest rate risk sensitivity to parallel shifts in yield curves” in this section for more information →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the classification of financial instruments Pension risk We provide a number of pension plans for past and current employees, some of which are classified as defined benefit pension plans under IFRS. These defined benefit plans can have a material effect on our IFRS equity and CET1 capital. In order to meet the expected future benefit payments, the plans invest employee and employer contributions in various asset classes. The funded status of the plan is the difference between the fair value of these assets and the present value of the expected future benefit payments to plan members, i.e., the defined benefit obligation. Pension risk is the risk that the funded status of defined benefit plans might decrease, negatively affecting our IFRS equity and / or our CET1 capital. This can arise from a fall in the plan assets’ value or in the investment returns, an increase in defined benefit obligations, or a combination of these. Important risk factors affecting the fair value of the plan assets are, among other things, equity market returns, interest rates, bond yields and real estate prices. Important risk factors affecting the present value of the expected future benefit payments include high-grade bond yields, interest rates, inflation rates and life expectancy. Pension risk is included in our Group-wide statistical and stress testing metrics, which flow into our risk appetite framework. The potential effects are thus captured in the calculation of our post-stress CET1 capital ratio. →Refer to “Note 1 Summary of significant accounting policies” and “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of this report for more information on defined benefit plans UBS own share exposure Group Treasury holds UBS Group AG shares to hedge future share delivery obligations related to employee share-based compensation and participation plans. In addition, the Investment Bank holds a very limited number of UBS Group AG shares, primarily in its capacity as a market-maker in UBS Group AG shares and related derivatives and to hedge certain issued structured debt instruments. We began a share repurchase program in March 2018. We may repurchase up to an aggregate of CHF 2 billion of UBS Group AG shares until March 2021 under the repurchase program in accordance with Swiss regulations. During 2018, we acquired shares for aggregate consideration of CHF 750 million (USD 762 million). Consistent with our capital returns policy, we intend to establish an additional share repurchase program when we have completed the current program. Shares acquired through the share repurchase program are purchased for the purpose of capital reduction. Until the shareholders of UBS Group AG approve cancelation of the shares, shares acquired in the repurchase program will be held in Group Treasury. →Refer to “UBS shares” in the “Capital management” section of this report for more information 165 Country risk Country risk framework Country risk includes all country-specific events that occur within a sovereign’s jurisdiction and may lead to an impairment of UBS’s exposures. Country risk may take the form of sovereign risk, which refers to the ability and willingness of a government to honor its financial commitments; transfer risk, which would arise if an issuer or counterparty could not acquire foreign currencies following a moratorium of a central bank on foreign exchange transfers; or “other” country risk. “Other” country risk may manifest itself through increased and multiple counterparty and issuer default risk (systemic risk) on the one hand, and on the other hand through events that may affect the standing of a country, such as adverse shocks affecting political stability or the institutional and legal framework. We maintain a well- established risk control framework, through which we assess the risk profile of all countries where we have exposure. We attribute to each foreign country a sovereign rating, which expresses the probability of the sovereign defaulting on its own financial obligations in foreign currency. Our ratings are expressed by statistically derived default probabilities as described under “Probability of default” in this section. Based on this internal analysis, we also define the probability of a transfer event occurring and establish rules as to how the aspects of “other” country risk should be incorporated into the analysis of the counterparty rating of entities that are domiciled in the respective country. Our risk exposure to foreign countries considers the credit ratings assigned to those countries. A country risk ceiling (i.e., maximum aggregate exposure) applies to our exposures to counterparties or issuers of securities and financial investments in the respective foreign country. We may limit the extension of credit, transactions in traded products or positions in securities based on a country risk ceiling, even if our exposure to a counterparty is otherwise acceptable. For internal measurement and control of country risk, we also consider the financial effect of market disruptions arising prior to, during and after a country crisis. These may take the form of a severe deterioration in a country’s debt, equity or other asset markets, or a sharp depreciation of the currency. We use stress testing to assess the potential financial effect of a severe country or sovereign crisis. This involves the development of plausible stress scenarios for combined stress testing and the identification of countries that may potentially be subject to a crisis event, determining potential losses and making assumptions about recovery rates depending on the types of credit transactions involved and their economic importance to the affected countries. Our exposures to market risks are also subject to regular stress tests that cover major global scenarios, which are used for combined stress testing as well, whereby we apply market shock factors to equity indices, interest rates and currency rates in all relevant countries and consider the potential liquidity of the instruments. Country risk exposure Country risk exposure measure The presentation of country risk follows our internal risk view, whereby the basis for measurement of exposures depends on the product category into which we have classified our exposures. In addition to the classification of exposures into banking products and traded products, as defined in “Credit risk profile of the Group” in this section, within trading inventory we classify issuer risk on securities such as bonds and equities, as well as the risk relating to the underlying reference assets for derivative positions. This includes those linked to credit protection we buy or sell, loan or security underwriting commitments pending distribution and single-stock margin loans for syndication. As we manage the trading inventory on a net basis, we net the value of long positions against short positions with the same underlying issuer. Net exposures are, however, floored at zero per issuer in the figures presented in the following tables. We therefore do not recognize the potentially offsetting benefit of certain hedges and short positions across issuers. We do not recognize any expected recovery values when reporting country exposures as exposure before hedges, except for the risk-reducing effects of master netting agreements and collateral held in the form of either cash or portfolios of diversified marketable securities, which we deduct from the basic positive exposure values. Within banking products and traded products, the risk-reducing effect of any credit protection is taken into account on a notional basis when determining the net of hedges exposures.Risk, treasury and capital management 166 Risk, treasury and capital management Risk management and control Country risk exposure allocation In general, exposures are shown against the country of domicile of the contractual counterparty or the issuer of the security. For some counterparties whose economic substance in terms of assets or source of revenues is primarily located in a different country, the exposure is allocated to the risk domicile of that issuer. This is the case, for example, with legal entities incorporated in financial offshore centers, which have their main assets and revenue streams outside the country of domicile. The same principle applies to exposures for which we hold third-party guarantees or collateral, where we report the exposure against the country of domicile of either the guarantor or the issuer of the underlying security, or against the country where pledged physical assets are located. We apply a specific approach for banking products exposures to branches of banks that are located in a country other than the legal entity’s domicile. In such cases, exposures are recorded in full against the country of domicile of the counterparty and additionally in full against the country in which the branch is located. In the case of derivatives, we show the counterparty risk associated with the positive replacement value (PRV) against the country of domicile of the counterparty (presented within traded products). In addition, the risk associated with the instantaneous fall in value of the underlying reference asset to zero (assuming no recovery) is shown against the country of domicile of the issuer of the reference asset (presented within trading inventory). This approach allows us to capture both the counterparty and, where applicable, issuer elements of risk arising from derivatives and applies comprehensively for all derivatives, including single-name credit default swaps (CDSs) and other credit derivatives. As a basic example: if CDS protection for a notional value of 100 bought from a counterparty domiciled in country X referencing debt of an issuer domiciled in country Y has a PRV of 20, we record (i) the fair value of the CDS (20) against country X (within traded products) and (ii) the hedge benefit (notional minus fair value) of the CDS (100 – 20 = 80) against country Y (within trading inventory). In the example of protection bought, the 80 hedge benefit would offset any exposure arising from securities held and issued by the same entity as the reference asset, floored at zero per issuer. In the case of protection sold, this would be reflected as a risk exposure of 80 in addition to any exposure arising from securities held and issued by the same entity as the reference asset. In the case of derivatives referencing a basket of assets, the issuer risk against each reference entity is calculated as the expected change in fair value of the derivative given an instantaneous fall in value to zero of the corresponding reference asset (or assets) issued by that entity. Exposures are then aggregated by country across issuers, floored at zero per issuer. Exposures to selected eurozone countries Our exposure to peripheral European countries remains limited, but we nevertheless remain watchful regarding the potential broader implications of adverse developments in the eurozone. As noted under “Stress testing” in this section, a eurozone crisis remains a core part of the new binding Severe Eurozone Crisis scenario for combined stress test purposes, making it central to the regular monitoring of risk exposure against the minimum capital, earnings and leverage ratio objectives in our risk appetite framework. The “Exposures to eurozone countries rated lower than AAA / Aaa by at least one major rating agency” table on the next page provides an overview of our exposures to such rated countries as of 31 December 2018. CDSs are primarily bought and sold in relation to our trading businesses, but are also used to hedge parts of our risk exposure, including that related to certain eurozone countries. As of 31 December 2018, and not taking into account the risk- reducing effect of master netting agreements, we had purchased approximately USD 7 billion gross notional of single- name CDS protection on issuers domiciled in Greece, Italy, Ireland, Portugal and Spain (GIIPS) and had sold USD 8 billion gross notional of single-name CDS protection for these same countries. On a net basis, taking into account the risk-reducing effect of master netting agreements, this equates to approximately USD 1 billion notional purchased and USD 2 billion notional sold. All gross protection purchased was from investment grade counterparties (based on our internal ratings) and on a collateralized basis. The vast majority of this was from financial institutions domiciled outside the eurozone. The gross protection purchased from counterparties domiciled in a GIIPS country was USD 50 million, with no protection purchased from counterparties domiciled in the same country as the reference entity. 167 Exposures to eurozone countries rated lower than AAA / Aaa by at least one major rating agency USD million TTotal Banking products (loans, guarantees, loan commitments) Traded products (counterparty risk from derivatives and securities financing) after master netting agreements and net of collateral Trading inventory (securities and potential benefits / remaining exposure from derivatives) 31.12.18 Net of hedges1 Exposure before hedges Net of hedges1 of which: unfunded Exposure before hedges Net of hedges Net long per issuer AAustria 379 298 79 78 27 244 164 56 Sovereign, agencies and central bank 205 126 205 125 0 Local governments 0 0 0 Banks 136 136 55 55 27 27 54 Other2 38 36 24 22 12 12 2 BBelgium 425 420 280 276 3 87 87 58 Sovereign, agencies and central bank 38 38 38 Local governments Banks 284 284 276 276 3 3 5 Other2 103 99 4 0 84 84 15 FFinland 310 310 10 10 2 103 103 197 Sovereign, agencies and central bank Local governments 35 35 35 35 Banks 208 208 10 10 24 24 174 Other2 67 67 0 0 44 44 23 FFrance 3,475 3,381 613 611 377 1,030 938 1,832 Sovereign, agencies and central bank 1,880 1,788 293 201 1,587 Local governments 0 0 0 Banks 573 573 299 299 219 219 55 Other2 1,023 1,020 314 312 518 518 190 GGreece 6 4 3 1 0 0 0 2 Sovereign, agencies and central bank 0 0 0 Local governments Banks 3 2 3 1 0 0 0 Other2 3 2 0 0 2 IIreland3 1,100 1,093 238 230 73 32 32 831 Sovereign, agencies and central bank Local governments Banks 63 63 34 34 9 9 20 Other2 1,038 1,030 203 196 23 23 811 IItaly 1,181 1,041 763 652 518 292 262 127 Sovereign, agencies and central bank 58 31 36 9 21 Local governments 62 60 57 54 6 Banks 394 394 373 373 18 18 2 Other2 667 556 389 279 180 180 98 PPortugal 27 27 21 21 20 4 4 2 Sovereign, agencies and central bank 1 1 1 1 Local governments Banks 24 24 21 21 2 2 0 Other2 3 3 0 0 0 0 2 SSpain 635 633 385 383 342 50 50 199 Sovereign, agencies and central bank 58 58 58 Local governments Banks 96 96 67 67 7 7 22 Other2 480 479 318 316 44 44 119 OOther4 307 290 275 257 6 6 6 27 TTotal 7,845 7,497 2,667 2,519 1,848 1,646 3,331 11 Before deduction of IFRS 9 ECL allowances and provisions. 2 Includes corporates, insurance companies and funds. 3 The majority of the Ireland exposure relates to funds and foreign bank subsidiaries. 4 Represents aggregate exposures to Andorra, Cyprus, Estonia, Latvia, Lithuania, Malta, Monaco, Montenegro, San Marino, Slovakia and Slovenia.Risk, treasury and capital management 168 Risk, treasury and capital management Risk management and control Exposure from single-name credit default swaps referencing Greece, Italy, Ireland, Portugal or Spain (GIIPS) PProtection bought PProtection sold Net position (after application of counterparty master netting agreements) USD million of which: counterparty domiciled in GIIPS country of which: counterparty domicile is the same as the reference entity domicile 31.12.18 Notional RV Notional RV Notional RV Notional RV Buy notional Sell notional PRV NRV Greece 4 0 0 0 0 0 (7) 1 0 (3) 0 0 Italy 6,161 78 0 0 0 0 (6,672) (139) 655 (1,166) 38 (99) Ireland 127 (9) 0 0 0 0 (27) 3 109 (9) 0 (7) Portugal 170 (2) 0 0 0 0 (204) 2 107 (141) 1 (1) Spain 542 (12) 50 0 0 0 (620) 14 190 (267) 8 (6) TTotal 7,004 54 50 0 0 0 (7,529) (120) 1,061 (1,586) 48 (113) Holding CDS for credit default protection does not necessarily protect the buyer of protection against losses, as the contracts will only pay out under certain scenarios. The effectiveness of our CDS protection as a hedge of default risk is influenced by a number of factors, including the contractual terms under which the CDS was written. Generally, only the occurrence of a credit event as defined by the CDS terms (which may include, among other events, failure to pay, restructuring or bankruptcy) results in a payment under the purchased credit protection contracts. For CDS contracts on sovereign obligations, repudiation can also be deemed as a default event. The determination as to whether a credit event has occurred is made by the relevant International Swaps and Derivatives Association (ISDA) determination committees (comprised of various ISDA member firms) based on the terms of the CDS and the facts and circumstances surrounding the event. Exposure to emerging market countries The “Emerging market net exposure by major geographical region and product type” table on the following page shows the five largest emerging market country exposures in each major geographical area by product type as of 31 December 2018 compared with 31 December 2017. Based on the sovereign rating categories, as of 31 December 2018, 84% of our emerging market country exposure was rated investment grade, compared with 79% as of 31 December 2017. Our direct net exposure to China was USD 6.3 billion, up USD 1.2 billion from the prior year, mainly in the trading book. Trading inventory, which is measured at fair value, continues to account for the majority of our exposure to China. Emerging markets net exposure¹ by internal UBS country rating category USD million 31.12.18 31.12.17 Investment grade 15,763 14,384 Sub-investment grade 3,039 3,870 Total 18,803 18,254 1 Net of credit hedges (for banking products and for traded products); net long per issuer (for trading inventory). Before deduction of IFRS 9 ECL allowances and provisions. 169 Emerging market net exposures by major geographical region and product type USD million TTotal Banking products (loans, guarantees, loan commitments) Traded products (counterparty risk from derivatives and securities financing) after master netting agreements and net of collateral Trading inventory (securities and potential benefits / remaining exposure from derivatives) Net of hedges1 Net of hedges1 Net of hedges Net long per issuer 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 EEmerging America 1,505 1,441 820 410 262 274 422 757 Brazil 1,137 834 573 134 183 231 381 469 Mexico 174 364 102 152 56 21 16 193 Panama 45 10 42 3 2 2 1 5 El Salvador 33 30 33 30 0 0 Colombia 30 31 22 18 7 4 1 8 Other 86 172 48 73 14 16 23 82 EEmerging Asia 13,890 12,398 4,307 4,057 1,693 1,749 7,890 6,591 China 6,302 5,150 1,060 724 473 339 4,769 4,087 Hong Kong 2,920 2,600 1,377 1,482 442 413 1,101 703 South Korea 1,282 1,491 523 541 391 623 368 327 Thailand 1,176 809 147 140 25 8 1,005 662 India 909 879 553 479 144 169 212 231 Other 1,301 1,469 647 691 218 197 435 581 EEmerging Europe 1,189 1,667 1,015 1,153 125 95 49 419 Turkey 434 566 413 520 4 22 16 24 Russia 400 624 270 211 111 52 19 360 Azerbaijan 145 224 139 216 1 1 5 5 Bulgaria 76 51 76 51 Ukraine 53 62 50 57 3 4 Other 82 141 67 96 10 21 6 26 MMiddle East and Africa 2,219 2,747 1,245 1,355 659 828 315 565 United Arab Emirates 572 547 418 257 142 286 11 3 Kuwait 379 222 71 19 308 202 0 South Africa 362 909 73 354 60 126 229 429 Saudi Arabia 275 286 166 140 108 147 Qatar 205 155 182 148 22 6 1 0 Other 427 629 336 437 18 61 73 133 TTotal 18,803 18,254 7,387 6,976 2,739 2,946 8,676 8,331 11 Before deduction of IFRS 9 ECL allowances and provisions.Risk, treasury and capital management 170 Risk, treasury and capital management Risk management and control Operational risk Key developments The pervasive consequential risk themes that continue to challenge UBS and the financial industry are operational resilience, conduct and financial crime. Operational resilience remains a key focus for the firm as we continually enhance our ability to respond to disruptions and maintain effective day-to-day business activities. Cybersecurity and data protection are critical elements of operational resilience. Our cybersecurity objectives are set in line with prevailing international standards and our data protection standards are intended to align with applicable data protection regulations and standards. We are investing in preemptive and detection measures to defend UBS against evolving and highly sophisticated cyberattacks, to achieve our objectives and meet applicable standards. Our investment priorities focus on increasing readiness to identify and respond to cyber threats and data loss, employee training and behaviors, and application and infrastructure security (including vulnerability management). UBS has not been affected by any significant business continuity events in 2018; where local events have occurred, our business continuity procedures have allowed us to monitor the safety of staff and to continue our operations with minimal disruption. Achieving fair outcomes for our clients, upholding market integrity and cultivating the highest standards of employee conduct are of critical importance to the firm. Management of conduct risks is an integral part of our operational risk framework. In managing conduct risk, we continue to focus on embedding the conduct risk framework, enhancing management information and maintaining momentum on improving culture. Conduct-related management information is reviewed at the business and regional governance level, providing metrics on employee conduct, clients and markets. Employee conduct is a central consideration in the annual compensation process. Our incentive schemes distinguish clearly between quantitative performance and conduct-related behaviors, so that achievement against financial targets is not the only determinant of our employees’ performance assessment. Furthermore, we continue to pursue behavioral initiatives, such as the “Principles of Good Supervision,” and provide mandatory compliance and risk training. Suitability risk, product selection, cross-divisional service offerings, quality of advice and price transparency also remain areas of heightened focus for UBS and for the industry as a whole, as low interest rates and major legislative change programs, such as the Markets in Financial Instruments Directive II (MiFID II) in the EU, continue. We regularly monitor our suitability, product and conflicts of interest control frameworks to assess whether they are reasonably designed to facilitate our adherence to applicable laws and regulatory expectations. Financial crime (including money laundering, terrorist financing, sanctions violations, fraud, bribery and corruption) continues to present a risk, as technological innovation and geopolitical developments increase the complexity of doing business and heightened regulatory attention persists. An effective financial crime prevention program remains essential for the firm. Money laundering and financial fraud techniques are becoming increasingly sophisticated, while geopolitical volatility makes the sanctions landscape more complex. During 2018, we made significant progress in strengthening our anti- money laundering (AML), terrorist financing, sanctions and fraud control framework capabilities in response to the continued elevated regulatory and financial crime challenges. We continue to invest heavily in our detection capabilities and core systems as part of our financial crime prevention program. We are exploring new technologies to combat financial crime, and implementing rule-based monitoring by applying self- learning systems to identify suspicious transactions. Furthermore, we are actively participating in AML public-private partnerships with public-sector stakeholders, including law enforcement, to improve information sharing and better detect financial crimes. With financial crime and AML as the primary areas of supervisory concern, in May 2018, the Office of the Comptroller of the Currency issued UBS a Cease and Desist Order relating to certain of UBS’s US branches. In response, UBS has developed a comprehensive and sustainable program to drive the consolidated and strategic remediation of US-relevant Bank Secrecy Act / AML issues across all US legal entities, in alignment with our global AML policies. Cross-border risk remains an area of regulatory attention for global financial institutions, with a strong focus on fiscal transparency and increased legislation, such as the automatic exchange of information. We continue to adapt our cross-border control framework to adhere to the regulatory expectations and facilitate compliant client-driven cross-border business. Regulatory reporting remains a challenging area due to both new and increasing reporting requirements and a general trend toward increasing scrutiny from regulators globally. In 2018, we continued to focus on this area, updating our regulatory process management framework and enhancing our regulatory developments tracking. As the overall regulatory environment continues to undergo major change with the introduction of new regulation, increasing international collaboration among regulators, and increased focus on individual liability and industry operating models, it is important that we maintain strong relationships with our industry’s regulatory bodies and demonstrate observable progress in achieving and sustaining corrective actions. →Refer to the “Risk factors” section of this report for more information 171 Operational risk framework Operational risk is an inherent part of our business. Losses can result from inadequate or flawed internal processes, decisions and systems, or from external events. We provide a Group-wide framework that supports identifying, assessing and mitigating material operational risks and their potential concentrations, to achieve a suitable balance between risk and return. The divisional Presidents and the Corporate Center function heads are ultimately accountable for the effectiveness of operational risk management and for implementing the operational risk framework. Responsibility for the front-to-back control environment and risk management is held by the Chief Operating Officers. Management in all functions is responsible for establishing a robust operational risk management environment, including establishing and maintaining internal controls, effective supervision and a strong risk culture. In 2018, we further improved our operational risk framework, streamlined administrative processes, strengthened our abilities to detect and mitigate operational risk and better embedded the framework as a key tool used by the business to manage its risks day-to-day. Compliance & Operational Risk Control (C&ORC) is responsible for providing an independent and objective view of the adequacy of operational risk management across the Group, and ensuring that all our operational risks, including compliance and conduct risk, are understood, owned and managed to suit the firm’s risk appetite. C&ORC sits within the Group Compliance, Regulatory & Governance (GCRG) function, reporting to the Group Chief Compliance and Governance Officer, who is a member of the Group Executive Board. The operational risk framework establishes general requirements for managing and controlling operational risks, including compliance and conduct risk at UBS. It is built on the following pillars: – classifying inherent risks through the operational risk taxonomy – assessing the design and operating effectiveness of controls through the control assessment process – assessing inherent and residual risk through the risk assessment processes with remediation planned to address identified deficiencies that are outside accepted levels of residual risk – defining operational risk appetite through quantitative metrics and thresholds and qualitative measures, and identifying levels of operational risk that exceed appetite and taking appropriate measures to bring residual risk back within the defined appetite The operational risk taxonomy provides a clear and logical classification of our inherent operational, compliance and conduct risks, across all divisions. Throughout the organizational hierarchy, a level of risk appetite must be agreed for each of the taxonomy categories, together with a minimum set of internal controls and associated performance thresholds considered necessary to keep risk exposure within acceptable levels. All functions within our firm are required to assess internal controls periodically, whereby they evaluate and evidence the design and operating effectiveness of their key controls. This also forms the basis for the assessment and testing of internal controls over financial reporting as required by the Sarbanes- Oxley Act, section 404 (SOX 404). The framework facilitates the identification of SOX 404-relevant controls for independent testing, functional assessments, management affirmation and, where control weaknesses are identified, remediation tracking. We employ a consistent global framework to assess the aggregated effect of control deficiencies and the adequacy of remediation efforts. The UBS risk assessment approach covers all business activities and internal as well as external identified or known factors posing a threat to the UBS Group. Aggregated with any identified or known weaknesses in the control environment, the risk assessment articulates the current residual operational risk exposure against the firm’s risk appetite. Key control deficiencies that surface during the internal control and risk assessment processes must be reported in the operational risk inventory, and sustainable remediation has to be defined and executed. These issues are assigned to owners at the senior management level and must be reflected in the respective manager’s annual performance measurement and management objectives. To assist with prioritizing the known operational risk issues and measuring aggregated risk exposure, irrespective of origin, a common rating methodology is adopted by all internal control functions and both internal and external audit. Group Internal Audit conducts an issue assurance process after a risk issue has been closed to maintain rigorous management discipline in the sustainable mitigation and control of operational risk issues.Risk, treasury and capital management 172 Risk, treasury and capital management Risk management and control Advanced measurement approach model The operational risk framework detailed above is aligned with and underpins the calculation of regulatory capital for operational risk, which in turn allows us to quantify operational risk and to define effective management incentives. We measure operational risk exposure and calculate operational risk regulatory capital by using the advanced measurement approach (AMA) in accordance with FINMA requirements. An entity-specific AMA model has been applied for UBS Switzerland AG, but for other regulated entities, the basic indicator or standardized approaches are adopted for regulatory capital in agreement with local regulators. In addition, the underlying methodology of the Group AMA is leveraged for entity-specific Internal Capital Adequacy Assessment Processes and for UBS Bank USA’s Dodd-Frank Act stress test submissions. Currently, the model includes 15 AMA units of measure (UoM), which are aligned with our operational risk taxonomy. For each of the model’s UoM, a frequency and severity distribution is calibrated. The modeled distribution functions for both frequency and severity are then leveraged to generate the annual loss distribution. The resulting 99.9% quantile of the overall annual operational risk loss distribution across all UoM determines the required regulatory capital. Currently, we do not reflect mitigation through insurance or any other risk transfer mechanism in our AMA model. A key assumption when calibrating the data-driven frequency and severity distributions is that historical losses form a reasonable proxy for future events. In line with regulatory expectations, the Group AMA utilizes both historical internal losses and external losses suffered by the broader industry. A statistical mechanism aims to ensure that only those industry losses that are statistically consistent with the internal UBS loss profile are used in modeling. AMA model calibration and review Initial model outputs are reviewed and adjusted to reflect fast- changing external developments such as new regulations, geopolitical change, volatile market and economic conditions, as well as internal factors including changes in business strategy and internal control framework enhancements. The data-driven frequency and severity distributions are reviewed by subject matter experts and where necessary adjusted based on a review of qualitative information on the Business Environment and Internal Control Factors as well as expert judgment with the aim of accurately forecasting loss. To maintain risk sensitivity, our model is reviewed semi- annually and has to be recalibrated at least annually. Any changes to regulatory capital as a result of a recalibration or methodology changes are presented to FINMA for approval prior to their utilization for disclosure purposes. AMA model confirmation The Group AMA model is subject to an annual independent validation performed by Model Risk Management & Control in line with the Group’s model risk management framework. Future operational risk-related regulatory capital developments In December 2017, the Basel Committee on Banking Supervision published the final Basel III framework. Based on the published framework, the regulatory capital requirements for operational risks will be determined by the standardized measurement approach (SMA), which will replace the AMA capital regime. The SMA is mainly based on two components: a business indicator component, which is basically utilized as a size proxy for the banks in the SMA context, and a historical loss experience component. With regard to the loss experience component, the published framework has a number of parameters that are subject to national discretion. UBS maintains a close dialog with FINMA to discuss the implementation objectives in more detail and to provide for a smooth transition of the capital regime for operational risks. →Refer to “Capital management objectives, planning and activities” in the “Capital management” section of this report for more information on the development of risk-weighted assets →Refer to “Risk measurement” in this section for more information on our approach to model confirmation procedures →Refer to the “Regulatory and legal developments” and “Risk factors” sections of this report for more information 173 Treasury management Balance sheet, liquidity and funding management Strategy, objectives and governance Audited | We manage our balance sheet, liquidity and funding positions with the overall objective of optimizing the value of our franchise across a broad range of market conditions while considering current and future regulatory constraints. We employ a number of measures to monitor these positions under normal and stressed conditions. In particular, we use stress scenarios to apply behavioral adjustments to our balance sheet and calibrate the results from these internal stress models with external measures, primarily the liquidity coverage ratio and the net stable funding ratio. Our liquidity and funding strategy is proposed by Group Treasury, approved by the Group Asset and Liability Management Committee (Group ALCO), which is a committee of the Group Executive Board, and is overseen by the Risk Committee of the Board of Directors (BoD). This section provides more detailed information on regulatory requirements, our governance structure, our balance sheet, liquidity and funding management (including our sources of liquidity and funding), and our contingency planning and stress testing. The balances disclosed in this section represent year-end positions, unless indicated otherwise. Intra-period balances fluctuate in the ordinary course of business and may differ from year-end positions. Group Treasury monitors and oversees the implementation and execution of our liquidity and funding strategy and is responsible for adherence to policies, limits and targets. This enables close control of both our cash and collateral, including our high-quality liquid assets, and centralizes the Group’s general access to wholesale cash markets in Corporate Center – Group Asset and Liability Management. In addition, should a crisis require contingency funding measures to be invoked, Group Treasury is responsible for coordinating liquidity generation with representatives of the relevant business areas. Group Treasury reports on the Group’s overall liquidity and funding position, including funding status and concentration risks, at least monthly to the Group ALCO and the Risk Committee of the BoD. Audited | Liquidity and funding limits and targets are set at Group and, where appropriate, at legal entity and business division levels, and are reviewed and reconfirmed at least once a year by the BoD, the Group ALCO, the Group Chief Financial Officer, the Group Treasurer and the business divisions, taking into consideration current and projected business strategy and risk tolerance. The principles underlying our limit and target framework are designed to maximize and sustain the value of our business franchise and maintain an appropriate balance in the asset and liability structure. Structural limits and targets focus on the structure and composition of the balance sheet, while supplementary limits and targets are designed to drive the utilization, diversification and allocation of funding resources. To complement and support this framework, Group Treasury monitors the markets for early warning indicators reflecting the current liquidity situation. The liquidity status indicators are used at Group level to assess both the overall global and regional situations for potential threats. Market & Treasury Risk Control provides independent oversight over liquidity and funding risks. →Refer to the “Corporate governance” section of this report for more information →Refer to the “Risk management and control” section of this report for more information Adoption of IFRS 9 Effective 1 January 2018, we adopted IFRS 9, Financial Instruments. The adoption of IFRS 9 has resulted in changes to the classification and measurement of certain financial instruments, which have been applied prospectively from 1 January 2018. The tables below and on the following pages also present the balances as of 31 December 2017 under IAS 39, and then upon adoption of IFRS 9 on 1 January 2018. The analysis of movements in balance sheet assets and liabilities on the following pages has been performed in comparison with these balances as of 1 January 2018 (i.e., after the adoption of IFRS 9 classification and measurement changes). The most significant effects from the adoption of IFRS 9 are outlined below. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information on the adoption of IFRS 9 Risk, treasury and capital management 174 Risk, treasury and capital management Treasury management Lending USD 3 billion of financial assets previously included within Lending were reclassified to fair value and are now reflected under Other financial assets at amortized cost / fair value. In addition, USD 5 billion of client brokerage receivables were reclassified from Lending to Brokerage receivables. Securities financing transactions at amortized cost USD 5 billion of securities financing transaction assets and USD 5 billion of securities financing transaction liabilities were reclassified to fair value. As a result, these assets and liabilities are now reflected under Other financial assets at amortized cost / fair value and Other financial liabilities at amortized cost / fair value, respectively. Trading portfolio USD 12 billion of financial assets for unit-linked investment contracts were reclassified from Trading portfolio to Non- financial assets and financial assets for unit-linked investment contracts in the table below. Other financial assets at amortized cost / fair value As previously mentioned, USD 3 billion of financial assets and USD 5 billion of securities financing transaction assets formerly included within Lending and Securities financing transactions at amortized cost, respectively, were reclassified to fair value and are now reflected under Other financial assets at amortized cost / fair value. These increases were offset by a decrease related to USD 20 billion of brokerage receivables, which were reclassified from Other financial assets at amortized cost to the new reporting line Brokerage receivables. Non-financial assets and financial assets for unit-linked investment contracts USD 12 billion of financial assets for unit-linked investment contracts were reclassified from Trading portfolio to Non- financial assets and financial assets for unit-linked investment contracts. Customer deposits USD 5 billion of client brokerage payables previously included within Customer deposits were reclassified to fair value and are now reflected under the new reporting line Brokerage payables. Other financial liabilities at amortized cost / fair value USD 5 billion of securities financing transaction liabilities were reclassified to fair value and are now reflected under the reporting line Other financial liabilities at amortized cost / fair value. This increase was more than offset by a decrease of USD 30 billion of brokerage payables, which were reclassified from Other financial liabilities at amortized cost to Brokerage payables. Assets and liquidity management Audited | Our liquidity risk management aims to maintain a sound liquidity position to meet all our liabilities when due and to provide adequate time and financial flexibility to respond to a firm-specific liquidity crisis in a generally stressed market environment, without incurring unacceptable losses or risking sustained damage to our businesses. Our liquid assets are managed using limits and targets to maintain an appropriate level of diversification (issuer, tenor and other risk characteristics) in response to any anticipated or unanticipated volatility in funding availability or requirements caused by adverse market, operational or other firm-specific events. The liquid asset portfolio size is managed to operate within the risk appetite of the Board of Directors and relevant local authorities at Group and legal entity level. Assets As of % change from USD billion 331.12.18 (IFRS 9) 1.1.18 (IFRS 9)1 31.12.17 (IAS 39) 1.1.18 (IFRS 9) Cash and balances at central banks 108.4 90.0 90.0 20 Lending2 337.2 332.6 340.8 1 Securities financing transactions at amortized cost 95.3 86.9 92.0 10 Trading portfolio3,4 104.4 118.3 129.4 (12) Derivatives and cash collateral receivables on derivative instruments 149.8 145.3 145.3 3 Brokerage receivables 16.8 24.4 0.0 (31) Other financial assets at AC / FV5 90.5 95.1 107.2 (5) Non-financial assets and financial assets for unit-linked investment contracts4 56.1 46.3 34.6 21 TTotal assets 958.5 938.8 939.3 2 Total assets excluding derivatives and cash collateral 808.7 793.5 794.0 2 11 Opening balance sheet upon adoption of IFRS 9 on 1 January 2018. Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information. 2 Consists of loans and advances to banks and customers. 3 Consists of financial assets at fair value held for trading. 4 As of 1 January 2018, financial assets for unit-linked investment contracts are reported with non-financial assets. Prior to 1 January 2018, these assets were reported within the trading portfolio. 5 Primarily held in Group ALM. Consists of financial assets at fair value not held for trading, financial assets measured at fair value through other comprehensive income and other financial assets measured at amortized cost, but excludes financial assets for unit-linked investment contracts (from 1 January 2018) and cash collateral receivables on derivative instruments. 175 Balance sheet assets Group (31 December 2018 vs 1 January 2018) As of 31 December 2018, balance sheet assets totaled USD 958 billion, an increase of USD 20 billion from 1 January 2018, driven mainly by increases in cash and balances at central banks, non-financial assets and financial assets for unit-linked investment contracts and receivables for securities financing transactions at amortized cost, which were partly offset by decreases in trading portfolio assets and brokerage receivables. Total assets excluding derivatives and cash collateral receivables on derivative instruments increased by USD 15 billion to USD 809 billion as of 31 December 2018. Excluding currency effects, total assets excluding derivatives and cash collateral receivables on derivative instruments increased by USD 26 billion. Cash and balances at central banks increased by USD 18 billion, mainly in Corporate Center – Group Asset and Liability Management (Group ALM), primarily resulting from changes in client activity, which reduced net funding consumption by the business divisions. Funding available in excess of the business divisions’ requirements is transferred to Group ALM’s balance sheet to be reinvested, or to be reduced over time if business needs remain lower. This increase was partly offset by maturities of short-term borrowings and a shift to receivables from securities financing transactions. Non-financial assets and financial assets for unit-linked investment contracts increased by USD 10 billion, driven by an increase in unit-linked investment contracts in Asset Management, with a related increase in the associated liabilities. Receivables from securities financing transactions at amortized cost increased by USD 8 billion, mainly in Group ALM, reflecting a reinvestment of higher cash balances resulting from the aforementioned changes in business division funding consumption, partly offset by client-driven decreases and fair value movements in the Investment Bank. Lending increased by USD 5 billion, mainly in Global Wealth Management, mainly reflecting an increase in the mortgage portfolio in the Americas and Switzerland and an increase in the Investment Bank relating to segregated deposits, partly offset by currency effects. Derivatives and cash collateral receivables on derivative instruments increased by USD 4 billion, mainly in the Equities and Foreign Exchange, Rates and Credit businesses in the Investment Bank, reflecting increased client activity, partly offset by a decrease in Corporate Center – Non-core and Legacy Portfolio, mainly reflecting maturities and trade terminations. These increases were partly offset by a USD 14 billion decrease in trading portfolio assets, mainly reflecting client- driven reductions and trade unwinds in our Equities and Foreign Exchange, Rates and Credit businesses in the Investment Bank. Brokerage receivables decreased by USD 8 billion, relating to client-driven reductions in the Investment Bank. Other financial assets measured at amortized cost and fair value decreased by USD 5 billion, mainly reflecting fair value changes in our Corporate Client Solutions business in the Investment Bank. →Refer to the “Consolidated financial statements” section of this report for more information Investment Bank (31 December 2018 vs 1 January 2018) Investment Bank total assets decreased by USD 11 billion to USD 259 billion. Trading portfolio assets in the Investment Bank decreased by USD 12 billion, mainly in our Equities business, primarily reflecting client-driven reductions and trade unwinds. Brokerage receivables were USD 7 billion lower, resulting from lower client activity. Receivables from securities financing transactions at amortized cost decreased by USD 4 billion as a result of lower client activity as well as a reduction in the stock borrowings used to hedge certain financing transactions, resulting from fair value movements in the underlying share price. Other financial assets measured at amortized cost and fair value decreased by USD 3 billion, primarily related to fair value changes. Derivatives and cash collateral receivables on derivative instruments increased by USD 14 billion, mainly in the Equities and Foreign Exchange, Rates and Credit businesses, reflecting increased client activity on higher market volatility.Risk, treasury and capital management 176 Risk, treasury and capital management Treasury management Group ALM (31 December 2018 vs 1 January 2018) Group ALM total assets increased by USD 28 billion to USD 280 billion, primarily reflecting an USD 18 billion increase in cash and balances at central banks that mainly resulted from changes in client activity, which reduced net funding consumption by the business divisions, partly offset by maturities of short-term borrowings and a shift to receivables from securities financing transactions. In addition, receivables from securities financing transactions at amortized cost increased by USD 13 billion, reflecting a reinvestment of higher cash balances resulting from the aforementioned changes in business division funding consumption. Non-core and Legacy Portfolio (31 December 2018 vs 1 January 2018) Non-core and Legacy Portfolio total assets decreased by USD 12 billion to USD 35 billion, mainly driven by an USD 11 billion reduction in derivatives and cash collateral receivables on derivative instruments, primarily as a result of maturities and trade terminations. Total assets excluding derivatives and cash collateral receivables on derivative instruments decreased by USD 1 billion to USD 4 billion. Other business divisions (31 December 2018 vs 1 January 2018) Global Wealth Management total assets increased by USD 5 billion, mainly driven by an increase of USD 3 billion in derivatives and cash collateral receivables on derivative instruments reflecting higher client activity. In addition, lending increased by USD 3 billion, driven by higher mortgage loans, partly offset by a decrease in Lombard lending. Asset Management total assets increased by USD 10 billion to USD 24 billion, reflecting an increase in financial assets for unit- linked investment contracts driven by net new money inflows, with an increase in the corresponding liabilities. Personal & Corporate Banking total assets were stable at USD 139 billion. High-quality liquid assets High-quality liquid assets (HQLA) are low-risk unencumbered assets under the control of Group Treasury that are easily and immediately convertible into cash at little or no loss of value, in order to meet liquidity needs. Our HQLA predominantly consist of assets that qualify as Level 1 in the liquidity coverage ratio (LCR) framework, including cash, central bank reserves and government bonds. Group HQLA are held by UBS AG and its subsidiaries, and may include amounts that are available to meet funding and collateral needs in certain jurisdictions, but are not readily available for use by the Group as a whole. These limitations are typically the result of local regulatory requirements, including local LCR and large exposure requirements. Funds that are effectively restricted are excluded from the calculation of Group HQLA to the extent they exceed the outflow assumptions for the subsidiary that holds the relevant HQLA. On this basis, USD 34 billion of assets were excluded from our daily average Group HQLA for the fourth quarter of 2018. Amounts held in excess of local liquidity requirements that are not subject to other restrictions are generally available for transfer within the Group. The total weighted liquidity value of HQLA decreased by USD 12 billion to USD 173 billion. 177 Liquidity coverage ratio The LCR measures the short-term resilience of a bank’s liquidity profile by comparing whether sufficient HQLA are available to survive expected net cash outflows from a significant liquidity stress scenario, as defined by the relevant regulator. The Basel Committee on Banking Supervision standards require an LCR of at least 100% by 2019, with a phase-in period that started in 2015. UBS is required to maintain a minimum total Group LCR of 110% as communicated by the Swiss Financial Market Supervisory Authority (FINMA), as well as a Swiss franc LCR of 100%. In addition, both UBS AG and UBS Switzerland AG are subject to minimum LCR requirements on a standalone basis. In a period of financial stress, FINMA may allow banks to use their HQLA and let their LCR temporarily fall below the minimum threshold. We monitor the LCR in all significant currencies in order to manage any currency mismatches between HQLA and the net expected cash outflows in times of stress. In December 2017, FINMA amended its circular “Liquidity risks – banks” following the Federal Council’s amendment to a number of provisions on bank liquidity in the Liquidity Ordinance. The changes to the circular have been effective since 1 January 2018. Our daily average LCR for the fourth quarter of 2018 was 136%, compared with 143% in the fourth quarter of 2017, remaining above the 110% Group LCR minimum communicated by FINMA. The decrease in the LCR mainly reflected reduced HQLA, primarily driven by an increase in assets subject to transfer restrictions in the US branches of UBS AG. In addition, net cash outflows decreased, mainly driven by lower net cash outflows from unsecured wholesale funding, partly offset by a decrease of inflows from fully performing exposures and a decrease in other cash outflows related to the aforementioned revised regulatory requirements in 2018. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on the liquidity coverage ratio →Refer to the “Significant regulated subsidiary and sub-group information” section of this report for more information on the liquidity coverage ratio of UBS AG and UBS Switzerland AG Liquidity coverage ratio USD billion, except where indicated AAverage 4Q181 Average 4Q171 High-quality liquid assets2 Cash balances3 96 104 Securities (on- and off-balance sheet) 78 81 TTotal high-quality liquid assets4 173 185 Cash outflows5 Retail deposits and deposits from small business customers 26 27 Unsecured wholesale funding 102 106 Secured wholesale funding 76 80 Other cash outflows 42 45 TTotal cash outflows 246 257 Cash inflows5 Secured lending 79 84 Inflows from fully performing exposures 29 33 Other cash inflows 10 10 TTotal cash inflows 119 128 Liquidity coverage ratio High-quality liquid assets 173 185 Net cash outflows 127 130 LLiquidity coverage ratio (%) 136 143 11 Calculated based on an average of 64 data points in the fourth quarter of 2018 and 63 data points in the fourth quarter of 2017. 2 Calculated after the application of haircuts. 3 Includes cash and balances at central banks and other eligible balances as prescribed by FINMA. 4 Calculated in accordance with FINMA requirements. 5 Calculated after the application of inflow and outflow rates.Risk, treasury and capital management 178 Risk, treasury and capital management Treasury management Asset encumbrance The table on the next page provides a breakdown of on- and off-balance sheet assets between encumbered assets, unencumbered assets and assets that cannot be pledged as collateral. Assets are presented as Encumbered if they have been pledged as collateral against an existing liability or if they are otherwise not available for the purpose of securing additional funding. Included within the latter category are assets protected under client asset segregation rules, assets held by the Group’s insurance entities to back related liabilities to policy holders, assets held in certain jurisdictions to comply with explicit minimum local asset maintenance requirements and assets held in consolidated bankruptcy remote entities, such as certain investment funds and other structured entities. →Refer to “Note 26 Restricted and transferred financial assets” in the “Consolidated financial statements” section of this report for more information Assets that cannot be pledged as collateral represent those assets that are not encumbered, but by their nature are not considered available to secure funding or to meet collateral needs. These mainly include collateral trading assets, derivative financial assets, cash collateral receivables on derivative instruments, deferred tax assets, goodwill and intangible assets and other assets. All other assets are presented as Unencumbered. Assets that are considered to be readily available to secure funding on a Group and / or legal entity level are shown separately and consist of cash and securities readily realizable in the normal course of business. These include our HQLA and unencumbered positions in our trading portfolio. Unencumbered assets that are considered to be available to secure funding on a legal entity level may be subject to restrictions that limit the total amount of assets that is available to the Group as a whole. Other unencumbered assets, which are not considered readily available to secure funding on a Group and / or legal entity level, primarily consist of loans and amounts due from banks. 179 Asset encumbrance as of 31 December 2018 Encumbered Unencumbered USD million Assets pledged as collateral Assets otherwise restricted and not available to secure funding Cash and securities available to secure funding on a Group and/or legal entity level Other realizable assets Assets that cannot be pledged as collateral Total Group assets (IFRS) OOn-balance sheet assets Cash and balances at central banks 108,370 108,370 Loans and advances to banks 5,140 11,703 25 16,868 Receivables from securities financing transactions 95,349 95,349 of which: cash collateral on securities borrowed 13,061 13,061 of which: reverse repurchase agreements 82,288 82,288 Cash collateral receivables on derivative instruments 3,205 20,397 23,602 Loans and advances to customers 18,804 935 294,307 6,306 320,352 of which: mortgage loans 18,804 151,301 170,105 Other financial assets measured at amortized cost 197 13,446 1,091 7,828 22,563 TTotal financial assets measured at amortized cost 18,804 9,477 121,816 307,101 129,905 587,104 FFinancial assets at fair value held for trading1 43,2922 3,589 53,924 3,566 104,370 of which: trading assets – treasury bills / bonds 4,776 6,385 11,161 of which: trading assets – mortgage-backed securities 258 258 of which: trading assets – other asset-backed securities 134 134 of which: trading assets – other bonds 1,660 187 4,921 6,768 of which: trading assets – investment fund units 3,541 898 5,277 9,716 of which: trading assets – equity instruments 33,315 2,504 36,949 72,768 of which: loans 3,566 3,566 DDerivative financial instruments 126,210 126,210 BBrokerage receivables 16,840 16,840 of which: customer brokerage 4,384 4,384 of which: prime brokerage 12,457 12,457 FFinancial assets at fair value not held for trading1 23,514 39,186 9,826 10,163 82,690 TTotal financial assets measured at fair value through profit or loss 43,292 27,104 93,110 13,392 153,213 330,110 FFinancial assets measured at fair value through other comprehensive income 171 6,495 6,667 Investments in associates 1,099 1,099 Property, equipment and software 9,348 9,348 Goodwill and intangible assets 6,647 6,647 Deferred tax assets 10,105 10,105 Other non-financial assets 6 4,298 3,106 7,410 TTotal non-financial assets 6 4,298 10,447 19,858 34,608 TTotal on-balance sheet assets 62,096 36,758 225,719 330,940 302,976 958,489 Encumbered Unencumbered USD million Assets pledged as collateral Assets otherwise restricted and not available to secure funding Cash and securities available to secure funding on a Group and/or legal entity level Other realizable assets Assets that cannot be pledged as collateral Total Group assets (IFRS) OOff-balance sheet assets FFair value of assets received that can be sold or repledged 356,745 14,954 109,310 2,678 483,688 of which: money market paper as collateral 10,110 390 3,922 14,421 of which: other debt instruments as collateral 211,156 11,204 87,788 310,148 of which: equity instruments as collateral 130,853 3,356 16,598 150,807 of which: investment fund units as collateral 4,621 4 1,003 5,628 of which: other 5 2,678 2,683 TTotal on- and off-balance sheet assets as of 31 December 2018 418,841 51,712 335,029 333,618 302,976 of which: high-quality liquid assets 184,361 11 Financial assets for unit-linked investment contracts were reclassified from Financial assets at fair value held for trading to Financial assets at fair value not held for trading upon adoption of IFRS 9 as of 1 January 2018. Refer to “Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9, Financial Instruments” in the “Consolidated financial statements” section of this report for more information on IFRS 9. 2 Includes USD 32,121 million of assets pledged as collateral that may be sold or repledged by counterparties. Risk, treasury and capital management 180 Risk, treasury and capital management Treasury management Asset encumbrance as of 31 December 2017 Encumbered Unencumbered USD million Assets pledged as collateral Assets otherwise restricted and not available to secure funding Cash and securities available to secure funding on a Group and/or legal entity level Other realizable assets Assets that cannot be pledged as collateral Total Group assets (IFRS) OOn-balance sheet assets Cash and balances at central banks 90,045 90,045 Loans and advances to banks 3,364 10,702 28 14,094 Receivables from securities financing transactions 91,951 91,951 of which: cash collateral on securities borrowed 12,713 12,713 of which: reverse repurchase agreements 79,238 79,238 Cash collateral receivables on derivative instruments 3,921 20,120 24,040 Loans and advances to customers 18,087 1,289 295,355 12,015 326,746 of which: mortgage loans 18,087 149,256 167,343 Other financial assets measured at amortized cost 60 9,403 1,086 27,266 37,815 TTotal financial assets measured at amortized cost 18,087 8,633 99,448 307,143 151,379 584,691 FFinancial assets at fair value held for trading 47,4143 12,591 65,456 3,946 129,407 of which: trading assets – treasury bills / bonds 4,510 8,676 13,186 of which: trading assets – mortgage-backed securities 8 153 161 of which: trading assets – other asset-backed securities 216 216 of which: trading assets – other bonds 2,367 979 6,204 9,550 of which: trading assets – investment fund units 2,559 768 6,554 9,881 of which: trading assets – equity instruments 37,970 10,843 43,653 92,466 of which: loans 3,946 3,946 DDerivative financial instruments 121,285 121,285 BBrokerage receivables of which: customer brokerage of which: prime brokerage FFinancial assets at fair value not held for trading 174 2,669 46,284 10,709 621 60,457 TTotal financial assets measured at fair value through profit or loss 47,588 15,260 111,739 14,655 121,906 311,148 FFinancial assets measured at fair value through other comprehensive income 253 8,637 8,889 Investments in associates 1,045 1,045 Property, equipment and software 9,057 9,057 Goodwill and intangible assets 6,563 6,563 Deferred tax assets 10,056 10,056 Other non-financial assets 37 4,681 3,112 7,830 TTotal non-financial assets 37 4,681 10,102 19,731 34,551 TTotal on-balance sheet assets 65,676 24,183 224,505 331,899 293,016 939,279 Encumbered Unencumbered USD million Assets pledged as collateral Assets otherwise restricted and not available to secure funding Cash and securities available to secure funding on a Group and/or legal entity level Other realizable assets Assets that cannot be pledged as collateral Total Group assets (IFRS) OOff-balance sheet assets FFair value of assets received that can be sold or repledged 346,243 13,341 117,097 4,584 481,265 of which: money market paper as collateral 9,799 784 1,707 12,290 of which: other debt instruments as collateral 188,792 9,373 75,856 274,022 of which: equity instruments as collateral 144,099 3,184 37,429 184,711 of which: investment fund units as collateral 3,535 2,017 5,552 of which: other 18 88 4,584 4,690 TTotal on- and off-balance sheet assets as of 31 December 2017 411,919 37,524 341,602 336,484 293,016 of which: high-quality liquid assets 176,849 33 Includes USD 36,277 million of assets pledged as collateral that may be sold or repledged by counterparties. 181 Unencumbered assets available to secure funding on a Group and / or legal entity level by currency USD million 331.12.18 31.12.17 Swiss franc 79,595 64,827 US dollar 131,838 143,312 Euro 36,874 43,860 Other 86,720 89,603 TTotal 335,029 341,602 Stress testing Audited | We perform stress testing to determine the optimal asset and liability structure that allows us to maintain an appropriately balanced liquidity and funding position under various scenarios. Liquidity crisis scenario analysis and contingency funding planning support the liquidity management process and ensure that immediate corrective measures to absorb potential sudden liquidity shortfalls can be put into effect. We model our liquidity exposures under two main potential scenarios that encompass stressed and acute market conditions, including considering the possible effect on our access to markets from stress events affecting all parts of our business. These models and their assumptions are reviewed regularly to incorporate the latest business and market developments. We continuously refine the assumptions used to maintain a robust, actionable and tested contingency plan. →Refer to “Risk measurement” in the “Risk management and control” section of this report for more information on stress testing Stressed scenario As a liquidity crisis could have myriad causes, the stressed scenario encompasses potential stress effects across all markets, currencies and products, but it is typically not firm-specific. In addition to the loss of the ability to replace maturing wholesale funding, it assumes a gradual decline of otherwise stable client deposits and liquidity outflows corresponding to a two-notch downgrade in our long-term credit rating and a corresponding downgrade in our short-term rating. We use a cash capital model that incorporates the stress scenario and measures the amount of long-term funding available to fund illiquid assets. The illiquid portion of an asset is the difference between the carrying value of the asset and its effective cash value when used as collateral in a secured funding transaction. Long-term funding used as cash capital to support illiquid assets is comprised of unsecured funding with a remaining time to maturity of at least one year, shareholders’ equity and core deposits, which are the portion of our customer deposits that are deemed to have a behavioral maturity of at least one year. Acute scenario The acute scenario represents an extreme stress event that combines a firm-specific crisis with market disruption. This scenario assumes: (i) substantial outflows on otherwise stable client deposits, mainly due on demand, (ii) inability to renew or replace maturing unsecured wholesale funding, (iii) unusually large drawdowns on loan commitments, (iv) reduced capacity to generate liquidity from trading assets, (v) liquidity outflows corresponding to a three-notch downgrade in our long-term credit rating and a corresponding downgrade in our short-term rating, (vi) triggering contractual obligations to unwind derivative positions or to deliver additional collateral, and (vii) additional collateral requirements due to adverse movements in the market values of derivatives. It is run daily to project potential cash outflows under an acute scenario and is assessed as part of ongoing risk management activities. Contingency Funding Plan Audited | Our Group Contingency Funding Plan is an integral part of our global crisis management framework, which covers various types of crisis events. This Contingency Funding Plan contains an assessment of contingent funding sources in a stressed environment, liquidity status indicators and metrics, and contingency procedures. Our funding diversification and global scope help protect our liquidity position in the event of a crisis. We regularly assess and test all material known and expected cash flows, as well as the level and availability of high-grade collateral that could be used to raise additional funding if required. Our contingent funding sources include our HQLA portfolio, available and unutilized liquidity facilities at several major central banks, and contingent reductions of liquid trading portfolio assets.Risk, treasury and capital management 182 Risk, treasury and capital management Treasury management Liabilities and funding management Audited | Group Treasury regularly monitors our funding status, including concentration risks, to ensure we maintain a well- balanced and diversified liability structure. Our funding risk management aims for the optimal asset and liability structure to finance our businesses reliably and cost-efficiently, and our funding activities are planned by analyzing the overall liquidity and funding profile of our balance sheet, taking into account the amount of stable funding that would be needed to support ongoing business activities through periods of difficult market conditions. The funding strategy of UBS Group AG is set annually in the Funding Plan and is reviewed on a quarterly basis under its Funding Management Policy governance framework. The Funding Plan is developed by Group Treasury and approved by the Group ALCO considering factors such as currency, market and tenor diversification. The operational execution of funding transactions defined in the Funding Plan for specific product types is delegated to the business divisions (e.g., structured notes to the Investment Bank). Nevertheless, Group Treasury retains overall responsibility and oversight over all product types. Group Treasury proposes, sets and oversees limits and targets for funding generation including concentration limits, weighted average maturity floors and volume. To ensure effective diversification and address potential funding concentration, actual results (monthly and year-to-date activity) are monitored on a monthly basis and are aggregated in the Group Treasury Report. Funding diversification is monitored continuously, with a focus on product type, single-counterparty exposure (as a percentage of the total), maturity profile, as well as overall contribution of a particular funding source to the liability mix. Our business activities generate asset and liability portfolios that are highly diversified with respect to market, product, tenor and currency. This reduces our exposure to individual funding sources, provides a broad range of investment opportunities and reduces liquidity risk. Global Wealth Management and Personal & Corporate Banking provide significant, cost-efficient and reliable sources of funding. These include core deposits and Swiss covered bonds, which use (as a pledge) a portion of our portfolio of Swiss residential mortgages as collateral to generate long-term funding. In addition, we have several short-, medium- and long- term funding programs under which we issue senior unsecured debt and structured notes, as well as short-term debt. These programs allow institutional and private investors in Europe, the US and Asia Pacific to customize their investments in UBS’s debt. Collectively, these broad product offerings and funding sources, together with the global scope of our business activities, support our funding stability. Balance sheet liabilities (31 December 2018 vs 1 January 2018) Total liabilities increased by USD 19 billion to USD 905 billion as of 31 December 2018. Non-financial liabilities and amounts due under unit-linked investment contracts increased by USD 10 billion, driven by an increase in liabilities for unit-linked investment contracts, with a corresponding increase in associated assets. Long-term debt issued, which represented 22% of our funding sources as of 31 December 2018, increased by USD 9 billion. This reflected a USD 6 billion increase in debt issued designated at fair value, driven by higher issuances of structured debt. In addition, long-term debt held at amortized cost increased by USD 2 billion, primarily as a result of the issuance of USD 3.4 billion equivalent of euro- and Japanese yen-denominated senior unsecured debt that contributes to our total loss-absorbing capacity (TLAC), the issuance of USD 9.7 billion equivalent of senior unsecured debt, and the issuance of USD 2.5 billion equivalent of US dollar- and Singapore dollar- denominated high-trigger loss-absorbing additional tier 1 capital instruments. These issuances were partly offset by the maturity or early redemption of USD 10.0 billion equivalent of senior unsecured debt and USD 1.5 billion equivalent of a tier 2 capital instrument. Customer deposits increased by USD 6 billion, mainly driven by higher deposits in Personal & Corporate Banking and in Global Wealth Management, partly offset by currency effects. As of 31 December 2018, customer deposits represented 60% of our funding sources and our ratio of customer deposits to outstanding loan balances was 131% (31 December 2017: 128%). Derivatives and cash collateral payables increased by USD 4 billion, in line with the aforementioned increase in derivative assets and cash collateral receivables. Short-term borrowings decreased by USD 10 billion, mainly reflecting net redemptions of commercial paper and certificates of deposit, related to a reduction in business division net funding consumption. Short-term borrowings represented 7% of our funding sources. →Refer to the document “UBS Group AG consolidated capital instruments and TLAC-eligible senior unsecured debt” under “Bondholder information” at www.ubs.com/investors for more information →Refer to the “Consolidated financial statements” section of this report for more information 183 Liabilities and equity As of % change from USD billion 331.12.18 (IFRS 9) 1.1.18 (IFRS 9)1 31.12.17 (IAS 39) 1.1.18 (IFRS 9) Short-term borrowings2 50.0 60.0 60.0 (17) Securities financing transactions at amortized cost 10.3 12.3 17.5 (16) Customer deposits 419.8 414.1 419.6 1 Long-term debt issued3 150.3 141.7 141.7 6 Trading portfolio4 28.9 31.3 31.3 (7) Derivatives and cash collateral payables on derivative instruments 154.6 150.2 150.2 3 Brokerage payables 38.4 35.8 0.0 7 Other financial liabilities at AC / FV5 18.8 16.9 42.1 11 Non-financial liabilities and amounts due under unit-linked investment contracts 34.2 24.6 24.5 39 TTotal liabilities 905.4 886.9 886.7 2 Total liabilities excluding derivatives and cash collateral 750.8 736.6 736.6 2 Share capital 0.3 0.3 0.3 0 Share premium 20.8 23.6 23.6 (12) Treasury shares (2.6) (2.2) (2.2) 19 Retained earnings 30.4 25.4 25.9 20 Other comprehensive income6 3.9 4.8 4.8 (17) TTotal equity attributable to shareholders 52.9 51.9 52.5 2 Equity attributable to non-controlling interests 0.2 0.1 0.1 200 TTotal equity 53.1 52.0 52.6 2 TTotal liabilities and equity 958.5 938.8 939.3 2 11 Opening balance sheet upon adoption of IFRS 9 on 1 January 2018. Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section of this report for more information. 2 Consists of short-term debt issued measured at amortized cost and amounts due to banks. 3 Consists of long-term debt issued measured at amortized cost and debt issued designated at fair value. The classification of debt issued into short-term and long-term does not consider any early redemption features. 4 Consists of financial liabilities at fair value held for trading. 5 Consists of other financial liabilities measured at amortized cost and other financial liabilities designated at fair value, but excludes cash collateral payables on derivative instruments and amounts due under unit-linked investment contracts. 6 Excludes defined benefit plans and own credit that are recorded directly in Retained earnings. s s s CHVGT 5GPKQTFGDV 5WDQTFKPCVGFFGDV %QPVTCEVWCNOCVWTKV[RTQƂNGQHQWVUVCPFKPINQPIVGTOFGDVJGNFCVCOQTVK\GFEQUV 75&DKNNKQPGZEGRVYJGTGKPFKECVGF ;GCTQHOCVWTKV[ #UQHRisk, treasury and capital management 184 Risk, treasury and capital management Treasury management Funding by product and currency UUSD billion AAs a percentage of total funding sources (%) AAll currencies AAll currencies UUSD CCHF EEUR OOther 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.17 Short-term borrowings 50.0 60.0 7.2 8.6 4.0 3.7 0.5 0.5 1.7 3.1 1.0 1.3 of which: due to banks 11.0 7.7 1.6 1.1 0.5 0.3 0.4 0.4 0.2 0.1 0.4 0.2 of which: short-term debt issued 1 39.0 52.3 5.6 7.5 3.5 3.4 0.0 0.1 1.4 2.9 0.7 1.1 Securities financing transactions 10.3 17.5 1.5 2.5 1.2 2.0 0.0 0.0 0.0 0.3 0.3 0.2 Cash collateral payables on derivative instruments 28.9 31.0 4.1 4.4 1.9 2.1 0.1 0.1 1.3 1.4 0.8 0.8 Customer deposits 419.8 419.6 60.2 59.9 20.5 22.4 26.0 24.9 8.0 7.2 5.7 5.5 of which: demand deposits 181.9 193.5 26.1 27.6 5.8 8.1 9.9 9.1 6.7 6.4 3.6 4.0 of which: retail savings / deposits 165.8 166.0 23.8 23.7 7.8 8.3 15.2 14.6 0.8 0.8 0.0 0.0 of which: time deposits 53.6 48.6 7.7 6.9 4.9 4.6 0.8 1.0 0.1 0.1 1.9 1.3 of which: fiduciary deposits 18.6 11.5 2.7 1.6 2.0 1.4 0.1 0.1 0.4 0.0 0.2 0.1 Long-term debt issued2 150.3 141.7 21.5 20.2 6.8 12.1 1.4 1.8 4.3 4.8 9.1 1.5 Brokerage payables 38.4 30.4 5.5 4.3 3.8 2.5 0.1 0.1 0.4 0.5 1.2 1.3 TTotal 697.7 700.2 100.0 100.0 38.2 44.8 28.0 27.4 15.7 17.3 18.1 10.5 11 Short-term debt issued is comprised of certificates of deposit, commercial paper, acceptances and promissory notes, and other money market paper. 2 Long-term debt issued also includes debt with a remaining time to maturity of less than one year. &GDVKUUWGFFGUKIPCVGFCVHCKTXCNWG &GDVKUUWGFOGCUWTGFCVCOQTVK\GFEQUV 5GEWTKVKGUƂ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ƂPCPEKPIVTCPUCEVKQPU 6KOGFGRQUKVU 185 Equity Effective from 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland changed from Swiss francs to US dollars and that of UBS AG’s London Branch from British pounds to US dollars. The presentation currency of UBS Group AG’s consolidated financial statements has also changed from Swiss francs to US dollars to align with the functional currency changes of significant Group entities. Prior periods have been restated for this presentation currency change. This has resulted in a change in our foreign currency translation other comprehensive income (OCI) life-to-date balance, with offsetting effects on other components of equity. →Refer to “Note 1b Changes in accounting policies, comparability and other adjustments, excluding the effects of adoption of IFRS 9, Financial Instruments” in the “Consolidated financial statements” section of this report for more information Equity attributable to shareholders increased by USD 432 million to USD 52,928 million as of 31 December 2018. This increase included the effects from the adoption of new accounting standards, which decreased equity attributable to shareholders by USD 617 million. Total comprehensive income attributable to shareholders was positive USD 4,225 million, reflecting net profit of USD 4,516 million and negative OCI of USD 290 million. Negative OCI included foreign currency translation losses of USD 541 million, net losses on cash flow hedges of USD 269 million and negative OCI related to financial assets measured at fair value through OCI of USD 45 million, partly offset by own credit gains of USD 509 million and net gains on defined benefit plans of USD 56 million. Share premium decreased by USD 2,755 million, primarily as a result of the distribution of USD 2,440 million out of the capital contribution reserve and a reduction of USD 1,009 million from the delivery of treasury shares under share-based compensation plans, which were partly offset by an increase of USD 676 million due to the amortization of deferred equity compensation awards in the income statement. Net treasury share activity decreased equity attributable to shareholders by USD 421 million, mainly as a result of share repurchases of USD 762 million in 2018 under our share buyback program, which were partly offset by the net disposal of treasury shares related to employee share-based compensation awards. Equity attributable to non-controlling interests increased by USD 117 million to USD 176 million, primarily related to the increase of our stake in UBS Securities China from 24.99% to 51% in 2018, resulting in consolidation of this entity and recognition of non-controlling interest. →Refer to “Note 1c Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9, Financial Instruments” in the “Consolidated financial statements” section of this report for more information →Refer to the “Group performance” and “Consolidated financial statements” sections of this report for more information Net stable funding ratio The net stable funding ratio (NSFR) framework is intended to limit overreliance on short-term wholesale funding, to encourage a better assessment of funding risk across all on- and off-balance sheet items and to promote funding stability. The NSFR has two components: available stable funding (ASF) and required stable funding (RSF). ASF is the portion of capital and liabilities expected to be available over the period of one year. RSF is a measure of the stable funding requirement of an asset based on its maturity, encumbrance and other characteristics, as well as the potential for contingent calls on funding liquidity from off-balance sheet exposures. The Basel Committee on Banking Supervision (BCBS) NSFR regulatory framework requires a ratio of at least 100% from 2018. We report our estimated pro forma NSFR based on current guidance from FINMA and will adjust our NSFR reporting according to the final implementation of the BCBS NSFR disclosure standards in Switzerland. The calculation of our pro forma NSFR includes interpretation and estimates of the effect of the NSFR rules, and will be refined as regulatory interpretations evolve and as new models and associated systems are enhanced. In November 2018, the Swiss Federal Council informed that the introduction of the NSFR, which was originally planned for 1 January 2018, will be reconsidered at the end of 2019. As of 31 December 2018, our estimated pro forma NSFR was 110%, an increase of 5 percentage points from 31 December 2017. This primarily reflected a USD 10 billion decrease in required stable funding, mainly related to a reduction in trading assets and prime brokerage receivables as well as an increase in available stable funding, mainly driven by new issuances and deposit increases. Pro forma net stable funding ratio USD billion, except where indicated 331.12.18 31.12.17 Available stable funding 469 458 Required stable funding 426 436 PPro forma net stable funding ratio (%) 110 105 Risk, treasury and capital management 186 Risk, treasury and capital management Treasury management Internal funding and funds transfer pricing We employ an integrated liquidity and funding framework to govern the liquidity management of all our branches and subsidiaries, and our major sources of liquidity are channeled through entities that are fully consolidated. Group ALM meets internal demands for funding by channeling funds from entities generating surplus cash to those in need of financing, except in those circumstances where transfer restrictions exist. Funding costs and benefits are allocated to our business divisions and Non-core and Legacy Portfolio according to our liquidity and funding risk management framework. Our internal funds transfer pricing system, which is governed by Group Treasury, is designed to provide the proper liability structure to support the assets and planned activities of each business division. The funds transfer pricing mechanism aims to allocate funding and liquidity costs to the activities generating the liquidity and funding risks, and deals with the movement of funds from those businesses in surplus to those that have a shortfall. Funding is internally transferred or allocated among businesses at rates and tenors that reflect each business’s asset composition, liquidity and reliable external funding, and, for major subsidiaries, is entity-specific. We regularly review our internal funds transfer pricing mechanisms and make enhancements where appropriate to help better accomplish our liquidity and funding management objectives. Credit ratings Credit ratings can affect the cost and availability of funding, especially funding from wholesale unsecured sources. Our credit ratings can also influence the performance of some of our businesses and the levels of client and counterparty confidence. Rating agencies take into account a range of factors when assessing creditworthiness and setting credit ratings. These include the company’s strategy, its business position and franchise value, stability and quality of earnings, capital adequacy, risk profile and management, liquidity management, diversification of funding sources, asset quality and corporate governance. Credit ratings reflect the opinions of the rating agencies and can change at any time. In evaluating our liquidity and funding requirements, we consider the potential effect of a reduction in UBS’s long-term credit ratings and a corresponding reduction in short-term ratings. If our credit ratings were to be downgraded, rating trigger clauses could result in an immediate cash settlement or the need to deliver additional collateral to counterparties from contractual obligations related to over-the-counter derivative positions and other obligations. Based on our credit ratings as of 31 December 2018, USD 0.0 billion, USD 0.4 billion and USD 1.2 billion would have been required for such contractual obligations in the event of a one-notch, two-notch and three-notch reduction in long- term credit ratings, respectively. Of these, the portion related to additional collateral is USD 0.0 billion, USD 0.3 billion and USD 1.0 billion, respectively. There were three main rating actions on UBS Group AG’s and UBS AG’s solicited credit ratings in 2018. On 29 January 2018, Standard & Poor’s Global Ratings downgraded UBS Group AG’s high-trigger additional tier 1 capital instruments rating to BB (stable outlook) from BB+. On 18 June 2018, Moody’s Investors Service (Moody’s) upgraded UBS AG’s long-term senior unsecured debt ratings to Aa3 (stable outlook) from A1, following the ratings being placed on review for upgrade on 5 April 2018. Moody’s rates the TLAC- eligible senior unsecured debt guaranteed by UBS Group AG on an unsolicited basis (issuance out of UBS Group Funding (Switzerland) AG). Moody’s also upgraded its long-term rating for this debt to A3 (stable outlook) from Baa1 on 18 June 2018. On 22 November 2018, Rating and Investment Information (R&I) affirmed UBS Group AG’s issuer rating of A while revising its outlook from stable to positive. →Refer to “Liquidity and funding management are critical to our ongoing performance” in the “Risk factors” section of this report for more information Maturity analysis of assets and liabilities The tables on the following pages provide an analysis of on- and off-balance sheet assets and liabilities by residual contractual maturity as of the balance sheet date. The contractual maturity of liabilities is based on carrying amounts and the earliest date on which we could be required to pay. The contractual maturity of assets is based on carrying amounts and includes the effect of callable features. The presentation of liabilities at carrying value in this table differs from “Note 27 Maturity analysis of financial liabilities” in the “Consolidated financial statements” section of this report, where these liabilities are presented on an undiscounted basis, as required by International Financial Reporting Standards. Derivative financial instruments and Financial assets and liabilities at fair value held for trading are assigned to the column Due within 1 month, noting that the respective contractual maturities may extend over significantly longer periods. Assets held to hedge unit-linked investment contracts (presented within Financial assets at fair value not held for trading) are assigned to the column Due within 1 month, consistent with the maturity assigned to the related amounts due under unit-linked investment contracts (presented within Other financial liabilities designated at fair value). Other financial assets and liabilities with no contractual maturity, such as equity securities, are included in the Perpetual / Not applicable time bucket. Undated or perpetual instruments are classified based on the contractual notice period that the counterparty of the instrument is entitled to give. Where there is no contractual notice period, undated or perpetual contracts are included in the Perpetual / Not applicable time bucket. Non-financial assets and liabilities with no contractual maturity are generally included in the Perpetual / Not applicable time bucket. Loan commitments are classified on the basis of the earliest date they can be drawn down. 187 Maturity analysis of assets and liabilities USD billion Due within 1 month Due between 1 and 3 months Due between 3 and 6 months Due between 6 and 9 months Due between 9 and 12 months Due between 1 and 2 years Due between 2 and 5 years Due over 5 years Perpetual / Not applicable Total Assets Cash and balances at central banks 108.3 0.1 108.4 Loans and advances to banks 15.4 0.8 0.4 0.1 0.1 0.0 0.0 0.0 16.9 Receivables from securities financing transactions 67.6 17.5 4.8 2.6 1.7 1.3 95.3 Cash collateral receivables on derivative instruments 23.6 23.6 Loans and advances to customers 118.5 35.1 13.0 7.7 10.2 25.5 63.2 47.2 320.4 Other financial assets measured at amortized cost 5.2 0.7 0.4 0.7 0.7 2.0 4.5 8.3 22.6 TTotal financial assets measured at amortized cost 338.6 54.1 18.4 11.2 12.7 28.8 67.7 55.6 587.1 Financial assets at fair value held for trading 104.4 104.4 of which: assets pledged as collateral that may be sold or repledged by counterparties 32.1 32.1 Derivative financial instruments 126.2 126.2 Brokerage receivables 16.8 16.8 Financial assets at fair value not held for trading 34.3 8.8 5.4 5.5 6.1 7.8 11.0 2.4 1.4 82.7 TTotal financial assets measured at fair value through profit or loss 281.7 8.8 5.4 5.5 6.1 7.8 11.0 2.4 1.4 330.1 FFinancial assets measured at fair value through other comprehensive income 0.1 0.2 0.4 0.3 0.1 0.8 0.6 4.2 6.7 Investments in associates 1.1 1.1 Property, equipment and software 9.3 9.3 Goodwill and intangible assets 6.6 6.6 Deferred tax assets 10.1 10.1 Other non-financial assets 6.1 1.3 0.0 7.4 TTotal assets as of 31 December 2018 626.5 63.0 24.2 17.0 18.9 37.4 80.6 62.2 28.6 958.5 TTotal assets as of 31 December 2017 589.1 72.5 26.5 18.0 23.5 36.0 86.6 59.0 28.1 939.3 Risk, treasury and capital management 188 Risk, treasury and capital management Treasury management Maturity analysis of assets and liabilities (continued) USD billion Due within 1 month Due between 1 and 3 months Due between 3 and 6 months Due between 6 and 9 months Due between 9 and 12 months Due between 1 and 2 years Due between 2 and 5 years Due over 5 years Perpetual / Not applicable Total Liabilities Amounts due to banks 7.9 1.0 0.6 0.7 0.2 0.0 0.5 0.0 11.0 Payables from securities financing transactions 9.5 0.5 0.3 0.0 10.3 Cash collateral payables on derivative instruments 28.9 28.9 Customer deposits 395.8 13.0 4.5 1.2 1.2 2.3 1.8 0.0 419.8 Debt issued measured at amortized cost 4.5 5.4 17.4 13.3 7.5 18.4 30.7 24.8 10.2 132.3 Other financial liabilities measured at amortized cost 6.9 6.9 TTotal financial liabilities measured at amortized cost 453.5 19.9 22.8 15.3 9.0 20.7 33.0 24.9 10.2 609.2 Financial liabilities at fair value held for trading 28.9 28.9 Derivative financial instruments 125.7 125.7 Brokerage payables designated at fair value 38.4 38.4 Debt issued designated at fair value 15.9 18.0 4.8 2.2 2.8 1.8 4.6 7.1 57.0 Other financial liabilities designated at fair value 30.1 0.4 1.0 0.1 0.0 1.2 0.1 0.8 33.6 TTotal financial liabilities measured at fair value through profit or loss 239.1 18.4 5.8 2.3 2.7 2.9 4.7 7.8 283.7 Provisions 3.5 3.5 Other non-financial liabilities 3.6 3.2 2.3 9.0 TTotal liabilities as of 31 December 2018 699.7 41.4 28.6 17.6 11.7 23.6 37.7 32.7 12.5 905.4 TTotal liabilities as of 31 December 2017 684.8 41.8 31.6 16.2 15.0 14.3 38.9 35.3 8.8 886.7 GGuarantees, commitments and forward starting transactions Loan commitments 34.1 0.3 0.2 0.1 0.1 34.7 Guarantees 19.8 19.8 Reverse repurchase agreements 9.0 0.0 9.0 Securities borrowing agreements 0.0 0.0 TTotal as of 31 December 2018 63.0 0.3 0.2 0.1 0.2 0.0 0.0 0.0 63.6 TTotal as of 31 December 2017 71.9 0.2 0.1 0.1 0.0 0.1 0.0 0.0 72.5 189 Off-balance sheet Off-balance sheet arrangements In the normal course of business, we enter into transactions that may not be recognized in whole or in part on our balance sheet in accordance with International Financial Reporting Standards. These transactions include derivative instruments, guarantees and similar arrangements, as well as some purchased and retained interests in non-consolidated structured entities, which are transacted for a number of reasons, including hedging and market-making activities, to meet specific needs of our clients or to offer investment opportunities to clients through entities that are not controlled by us. When we incur an obligation or become entitled to an asset through these arrangements, we recognize them on the balance sheet. It should be noted that in certain instances the amount recognized on the balance sheet does not represent the full gain or loss potential inherent in such arrangements. →Refer to “Note 1a Significant accounting policies,” items 1, 3a and 3d, and “Note 31 Interests in subsidiaries and other entities” in the “Consolidated financial statements” section of this report for more information Off-balance sheet development in 2018 Forward starting reverse repurchase agreements decreased by USD 4 billion and forward starting repurchase agreements were stable at USD 8 billion. Guarantees increased by USD 1 billion, primarily in Global Wealth Management. Loan commitments decreased by USD 5 billion, primarily reflecting a decrease in our Corporate Client Solutions business in the Investment Bank resulting from commitments that were funded, canceled or syndicated during the year. Off-balance sheet1 As of % change from USD billion 331.12.18 31.12.17 31.12.17 Total guarantees2 17.0 16.4 4 Loan commitments2 34.1 39.0 (13) Forward starting reverse repurchase agreements 9.0 13.0 (31) Forward starting repurchase agreements 8.3 8.4 (1) 11 The information provided in this table is aligned with the scope disclosed in “Note 34 Guarantees, commitments and forward starting transactions” in the “Consolidated financial statements” section of this report. 2 Total guarantees and Loan commitments are shown net of sub-participations. The paragraphs on the next page provide more information on several distinct off-balance sheet arrangements. Additional off- balance sheet information is primarily provided in Notes 10, 11, 21, 23, 24i, 26, 31 and 33 in the “Consolidated financial statements” section of this report, as well as in the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors.Risk, treasury and capital management 190 Risk, treasury and capital management Treasury management Risk disclosures, including our involvement with off-balance sheet vehicles Refer to the “Risk management and control” section of this report for comprehensive credit, market and liquidity risk information related to our exposures, which includes exposures to off-balance sheet vehicles. Support provided to non-consolidated investment funds In 2018, the Group did not provide material support, financial or otherwise, to unconsolidated investment funds when the Group was not contractually obligated to do so, nor does the Group have an intention to do so. Guarantees and similar arrangements In the normal course of business, we issue various forms of guarantees, commitments to extend credit, standby and other letters of credit to support our clients, commitments to enter into forward starting transactions, note issuance facilities and revolving underwriting facilities. With the exception of related premiums, generally these guarantees and similar obligations are kept as off-balance sheet items unless a provision to cover probable losses or expected credit losses is required. As of 31 December 2018, the net exposure (gross values less sub-participations) from guarantees and similar instruments was USD 17.0 billion compared with USD 16.4 billion as of 31 December 2017. Fee income from issuing guarantees was not significant to total revenues in 2018 and 2017. Guarantees represent irrevocable assurances that, subject to the satisfaction of certain conditions, we will make payments in the event that our clients fail to fulfill their obligations to third parties. We also enter into commitments to extend credit in the form of credit lines that are available to secure the liquidity needs of our clients. The majority of these unutilized credit lines range in maturity from one month to five years. If customers fail to meet their obligations, our maximum exposure to credit risk is the contractual amount of these instruments. The risk is similar to the risk involved in extending loan facilities and is subject to the same risk management and control framework. In 2018, we recognized net credit loss expenses of USD 12 million related to loan commitments, guarantees and other credit facilities in scope of expected credit loss measurement compared with a net credit loss recovery of USD 22 million in 2017. Provisions recognized for guarantees and loan commitments were USD 116 million as of 31 December 2018 and USD 34 million as of 31 December 2017. →Refer to “Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement” and “Note 23 Expected credit loss measurement” in the “Consolidated financial statements” section of this report for more information on provisions for loan commitments and guarantees For certain obligations, we enter into partial sub- participations to mitigate various risks from guarantees and loan commitments. A sub-participation is an agreement by another party to take a share of the loss in the event that the obligation is not fulfilled by the obligor and, where applicable, to fund a part of the credit facility. We retain the contractual relationship with the obligor, and the sub-participant has only an indirect relationship. We only enter into sub-participation agreements with banks to which we ascribe a credit rating equal to or better than that of the obligor. Furthermore, we provide representations, warranties and indemnifications to third parties in the normal course of business. Clearing house and exchange memberships We are a member of numerous securities and derivative exchanges and clearing houses. In connection with some of those memberships, we may be required to pay a share of the financial obligations of another member who defaults or we may be otherwise exposed to additional financial obligations. While the membership rules vary, obligations generally would arise only if the exchange or clearing house had exhausted its resources. We consider the probability of a material loss due to such obligations to be remote. Deposit insurance Swiss banking law and the deposit insurance system require Swiss banks and securities dealers to jointly guarantee an amount of up to CHF 6 billion for privileged client deposits in the event that a Swiss bank or securities dealer becomes insolvent. FINMA estimates our share in the deposit insurance system to be CHF 0.9 billion. As a member of the Deposit Protection Fund of the Association of German Banks (the Fund), we are required to provide an indemnity to the Fund related to its coverage of certain non-institutional deposits for amounts above EUR 100,000 and below EUR 210.1 million per depositor in the event that a German bank becomes unable to meet its obligations. The aforementioned deposit insurance requirements represent a contingent payment obligation and expose us to additional risk. As of 31 December 2018, we considered the probability of a material loss from our obligations to be remote. 191 Contractual obligations Payment due by period USD million Within 1 year 1–3 years 3–5 years Over 5 years Total Long-term debt obligations 56,118 37,271 27,457 45,749 166,595 Finance lease obligations 3 2 0 18 24 Operating lease obligations 684 1,189 938 1,877 4,688 Purchase obligations 1,057 820 266 180 2,324 TTotal as of 31 December 2018 57,862 39,283 28,661 47,823 173,630 Contractual obligations The table above summarizes payments due by period under contractual obligations as of 31 December 2018. All contractual obligations included in this table, with the exception of purchase obligations (i.e., those in which we are committed to purchasing determined volumes of goods and services), are either recognized as liabilities on our balance sheet or, in the case of operating leases, disclosed in “Note 33 Operating leases and finance leases” in the “Consolidated financial statements” section of this report. Long-term debt obligations as of 31 December 2018 were USD 167 billion. They consisted of debt issued designated at fair value (USD 59 billion) and long-term debt issued (USD 107 billion) and represent estimated future interest and principal payments on an undiscounted basis. →Refer to “Note 27 Maturity analysis of financial liabilities” in the “Consolidated financial statements” section of this report for more information Approximately half of total long-term debt obligations had a variable rate of interest. Amounts due on interest rate swaps used to hedge interest rate risk inherent in fixed-rate debt issued, and designated in fair value hedge accounting relationships, are not included in the table above. The notional amount of these interest rate swaps was USD 64 billion as of 31 December 2018. Debt issued designated at fair value mainly consists of structured notes and is generally economically hedged, but it would not be practicable to estimate the amount and / or timing of the payments on interest swaps used to hedge these instruments as interest rate risk inherent in respective liabilities is generally risk managed on a portfolio level. Within purchase obligations, the obligation to employees under mandatory notice periods is excluded (i.e., the period in which we must pay contractually agreed salaries to employees leaving the firm). Our liabilities recognized on the balance sheet as Amounts due to banks, Payables from securities financing transactions, Cash collateral payables on derivative instruments, Customer deposits, Other financial liabilities measured at amortized cost, Financial liabilities at fair value held for trading, Derivative financial instruments, Brokerage payables designated at fair value, Other financial liabilities designated at fair value, Provisions and Other non-financial liabilities are excluded from the table above. →Refer to the respective Notes, including “Note 28 Hedge accounting,” in the “Consolidated financial statements” section of this report for more information Risk, treasury and capital management 192 Risk, treasury and capital management Treasury management Currency management Strategy, objectives and governance Beginning 1 October 2018, the US dollar has become the presentation currency of the Group. As a result of the change, our Group currency management activities have been recalibrated to reduce adverse currency effects on our reported financial results in US dollars, within limits set by the BoD. Group ALM focuses on three principal areas of currency risk management: (i) currency-matched funding and investment of non-US dollar assets and liabilities; (ii) sell-down of non-US dollar profits and losses; and (iii) selective hedging of anticipated non- US dollar profits and losses to further mitigate the effect of structural imbalances in the balance sheet. Non-trading foreign exchange risks arising from transactions denominated in a currency other than the reporting entity’s functional currency are managed under market risk limits. Activities performed by Group ALM include the management of the structural currency composition at the consolidated Group level. Currency-matched funding and investment of non-US dollar assets and liabilities For monetary balance sheet items and non-core investments, as far as it is practical and efficient, we follow the principle of matching the currencies of our assets and liabilities for funding purposes. This avoids profits and losses arising from the translation of non-US dollar assets and liabilities. Net investment hedge accounting is applied to non-US dollar core investments to balance the effect of foreign exchange movements on both common equity tier 1 (CET1) capital and the CET1 capital ratio. →Refer to “Note 1a Significant accounting policies” and “Note 11 Derivative instruments” in the “Consolidated financial statements” section of this report for more information Sell-down of non-US dollar reported profits and losses Income statement items of foreign subsidiaries and branches with a functional currency other than the US dollar are translated into US dollars on a monthly basis using the relevant month-end rate. To reduce earnings volatility on the translation of previously recognized earnings in foreign currencies, Group ALM centralizes the profits and losses arising in UBS AG and its branches and sells or buys the profit or loss for US dollars. Our foreign subsidiaries follow a similar monthly sell-down process into their own functional currencies. Retained earnings in foreign subsidiaries with a functional currency other than the US dollar are integrated and managed as part of our net investment hedge accounting program. Hedging of anticipated non-US dollar profits and losses The Group ALCO may at any time instruct Group ALM to execute hedges to protect anticipated future profits and losses in foreign currencies against possible adverse trends of foreign exchange rates. Although intended to hedge future earnings, these transactions are accounted for as open currency positions and are subject to internal market risk limits for value-at-risk and stress loss limits. →Refer to the “Capital management” section of this report for more information on our active management of sensitivity to currency movements and its effect on our key ratios 193 Cash flows As a global financial institution, our cash flows are complex and often may bear little relation to our net earnings and net assets. Consequently, we believe that a traditional cash flow analysis is less meaningful in evaluating our liquidity position than the liquidity, funding and capital management frameworks and measures described elsewhere in the “Risk, treasury and capital management” section of this report. Cash and cash equivalents As of 31 December 2018, cash and cash equivalents totaled USD 126.1 billion, an increase of USD 21.2 billion from 31 December 2017, driven by net cash inflows from operating activities, partly offset by net cash outflows from investing activities. Operating activities In 2018, net cash inflows from operating activities were USD 28.9 billion. Net operating cash flow, before changes in operating assets and liabilities and income taxes paid, was an outflow of USD 0.2 billion. Changes in operating assets and liabilities resulted in net cash inflows of USD 29.1 billion, mainly driven by an USD 11.4 billion net inflow related to brokerage receivables and payables, a USD 11.1 billion net inflow from financial assets at fair value not held for trading and other financial assets and liabilities, a USD 11.1 billion inflow from financial assets and liabilities at fair value held for trading and derivative financial instruments, and a USD 9.1 billion inflow from customer deposits. These inflows were partly offset by a net outflow from securities financing transactions of USD 11.2 billion and a net outflow from lending balances to customers of USD 5.2 billion. In 2017, net cash outflows from operating activities were USD 52.1 billion. Net operating cash flow, before changes in operating assets and liabilities and income taxes paid, was an inflow of USD 6.7 billion. Changes in operating assets and liabilities resulted in net cash outflows of USD 58.8 billion, mainly driven by a USD 23.5 billion net outflow related to financial assets and liabilities at fair value held for trading and derivative financial instruments, a USD 14.5 billion net outflow from loans and advances to customers, and a USD 13.0 billion net outflow from customer deposits. Investing activities Investing activities resulted in a net cash outflow of USD 6.1 billion in 2018, primarily related to net cash outflows of USD 3.8 billion from the purchase and redemption of debt securities measured at amortized cost. In 2017, investing activities resulted in a net cash inflow of USD 5.2 billion, primarily related to gross cash inflows of USD 15.3 billion from the disposal and redemption of financial assets measured at fair value through other comprehensive income, partly offset by gross cash outflows of USD 8.6 billion related to the purchase of financial assets measured at fair value through other comprehensive income. Financing activities Financing activities resulted in a net cash inflow of USD 0.2 billion in 2018, mainly due to the net issuance of USD 16.3 billion of long-term debt, which includes debt issued designated at fair value, partly offset by net repayments of USD 12.2 billion of short-term debt, a dividend distribution to shareholders of USD 2.4 billion and net cash used to acquire treasury shares of USD 1.4 billion. In 2017, financing activities resulted in a net cash inflow of USD 27.0 billion, mainly due to the net issuance of USD 24.5 billion of short-term debt and USD 6.3 billion of long-term debt, which includes debt issued designated at fair value, partly offset by a dividend distribution to shareholders of USD 2.3 billion. →Refer to “Primary financial statements” in the “Consolidated financial statements” section of this report for more information on cash flows Statement of cash flows (condensed) For the year ended USD million 331.12.18 31.12.17 Net cash flow from / (used in) operating activities 28,913 (52,099) Net cash flow from / (used in) investing activities (6,132) 5,186 Net cash flow from / (used in) financing activities 190 26,988 Effects of exchange rate differences on cash and cash equivalents (1,726) 5,745 NNet increase / (decrease) in cash and cash equivalents 21,245 (14,180) CCash and cash equivalents at the end of the year 126,079 104,834 Risk, treasury and capital management 194 Risk, treasury and capital management Capital management Capital management Capital management objectives, planning and activities Capital management objectives Audited | An adequate level of total loss-absorbing capacity (TLAC) in accordance with both our internal assessment and regulatory requirements is a prerequisite to conducting our business activities. We are therefore committed to maintaining a strong TLAC position and sound TLAC ratios at all times, in order to meet regulatory capital requirements and our target capital ratios, and to support the growth of our businesses. We expect to meet known future increases in TLAC requirements mainly through a combination of retaining earnings and issuing high-trigger loss-absorbing additional tier 1 (AT1) capital instruments, including Deferred Contingent Capital Plan (DCCP) employee compensation awards, as well as issuing senior unsecured debt that contributes to our TLAC. As of 31 December 2018, our common equity tier 1 (CET1) capital ratio and our CET1 leverage ratio were 12.9% and 3.8%, respectively, each of which is in line with our capital guidance and above the requirements for Swiss systemically relevant banks (SRBs) as well as the Basel Committee on Banking Supervision (BCBS) requirements. We believe that our capital strength is a source of confidence for our stakeholders, contributes to our strong credit ratings and is one of the foundations of our success. In December 2017, the BCBS announced the finalization of the Basel III framework, which we expect to be implemented by FINMA into national law with an effective date of 1 January 2022. During 2018, we established a multi-year program to assess, design and eventually implement the applicable requirements prescribed by FINMA. We are currently assessing the final revisions of the market risk framework issued by the BCBS in January. Until the assessment is complete, we continue to estimate that the introduction of the revised Basel III framework will likely lead to a further net increase in risk- weighted assets (RWA) of approximately USD 35 billion, before taking into account mitigating actions. These estimates are based on our current understanding of the relevant standards and may change as a result of new or changed regulatory interpretations, implementation of the Basel III standards into national law, changes in business growth, market conditions and other factors. We plan to update our guidance on CET1 ratios when further details on the final implementation of the new Basel III rules into national law are available and we have assessed the effect of incorporating elements of the regulatory Loss Potential Analysis in our consolidated stress test. We have adopted IFRS 16, Leases, as of 1 January 2019, which will increase RWA and leverage ratio denominator (LRD) by approximately USD 3.5 billion, respectively. →Refer to the “Our strategy” and “Performance targets and measurement” sections of this report for more information on our capital and resource guidelines 2019 –2021 →Refer to “Our stated capital returns objective is based, in part, on capital ratios that are subject to regulatory change and may fluctuate significantly” in the “Risk factors” section of this report for more information on the risks related to our capital ratios Capital planning and activities Audited | We manage our balance sheet, RWA, LRD and TLAC ratio levels within our internal limits and targets and on the basis of our regulatory TLAC requirements. Our strategic focus is to achieve an optimal attribution and use of financial resources between our business divisions and Corporate Center, as well as between our legal entities, while remaining within the limits defined for the Group and allocated to the business divisions by the Board of Directors (BoD). These resource allocations, in turn, affect business plans and earnings projections, which are reflected in our capital plans. The annual strategic planning process includes a capital- planning component that is key in defining medium- and longer- term capital targets. It is based on an attribution of Group RWA and LRD internal limits to the business divisions. Effective 1 January 2019, changes in resource allocation from Corporate Center to the business divisions will be reflected in the equity attribution to the business divisions, alongside other updates to the equity attribution framework. →Refer to the “Significant accounting and financial reporting changes” section of this report for more information on the alignment of the equity attribution framework to the revised resource allocation methodology →Refer to “Equity attribution and return on attributed equity” in this section for more information on how equity is attributed to our business divisions 195 Limits and targets are established at both the Group and business division levels, and are submitted to the BoD for approval at least annually. In the target-setting process, we take into account the current and potential future TLAC requirements, our aggregate risk exposure in terms of capital-at- risk, the assessment by rating agencies, comparisons with peers and the effect of expected accounting policy changes. Monitoring is based on these internal limits and targets and provides indications if changes are required. Any breach of the limits in place triggers the imposition of a series of required remediating actions. Group Treasury plans for, and monitors, consolidated TLAC information on an ongoing basis, also considering developments in capital regulations. In addition, capital planning and monitoring are performed at the legal entity level for our significant subsidiaries that are subject to prudential supervision and must meet capital and other supervisory requirements. →Refer to “Capital and capital ratios of our significant regulated subsidiaries” in this section for more information Audited | In 2018, we continued to focus on meeting the Swiss SRB capital requirements applicable as of 1 January 2020. Therefore, we executed a series of transactions, including: – the issuance of USD 2.5 billion equivalent of high-trigger loss- absorbing additional tier 1 (AT1) capital instruments denominated in US dollars and Singapore dollars; – the issuance of USD 3.4 billion equivalent of TLAC-eligible senior unsecured debt denominated in euros and Japanese yen, – the issuance of USD 0.4 billion of high-trigger loss-absorbing AT1 capital instruments related to DCCP awards granted for the performance year 2018; and – the call of USD 1.4 billion equivalent of low-trigger tier 2 capital instruments. As of 31 December 2018, these transactions contributed to our TLAC ratio amounting to 31.7% of our RWA and 9.3% of our LRD compared with the respective minimum requirements of 26.3%, excluding countercyclical buffer requirements, and 9.2%, which are applicable as of 1 January 2020. These minimum requirements include the current applicable rebates. → Refer to the “Swiss SRB going and gone concern requirements – time series” table in this section for more information Risk, treasury and capital management 196 Risk, treasury and capital management Capital management Swiss SRB total loss-absorbing capacity framework Disclosures in this section are provided for UBS Group AG on a consolidated basis and focus on information in accordance with the Basel III framework as applicable to Swiss systemically relevant banks (SRBs). Information in accordance with the Basel Committee on Banking Supervision (BCBS) framework, including requirements for global systemically important banks as of 31 December 2018 for UBS Group AG consolidated, is provided in the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors. Capital and other regulatory information as of 31 December 2018 for UBS AG consolidated is provided in the UBS Group AG and UBS AG Annual Report 2018 under “Annual reporting” and in the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors. Capital and other regulatory information as of 31 December 2018 for UBS AG standalone, UBS Switzerland AG standalone, UBS Limited standalone and UBS Americas Holding LLC consolidated is provided in the “Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” section of this report and in the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors. Regulatory framework The Basel III framework came into effect in Switzerland on 1 January 2013 and is embedded in the Swiss Capital Adequacy Ordinance (CAO). The CAO also includes the too big to fail provisions applicable to Swiss SRBs, which became effective on 1 July 2016 and will be transitioned in until 1 January 2020. Under the Swiss SRB framework, going and gone concern requirements represent the total loss-absorbing capacity (TLAC) requirement of the Group. TLAC encompasses regulatory capital, such as common equity tier 1 (CET1), loss-absorbing additional tier 1 (AT1) and tier 2 capital instruments, as well as liabilities that can be written down or converted into equity in case of resolution or for the purpose of restructuring measures. Common equity tier 1 capital The Basel III framework includes prudential filters for the calculation of capital. These prudential filters consist mainly of capital deductions for deferred tax assets (DTAs) recognized for tax loss carry-forwards, DTAs on temporary differences that exceed a certain threshold and effects related to defined benefit plans. Effective from 1 January 2018, these filters are fully phased in and entirely reflected in our capital, RWA and capital ratios. Capital and other instruments contributing to our total loss-absorbing capacity In addition to CET1 capital, the following instruments contribute to our loss-absorbing capacity: – loss-absorbing AT1 capital instruments (high- and low-trigger) – loss-absorbing tier 2 capital instruments (high- and low-trigger) – non-Basel III-compliant tier 2 capital instruments – TLAC-eligible senior unsecured debt instruments Under the Swiss SRB rules applicable as of 1 January 2020, going concern capital includes CET1 and high-trigger loss- absorbing AT1 capital instruments. Under the transitional rules for the Swiss SRB framework, outstanding low-trigger loss- absorbing AT1 capital instruments are available to meet the going concern capital requirements until their first call date, even if the first call date is after 31 December 2019. As of their first call date, these instruments are eligible to meet the gone concern requirements. Outstanding high- and low-trigger loss-absorbing tier 2 capital instruments are available to meet the going concern capital requirements until the earlier of (i) their maturity or first call date or (ii) 31 December 2019, and to meet gone concern requirements thereafter. Outstanding low-trigger loss-absorbing tier 2 capital instruments are subject to amortization starting five years prior to their maturity, with the amortized portion qualifying as gone concern loss-absorbing capacity. Non-Basel III-compliant tier 2 capital instruments and TLAC- eligible senior unsecured debt instruments are eligible to meet gone concern requirements. Instruments available to meet gone concern requirements are eligible until one year before maturity, with a haircut of 50% applied in the last year of eligibility. →Refer to “Bondholder information” at www.ubs.com/investors for more information on the eligibility of capital and senior unsecured debt instruments and on key features and terms and conditions of capital instruments 197 Total loss-absorbing capacity and leverage ratio requirements Going concern capital requirements Once the Swiss SRB requirements are fully implemented by 1 January 2020, total going concern minimum requirements for all Swiss SRBs are a capital ratio requirement of 12.86% of RWA and a leverage ratio requirement of 4.5%. In addition to these minimum requirements, an add-on reflecting the degree of systemic importance is applied based on market share and the leverage ratio denominator (LRD). The add-on for UBS is expected to be 1.44% of RWA and 0.5% of our LRD, resulting in total going concern capital requirements applicable starting as of 1 January 2020 of 14.3% of RWA (excluding countercyclical buffer requirements) and 5.0% of the LRD. Furthermore, of the total going concern capital requirement of 14.3% of RWA, at least 10% must be met with CET1 capital, while a maximum of 4.3% can be met with high-trigger loss-absorbing AT1 capital instruments. Similarly, of the total going concern leverage ratio requirement of 5.0%, 3.5% must be met with CET1 capital, while a maximum of 1.5% can be met with high-trigger loss- absorbing AT1 capital instruments. National authorities can put in place a countercyclical buffer requirement of up to 2.5% of RWA for private-sector credit exposures in their jurisdictions. The requirement must also be met with CET1 capital. The Swiss Federal Council has activated a countercyclical buffer requirement of 2% of RWA for mortgage loans on residential property in Switzerland, applicable since 30 June 2014. Furthermore, since 1 July 2016, we are required to apply additional countercyclical buffer requirements implemented in other Basel Committee member jurisdictions. The requirements were phased in by and became fully effective on 1 January 2019. The effect as of 31 December 2018 was immaterial. Gone concern loss-absorbing capacity requirements As an internationally active Swiss SRB, UBS is also subject to gone concern loss-absorbing capacity requirements. The gone concern requirements also include add-ons for market share and the LRD, and may be met with senior unsecured debt that is TLAC eligible. Under the Swiss SRB framework, banks are eligible for a rebate on the gone concern requirement if they take actions that facilitate recovery and resolvability beyond the minimum requirements to ensure the integrity of systemically important functions in the case of an impending insolvency. In addition, in the event that CET1 capital, loss-absorbing AT1 or certain low- trigger tier 2 capital instruments are used to meet the gone concern requirements, such requirements may be reduced by up to 2.86 percentage points for the RWA-based requirement and up to 1 percentage point for the LRD-based requirement. The combined reduction applied for resolvability measures and the aforementioned gone concern requirement reduction for the use of low-trigger loss-absorbing AT1 and tier 2 capital instruments may not exceed 5.72 percentage points for the RWA-based requirement of 14.3% and 2 percentage points for the LRD- based requirement of 5%. The amount of the rebate for improved resolvability is assessed annually by FINMA, and will be phased in until 1 January 2020. Based on actions we completed up to December 2017 to improve resolvability, FINMA granted a rebate on the gone concern requirement of 40% of the aforementioned maximum rebate in the fourth quarter of 2018, which resulted in a reduction of 2.29 percentage points for the RWA-based requirement and 0.8 percentage points for the LRD- based requirement. We also qualify for an additional rebate for the use of low-trigger tier 2 capital instruments to fulfill gone concern requirements, and have agreed with FINMA to quantify this rebate at a later date. In this report, we refer to the RWA-based gone concern requirements as gone concern loss-absorbing capacity requirements, and the RWA-based gone concern ratio is referred to as the gone concern loss-absorbing capacity ratio. Swiss SRB going and gone concern requirements – time series1 RRisk-weighted assets (%)LLeverage ratio (%) RRequirements RRequirements 331.12.18 11.1.19 11.1.20 331.12.18 11.1.19 11.1.20 GGoing concern Minimum capital 8.00 8.00 8.00 3.00 3.00 3.00 Buffer capital including applicable add-ons2 5.15 5.58 6.30 1.00 1.50 2.00 TTotal going concern 13.15 13.58 14.30 4.00 4.50 5.00 of which: common equity tier 1 capital 2 9.75 9.68 10.00 2.90 3.20 3.50 of which: maximum high-trigger loss-absorbing additional tier 1 capital 3.40 3.90 4.30 1.10 1.30 1.50 GGone concern Base requirement including applicable add-ons and rebate 7.48 9.74 12.01 2.52 3.36 4.20 TTotal gone concern 7.48 9.74 12.01 2.52 3.36 4.20 TTotal loss-absorbing capacity 20.62 23.32 26.31 6.52 7.86 9.20 11 This table includes a rebate equal to 40% of the maximum rebate on the gone concern requirements, which was granted by FINMA due to improved resolvability. This resulted in a reduction of 2.29 percentage points for the RWA-based requirement and 0.8 percentage points for the LRD-based requirement and will be phased in until 1 January 2020. This table does not include a rebate for the usage of low-trigger loss- absorbing tier 2 capital instruments to meet the gone concern requirements. 2 Going concern capital ratio requirements as of 31 December 2018 include a countercyclical buffer requirement of 0.29%. Requirements for subsequent periods exclude the effect of the countercyclical buffer requirement, as potential future countercyclical buffer requirements are not yet known. Risk, treasury and capital management 198 Risk, treasury and capital management Capital management Swiss SRB going and gone concern requirements and information1 SSwiss SRB, including transitional arrangements As of 31.12.18 RRWA LLRD USD million, except where indicated RRequirement (%)AActual (%)RRequirement EEligible RRequirement (%)AActual (%)RRequirement EEligible Common equity tier 1 capital 9.75 12.94 25,711 34,119 2.90 3.77 26,233 34,119 Maximum high-trigger loss-absorbing additional tier 1 capital2,3 3.40 6.89 8,967 18,167 1.10 2.01 9,951 18,167 of which: high-trigger loss-absorbing additional tier 1 capital 3.71 9,790 1.08 9,790 of which: low-trigger loss-absorbing additional tier 1 capital 0.90 2,369 0.26 2,369 of which: low-trigger loss-absorbing tier 2 capital 2.28 6,008 0.66 6,008 TTotal going concern capital 13.154 19.82 34,678 52,287 4.005 5.78 36,184 52,287 Base gone concern loss-absorbing capacity, including applicable add-ons and rebate 7.48 6 11.93 19,718 31,452 2.52 6 3.48 22,796 31,452 TTotal gone concern loss-absorbing capacity 7.48 11.93 19,718 31,452 2.52 3.48 22,796 31,452 TTotal loss-absorbing capacity 20.62 31.75 54,396 83,738 6.52 9.26 58,980 83,738 SSwiss SRB as of 1.1.20 As of 31.12.18 RRWA LLRD USD million, except where indicated RRequirement (%)AActual (%)RRequirement EEligible RRequirement (%)AActual (%)RRequirement EEligible Common equity tier 1 capital 10.29 12.94 27,135 34,119 3.50 3.77 31,661 34,119 Maximum high-trigger loss-absorbing additional tier 1 capital2 4.30 4.61 11,341 12,160 1.50 1.34 13,569 12,160 of which: high-trigger loss-absorbing additional tier 1 capital 3.71 9,790 1.08 9,790 of which: low-trigger loss-absorbing additional tier 1 capital 0.90 2,369 0.26 2,369 TTotal going concern capital 14.597 17.55 38,476 46,279 5.008 5.12 45,230 46,279 Base gone concern loss-absorbing capacity, including applicable add-ons and rebate 12.019 14.20 31,681 37,460 4.20 9 4.14 37,993 37,460 TTotal gone concern loss-absorbing capacity 12.01 14.20 31,681 37,460 4.20 4.14 37,993 37,460 TTotal loss-absorbing capacity 26.60 31.75 70,158 83,738 9.20 9.26 83,223 83,738 11 This table includes a rebate equal to 40% of the maximum rebate on the gone concern requirements, which was granted by FINMA and will be phased in until 1 January 2020. This table does not include a rebate for the usage of low-trigger loss-absorbing tier 2 capital instruments to meet the gone concern requirements. 2 Includes outstanding low-trigger loss-absorbing additional tier 1 (AT1) capital instruments, which are available under the transitional rules of the Swiss SRB framework to meet the going concern requirements until their first call date, even if the first call date is after 31 December 2019. As of their first call date, these instruments are eligible to meet the gone concern requirements. 3 Includes outstanding high- and low-trigger loss-absorbing tier 2 capital instruments, which are available under the transitional rules of the Swiss SRB framework to meet the going concern requirements until the earlier of (i) their maturity or first call date or (ii) 31 December 2019, and to meet gone concern requirements thereafter. Outstanding low- trigger loss-absorbing tier 2 capital instruments are subject to amortization starting five years prior to their maturity, with the amortized portion qualifying as gone concern loss-absorbing capacity. Instruments available to meet gone concern requirements are eligible until one year before maturity, with a haircut of 50% applied in the last year of eligibility. 4 Consists of a minimum capital requirement of 8% and a buffer capital requirement of 5.15%, including the effect of countercyclical buffers of 0.29%. 5 Consists of a minimum leverage ratio requirement of 3% and a buffer leverage ratio requirement of 1%. 6 Includes applicable add-ons of 0.72% for RWA and 0.25% for LRD and a rebate of 1.42% for RWA and 0.48% for LRD. 7 Consists of a minimum capital requirement of 8% and a buffer capital requirement of 6.59%, including the effect of countercyclical buffers of 0.29% and applicable add-ons of 1.44%. 8 Consists of a minimum leverage ratio requirement of 3% and a buffer leverage ratio requirement of 2%, including applicable add-ons of 0.5%. 9 Includes applicable add-ons of 1.44% for RWA and 0.5% for LRD and a rebate of 2.29% for RWA and 0.80% for LRD. 199 Total loss-absorbing capacity Swiss SRB going and gone concern information SSwiss SRB, including transitional arrangements SSwiss SRB as of 1.1.20 USD million, except where indicated 331.12.18 31.12.171 331.12.18 31.12.17 Going concern capital CCommon equity tier 1 capital 34,1192 36,412 34,1192 33,516 High-trigger loss-absorbing additional tier 1 capital 9,790 7,034 9,790 7,034 Low-trigger loss-absorbing additional tier 1 capital 2,369 1,1153 2,369 2,445 TTotal loss-absorbing additional tier 1 capital 12,160 8,150 12,160 9,479 TTotal tier 1 capital 46,279 44,562 46,279 42,995 High-trigger loss-absorbing tier 2 capital 0 447 Low-trigger loss-absorbing tier 2 capital4 6,008 8,077 TTotal tier 2 capital 6,008 8,524 TTotal going concern capital 52,287 53,086 46,279 42,995 Gone concern loss-absorbing capacity5 High-trigger loss-absorbing tier 2 capital 223 Low-trigger loss-absorbing tier 2 capital4 771 388 6,779 8,466 Non-Basel III-compliant tier 2 capital6 693 707 693 707 TTotal tier 2 capital 1,464 1,095 7,471 9,396 TTLAC-eligible senior unsecured debt 29,988 27,937 29,988 27,937 TTotal gone concern loss-absorbing capacity 31,452 29,032 37,460 37,333 Total loss-absorbing capacity TTotal loss-absorbing capacity 83,738 82,118 83,738 80,328 Risk-weighted assets / leverage ratio denominator Risk-weighted assets 263,747 244,559 263,747 243,636 Leverage ratio denominator 904,598 910,591 904,598 909,032 Capital and loss-absorbing capacity ratios (%) Going concern capital ratio 19.8 21.7 17.5 17.6 of which: common equity tier 1 capital ratio 12.9 14.9 12.9 13.8 Gone concern loss-absorbing capacity ratio 11.9 11.9 14.2 15.3 Total loss-absorbing capacity ratio 31.7 33.6 31.7 33.0 Leverage ratios (%) Going concern leverage ratio 5.8 5.8 5.1 4.7 of which: common equity tier 1 leverage ratio 3.77 4.00 3.77 3.69 Gone concern leverage ratio 3.5 3.2 4.1 4.1 Total loss-absorbing capacity leverage ratio 9.3 9.0 9.3 8.8 11 As of 31 December 2017, the phase-in deduction applied for the purpose of the CET1 capital calculation was 80%. These effects are fully phased in from 1 January 2018. Prudential filters applied to RWA and LRD are also fully phased in from 1 January 2018. 2 IFRS 9 expected credit loss effects are considered on a phased-in basis in accordance with the FINMA guidance. Refer to “Introduction and basis for preparation” of our 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information. 3 Low-trigger loss-absorbing additional tier 1 capital of USD 2,445 million was partly offset by required deductions for goodwill of USD 1,329 million. 4 Under the transitional rules of the Swiss SRB framework, outstanding low-trigger loss-absorbing tier 2 capital instruments are subject to amortization starting five years prior to their maturity, with the amortized portion qualifying as gone concern loss-absorbing capacity. 5 Instruments available to meet gone concern requirements are eligible until one year before maturity, with a haircut of 50% applied in the last year of eligibility. 6 Non-Basel III-compliant tier 2 capital instruments qualify as gone concern instruments.Risk, treasury and capital management 200 Risk, treasury and capital management Capital management Audited | Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital USD million 331.12.18 31.12.17 TTotal IFRS equity 53,103 52,554 Equity attributable to non-controlling interests (176) (59) Defined benefit plans, net of tax 0 0 Deferred tax assets recognized for tax loss carry-forwards (6,107) (5,947) Deferred tax assets on temporary differences, excess over threshold (586) (879) Goodwill, net of tax1 (6,514) (6,646) Intangible assets, net of tax (251) (220) Compensation-related components (not recognized in net profit) (1,652) (1,662) Expected losses on advanced internal ratings-based portfolio less provisions2 (368) (650) Unrealized (gains) / losses from cash flow hedges, net of tax (109) (360) Unrealized own credit related to financial liabilities designated at fair value, net of tax, and replacement values (397) 136 Unrealized gains related to debt instruments at fair value through OCI, net of tax (4) (198)3 Prudential valuation adjustments (120) (61) Accruals for proposed dividends to shareholders (2,648) (2,501) Other (52) 8 TTotal common equity tier 1 capital 34,119 33,516 11 Includes goodwill related to significant investments in financial institutions of USD 176 million (31 December 2017: USD 359 million) presented on the balance sheet line “Investments in associates.” 2 From 1 January 2018, provisions have been calculated in accordance with IFRS 9. Provisions in prior periods have been calculated in accordance with International Accounting Standard (IAS) 39. 3 As of 31 December 2017 related to equity and debt instruments available for sale. Total loss-absorbing capacity and movement under Swiss SRB rules applicable as of 1 January 2020 Going concern capital and movement Audited | Our CET1 capital mainly consists of share capital, share premium, which primarily consists of additional paid-in capital related to shares issued, and retained earnings. A detailed reconciliation of IFRS equity to CET1 capital is provided in the “Reconciliation of IFRS equity to Swiss SRB common equity tier 1 capital” table. Our CET1 capital increased by USD 0.6 billion to USD 34.1 billion as of 31 December 2018, mainly as a result of operating profit before tax, partly offset by accruals for capital returns to shareholders and our share repurchase program. →Refer to “UBS shares” in this section for more information on the share repurchase program Our loss-absorbing additional tier 1 (AT1) capital increased by USD 2.7 billion to USD 12.2 billion as of 31 December 2018, primarily due to the issuance of USD 2.5 billion equivalent of US dollar- and Singapore dollar-denominated AT1 capital instruments and a USD 0.4 billion increase related to Deferred Contingent Capital Plan (DCCP) awards granted for the performance year 2018, partly offset by currency effects. Gone concern loss-absorbing capacity and movement Audited | Our total gone concern loss-absorbing capacity included USD 30.0 billion of TLAC-eligible senior unsecured debt, and increased by USD 0.1 billion to USD 37.5 billion as of 31 December 2018. The issuance of USD 3.4 billion of TLAC- eligible senior unsecured debt during the year was offset by a call of a low-trigger tier 2 capital instrument in the amount of USD 1.4 billion, a USD 1.1 billion decrease in eligibility of DCCP awards and two TLAC-eligible senior unsecured bonds due to the shortening of the residual tenor, and currency effects. Loss-absorbing capacity and leverage ratios Our CET1 capital ratio was 12.9%, a decrease of 0.8 percentage points compared with 31 December 2017, reflecting a USD 0.6 billion increase in CET1 capital and a USD 20.1 billion increase in risk-weighted assets (RWA). Our CET1 leverage ratio increased 0.08 percentage points to 3.8% as of 31 December 2018, reflecting the aforementioned increase in CET1 capital and a USD 4 billion decrease in the leverage ratio denominator (LRD). Our gone concern loss-absorbing capacity ratio decreased 1.1 percentage points to 14.2%, primarily driven by the aforementioned RWA increase. Our gone concern leverage ratio remained at 4.1%. 201 Swiss SRB total loss-absorbing capacity movement1 USD million SSwiss SRB, including transitional arrangements SSwiss SRB as of 1.1.20 Going concern capital CCommon equity tier 1 capital as of 31.12.17 36,412 33,516 Deferred tax assets recognized for tax loss carry-forwards, additional phase-in effect (1,189) Deferred tax assets recognized for temporary differences, additional phase-in effect (377) Goodwill, additional phase-in effect (1,329) IFRS 9 transition effect (284) (284) IFRS 15 transition effect (28) (28) CCommon equity tier 1 capital as of 1.1.18 33,204 33,204 Operating profit before tax 5,991 5,991 Current tax (expense) / benefit (1,043) (1,043) Foreign currency translation effects (399) (399) Compensation- and own shares-related capital components (including share premium) 38 38 Defined benefit plans (220) (220) Share repurchase program2 (762) (762) Accruals for proposed dividends to shareholders (2,648) (2,648) Other (42) (42) CCommon equity tier 1 capital as of 31.12.18 34,119 34,119 LLoss-absorbing additional tier 1 capital as of 31.12.17 8,150 9,479 Goodwill, additional phase-in effect 1,329 LLoss-absorbing additional tier 1 capital as of 1.1.18 9,479 9,479 Issuance of high-trigger loss-absorbing additional tier 1 capital 2,931 2,931 Foreign currency translation and other effects (251) (251) LLoss-absorbing additional tier 1 capital as of 31.12.18 12,160 12,160 TTier 2 capital as of 31.12.17 8,524 Call of a low-trigger loss-absorbing tier 2 capital instrument (1,438) Amortization due to shortening of residual tenor (379) Amortization of Deferred Contingent Capital Plan (DCCP) awards (431) Foreign currency translation and other effects (269) TTier 2 capital as of 31.12.18 6,008 TTotal going concern capital as of 31.12.17 53,086 42,995 TTotal going concern capital as of 31.12.18 52,287 46,279 Gone concern loss-absorbing capacity TTier 2 capital as of 31.12.17 1,095 9,396 Amortized portion, which qualifies as gone concern loss-absorbing capacity 379 Call of a low-trigger loss-absorbing tier 2 capital instrument (1,438) Decrease in eligibility due to shortening of residual tenor (228) Foreign currency translation and other effects (10) (258) TTier 2 capital as of 31.12.18 1,464 7,471 TTLAC-eligible senior unsecured debt as of 31.12.17 27,937 27,937 Issuance of TLAC-eligible senior unsecured debt instruments 3,394 3,394 Decrease in eligibility due to shortening of residual tenor (877) (877) Foreign currency translation and other effects (466) (466) TTLAC-eligible senior unsecured debt as of 31.12.18 29,988 29,988 TTotal gone concern loss-absorbing capacity as of 31.12.17 29,032 37,333 TTotal gone concern loss-absorbing capacity as of 31.12.18 31,452 37,460 Total loss-absorbing capacity TTotal loss-absorbing capacity as of 31.12.17 82,118 80,328 TTotal loss-absorbing capacity as of 31.12.18 83,738 83,738 11 The movement table line items, except operating profit before tax, current taxes and foreign currency translation effects, represent the sum of the respective first quarter to third quarter 2018 movements (under the presentation currency Swiss franc translated at spot rates prevailing at each quarter end to US dollars) and the respective fourth quarter 2018 movements (under the presentation currency US dollars) disclosed in the fourth quarter 2018 report. 2 Refer to “UBS shares” in this section for more information. Risk, treasury and capital management 202 Risk, treasury and capital management Capital management Additional information Active management of sensitivity to currency movements Corporate Center – Group Asset and Liability Management (Group ALM) is mandated to minimize adverse effects from changes in currency rates on our CET1 capital and CET1 capital ratio. A significant portion of our capital and RWA are denominated in Swiss francs, euros, British pounds and other currencies. In order to hedge the CET1 capital ratio, CET1 capital needs to have foreign currency exposure, leading to currency sensitivity of CET1 capital. As a consequence, it is not possible to simultaneously fully hedge the capital and the capital ratio. As the proportion of RWA denominated in foreign currencies outweighs the capital in these currencies, a significant appreciation of the US dollar against these currencies could benefit our capital ratios, while a significant depreciation of the US dollar against these currencies could adversely affect our capital ratios. The Group Asset and Liability Management Committee, a committee of the Group Executive Board, can adjust the currency mix in capital, within limits set by the Board of Directors, to balance the effect of foreign exchange movements on the CET1 capital and capital ratio. Limits are in place for the sensitivity of both CET1 capital and the capital ratio to an appreciation or depreciation of 10% in the value of the US dollar against other currencies. Sensitivity to currency movements Risk-weighted assets We estimate that a 10% depreciation of the US dollar against other currencies would have increased our RWA by USD 11 billion and our CET1 capital by USD 1.2 billion as of 31 December 2018 and reduced our CET1 capital ratio by 9 basis points. Conversely, we estimate that a 10% appreciation of the US dollar against other currencies would have reduced our RWA by USD 10 billion and our CET1 capital by USD 1.1 billion and increased our CET1 capital ratio by 9 basis points. Leverage ratio denominator Our leverage ratio is also sensitive to foreign exchange movements as a result of the currency mix of our capital and LRD. When adjusting the currency mix in capital, potential effects on the going concern leverage ratio are taken into account and the sensitivity of the going concern leverage ratio to an appreciation or depreciation of 10% in the value of the US dollar against other currencies is actively monitored. We estimate that a 10% depreciation of the US dollar against other currencies would have increased our LRD by USD 57 billion and reduced our Swiss SRB going concern leverage ratio by 15 basis points. Conversely, we estimate that a 10% appreciation of the US dollar against other currencies would have reduced our LRD by USD 51 billion and increased our Swiss SRB going concern leverage ratio by 16 basis points. The aforementioned sensitivities do not consider foreign currency translation effects related to defined benefit plans other than those related to the currency translation of the net equity of foreign operations. Estimated effect on capital from litigation, regulatory and similar matters subject to provisions and contingent liabilities We have estimated the loss in capital that we could incur as a result of the risks associated with the matters described in “Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report. We have used for this purpose the advanced measurement approach (AMA) methodology that we use when determining the capital requirements associated with operational risks, based on a 99.9% confidence level over a 12-month horizon. The methodology takes into consideration UBS and industry experience for the AMA operational risk categories to which those matters correspond, as well as the external environment affecting risks of these types, in isolation from other areas. On this standalone basis, we estimate the loss in capital that we could incur over a 12-month period as a result of our risks associated with these operational risk categories at USD 4.5 billion as of 31 December 2018, a reduction of USD 0.3 billion from 31 December 2017. This estimate is not related to and does not take into account any provisions recognized for any of these matters and does not constitute a subjective assessment of our actual exposure in any of these matters. →Refer to “Operational risk” in the “Risk management and control” section of this report for more information →Refer to “Note 21 Provisions and contingent liabilities” in the “Consolidated financial statements” section of this report for more information 203 Capital and capital ratios of our significant regulated subsidiaries UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and its subsidiaries. UBS Group AG and UBS AG have contributed a significant portion of their respective capital and provide substantial liquidity to subsidiaries. Many of these subsidiaries are subject to regulations requiring compliance with minimum capital, liquidity and similar requirements. Regulatory capital components and capital ratios of our significant regulated subsidiaries determined under the regulatory framework of each subsidiary’s home jurisdiction are provided in the “Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” section of this report. Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities of subsidiaries. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis and may limit the ability of the entity to engage in new activities or take capital actions based on the results of those tests. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more capital and other regulatory information on our significant regulated subsidiaries and sub-groups Joint liability of UBS AG and UBS Switzerland AG In June 2015, upon the transfer of the Personal & Corporate Banking and Global Wealth Management businesses booked in Switzerland from UBS AG to UBS Switzerland AG, UBS AG and UBS Switzerland AG assumed joint liability for obligations transferred to UBS Switzerland AG and existing at UBS AG, respectively. Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in connection with a resolution or insolvency of such bank. The joint liability amounts have declined as obligations matured, terminated or were novated following the transfer date. As of 31 December 2018, the liability of UBS Switzerland AG amounted to less than CHF 25.6 billion (or the US dollar equivalent of 26.1 billion). The respective liability of UBS AG has been substantially extinguished.Risk, treasury and capital management 204 Risk, treasury and capital management Capital management Risk-weighted assets RWA development in 2018 As of 31 December 2018, RWA increased by USD 20.1 billion to USD 263.7 billion, mainly driven by a USD 16.2 billion increase in credit and counterparty credit risk and a USD 7.4 billion increase in market risk, partly offset by a USD 3.9 billion decrease in operational risk. The total RWA increase was primarily driven by a USD 19.1 billion increase from model updates and methodology and policy changes, primarily relating to credit and counterparty credit risk. RWA also increased by USD 5.3 billion from asset size and other movements. These increases were partly offset by a decrease in currency effects of USD 2.6 billion and from lower net regulatory add-ons of USD 1.7 billion, whereby USD 5.9 billion lower regulatory add-ons for credit and counterparty credit risk were partly offset by USD 4.3 billion higher regulatory add-ons for market risk. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on RWA movements and definitions of RWA movement key drivers Movement in risk-weighted assets by key driver USD billion RWA as of 31.12.17 Currency effects Methodology and policy changes Model updates / changes Regulatory add-ons Asset size and other1 RRWA as of 31.12.18 Credit and counterparty credit risk2 131.8 (2.3) 4.0 18.5 (5.9) 1.8 147.9 Non-counterparty-related risk 17.8 (0.3) 0.0 0.0 0.0 0.8 18.3 Market risk 12.6 0.0 0.0 0.0 4.3 3.2 20.0 Operational risk 81.5 0.0 0.0 (3.4) 0.0 (0.5) 77.6 TTotal 243.6 (2.6) 4.0 15.1 (1.7) 5.3 263.7 11 Includes the Pillar 3 categories “Asset size,” “Credit quality of counterparties,” “Acquisitions and disposals” and “Other.” Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information. 2 Includes settlement risk, credit valuation adjustments, equity exposures in the banking book and securitization exposures in the banking book. Credit and counterparty credit risk Credit and counterparty credit risk RWA increased by USD 16.2 billion to USD 147.9 billion as of 31 December 2018. This increase was primarily driven by increases from model updates of USD 18.5 billion, methodology and policy changes of USD 4.0 billion and asset size of USD 3.2 billion, and partly offset by decreases in regulatory add-ons of USD 5.9 billion, asset quality of USD 1.7 billion, currency effects and other changes. Movement in credit and counterparty credit risk RWA by key driver1 USD billion Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank CC – Services CC – Group ALM CC – Non- core and Legacy Portfolio GGroup Total credit and counterparty credit risk RWA as of 31.12.17 26.4 45.1 1.5 44.0 1.8 8.2 4.6 131.8 Asset size 1.3 1.9 0.1 (0.5) 0.1 0.9 (0.5) 3.2 Asset quality 0.3 (2.8) 0.0 1.2 0.0 0.1 (0.5) (1.7) Model updates 2.8 15.6 0.0 0.1 0.0 0.0 0.0 18.5 Methodology and policy changes 0.1 0.3 0.0 3.5 0.0 0.1 0.0 4.0 Regulatory add-ons (1.8) (6.7) 0.0 2.6 0.0 0.0 0.0 (5.9) Acquisitions and disposals 0.5 0.0 0.0 0.1 0.0 0.0 0.0 0.6 Foreign exchange movements (0.3) (0.4) 0.0 (1.3) (0.1) (0.1) (0.1) (2.3) Other 0.0 (0.3) 0.0 0.0 0.0 0.0 0.0 (0.3) Total movement 2.9 7.6 0.1 5.8 0.0 1.0 (1.2) 16.2 Total credit and counterparty credit risk RWA as of 31.12.18 29.3 52.7 1.6 49.8 1.9 9.2 3.4 147.9 1 Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for the definitions of credit and counterparty credit risk RWA movement categories. 205 Model updates The increase in credit and counterparty credit risk RWA from model updates of USD 18.5 billion was driven by the implementation of revised probability of default (PD) and loss given default (LGD) models, as part of our continuous efforts to enhance models to reflect market developments, and newly available data for residential mortgages and income-producing real estate, as well as a new LGD model for unsecured financing and commercial self-used real estate, resulting in an increase of USD 15.2 billion in Personal & Corporate Banking and USD 2.5 billion in Global Wealth Management. In addition, RWA increased by USD 0.8 billion due to the implementation of credit conversion factors for Lombard loan facilities that are entirely undrawn in Global Wealth Management, amounting to USD 0.3 billion, by USD 0.4 billion in Personal & Corporate Banking from the calibration of aircraft leasing PD and LGD parameters and by net USD 0.1 billion in the Investment Bank due to an increase of USD 0.3 billion from the revision of the modeled exposure methodology and a decrease of USD 0.2 billion from the LGD parameter update for sovereigns. In the first quarter of 2019, we expect that there will be further regulatory-driven increases in credit risk RWA of USD 3 billion as well as an accounting-driven increase of USD 3.5 billion due to the implementation of IFRS 16, Leases. The extent and timing of RWA increases may vary as methodology changes and model updates are completed and receive regulatory approval, and as regulatory multipliers are adjusted. In addition, changes in composition of the relevant portfolios and other factors will affect our RWA. →Refer to “Credit risk models” in the “Risk management and control” section of this report for more information on model updates Regulatory add-ons The net RWA decrease from regulatory add-ons of USD 5.9 billion was primarily driven by the reduction of USD 8.5 billion following the aforementioned model updates to PD and LGD parameters for residential mortgages in Personal & Corporate Banking and Global Wealth Management. The decrease was partly offset by a USD 2.6 billion increase resulting from a higher internal ratings-based multiplier on Investment Bank exposures to corporates. Methodology changes Upon adoption of IFRS 9, equity instruments were reclassified from fair value through other comprehensive income (available for sale) to fair value through profit or loss as unrealized gains on such instruments (previously deducted) are now added back for the purpose of the RWA exposure calculation, resulting in a USD 0.7 billion increase in RWA. Additionally, the methodology applied for structured margin lending transactions was revised, as agreed with FINMA, thus leading to a USD 3.3 billion increase of RWA. →Refer to the “Risk management and control” section of this report and the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on credit and counterparty credit risk developments Market risk Market risk RWA increased by USD 7.4 billion to USD 20.0 billion as of 31 December 2018, mainly driven by USD 4.3 billion higher regulatory add-ons and a USD 3.2 billion increase resulting from asset size and other movements. The USD 4.3 billion higher RWA from regulatory add-ons reflected a combination of the concluding changes to our risks- not-in-VaR (RniV) framework as of the third quarter of 2018, as well as updates from the monthly RniV assessment, and higher levels of regulatory VaR and stressed VaR. The USD 3.2 billion increase in asset size and other movements was primarily driven by higher average VaR and stressed VaR levels observed during the fourth quarter, mainly from increased market volatility and client flow in the Investment Bank’s Equities business. →Refer to the “Risk management and control” section of this report and the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on market risk developments Operational risk Operational risk RWA decreased by USD 3.9 billion to USD 77.6 billion as of 31 December 2018, driven by USD 3.4 billion from changes to the advanced measurement approach (AMA) model used for the calculation of operational risk capital as well as a consequential one-time translation effect of USD 0.5 billion due to the change of our presentation currency from Swiss franc to US dollar. →Refer to “Operational risk” in the “Risk management and control” section of this report for more information on the AMA model Risk, treasury and capital management 206 Risk, treasury and capital management Capital management Risk-weighted assets by business division and Corporate Center unit USD billion GGlobal Wealth Management PPersonal & Corporate Banking AAsset Manage- ment IInvestment Bank CCC – Services CCC – Group ALM CCC – Non- core and Legacy Portfolio TTotal RWA 331.12.18 CCredit and counterparty credit risk1 29.3 52.7 1.6 49.8 1.9 9.2 3.4 147.9 NNon-counterparty-related risk2 0.1 0.1 0.1 0.0 18.1 0.0 0.0 18.3 MMarket risk 1.3 0.0 0.0 16.83 0.0 0.6 1.3 20.0 OOperational risk 27.5 4.0 2.4 20.2 11.9 2.3 9.2 77.6 TTotal4 58.2 56.8 4.1 86.9 31.8 12.0 13.9 263.7 RWA held by CC – Group ALM on behalf of business divisions and other CC units5 2.3 1.1 0.1 0.4 0.0 (4.0) 0.0 0.0 RRWA after allocation from CC – Group ALM to business divisions and other CC units 660.5 557.9 44.2 887.3 331.8 88.0 113.9 2263.7 331.12.17 CCredit and counterparty credit risk1 26.4 45.1 1.5 44.0 1.8 8.2 4.6 131.8 NNon-counterparty-related risk2 0.1 0.1 0.1 0.0 17.6 0.0 0.0 17.8 MMarket risk 1.7 0.0 0.0 12.0 (3.2) 3 0.7 1.3 12.6 OOperational risk 27.7 4.1 2.5 20.4 13.7 2.6 10.6 81.5 TTotal4 55.9 49.3 4.0 76.5 29.9 11.5 16.5 243.6 RWA held by CC – Group ALM on behalf of business divisions and other CC units5 2.3 1.1 0.1 0.5 0.0 (4.0) 0.0 0.0 RRWA after allocation from CC – Group ALM to business divisions and other CC units 558.1 550.4 44.1 777.0 229.9 77.5 116.6 243.6 331.12.18 vs 31.12.17 CCredit and counterparty credit risk1 2.9 7.6 0.1 5.8 0.0 1.0 (1.2) 16.2 NNon-counterparty-related risk2 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.5 MMarket risk (0.4) 0.0 0.0 4.8 3.2 (0.1) (0.1) 7.4 OOperational risk (0.2) 0.0 0.0 (0.1) (1.8) (0.3) (1.4) (3.9) TTotal4 2.3 7.5 0.1 10.4 1.9 0.5 (2.7) 20.1 RWA held by CC – Group ALM on behalf of business divisions and other CC units5 0.0 0.0 0.0 (0.1) 0.0 0.0 0.0 0.0 RRWA after allocation from CC – Group ALM to business divisions and other CC units 22.4 77.6 00.1 110.3 11.9 00.5 ((2.7)220.1 11 Includes settlement risk, credit valuation adjustments, equity exposures in the banking book and securitization exposures in the banking book. 2 Non-counterparty-related risk includes deferred tax assets recognized for temporary differences (31 December 2018: USD 8.8 billion; 31 December 2017: USD 8.6 billion), property, equipment and software (31 December 2018: USD 9.3 billion; 31 December 2017: USD 9.0 billion) and other items (31 December 2018: USD 0.2 billion; 31 December 2017: USD 0.2 billion). 3 As of 31 December 2018, the effect of portfolio diversification across businesses, which was previously reflected in Corporate Center – Services market risk RWA, was included in the Investment Bank market risk RWA. 4 Represents RWA held by the respective business division or Corporate Center unit. 5 Represents RWA held by Corporate Center – Group ALM that are directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity“ in this section for more information. 207 Leverage ratio denominator The leverage ratio denominator (LRD) decreased by USD 4 billion to USD 905 billion as of 31 December 2018, primarily driven by decreases from currency effects of USD 12 billion and incremental netting and collateral mitigation as well as policy changes of USD 2 billion, partly offset by an increase of USD 9 billion from asset size and other sources. Movement in leverage ratio denominator by key driver USD billion LLRD as of 31.12.17 Currency effects Incremental netting and collateral mitigation Policy changes Asset size and other LLRD as of 31.12.18 On-balance sheet exposures (excluding derivative exposures and SFTs)1 663.6 (8.2) (0.6) 8.3 663.1 Derivative exposures 100.6 (2.1) (1.4) (1.8) 95.4 Securities financing transactions 127.4 (1.4) 5.0 130.9 Off-balance sheet items 31.9 (0.3) (2.5) 29.0 Deduction items (14.5) 0.0 0.5 0.1 (13.8) TTotal 909.0 (12.1) (1.4) (0.1) 9.1 904.6 11 Excludes positive replacement values, cash collateral receivables on derivative instruments, cash collateral on securities borrowed, reverse repurchase agreements, margin loans and prime brokerage receivables related to securities financing transactions, which are presented separately under Derivative exposures and Securities financing transactions in this table. The LRD movements described below exclude currency effects. On-balance sheet exposures (excluding derivative exposures and securities financing transactions (SFTs)) increased by USD 8 billion as a result of asset size and other movements. The net increase in Corporate Center – Group Asset and Liability Management (Group ALM) was driven by an increase in cash and balances at central banks due to lower client-driven activity that reduced funding consumption by the business divisions, especially the Investment Bank, and partly offset by maturities of short-term borrowings and a shift to receivables from securities financing transactions. Conversely, client-driven reductions and trade unwinds in the Investment Bank’s Equities business reduced trading portfolio assets. SFTs increased by USD 5 billion as a result of asset size and other movements, primarily reflecting the increase in Corporate Center – Group ALM due to reinvestment of higher cash balances resulting from the aforementioned changes in business division funding consumption, and partly offset by a decrease in our Investment Bank business, driven by lower prime brokerage receivables in the Equities business. These increases were partly offset by a decrease in derivative exposures of USD 2 billion, because of asset size and other movements, primarily resulting from lower notional amounts and add-on exposures under the current exposure method driven by a net increase of client-driven trade terminations and maturities across the Equities and the Foreign Exchange, Rates and Credit businesses within the Investment Bank. Furthermore, a decrease of USD 1 billion was driven by incremental netting and collateral mitigation, mainly reflecting enhanced yields due to add-on netting benefits in the Investment Bank’s Foreign Exchange, Rates and Credit business. Off-balance sheet items decreased by USD 3 billion, primarily due to client-driven reductions of unutilized credit facilities within the Investment Bank’s Corporate Client Solutions business and termination of forward starting transactions in Corporate Center – Group ALM. →Refer to “Balance sheet, liquidity and funding management” in the “Treasury management” section of this report for more information on balance sheet movements Risk, treasury and capital management 208 Risk, treasury and capital management Capital management Leverage ratio denominator by business division and Corporate Center unit USD billion GGlobal Wealth Management PPersonal & Corporate Banking AAsset Management IInvestment Bank CCC – Services CCC – Group ALM CCC – Non- core and Legacy Portfolio TTotal 331.12.18 Total IFRS assets 200.0 138.8 24.4 258.6 21.7 280.1 34.7 958.4 Difference in scope of consolidation1 (0.2) 0.0 (21.7) (0.4) (0.1) 0.1 0.0 (22.3) Less: derivative exposures and SFTs2 (8.8) (0.8) 0.0 (135.8) 0.0 (96.0) (31.5) (273.0) OOn-balance sheet exposures 191.1 138.0 2.6 122.3 21.6 184.2 3.2 663.1 Derivative exposures 8.6 1.2 0.0 75.2 0.0 3.9 6.4 95.4 Securities financing transactions 2.7 0.0 0.0 32.0 0.0 95.0 1.2 130.9 Off-balance sheet items 5.0 13.0 0.0 10.6 0.1 0.4 0.0 29.0 Items deducted from Swiss SRB tier 1 capital (13.8) (13.8) TTotal3 207.4 152.2 2.7 240.1 7.9 283.5 10.8 904.6 LRD held by CC – Group ALM on behalf of business divisions and other CC units4 63.2 41.2 2.5 16.1 0.3 (124.9) 1.7 0.0 LLRD after allocation from CC – Group ALM to business divisions and other CC units 2270.6 1193.4 55.1 2256.2 88.2 1158.6 112.5 9904.6 31.12.17 Total IFRS assets 195.0 139.1 14.6 269.7 21.4 252.1 47.4 939.3 Difference in scope of consolidation1 (0.2) 0.0 (11.9) (0.3) (0.1) 0.2 (0.1) (12.5) Less: derivative exposures and SFTs2 (4.9) (1.2) 0.0 (134.0) 0.0 (80.1) (43.0) (263.2) OOn-balance sheet exposures 189.9 137.8 2.8 135.5 21.3 172.1 4.3 663.6 Derivative exposures 8.3 1.8 0.0 74.9 0.0 6.0 9.7 100.6 Securities financing transactions 2.3 0.0 0.0 45.7 0.0 78.1 1.3 127.4 Off-balance sheet items 4.5 12.2 0.0 14.9 0.1 0.1 0.0 31.9 Items deducted from Swiss SRB tier 1 capital 0.0 (14.5) (14.5) TTotal3 205.0 151.9 2.8 271.0 6.9 256.3 15.3 909.0 LRD held by CC – Group ALM on behalf of business divisions and other CC units4 63.7 39.9 2.1 19.9 0.1 (127.6) 1.8 0.0 LLRD after allocation from CC – Group ALM to business divisions and other CC units 2268.7 1191.8 44.9 2290.9 77.0 1128.7 117.1 909.0 31.12.18 vs 31.12.17 Total IFRS assets 5.0 (0.3) 9.7 (11.2) 0.3 28.0 (12.7) 19.1 Difference in scope of consolidation1 0.0 0.0 (9.9) (0.1) 0.1 0.0 0.1 (9.8) Less: derivative exposures and SFTs2 (3.9) 0.4 0.0 (1.9) 0.0 (15.9) 11.5 (9.8) OOn-balance sheet exposures 1.2 0.2 (0.1) (13.2) 0.4 12.1 (1.0) (0.5) Derivative exposures 0.3 (0.6) 0.0 0.4 0.0 (2.1) (3.2) (5.3) Securities financing transactions 0.5 0.0 0.0 (13.7) 0.0 17.0 (0.2) 3.6 Off-balance sheet items 0.5 0.8 0.0 (4.3) 0.0 0.3 0.0 (2.8) Items deducted from Swiss SRB tier 1 capital 0.7 0.7 TTotal3 2.4 0.3 (0.1) (30.8) 1.0 27.2 (4.4) (4.4) LRD held by CC – Group ALM on behalf of business divisions and other CC units4 (0.5) 1.3 0.4 (3.8) 0.2 2.7 (0.1) 0.0 LLRD after allocation from CC – Group ALM to business divisions and other CC units 11.9 11.6 00.2 ((34.7)11.2 229.9 ((4.6)((4.4) 11 Represents the difference between the IFRS and the regulatory scope of consolidation, which is the applicable scope for the LRD calculation. 2 Consists of derivative financial instruments, cash collateral receivables on derivative instruments, receivables from securities financing transactions, and margin loans as well as prime brokerage receivables and financial assets at fair value not held for trading, both related to securities financing transactions, in accordance with the regulatory scope of consolidation, which are presented separately under Derivative exposures and Securities financing transactions. 3 Represents LRD held by the respective business division or Corporate Center unit. 4 Represents LRD held by Corporate Center – Group ALM that is directly associated with activity managed centrally on behalf of the business divisions and other Corporate Center units. Refer to “Equity attribution and return on attributed equity“ in this section for more information. 209 Equity attribution and return on attributed equity Average equity attributed to business divisions and Corporate Center decreased by USD 1.5 billion to USD 52.4 billion in 2018, primarily driven by the net write-down of deferred tax assets (DTAs) following a reduction in the US federal corporate tax rate after the enactment of the Tax Cuts and Jobs Act in the fourth quarter of 2017. Equity attribution framework in 2018 Under our equity attribution framework, tangible equity is attributed based on a weighting of 50% each for average risk- weighted assets (RWA) and average leverage ratio denominator (LRD). Average RWA and LRD were converted to their common equity tier 1 (CET1) capital equivalents based on capital ratios of 11% and 3.75%, respectively. If the attributed tangible equity calculated under the weighted-driver approach were less than the CET1 capital equivalent of risk-based capital (RBC) for any business division, the CET1 capital equivalent of RBC was used as a floor for that business division. LRD and RWA held by Corporate Center – Group Asset and Liability Management (Group ALM) directly associated with activities that Corporate Center – Group ALM manages centrally on behalf of the business divisions and other Corporate Center units were allocated to those business divisions and other Corporate Center units for the purpose of equity attribution. This allocation was primarily based on the level of high-quality liquid assets that was needed to meet the Group’s minimum liquidity coverage ratio requirement of 110%. Corporate Center – Group ALM retains attributed equity related to liquidity and funding surpluses, i.e., at levels above regulatory requirements, together with that related to its own activities. In addition to tangible equity, we allocated equity to our businesses to support goodwill and intangible assets. Furthermore, we attributed all remaining Basel III capital deduction items to Corporate Center Group items. These deduction items included DTAs recognized for tax loss carry- forwards and DTAs on temporary differences in excess of the threshold, which together constituted the largest component of Corporate Center Group items, dividend accruals, unrealized gains from cash flow hedges and compensation- and own shares-related components. Change in equity attribution framework as of 1 January 2019 We have updated our equity attribution framework by revising the capital ratio for RWA from 11% to 12.5% and incrementally allocating to business divisions approximately USD 2 billion of attributed equity that is related to certain CET1 deduction items previously held centrally, such as compensation-related components and the expected loss on advanced internal ratings- based portfolio less general provisions. We continue to allocate tangible equity based on a weighting of 50% each for average RWA and average LRD, and apply a floor for business divisions if the attributed tangible equity calculated under the weighted-driver approach is less than the CET1 capital equivalent of RBC. Also, we continue to allocate equity to our businesses to support goodwill and intangible assets. Given these changes, as well as changes in resource allocation from Corporate Center to the business divisions, we expect to allocate approximately USD 7 billion of additional attributed equity to the business divisions, of which approximately USD 3 billion will be allocated to the Investment Bank. The remaining attributed equity retained in Corporate Center will primarily relate to deferred tax assets, dividend accruals and Corporate Center – Non-core and Legacy Portfolio. All of these changes are effective as of 1 January 2019, and we will provide restated prior-period information in advance of our first quarter results. →Refer to the “Significant accounting and financial reporting changes” section of this report for more information on the alignment of the equity attribution framework with the revised resource allocation methodology Risk, treasury and capital management 210 Risk, treasury and capital management Capital management Attributed equity For the year ended USD billion 331.12.18 31.12.17 31.12.16 Average attributed equity Global Wealth Management 13.4 13.0 6.1 Personal & Corporate Banking 6.6 6.2 4.1 Asset Management 1.7 1.7 1.4 Investment Bank 10.2 9.5 7.7 Corporate Center 20.5 23.5 29.4 of which: CC – Services 16.1 19.4 23.0 of which: Group items 1 14.3 17.6 21.6 of which: CC – Group ALM 3.2 2.8 4.3 of which: CC – Non-core and Legacy Portfolio 1.2 1.4 2.1 AAverage equity attributed to business divisions and Corporate Center 52.4 53.9 48.8 Average attributed tangible equity2, 3 Global Wealth Management 8.4 8.0 Personal & Corporate Banking 6.6 6.2 Asset Management 0.3 0.3 Investment Bank 10.2 9.4 Corporate Center 20.5 23.5 of which: CC – Services 16.1 19.4 of which: Group items 1 14.3 17.6 of which: CC – Group ALM 3.2 2.8 of which: CC – Non-core and Legacy Portfolio 1.2 1.4 AAverage tangible equity attributed to business divisions and Corporate Center 45.9 47.4 11 Of the USD 14.3 billion of average equity attributed to Group items for the fourth quarter of 2018, USD 6.1 billion related to average DTAs recognized for tax loss carry-forwards and USD 0.4 billion related to average DTAs on temporary differences in excess of the 10% of CET1 capital threshold. Dividend accruals are also included in Group items. DTA amounts and dividend accruals represent average amounts. 2 Attributed tangible equity equals attributed equity less goodwill and intangible assets. 3 Attributed tangible equity is shown for the period for which return on attributed tangible equity is available. This is a measure introduced in 2017, accordingly no comparative-period information is available. 211 Return on attributed equity1 For the year ended In %331.12.18 31.12.17 31.12.16 Return on (attributed) equity11 Reported Global Wealth Management 27.0 27.5 50.7 Personal & Corporate Banking 29.1 25.8 43.3 Asset Management 26.5 34.0 32.2 Investment Bank 16.1 13.3 13.1 UUBS Group 8.6 1.8 6.1 Adjusted3 Global Wealth Management 27.7 32.0 60.3 Personal & Corporate Banking 23.8 27.5 43.1 Asset Management 29.8 31.0 39.4 Investment Bank 17.9 16.0 19.7 UUBS Group 8.7 3.2 7.8 Return on (attributed) tangible equity11,2 Reported Global Wealth Management 44.0 45.5 Personal & Corporate Banking 29.1 25.8 Asset Management 139.4 186.2 Investment Bank 16.3 13.6 UUBS Group 10.0 2.2 Adjusted3 Global Wealth Management 45.0 52.8 Personal & Corporate Banking 23.8 27.5 Asset Management 156.7 170.0 Investment Bank 18.2 16.3 UUBS Group 10.1 3.7 11 Return on attributed equity and return on attributed tangible equity shown for the business divisions. Return on equity attributable to shareholders and return on tangible equity shown for the UBS Group. Return on attributed equity and return on attributed tangible equity for Corporate Center is not shown, as it is not meaningful. 2 Attributed tangible equity is shown for the period for which return on attributed tangible equity is available. This is a measure introduced in 2017, accordingly no comparative-period information is available. 3 Adjusted results are non-GAAP financial measures as defined by SEC regulations.Risk, treasury and capital management 212 Risk, treasury and capital management Capital management UBS shares UBS Group AG shares Audited | As of 31 December 2018, IFRS equity attributable to shareholders amounted to USD 52,928 million, represented by 3,855,634,749 shares issued. Shares issued increased by 2,538,146 shares in 2018, reflecting the issuance of shares out of conditional share capital upon exercise of employee share options. Each share has a par value of CHF 0.10 and entitles the holder to one vote at the UBS Group AG shareholders’ meeting, if entered into the share register as having the right to vote, and also a proportionate share of distributed dividends. All shares are fully paid up. As the Articles of Association of UBS Group AG indicate, there are no other classes of shares and no preferential rights for shareholders. →Refer to the “Corporate governance” section of this report for more information on UBS shares UBS Group share information As of or for the year ended % change from 331.12.18 31.12.17 31.12.17 Shares issued 3,855,634,749 3,853,096,603 0 Treasury shares 166,467,802 132,301,550 26 Shares outstanding 3,689,166,947 3,720,795,053 (1) Basic earnings per share (USD)1 1.21 0.26 365 Diluted earnings per share (USD)1 1.18 0.25 372 Basic earnings per share (CHF)2 1.18 0.26 354 Diluted earnings per share (CHF)2 1.14 0.26 338 Equity attributable to shareholders (USD million) 52,928 52,495 1 Less: goodwill and intangible assets (USD million) 6,647 6,563 1 Tangible equity attributable to shareholders (USD million) 46,281 45,932 1 Total book value per share (USD) 14.35 14.11 2 Tangible book value per share (USD) 12.55 12.34 2 Share price (USD)3 12.44 18.40 (32) Market capitalization (USD million)4 45,907 68,477 (33) 11 Refer to “Note 9 Earnings per share (EPS) and shares outstanding” in the “Consolidated financial statements” section of this report for more information. 2 Basic and diluted earnings per share in Swiss francs are calculated based on a translation of net profit / (loss) under our US dollar presentation currency. As a consequence of the restatement to a US dollar presentation currency, amounts may differ from those originally published in our quarterly and annual reports. 3 Represents the share price as listed on the SIX Swiss Exchange, translated to US dollars using the respective spot rate. 4 The calculation of market capitalization has been amended to reflect total shares outstanding multiplied by the share price at the end of the period. The calculation was previously based on total shares issued multiplied by the share price at the end of the period. Market capitalization has been reduced by USD 2.1 billion as of 31 December 2018 and by USD 2.4 billion as of 31 December 2017 as a result. 213 Holding of UBS Group AG shares Group Treasury holds UBS Group AG shares to hedge future share delivery obligations related to employee share-based compensation awards and also holds shares purchased under the share repurchase program, which will be canceled by means of a capital reduction to be proposed at future annual general meetings. In addition, the Investment Bank holds a limited number of UBS Group AG shares, primarily in its capacity as a market-maker in UBS Group AG shares and related derivatives and to hedge certain issued structured debt instruments. As of 31 December 2018, we held a total of 166,467,802 treasury shares (31 December 2017: 132,301,550), or 4.3% (31 December 2017: 3.4%) of shares issued. Share delivery obligations related to employee share-based compensation awards totaled 146 million shares as of 31 December 2018 (31 December 2017: 166 million). Share delivery obligations are calculated on the basis of unvested notional share awards, options and stock appreciation rights, taking applicable performance conditions into account. Treasury shares held are delivered to employees at exercise or vesting. However, share delivery obligations related to certain options and stock appreciation rights can also be satisfied by shares issued out of conditional capital. As of 31 December 2018, the number of UBS Group AG shares that could have been issued out of conditional capital for this purpose was 125 million (31 December 2017: 128 million). The table below outlines the market purchases of UBS Group AG shares by Group Treasury. It does not include the activities of the Investment Bank. Treasury share purchases Share repurchase program1 Other treasury shares purchased2 Month of purchase Number of shares Average price in CHF Remaining volume of share repurchase program in CHF million Number of shares Average price in USD January 2018 February 2018 March 2018 April 2018 1,900,000 16.61 1,968 May 2018 16,613,000 16.15 1,700 June 2018 16,247,000 15.39 1,450 July 2018 1,450 August 2018 1,450 September 2018 6,299,500 15.87 1,350 October 2018 6,000,000 13.68 1,268 100 13.43 November 2018 1,259,300 14.23 1,250 12,000,000 13.91 December 2018 1,2503 20,000,000 12.45 11 On 22 January 2018, UBS announced its intention to buy back its own registered shares over three years starting from March 2018, amounting to a maximum of CHF 2 billion. The share repurchase information in this table is disclosed in Swiss francs as the share buybacks are transacted in Swiss francs on a separate trading line on the SIX Swiss Exchange. 2 This table excludes purchases for the purpose of hedging derivatives linked to UBS Group AG shares and for market-making in UBS Group AG shares. The table also excludes UBS Group AG shares purchased by pension and retirement benefit funds for UBS employees, which are managed by a board of UBS management and employee representatives in accordance with Swiss law. UBS’s pension and other post-employment benefit funds purchased 888,572 UBS Group AG shares during the year and held 16,711,587 UBS Group AG shares as of 31 December 2018. 3 The remaining volume of the share repurchase program as of 31 December 2018 was USD 1,271 million. This was calculated based on the remaining volume of CHF 1,250 million as of 31 December 2018 and the respective foreign currency rate as of this date. Trading volumes For the year ended 1,000 shares 31.12.18 31.12.17 31.12.16 SIX Swiss Exchange total 3,277,995 3,084,804 3,761,294 SIX Swiss Exchange daily average 13,165 12,290 14,808 New York Stock Exchange total 166,728 146,902 160,887 New York Stock Exchange daily average 664 585 638 Source: Reuters Risk, treasury and capital management 214 Risk, treasury and capital management Capital management Listing of UBS Group AG shares UBS Group AG shares are listed on the SIX Swiss Exchange (SIX). They are also listed on the New York Stock Exchange (NYSE) as global registered shares. As such, they can be traded and transferred across applicable borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies. During 2018, the average daily trading volume of UBS Group AG shares was 13.2 million shares on the SIX and 0.7 million shares on the NYSE. The SIX is expected to remain the main venue for determining the movement in our share price because of the high volume traded on this exchange. During the hours in which both the SIX and the NYSE are simultaneously open for trading (generally 3:30 p.m. to 5:30 p.m. Central European Time), price differences between these exchanges are likely to be arbitraged away by professional market-makers. Accordingly, the share price will typically be similar between the two exchanges when considering the prevailing US dollar / Swiss franc exchange rate. When the SIX is closed for trading, globally traded volumes will typically be lower. However, the specialist firm making a market in UBS Group AG shares on the NYSE is required to facilitate sufficient liquidity and maintain an orderly market in UBS Group AG shares throughout normal NYSE trading hours. Ticker symbols UBS Group AG TTrading exchange SSIX/NYSE BBloomberg RReuters SIX Swiss Exchange UBSG UBSG SW UBSG.S New York Stock Exchange UBS UBS UN UBS.N Security identification codes ISIN CCH0244767585 Valoren 224 476 758 CUSIP CCINS H42097 10 7 Corporate governance and compensation Management report Audited information according to the Swiss law and applicable regulatory requirements and guidance Disclosures provided are in line with the requirements of article 663c para. 1 and 3 of the Swiss Code of Obligations (supplementary disclosures for companies whose shares are listed on a stock exchange: shareholdings) and the Ordinance against Excessive Compensation in Listed Stock Corporations (tables containing such information are marked as “Audited” throughout this section), as well as other applicable regulations and guidance. 216 Corporate governance and compensation Corporate governance Corporate governance UBS Group AG is subject to, and compliant with, all relevant Swiss legal and regulatory requirements regarding corporate governance, including the SIX Swiss Exchange’s Directive on Information Relating to Corporate Governance, as well as the standards established in the Swiss Code of Best Practice for Corporate Governance, including the appendix on executive compensation. In addition, as a foreign company with shares listed on the New York Stock Exchange (NYSE), UBS Group AG complies with all relevant corporate governance standards applicable to foreign private issuers. The Organization Regulations of UBS Group AG, adopted by the Board of Directors (BoD) based on article 716b of the Swiss Code of Obligations and articles 25 and 27 of the Articles of Association of UBS Group AG, constitute our primary corporate governance guidelines. To the extent practicable, the governance structures of UBS Group AG and UBS AG are aligned. UBS AG complies with all relevant Swiss legal and regulatory corporate governance requirements. As a foreign private issuer with debt securities listed on the NYSE, UBS AG also complies with the relevant NYSE corporate governance standards. The discussion in this section refers to both UBS Group AG and UBS AG, unless specifically noted otherwise or unless the information discussed is relevant only to companies with listed shares and therefore only applicable to UBS Group AG. This is in line with US Securities and Exchange Commission regulations and NYSE listing standards. →Refer to the Articles of Association of UBS Group AG and of UBS AG, and to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information →The SIX Swiss Exchange’s Directive on Information Relating to Corporate Governance is available at www.six-exchange- regulation.com, the Swiss Code of Best Practice for Corporate Governance is available at www.economiesuisse.ch and the NYSE rules are available at www.nyse.com Differences from corporate governance standards relevant to US-listed companies According to the NYSE listing standards on corporate governance, foreign private issuers are required to disclose any significant ways in which their corporate governance practices differ from those that have to be followed by domestic companies. These differences are discussed in the following paragraphs. Responsibility of the Audit Committee with regard to independent auditors Our Audit Committee is responsible for the compensation, retention and oversight of the independent auditors. It assesses the performance and qualification of the external auditors and submits its proposal for appointment, reappointment or removal of the independent auditors to the full BoD. As required by the Swiss Code of Obligations, the BoD then submits its proposal to the shareholders for their vote at the Annual General Meeting (AGM). Under NYSE standards, the Audit Committee is also responsible for the appointment of the independent auditors. Discussion of risk assessment and risk management policies by the Risk Committee In accordance with the respective Organization Regulations of UBS Group AG and UBS AG, the Risk Committee instead of the Audit Committee oversees our risk principles and risk capacity on behalf of the BoD. The Risk Committee is responsible for monitoring our adherence to those risk principles and for monitoring whether business divisions and control units maintain appropriate systems of risk management and control. Supervision of the internal audit function The Chairman of the BoD (Chairman) and the Audit Committee share the supervisory responsibility and authority with respect to the internal audit function. Under NYSE standards, only the Audit Committee supervises the internal audit function. 217 Responsibility of the Compensation Committee for performance evaluations of senior management of UBS Group AG In line with Swiss law, our Compensation Committee, together with the BoD, proposes for shareholder approval at the AGM the maximum aggregate amount of compensation for the BoD, the maximum aggregate amount of fixed compensation for the Group Executive Board (GEB) and the aggregate amount of variable compensation for the GEB. The shareholders elect the members of the Compensation Committee at the AGM. Under NYSE standards, it is the responsibility of the Compensation Committee to evaluate senior management performance and to determine and approve, as a committee or together with the other independent directors, its compensation. Proxy statement reports of the Audit Committee and the Compensation Committee NYSE listing standards would require the aforementioned committees to submit their reports directly to shareholders. However, under Swiss law, all our reports addressed to shareholders, including those from the aforementioned committees, are provided and approved by the BoD, which has ultimate responsibility to the shareholders. Shareholders’ votes on equity compensation plans While the NYSE standards would require shareholder approval for the establishment of and material revisions to all equity compensation plans, Swiss law authorizes the BoD to approve compensation plans. Shareholder approval is only mandatory if equity-based compensation plans require an increase in capital. No shareholder approval is required if shares for such plans are purchased in the market. →Refer to “Board of Directors” in this section for more information on the Board of Directors’ committees →Refer to “Share capital structure” in this section for more information on UBS Group AG’s capital Corporate governance and compensation 218 Corporate governance and compensation Corporate governance Group structure and shareholders Operational Group structure As of 31 December 2018, the operational structure of the Group is comprised of the Global Wealth Management, Personal & Corporate Banking, Asset Management and Investment Bank business divisions, as well as Corporate Center with its units Corporate Center – Services (comprising the Group functions Group Chief Operating Officer area, Group Finance, Group Risk Control, Group Legal, Group Compliance, Regulatory & Governance, Communications & Branding and UBS in society), Corporate Center – Group Asset and Liability Management (ALM) and Corporate Center – Non-core and Legacy Portfolio. Effective 1 February 2018, Wealth Management and Wealth Management Americas were combined into a unified business division called Global Wealth Management. Beginning with our first quarter 2019 report, we will provide results for total Corporate Center only and will not separately report Services, Group ALM and Non-core and Legacy Portfolio. →Refer to “Our businesses” in the “Our strategy, business model and environment” section from page 19 of this report for more information →Refer to the sections under “Financial and operating performance” from page 63 and to “Note 2 Segment reporting” in the “Consolidated financial statements” section from page 377 of this report for more information →Refer to the “Our evolution” section from page 12 of this report for more information Listed and non-listed companies belonging to the Group The Group includes a number of consolidated entities, of which only UBS Group AG has its shares listed. UBS Group AG’s registered office is at Bahnhofstrasse 45, CH-8001 Zurich, Switzerland. The shares of UBS Group AG are listed on the SIX Swiss Exchange (ISIN: CH0244767585) and on the NYSE (CUSIP: H42097107). →Refer to “UBS shares” in the “Capital management” section from page 212 of this report for information on UBS Group AG’s market capitalization and shares held by Group entities →Refer to “Note 31 Interests in subsidiaries and other entities” in the “Consolidated financial statements” section from page 485 of this report for more information on the significant subsidiaries of the Group Significant shareholders General rules Under the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading of 19 June 2015 (FMIA), anyone directly or indirectly, or acting in concert with third parties, holding shares in a company listed in Switzerland or holding derivative rights related to shares of such a company must notify the company and the SIX Swiss Exchange (SIX) if the holding reaches, falls below or exceeds one of the following thresholds: 3, 5, 10, 15, 20, 25, 331⁄3, 50, or 662⁄3% of voting rights, regardless of whether or not such rights may be exercised. Nominee companies that cannot autonomously decide how voting rights are exercised are not obligated to notify the company and the SIX if they reach, exceed or fall below the threshold percentages. Pursuant to the Swiss Code of Obligations, we disclose in the notes to our financial statements the identity of any shareholder with a holding of more than 5% of the total share capital of UBS Group AG. 219 Shareholders not registered in the UBS share register According to the FMIA disclosure notifications filed with UBS Group AG and the SIX, as of 31 December 2018, the following entities held more than 3% of the total share capital of UBS Group AG: Dodge & Cox, San Francisco, disclosed a holding of 3.03% of the total share capital of UBS Group AG on 30 November 2018; BlackRock Inc., New York, disclosed a holding of 4.99% on 28 August 2018; and MFS Investment Management, Boston, disclosed a holding of 3.05% on 10 February 2016. The above disclosures have not been subsequently superseded, and no new disclosures of significant shareholdings have been made since 31 December 2018. In accordance with the FMIA, the aforementioned holdings are calculated in relation to the total share capital of UBS Group AG reflected in its Articles of Association at the time of the respective disclosure notification. Information on disclosures under the FMIA is available at www.six-exchange-regulation.com/en/home/publications/ significant-shareholders.html. Shareholders registered in the UBS share register The shareholders (acting in their own name or in their capacity as nominees for other investors or beneficial owners) listed in the table below were registered in the UBS share register with 3% or more of the total share capital of UBS Group AG as of 31 December 2018. Cross-shareholdings UBS Group AG has no cross-shareholdings where reciprocal ownership would be in excess of 5% of capital or voting rights with any other company. Audited | Shareholders registered in the UBS share register with 3% or more of the total share capital % of share capital 331.12.18 31.12.17 31.12.16 Chase Nominees Ltd., London 12.08 11.16 9.43 DTC (Cede & Co.), New York1 7.23 6.64 6.62 Nortrust Nominees Ltd., London 4.14 4.11 3.88 11 DTC (Cede & Co.), New York, “The Depository Trust Company,” is a US securities clearing organization. Corporate governance and compensation 220 Corporate governance and compensation Corporate governance Share capital structure Ordinary share capital At year-end 2018, UBS Group AG had 3,855,634,749 issued shares with a par value of CHF 0.10 each, leading to a share capital of CHF 385,563,474.90. Under Swiss company law, shareholders must approve in a general meeting of shareholders an ordinary share capital increase or the creation of conditional or authorized share capital. In 2018, our shareholders were not asked to approve an ordinary share capital increase or the creation of conditional or authorized share capital. Share capital increased during the year by 2,538,146 shares, as shares were issued out of existing conditional capital due to the exercise of employee options. Issued share capital of UBS Group AG SShare capital in CHF NNumber of shares Par value in CHF AAs of 31 December 2017 385,309,660 3,853,096,603 0.10 Issue of shares out of conditional capital due to employee options exercised in 2018 253,815 2,538,146 0.10 AAs of 31 December 2018 385,563,475 3,855,634,749 0.10 Distribution of UBS shares As of 31 December 2018 Shareholders registered Shares registered Number of shares registered Number % Number % of shares issued 1–100 25,017 10.9 1,403,306 0.0 101–1,000 120,927 52.8 57,443,935 1.5 1,001–10,000 75,145 32.8 216,419,373 5.6 10,001–100,000 7,158 3.1 170,930,404 4.4 100,001–1,000,000 594 0.3 169,267,430 4.4 1,000,001–5,000,000 87 0.0 178,688,459 4.6 5,000,001–38,556,347 (1%) 26 0.0 321,024,783 8.3 1–2% 4 0.0 203,199,804 5.3 2–3% 0 0.0 0 0.0 3–4% 0 0.0 0 0.0 4–5% 1 0.0 159,517,521 4.1 Over 5% 21 0.0 744,583,467 19.3 Total registered 228,961 100.0 2,222,478,482 2 57.6 Unregistered3 1,633,156,267 42.4 Total shares issued 3,855,634,749 100.0 1 On 31 December 2018, Chase Nominees Ltd., London, entered as a fiduciary / nominee, was registered with 12.08% of all UBS shares issued. However, according to the provisions of UBS Group AG, voting rights of fiduciaries / nominees are limited to a maximum of 5% of all UBS shares issued. The US securities clearing organization DTC (Cede & Co.), New York, was registered with 7.23% of all UBS shares issued and is not subject to this 5% voting limit as a securities clearing organization. 2 Of the total shares registered, 403,358,353 shares did not carry voting rights. 3 Shares not entered in the UBS share register as of 31 December 2018. 221 Conditional share capital At year-end 2018, the following conditional share capital was available to UBS Group AG’s BoD: – a maximum of CHF 38,000,000 represented by up to 380,000,000 fully paid registered shares with a nominal value of CHF 0.10 each, to be issued through the voluntary or mandatory exercise of conversion rights and / or warrants granted in connection with the issuance of bonds or similar financial instruments on national or international capital markets. This conditional capital allowance was approved at the Extraordinary General Meeting (EGM) held on 26 November 2014, originally approved at the AGM of UBS AG on 14 April 2010. The BoD has not made use of such allowance. – a maximum of CHF 12,512,647.60 represented by 125,126,476 fully paid registered shares with a par value of CHF 0.10 each, to be issued upon exercise of employee options issued to employees and members of the management and of the BoD of UBS Group AG and its subsidiaries. This conditional capital allowance was approved by the shareholders at the same EGM in 2014. →Refer to article 4a of the Articles of Association of UBS Group AG for more information on the terms and conditions of the issue of shares out of existing conditional capital. The Articles of Association are available at www.ubs.com/governance Conditional capital of UBS Group AG AAs of 31 December 2018 MMaximum number of shares to be issued Year approved by Extraor- dinary General Meeting %% of shares issued Employee equity participation plans 125,126,476 2014 3.24 Conversion rights / warrants granted in connection with bonds 380,000,000 2014 9.85 TTotal 505,126,476 13.10 Authorized share capital UBS Group AG had no authorized capital available to issue on 31 December 2018. Changes in capital In accordance with International Financial Reporting Standards, Group equity attributable to shareholders amounted to USD 52.9 billion as of 31 December 2018 (2017: USD 52.5 billion; and 2016: USD 52.9 billion). UBS Group AG shareholders’ equity was represented by 3,855,634,749 issued shares as of 31 December 2018 (2017: 3,853,096,603 shares; and 2016: 3,850,766,389 shares). →Refer to “Statement of changes in equity” in the “Consolidated financial statements” section from page 320 of this report for more information on changes in shareholders’ equity over the last three years Ownership Ownership of UBS Group AG shares is widely spread. The tables in this section provide information about the distribution of UBS Group AG shareholders by category and geographic location. This information relates only to shareholders registered in the UBS share register and cannot be assumed to be representative of UBS Group AG’s entire investor base or the actual beneficial ownership. Only shareholders registered in the share register as “shareholders with voting rights” are entitled to exercise voting rights. →Refer to “Shareholders’ participation rights” in this section for more information As of 31 December 2018, 1,819,120,129 UBS Group AG shares were registered in the share register and carried voting rights, 403,358,353 shares were registered in the share register without voting rights, and 1,633,156,267 shares were not registered in the UBS share register. All shares were fully paid up and eligible for dividends. There are no preferential rights for shareholders, and no other classes of shares are issued by UBS Group AG.Corporate governance and compensation 222 Corporate governance and compensation Corporate governance Shareholders, legal entities and nominees: type and geographical distribution SShareholders registered AAs of 31 December 2018 Number % Individual shareholders 223,901 97.8 Legal entities 4,832 2.1 Nominees, fiduciaries 228 0.1 Total registered shares Unregistered shares TTotal 228,961 100.0 IIndividual shareholders LLegal entities NNominees TTotal Number % Number % Number % Number % AAmericas 5,309 2.3 148 0.1 104 0.0 5,561 2.4 of which: USA 4,683 2.0 78 0.0 98 0.0 4,859 2.1 AAsia Pacific 5,334 2.3 114 0.1 21 0.0 5,469 2.4 EEurope, Middle East and Africa 12,586 5.5 271 0.1 65 0.0 12,922 5.6 of which: Germany 4,123 1.8 35 0.0 4 0.0 4,162 1.8 of which: UK 4,719 2.1 7 0.0 6 0.0 4,732 2.1 of which: rest of Europe 3,532 1.5 226 0.1 55 0.0 3,813 1.7 of which: Middle East and Africa 212 0.1 3 0.0 0 0.0 215 0.1 SSwitzerland 200,672 87.6 4,299 1.9 38 0.0 205,009 89.5 Total registered shares Unregistered shares TTotal 223,901 97.8 4,832 2.1 228 0.1 228,961 100.0 At year-end 2018, UBS owned 166,467,802 UBS Group AG registered shares, which corresponded to 4.32% of the total share capital of UBS Group AG. At the same time, we had acquisition and disposal positions relating to 190,587,619 and 165,817,208 voting rights of UBS Group AG, corresponding to 4.95% and 4.30% of the total voting rights of UBS Group AG, respectively. Of the disposal positions, 3.88% consisted of voting rights on shares deliverable in respect of employee awards. The calculation methodology for the acquisition and disposal positions is based on the Swiss Financial Market Supervisory Authority Ordinance on Financial Market Infrastructure, which sets forth that all future potential share delivery obligations, irrespective of the contingent nature of the delivery, must be taken into account. Employee share ownership Employee share ownership is encouraged and enabled in a variety of ways. One example is our Equity Plus Plan. This is a voluntary plan that provides eligible employees with the opportunity to purchase UBS Group AG shares at market value and receive, at no additional cost, one notional UBS Group AG share for every three shares purchased. If the shares purchased are held for three years and the employee remains in employment, the notional shares vest. Another example is the Equity Ownership Plan (EOP). This is a mandatory deferral plan for all employees with total compensation greater than USD / CHF 300,000. Employees other than GEB members receive at least 60% of their deferred performance award under the EOP in notional shares. The plan includes provisions that allow the firm to reduce or fully forfeit the unvested deferred portion of the granted EOP award if an employee commits certain harmful acts, and in most cases trigger forfeiture where employment has been terminated. To encourage our employees to develop and manage the business in a way that delivers sustainable returns, EOP awards granted to GEB members and other senior employees will only vest if both Group and business division performance conditions are met. As of 31 December 2018, UBS employees held an estimated 6% of UBS shares outstanding (including approximately 4% in unvested / blocked actual and notional shares from our compensation programs). These figures are based on known shareholding information from employee participation plans, personal holdings with UBS and selected individual retirement plans. At the end of 2018, an estimated 34% of all employees held UBS shares through the firm’s employee share participation plans. →Refer to the “Compensation” section from page 250 of this report for more information Shares and participation certificates UBS Group AG has a single class of shares, which are registered shares in the form of uncertificated securities (in the sense of the Swiss Code of Obligations) and intermediary-held securities (in the sense of the Swiss Federal Act on Intermediated Securities). Each registered share has a par value of CHF 0.10 and carries one vote subject to the restrictions set out under “Transferability, voting rights and nominee registration” on the following page. We have no participation certificates outstanding. 223 Our shares are listed on the NYSE as global registered shares. As such, they can be traded and transferred across applicable borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies. →Refer to “UBS shares” in the “Capital management” section from page 212 of this report for more information Distributions to shareholders The decision to pay a dividend and the amount of any dividend depends on a variety of factors, including our profits, cash flow generation and capital ratios. At the 2019 AGM, UBS’s BoD intends to propose to shareholders for approval a dividend of CHF 0.70 per share for the financial year 2018, to be paid out of the capital contribution reserve. In March 2018, UBS initiated a share repurchase program of up to CHF 2 billion over a three-year period. The UBS shares repurchased under the program will be canceled by means of a capital reduction, to be proposed at future annual general meetings. During 2018, UBS repurchased shares totaling CHF 750 million, exceeding the 2018 target of up to CHF 550 million. →Refer to “UBS shares” in the “Capital management” section from page 212 of this report for more information on the share repurchase program Transferability, voting rights and nominee registration We do not apply any restrictions or limitations on the transferability of shares. Voting rights may be exercised without any restrictions by shareholders entered into the share register if they expressly render a declaration of beneficial ownership according to the provisions of the Articles of Association. We have special provisions for the registration of fiduciaries and nominees. Fiduciaries and nominees are entered in the share register with voting rights up to a total of 5% of all issued UBS Group AG shares if they agree to disclose, upon our request, beneficial owners holding 0.3% or more of all issued UBS Group AG shares. An exception to the 5% voting limit rule is in place for securities clearing organizations, which applied as of 31 December 2018 to The Depository Trust Company in New York. →Refer to “Shareholders’ participation rights” in this section for more information Convertible bonds and options As of 31 December 2018, there were no contingent capital securities or convertible bonds outstanding requiring the issuance of new shares. →Refer to the “Capital management” section from page 194 of this report for more information on our outstanding capital instruments As of 31 December 2018, there were 12,527,179 employee options outstanding, including stock appreciation rights. Options and stock appreciation rights equivalent to 3,705,363 shares were in the money and exercisable. Option-based compensation plans are sourced by issuing new shares out of conditional capital. As mentioned above, as of 31 December 2018, 125,126,476 unissued shares in conditional share capital were available for this purpose. →Refer to “Conditional share capital” in this section for more information →Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section from page 477 of this report for more information on outstanding options and stock appreciation rights SShares registered Number % 455,147,534 11.8 614,079,127 15.9 1,153,251,821 29.9 2,222,478,482 57.6 1,633,156,267 42.4 3,855,634,749 100.0 IIndividual shareholders LLegal entities NNominees TTotal Number of shares % Number of shares % Number of shares % Number of shares % 6,385,407 0.2 74,857,806 1.9 363,352,991 9.4 444,596,204 11.5 4,870,353 0.1 57,225,479 1.5 363,022,386 9.4 425,118,218 11.0 24,680,132 0.6 62,031,827 1.6 9,346,083 0.2 96,058,042 2.5 43,878,796 1.1 24,198,354 0.6 754,218,087 19.6 822,295,237 21.3 13,210,617 0.3 782,505 0.0 18,795,660 0.5 32,788,782 0.9 21,015,786 0.5 1,600,836 0.0 704,288,756 18.3 726,905,378 18.9 9,030,071 0.2 21,615,948 0.6 31,133,671 0.8 61,779,690 1.6 622,322 0.0 199,065 0.0 0 0.0 821,387 0.0 380,203,199 9.9 452,991,140 11.7 26,334,660 0.7 859,528,999 22.3 455,147,534 11.8 614,079,127 15.9 1,153,251,821 29.9 2,222,478,482 57.6 0 0 0 1,633,156,267 42.4 455,147,534 11.8 614,079,127 15.9 1,153,251,821 29.9 3,855,634,749 100.0 Corporate governance and compensation 224 Corporate governance and compensation Corporate governance Shareholders’ participation rights We are committed to shareholder participation in our decision- making process. During 2018, we continued to enhance the online voting platform to offer our registered shareholders a more convenient log-in and online voting process. Registered shareholders are sent personal invitations to the general meetings of shareholders. Together with the invitation materials, they receive a personal one-time password and a QR code to easily log in to our online voting platform, where they can enter their voting instructions or order an admission card for the general meeting. Shareholders who choose not to receive the comprehensive invitation materials are informed of the upcoming general meeting by a short letter containing a personal one-time password and a QR code for the online voting as well as a reference to www.ubs.com/agm, where all information for the upcoming general meeting is available. Relations with shareholders We regularly inform all our shareholders about our activities and performance and other developments. →Refer to “Information policy” in this section for more information The Annual General Meeting of shareholders (AGM) offers shareholders the opportunity to raise any questions to the Board of Directors (BoD) and Group Executive Board, as well as to our internal and external auditors. Voting rights, restrictions and representation We place no restrictions on share ownership and voting rights. However, pursuant to general principles formulated by the BoD, nominee companies and fiduciaries, who normally represent a large number of individual shareholders and may hold an unlimited number of shares, have voting rights limited to a maximum of 5% of all issued UBS Group AG shares in order to avoid the risk of unknown shareholders with large stakes being entered in the share register. Securities clearing organizations, such as The Depository Trust Company in New York, are not subject to this 5% voting limit. Shareholders can exercise their voting rights conferred by the shares only if they are registered in our share register with voting rights. To register, shareholders must confirm that they have acquired UBS Group AG shares in their own name and for their own account. Nominee companies and fiduciaries are required to sign an agreement confirming their willingness to disclose, upon our request, individual beneficial owners holding more than 0.3% of all issued UBS Group AG shares. All shareholders registered with voting rights are entitled to participate in general meetings of shareholders. If they do not wish to attend in person, they may issue instructions to support, reject or abstain for each individual item on the meeting agenda, either by giving instructions to an independent proxy in accordance with article 15 of the Articles of Association (AoA) or by appointing another registered shareholder of their choice to vote on their behalf. Alternatively, registered shareholders may issue their voting instructions to the independent proxy electronically through our online voting platform. Nominee companies normally submit the proxy material to the beneficial owners and forward the collected votes to the independent proxy. →Refer to the articles 14 and 15 of the Articles of Association of UBS Group AG for more information on the issuing of instructions to independent voting right representatives. The Articles of Association are available at www.ubs.com/governance Statutory quorums Motions, including the election and re-election of BoD members and the election of the auditors, are decided at a general meeting of shareholders by an absolute majority of the votes cast, excluding blank and invalid ballots. For the approval of certain specific issues, the Swiss Code of Obligations requires a positive vote from a two-thirds majority of the votes represented at a general meeting of shareholders, and from the absolute majority of the par value of shares represented at the meeting. Such issues include the creation of shares with privileged voting rights, the introduction of restrictions on the transferability of registered shares, conditional and authorized capital increases, and restrictions or exclusions of shareholders’ preemptive rights. The AoA also require a two-thirds majority of votes represented for approval of any change to their provisions regarding the number of BoD members, any decision to remove one-quarter or more of the BoD members, and any modification to the provision establishing this qualified quorum. Votes and elections are normally conducted electronically to ascertain the exact number of votes cast. Voting by a show of hands remains possible if a clear majority is predictable. Shareholders representing at least 3% of the votes represented may request that a vote or election be carried out electronically or by written ballot. In order to allow shareholders to clearly express their views on all individual topics, each item on the agenda is put to a vote separately and BoD members are elected on a person-by-person basis. 225 Convocation of general meetings of shareholders The AGM must be held within six months of the close of the financial year (31 December) and normally takes place in early May. In 2019, the AGM will take place on 2 May. Extraordinary General Meetings (EGMs) may be convened whenever the BoD or the auditors consider it necessary. Shareholders individually or jointly representing at least 10% of the share capital may at any time, including during an AGM, ask in writing for an EGM to be convened to address a specific issue they put forward. A personal invitation including a detailed agenda is made available to every registered shareholder at least 20 days ahead of the scheduled general meeting. The agenda items are also published in the Swiss Official Gazette of Commerce as well as at www.ubs.com/agm. Placing of items on the agenda Pursuant to our AoA, shareholders individually or jointly representing shares with an aggregate minimum par value of CHF 62,500 may submit proposals for matters to be placed on the agenda for consideration at the next general meeting of shareholders. At the beginning of February, the invitation to submit such proposals is published in the Swiss Official Gazette of Commerce and at www.ubs.com/agm. Requests for items to be placed on the agenda must include the actual motions to be put forward, together with a short explanation. Such requests must be submitted to the BoD 50 days prior to the general meeting of shareholders, including a statement from the depository bank confirming the number of shares held by the requesting shareholder and that these shares are blocked from sale until the end of the general meeting of shareholders. The BoD formulates opinions on the proposals, which are published together with the motions. Registrations in the share register Around 230,000 shareholders are directly registered in the UBS share register and some 140,000 US shareholders are registered via nominee companies. The share register of UBS Group AG is an internal, non-public register subject to statutory confidentiality, secrecy, privacy and data protection regulations, which are imposed on UBS Group AG to protect shareholders registered therein. In general, third parties and shareholders have no inspection rights with regard to data related to other shareholders. Disclosure of such data is permitted only in specific and limited instances. In line with the Swiss Federal Act on Data Protection, the disclosure of personal data as defined thereunder is only allowed with the consent of the registered shareholder and in cases where there is an overriding private or public interest or if explicitly provided for by Swiss law. The law contains specific reporting duties, such as in relation to significant shareholders (refer to the “Significant shareholders” section of this report for more information). Disclosure may also be required or requested by a court of a competent jurisdiction, by any regulatory body that regulates the conduct of UBS Group AG or by other statutory provisions. The general rules for entry into our Swiss share register with voting rights as described in article 5 of our AoA also apply before general meetings of shareholders. The same rules apply to our US transfer agent that operates the US share register for all UBS Group AG shares in a custodian account in the US. In order to determine the voting rights of each shareholder, our share register generally closes two business days prior to a general meeting of shareholders. Our independent proxy agent processes voting instructions from shareholders with voting rights as long as technically possible, generally also until two business days before a general meeting of shareholders. Such technical closure of our share register only facilitates the determination of the actual voting rights of every shareholder that issued a voting instruction. Irrespective of the technical closure, shares that are registered in our share register are never immobilized and are freely tradable at any time – irrespective of any issued voting instructions. Corporate governance and compensation 226 Corporate governance and compensation Corporate governance Board of Directors The Board of Directors (BoD) of UBS Group AG, under the leadership of the Chairman of the BoD (Chairman), consists of six to 12 members as per our Articles of Association (AoA). The BoD decides on the strategy of the Group upon recommendation by the Group Chief Executive Officer (Group CEO) and is responsible for the overall direction, supervision and control of the Group and its management, as well as for supervising compliance with applicable laws, rules and regulations. The BoD exercises oversight over UBS Group AG and its subsidiaries and is responsible for establishing a clear Group governance framework to provide effective steering and supervision of the Group, taking into account the material risks to which UBS Group AG and its subsidiaries are exposed. The BoD has ultimate responsibility for the success of the Group and for delivering sustainable shareholder value within a framework of prudent and effective controls. It also approves all financial statements for issue and appoints and removes all Group Executive Board (GEB) members. The BoD of UBS AG, under the leadership of the Chairman, decides on the strategy of UBS AG upon recommendation by the President of the Executive Board and exercises the ultimate supervision on management. Its ultimate responsibility for the success of UBS AG is exercised subject to the parameters set by the Group. Members of the Board of Directors At the AGM on 3 May 2018, Michel Demaré, David Sidwell, Reto Francioni, Ann F. Godbehere, Julie G. Richardson, Isabelle Romy, Robert W. Scully, Beatrice Weder di Mauro and Dieter Wemmer were re-elected as members of the BoD. As a result of his new role as Chairman of UBS Americas LLC, William G. Parrett did not stand for re-election. Jeremy Anderson and Fred Hu were elected for their first term. At the same time, Axel A. Weber was re-elected Chairman of the Board of Directors, and Ann F. Godbehere, Michel Demaré, Julie G. Richardson and Dieter Wemmer were elected as members of the Compensation Committee. Additionally, ADB Altorfer Duss & Beilstein AG was elected as independent proxy agent. Following their election, the BoD appointed Michel Demaré as Vice Chairman and David Sidwell as Senior Independent Director of UBS Group AG. Article 31 of our AoA limits the number of mandates that members of the BoD may hold outside the UBS Group to four board memberships in listed companies and five additional mandates in non-listed companies. Mandates in companies that are controlled by us or that control us are not subject to this limitation. In addition, members of the BoD may hold no more than 10 mandates at UBS’s request and 10 mandates in associations, charitable organizations, foundations, trusts, and employee welfare foundations. On 31 December 2018, no member of the BoD reached the thresholds described in article 31 of our AoA. The following biographies provide information on the BoD members and the Group Company Secretary. In addition to information on mandates, the biographies include information on memberships or other activities or functions, as required by the SIX Swiss Exchange Corporate Governance Directive. No member of the BoD carries out operational management tasks within the Group; all members of the BoD are therefore non-executive members. All members of UBS Group AG’s BoD are also members of UBS AG’s BoD, and committee membership is the same for both entities. The Senior Independent Director function relates only to UBS Group AG. In 2018, UBS AG’s BoD had three committees: the Audit Committee, the Compensation Committee and the Risk Committee. 227 Axel A. Weber German, born 1957 Functions at UBS Group AG Chairman of the Board of Directors / Chairperson of the Corporate Culture and Responsibility Committee / Chairperson of the Governance and Nominating Committee Professional history and education Axel A. Weber was elected to the Board of Directors (BoD) of UBS AG at the 2012 AGM and of UBS Group AG in November 2014. He is Chairman of the BoD of both UBS AG and UBS Group AG. He has chaired the Governance and Nominating Committee since 2012 and became Chairperson of the Corporate Culture and Responsibility Committee in 2013. Mr. Weber was president of the German Bundesbank between 2004 and 2011, during which time he also served as a member of the Governing Council of the European Central Bank, as a member of the Board of Directors of the Bank for International Settlements, as German governor of the International Monetary Fund, and as a member of the G7 and G20 Ministers and Governors. He was a member of the steering committees of the European Systemic Risk Board in 2011 and the Financial Stability Board from 2010 to 2011. From 2002 to 2004, Mr. Weber served as a member of the German Council of Economic Experts. His academic career encompasses professorships in international economics, monetary economics and economic theory at the universities of Cologne, Frankfurt am Main, Bonn and Chicago. Mr. Weber holds a master’s degree in economics from the University of Constance and a PhD in economics from the University of Siegen, where he also received his habilitation. He holds honorary doctorates from the universities of Duisburg-Essen and Constance. Other activities and functions –Board member of the Swiss Bankers Association –Trustees Board member of Avenir Suisse –Advisory Board member of the “Beirat Zukunft Finanzplatz” –Board member of the Swiss Finance Council –Chairman of the Board of the Institute of International Finance –Member of the European Financial Services Round Table –Member of the European Banking Group –Member of the International Advisory Panel, Monetary Authority of Singapore –Member of the Group of Thirty, Washington, DC –Chairman of the Board of Trustees of DIW Berlin –Advisory Board member of the Department of Economics, University of Zurich –Member of the Trilateral Commission Michel Demaré Belgian and Swiss, born 1956 Functions at UBS Group AG Independent Vice Chairman / member of the Audit Committee / member of the Compensation Committee / member of the Governance and Nominating Committee Professional history and education Michel Demaré was elected to the BoD of UBS AG at the 2009 AGM and of UBS Group AG in November 2014. In April 2010, he was appointed independent Vice Chairman for the first time. He has been a member of the Audit Committee since 2009 and of the Governance and Nominating Committee since 2010. He became a member of the Compensation Committee in 2013. Mr. Demaré was Chairman of the Board of Syngenta from 2013 to June 2017 and retired as its Vice Chairman in December 2017. He joined ABB in 2005 as Chief Financial Officer (CFO) and as a member of the Group Executive Committee. Mr. Demaré stepped down from his function in ABB in January 2013. Between February and August 2008, he acted as the interim CEO of ABB. From September 2008 to March 2011, he combined his role as CFO with that of President of Global Markets. Mr. Demaré joined ABB from Baxter International Inc., where he was CFO Europe from 2002 to 2005. Prior to this, he spent 18 years at the Dow Chemical Company, holding various treasury and risk management positions in Belgium, France, the US and Switzerland. Between 1997 and 2002, Mr. Demaré was CFO of the Global Polyolefins and Elastomers division. He began his career as an officer in the multinational banking division of Continental Illinois National Bank of Chicago, and was based in Antwerp. Mr. Demaré graduated with an MBA from the Katholieke Universiteit Leuven, Belgium, and holds a degree in applied economics from the Université Catholique de Louvain, Belgium. Other activities and functions –Board member of Vodafone Group Plc –Board member of Louis-Dreyfus Commodities Holdings BV –Vice Chairman of the Supervisory Board of IMD, Lausanne –Advisory Board member of the Department of Banking and Finance, University of Zurich David Sidwell American (US) and British, born 1953 Functions at UBS Group AG Senior Independent Director / Chairperson of the Risk Committee / member of the Governance and Nominating Committee Professional history and education David Sidwell was elected to the BoD of UBS AG at the 2008 AGM and of UBS Group AG in November 2014. In April 2010, he was appointed Senior Independent Director for the first time. He has chaired the Risk Committee since 2008 and has been a member of the Governance and Nominating Committee since 2011. Mr. Sidwell was Executive Vice President and CFO of Morgan Stanley between 2004 and 2007. Before joining Morgan Stanley, he worked for JPMorgan Chase & Co., where, in his 20 years of service, he held a number of different positions, including controller and, from 2000 to 2004, CFO of the Investment Bank. Prior to this, he was with Price Waterhouse in both London and New York. Mr. Sidwell graduated from Cambridge University and qualified as a chartered accountant with the Institute of Chartered Accountants in England and Wales. Other activities and functions –Senior advisor at Oliver Wyman, New York –Board member of Chubb Limited –Board member of GAVI Alliance –Chairman of the Board of Village Care, New York Corporate governance and compensation 228 Jeremy Anderson British, born 1958 Functions at UBS Group AG Chairperson of the Audit Committee / member of the Corporate Culture and Responsibility Committee Professional history and education Jeremy Anderson was elected to the BoD of UBS AG and UBS Group AG at the 2018 AGM. He has chaired the Audit Committee and has been a member of the Corporate Culture and Responsibility Committee since 2018. He was chairman of Global Financial Services at KPMG International from 2010 to 2017. He has spent over 30 years working with the banking and insurance industry in an advisory capacity, covering a broad range of topics, including strategy, audit and risk management, technology-enabled transformation, mergers and bank restructuring. Jeremy Anderson was the founding sponsor of KPMG’s Global Fintech Network in 2014 and is a regular participant at fintech events across Europe, the US and Asia. He joined KPMG International in 2004 and was Head of Financial Services KPMG Europe from 2006 to 2011 as well as Head of Clients and Markets KPMG Europe from 2008 to 2011. From 2004 to 2008 he was in charge of its UK Financial Services Practice. Prior to that, he served as a member of Atos Origin’s Group Management Board and as Head of its UK operations after Atos acquired KPMG Consulting UK in 2002. In this capacity he managed Atos’ consulting, systems integration and IT outsourcing services in the UK. Mr. Anderson joined KPMG’s UK consulting business in 1985 and led the firm as CEO from 2000 to 2002, having previously been a partner in its financial services business. He started his career as a software developer with Triad Computing Systems in 1980. Mr. Anderson graduated with a bachelor’s degree in economics from University College London. Other activities and functions –Trustee of the UK’s Productivity Leadership Group –Trustee of Kingham Hill Trust –Trustee of St. Helen’s Bishopsgate Reto Francioni Swiss, born 1955 Functions at UBS Group AG Member of the Corporate Culture and Responsibility Committee / member of the Risk Committee Professional history and education Reto Francioni was elected to the BoD of UBS AG at the 2013 AGM and of UBS Group AG in November 2014. He has been a member of the Corporate Culture and Responsibility Committee since 2013 and of the Risk Committee since 2015. He was CEO of Deutsche Börse AG from 2005 to 2015. Since 2006, he has been a professor of applied capital markets theory at the University of Basel. From 2002 to 2005, he was Chairman of the Supervisory Board and President of the SWX Group, Zurich, placing him at the heart of digitalization within the industry. Mr. Francioni was co-CEO and Spokesman for the Board of Directors of Consors AG, Nuremberg, from 2000 to 2002. Between 1993 and 2000, he held various management positions at Deutsche Börse AG, including that of Deputy CEO from 1999 to 2000. There he drove a fundamental transformation to shape it as a world leader in technology. From 1992 to 1993, he served in the corporate finance division of Hoffmann-La Roche, Basel. Prior to this, he was on the executive board of Association Tripartite Bourses for several years. From 1985 to 1988, he worked for the former Credit Suisse, holding positions in the equity sales and legal departments. He started his professional career in 1981 in the commerce division of Union Bank of Switzerland. Mr. Francioni completed his studies in law in 1981 and his PhD in 1987 at the University of Zurich. Other activities and functions –Board member of Coca-Cola HBC AG (Senior Independent Non-Executive Director) –Chairman of the Board of Swiss International Air Lines AG –Board member of Francioni AG –Board member of MedTech Innovation Partners AG Ann F. Godbehere Canadian and British, born 1955 Functions at UBS Group AG Chairperson of the Compensation Committee / member of the Audit Committee Professional history and education Ann F. Godbehere was elected to the BoD of UBS AG at the 2009 AGM and of UBS Group AG in November 2014. She has chaired the Compensation Committee since 2011 and has been a member of the Audit Committee since 2009. Ms. Godbehere was appointed CFO and Executive Director of Northern Rock in February 2008, serving in these roles during the initial phase of the business’s public ownership until the end of January 2009. Prior to this role, she served as CFO of Swiss Re Group from 2003 to 2007. Ms. Godbehere was CFO of its Property & Casualty division in Zurich for two years. Previously, she served as CFO of the Life & Health division in London for three years. From 1997 to 1998, she was CEO of Swiss Re Life & Health Canada and Head of IT for Swiss Re in North America. Between 1996 and 1997, she was CFO of Swiss Re Life & Health North America. Ms. Godbehere is a certified general accountant and was made a fellow of the Chartered Professional Accountant Association in 2014 and fellow of the Certified General Accountant Association of Canada in 2003. Other activities and functions –Board member of Rio Tinto plc (Senior Independent Director and chairman of the audit committee) –Board member of Rio Tinto Limited (Senior Independent Director and chairman of the audit committee) –Board member of Royal Dutch Shell plc Corporate governance and compensation Corporate governance 229 Fred Hu Chinese, born 1963 Function at UBS Group AG Member of the Board of Directors Professional history and education Fred Hu was elected to the BoD of UBS AG and UBS Group AG at the 2018 AGM. He has been chairman of Primavera Capital Group, a China-based global investment firm, since 2010. Through his numerous investments in leading technology companies over the years, he has obtained profound knowledge in the areas of mobile internet, digitalization and cybersecurity. Prior to founding Primavera, Fred Hu held various senior positions at Goldman Sachs from 1997 to 2010, where he was instrumental in building the firm’s franchise in the region. He was partner and chairman of Greater China from 2008 to 2010 and partner and co- head Investment Banking China from 2004 to 2008. Before that, he held the position of Goldman Sachs’ chief economist. From 1991 to 1996, he served as an economist at the International Monetary Fund in Washington, DC, and after that was co-director of the National Center for Economic Research and professor at Tsinghua University. He holds a master in engineering science from Tsinghua University, and a master and PhD in economics from Harvard University. Other activities and functions –Non-executive Chairman of the Board of Yum China Holdings –Board member of Hong Kong Exchanges and Clearing Ltd. –Board member of China Asset Management –Board member of Minsheng Financial Leasing Co. –Trustee of the China Medical Board –Governor of the Chinese International School –Co-Chairman of the Nature Conservancy Asia Pacific Council –Director and member of the Executive Committee of China Venture Capital and Private Equity Association Ltd. –Global Advisory Board member of the Council on Foreign Relations Julie G. Richardson American (US), born 1963 Functions at UBS Group AG Member of the Compensation Committee / Member of the Risk Committee Professional history and education Julie G. Richardson was elected to the BoD of UBS AG and UBS Group AG at the 2017 AGM. She has been a member of the Risk Committee since 2017 and a member of the Compensation Committee since 2018. From 2003 to 2012, Ms. Richardson was a Partner and Head of the New York Office of Providence Equity Partners, a global private equity firm specializing in equity investments in media, communications, education and information companies. She acted as a senior advisor to the partnership until 2014. From 1998 to 2003, Ms. Richardson served as Vice Chairman of JPMorgan Chase & Co.’s Investment Banking division and Head of its Global Telecommunications, Media and Technology group. Throughout her career, she has spent significant time with both incumbent and new technology companies, including as a board member of a digital knowledge management company since 2015. After graduating, she started with Merrill Lynch in 1986, where she worked until 1998, in her last position as Managing Director Media and Communications Investment Banking. Ms. Richardson graduated with a bachelor’s degree in business administration from the University of Wisconsin- Madison. Other activities and functions –Board member of The Hartford Financial Services Group, Inc. (chairman of the audit committee) –Board member of Yext (chairman of the audit committee) –Board member of Vereit, Inc. (chairman of the compensation committee) Isabelle Romy Swiss, born 1965 Functions at UBS Group AG Member of the Audit Committee / member of the Governance and Nominating Committee Professional history and education Isabelle Romy was elected to the BoD of UBS AG at the 2012 AGM and of UBS Group AG in November 2014. She has been a member of the Audit Committee and of the Governance and Nominating Committee since 2012. Ms. Romy is a partner at Froriep Legal AG, a large Swiss business law firm. From 1995 to 2012, she worked for another major Swiss law firm based in Zurich, where she was a partner from 2003 to 2012. Her legal practice includes litigation and arbitration in cross-border cases. Ms. Romy has been a professor at the University of Fribourg and at the Federal Institute of Technology in Lausanne (EPFL) since 1996. Between 2003 and 2008, she served as a deputy judge at the Swiss Federal Supreme Court. From 1999 to 2006, she was a member of the Ethics Commission at the EPFL. Ms. Romy earned her PhD in law (Dr. iur.) at the University of Lausanne in 1990 and has been a qualified attorney-at-law admitted to the bar since 1991. From 1992 to 1994, she was a visiting scholar at Boalt Hall School of Law, University of California, Berkeley, and completed her professorial thesis at the University of Fribourg in 1996. Other activities and functions –Board member of Froriep Legal AG –Vice Chairman of the Sanction Commission of SIX Swiss Exchange –Member of the Fundraising Committee of the Swiss National Committee for UNICEF –Supervisory Board member of the CAS program Financial Regulation of the University of Bern and University of Geneva Corporate governance and compensation 230 Robert W. Scully American (US), born 1950 Function at UBS Group AG Member of the Risk Committee Professional history and education Robert W. Scully was elected to the BoD of UBS AG and UBS Group AG at the 2016 AGM. He has been a member of the Risk Committee since 2016. Mr. Scully served as a member of the Office of the Chairman of Morgan Stanley from 2007 to 2009 and was its co-President responsible for Asset Management, Discover Credit Cards from 2006 to 2007. Prior to assuming the position of co-President, he was Chairman of Global Capital Markets from 2004 to 2006, Vice Chairman of Investment Banking from 1999 to 2006, and Managing Director from 1996 to 2009. Mr. Scully was Managing Director at Lehman Brothers from 1993 to 1996, having worked for Scully Brothers Foss & Wight from 1989 to 1993 as Managing Director and for Salomon Brothers in Investment Banking and Capital Markets from 1980 to 1989, where he became a Managing Director in 1984. He began his career in the banking industry with Chase Manhattan Bank in 1972 and then worked as an investment banker for Blyth Eastman Dillon & Co. from 1977 to 1980. Mr. Scully graduated in 1972 with a bachelor’s degree in psychology from Princeton University and holds an MBA from Harvard University. Other activities and functions –Board member of Chubb Limited –Board member of Zoetis, Inc. –Board member of KKR & Co. Inc. –Board member of Teach For All Beatrice Weder di Mauro Italian and Swiss, born 1965 Functions at UBS Group AG Member of the Audit Committee / member of the Corporate Culture and Responsibility Committee Professional history and education Beatrice Weder di Mauro was elected to the BoD of UBS AG at the 2012 AGM and of UBS Group AG in November 2014. She has been a member of the Audit Committee since 2012 and became a member of the Corporate Culture and Responsibility Committee in 2017. She was a member of the Risk Committee from 2013 to 2017. Since July 2018, Ms. Weder di Mauro has been President of the Center for Economic Policy Research, a network of more than 1,000 academic economists based in Europe. She is Research Professor and Distinguished Fellow at the Emerging Markets Institute at INSEAD in Singapore. From 2001 to 2018, she held the chair of international macroeconomics at the Johannes Gutenberg University of Mainz and was a member of the German Council of Economic Experts from 2004 to 2012. She held visiting positions at the International Monetary Fund (IMF) in Washington, DC, at the National Bureau of Economic Research in Cambridge, MA, and at the United Nations University in Tokyo. Prior to this, she worked as an economist at the IMF and the World Bank in Washington, DC. She received a PhD and a habilitation in economics from the University of Basel. Since 2005, Ms. Weder di Mauro has served as an independent director on the boards of globally leading companies in development finance, pharmaceuticals, technology and insurance. Other activities and functions –Supervisory Board member of Robert Bosch GmbH –Board member of Bombardier Inc. –Member of the ETH Zurich Foundation Board of Trustees Dieter Wemmer Swiss and German, born 1957 Functions at UBS Group AG Member of the Compensation Committee / Member of the Risk Committee Professional history and education Dieter Wemmer was elected to the BoD of UBS AG and UBS Group AG at the 2016 AGM. He has been a member of the Risk Committee since 2016 and a member of the Compensation Committee since 2018. Mr. Wemmer was Chief Financial Officer (CFO) of Allianz SE from 2013 to 2017. He joined Allianz SE in 2012 as a member of the Board of Management, responsible for the insurance business in France, Benelux, Italy, Greece and Turkey and for the Center of Competence “Global Property & Casualty.” He was CFO of Zurich Insurance Group (Zurich) from 2007 to 2011. From 2010 to 2011, he was Zurich’s Regional Chairman of Europe. Prior to this, Mr. Wemmer was CEO of the Europe General Insurance business and member of Zurich’s Group Executive Committee from 2004 to 2007. He held various other management positions in the Zurich Group, such as Chief Operating Officer of the Europe General Insurance business from 2003 to 2004, Head of Mergers and Acquisitions from 1999 to 2003 and Head of Financial Controlling from 1997 to 1999. He began his career in the insurance industry within the Zurich Group in 1986 in Cologne, after graduating from the University of Cologne with a master’s degree and acquiring his doctorate in mathematics in 1985. Other activities and functions –Board member of Ørsted A/S –Member of the Berlin Center of Corporate Governance –Senior advisor, Texas Pacific Group Corporate governance and compensation Corporate governance Markus Baumann Swiss, born 1963 Function at UBS Group AG Group Company Secretary Professional history and education Markus Baumann was appointed Group Company Secretary of UBS Group AG and Company Secretary of UBS AG by the BoD as of January 2017. He has been with UBS for 40 years and has held a broad range of leadership roles across the Group in Switzerland, the US and Japan, including Chief of Staff to the Chairman of the BoD since 2015 and Chief Operating Officer of Group Internal Audit from 2006 to 2015. Before this, he worked as Chief Operating Officer EMEA for UBS Asset Management. Earlier in his career, Mr. Baumann worked in Japan for four years as Corporate Planning Officer and assistant to the CEO. He joined UBS in 1979 as a banking apprentice, covering the full range of universal banking activities. Mr. Baumann holds an MBA from INSEAD Fontainebleau and a Swiss Federal Diploma as a Business Analyst. 231 Elections and terms of office Shareholders elect each member of the BoD individually, as well as the Chairman and the members of the Compensation Committee, every year based on proposals from the BoD. As set out in the Organization Regulations, BoD members are normally expected to serve for a minimum of three years. No BoD member may serve for more than 10 consecutive terms of office. In exceptional circumstances, the BoD may extend this limit. →Refer to “Skills, expertise and training of the Board of Directors” in this section for more information Organizational principles and structure Following each AGM, the BoD meets to appoint one or more Vice Chairmen, a Senior Independent Director, the BoD committee members (other than the Compensation Committee members, who are elected by the shareholders) and the respective committee Chairpersons. At the same meeting, the BoD appoints a Group Company Secretary, who acts as secretary to the BoD and its committees. According to the Articles of Association and the Organization Regulations, the BoD meets as often as business requires, but it must meet at least six times a year. During 2018, a total of 24 BoD meetings and calls were held, 16 of which were attended by GEB members. Average participation in BoD meetings and calls was 99%. In addition to the BoD meetings attended by GEB members, the Group CEO attended some of the meetings of the BoD without GEB participation. The average duration of the meetings and calls was 170 minutes. In 2018, the frequency and length of the combined meetings were the same for UBS Group AG and UBS AG. Additionally, five ad hoc calls were held, four of which were without GEB members. At every BoD meeting, each committee chairperson provides the BoD with an update on current activities of his or her committee as well as important committee issues. In response to the growing importance of legal entity governance, standalone meetings of the UBS AG BoD were held. In 2018, three UBS AG meetings were held with members of the Executive Board in attendance. Standalone meetings will be held on a regular basis going forward to discuss and agree on legal entity governance and other topics related to UBS AG.Corporate governance and compensation 232 Corporate governance and compensation Corporate governance Performance assessment At least once a year, the BoD reviews its own performance as well as the performance of each of its committees. This review contains an assessment of the BoD’s effectiveness overall under the auspices of the Governance and Nominating Committee and includes an assessment of each of the BoD committees. The assessment evaluates the following dimensions, covering both formal and material aspects of BoD and committees: meeting structure, frequency and duration; composition; information timeliness, volume and quality; priorities; fulfillment of duties, including succession planning; and dynamics. The committees review their responsibilities and authorities against the Organization Regulations. In addition, for a number of the committees a systematic comparison to best-practice standards is undertaken. The last self-assessment, which was concluded in May 2018, determined that the BoD and its committees were functioning effectively and efficiently. The results of the self- assessment also served as a key source for the definition of the Board’s priorities for 2018 / 2019, including adjustments to the BoD agenda. A particular focus was thereby put on the work with management on strategic priorities, the transformation of the Group structure, the culture within the Group and the regulatory and control environment. The BoD also continued to prioritize succession planning, and supported and monitored the talent development measures across the Group. At least every three years, the BoD assessments include an appraisal by an external expert. The next external appraisal will cover the BoD period for 2018 / 2019 and will be concluded by May 2019. The results will be incorporated in the Annual Report 2019. The committees listed on the following pages assist the BoD in the performance of its responsibilities. These committees and their charters are described in the Organization Regulations, published at www.ubs.com/governance. The committees meet as often as their business requires, but at least four times a year each for the Audit Committee, the Risk Committee and the Compensation Committee, and twice a year each for the Corporate Culture and Responsibility Committee and the Governance and Nominating Committee. Topics of common interest or affecting more than one committee are discussed at joint committee meetings. The Audit Committee and Risk Committee hold at least four joint meetings a year. The Compensation Committee and Risk Committee periodically hold joint meetings. During 2018, a total of nine joint committee meetings were held for UBS Group AG (eight joint committee meetings were held for UBS AG). Members in 2018 Meeting attendance without GEB3 Meeting and call attendance with GEB4 Key responsibilities include: Axel A. Weber, Chairman 8/8 100% 16/16 100% The BoD has ultimate responsibility for the|success of the Group and for delivering sustain- able shareholder value within a framework of prudent and effective controls. It decides on the Group’s strategic aims and|the necessary financial and human resources upon recommen- dation of the Group CEO and sets the Group’s values and standards to ensure that its obligations to its shareholders and other stakeholders are met. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information Michel Demaré 8/8 100% 16/16 100% David Sidwell 8/8 100% 16/16 100% Jeremy Anderson¹6/6 100% 11/11 100% Reto Francioni 8/8 100% 16/16 100% Ann F. Godbehere 8/8 100% 16/16 100% Fred Hu¹5/6 83% 10/11 91% William G. Parrett² 2/2 100% 5/5 100% Julie G. Richardson 8/8 100% 16/16 100% Isabelle Romy 8/8 100% 16/16 100% Robert W. Scully 8/8 100% 16/16 100% Beatrice Weder di Mauro 8/8 100% 16/16 100% Dieter Wemmer 8/8 100% 16/16 100% 1 Jeremy Anderson and Fred Hu were elected to the BoD at the 2018 AGM; indicated are attended and total meetings after their election. 2 William G. Parrett did not stand for re-election at the 2018 AGM; indicated are his attended and total meetings up to the AGM. 3 Additionally, four ad hoc calls took place in 2018. 4 Additionally, one ad hoc call took place in 2018. Board of Directors 233 Audit Committee The Audit Committee consisted of five BoD members throughout 2018, all of whom were determined by the BoD to be fully independent. As a group, members of the Audit Committee must have the necessary qualifications and skills to perform all of their duties and together must possess financial literacy and experience in banking and risk management. The Audit Committee itself does not perform audits but monitors the work of the external auditors, Ernst & Young Ltd, who in turn are responsible for auditing UBS Group AG’s and UBS AG’s consolidated and standalone annual financial statements and for reviewing the quarterly financial statements. Together with the external auditors and Group Internal Audit, the Audit Committee in particular reviews the annual financial statements of UBS Group AG and UBS AG as well as the consolidated annual and quarterly financial statements and the consolidated annual report of UBS Group AG and UBS AG, as proposed by management, in order to recommend approval to the BoD or propose any adjustments the Audit Committee considers appropriate. Periodically, and at least annually, the Audit Committee assesses the qualifications, expertise, effectiveness, independence and performance of the external auditors and their lead audit partner, in order to support the BoD in reaching a decision in relation to the appointment or dismissal of the external auditors and to the rotation of the lead audit partner. The BoD then submits these proposals to the shareholders for approval at the AGM. During 2018, the Audit Committee held eight committee meetings and nine calls with a participation rate of 100%. On average the duration of each of the meetings and calls was approximately 130 minutes. In 2018, for both UBS Group AG and UBS AG, the frequency and length of meetings were the same. All meetings and calls of the Audit Committee were attended by the Group Chief Financial Officer, the Group Controller and Chief Accounting Officer and some of the meetings were attended by the Group CEO. In 2018, the Chairperson and the committee met on a regular basis with core supervisory authorities. All Audit Committee members have accounting or related financial management expertise and, in compliance with the rules established pursuant to the US Sarbanes-Oxley Act of 2002, at least one member qualifies as a financial expert. The New York Stock Exchange (NYSE) listing standards on corporate governance and Rule 10A-3 under the US Securities Exchange Act set more stringent independence requirements for members of audit committees than for the other members of the BoD. Throughout 2018, all members of the Audit Committee, in addition to satisfying our independence criteria, satisfied these requirements, in that they did not receive, directly or indirectly, any consulting, advisory or compensatory fees from any member of the Group other than in their capacity as a BoD member, did not hold, directly or indirectly, UBS Group AG shares in excess of 5% of the outstanding capital, and (except as noted below) did not serve on the audit committees of more than two other public companies. The NYSE listing standards on corporate governance allow for an exemption for audit committee members to serve on more than three audit committees of public companies, provided that all BoD members determine that such simultaneous service does not impair the member’s ability to effectively serve on each committee and to fulfill his or her obligations. Considering the credentials of William G. Parrett, the BoD granted him such an exemption. Members in 2018 Meeting and call attendance Key responsibilities include: Jeremy Anderson (Chairperson)¹9/9 100% The function of the Audit Committee is to serve as an independent and objective body with oversight of: (i) UBS Group AG’s and the Group’s accounting policies, financial reporting and disclosure controls and procedures; (ii) the quality, adequacy and scope of external audit; (iii) UBS Group AG’s and the Group’s compliance with financial reporting requirements; (iv) the executives’ approach to internal controls with respect to the production and integrity of the financial statements and disclosure of the financial performance; and (v) the performance of Group Internal Audit in conjunction with the Chairman. The executives are responsible for the preparation, presentation and integrity of the financial statements. External auditors are responsible for auditing UBS Group AG’s and the Group’s annual financial statements and for reviewing the quarterly financial statements. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information William G. Parrett (Chairperson)²8/8 100% Michel Demaré 17/17 100% Ann F. Godbehere 17/17 100% Isabelle Romy 17/17 100% Beatrice Weder di Mauro 17/17 100% 1 Following his election at the 2018 AGM, Jeremy Anderson became Audit Committee Chairperson; indicated are attended and total meetings after his election. 2 William G. Parrett did not stand for re-election at the 2018 AGM; indicated are his attended and total meetings up to the AGM. Audit Committee Corporate governance and compensation 234 Corporate governance and compensation Corporate governance Compensation Committee The Compensation Committee consisted of four independent BoD members throughout 2018 as indicated in the table below. In addition to the key responsibilities indicated in the same table, the Compensation Committee reviews the compensation disclosures included in this report. During 2018, the Compensation Committee held seven meetings and two calls with a participation rate of 100%. On average the duration of each of the meetings and calls was approximately 100 minutes. The meetings were held in the presence of the Chairman, the Group CEO and generally external advisors. In 2018, the Chairperson met on a regular basis with core supervisory authorities. →Refer to “Board of Directors governance and compensation” in the “Compensation” section from page 280 of this report for more information on the Compensation Committee’s decision- making procedures Corporate Culture and Responsibility Committee Throughout 2018, the Corporate Culture and Responsibility Committee consisted of the Chairperson and three independent BoD members as listed in the table below. The Group CEO and the Head UBS in society are permanent guests of the Corporate Culture and Responsibility Committee, while senior regional representatives (chairmen or Presidents) attended two of the meetings as guests. During 2018, six meetings were held with an average participation rate of 96%. On average the duration of each of the meetings was approximately 100 minutes. Members in 2018 Meeting and call attendance Key responsibilities include: Ann F. Godbehere (Chairperson)9/9 100% The Compensation Committee is responsible for: (i) supporting the BoD in its duties to set guidelines on compensation and benefits, (ii) approving the total compensation for the Chairman and the non-independent BoD members, (iii) establishing, together with the Chairman, financial and non-financial performance targets for the Group CEO and reviewing, upon the recommendation from the Group CEO, financial and non-financial performance targets for the other GEB members, (iv) evaluating, in consultation with the Chairman, the performance of the Group CEO in meeting agreed targets, as well as informing the BoD of the individual performance assessments of the GEB members, (v) proposing, together with the Chairman, total individual compensation for the independent BoD members and Group CEO for approval by the BoD and (vi) proposing to the BoD for approval, upon recommendation from the Group CEO, the total individual compensation for GEB members. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information Michel Demaré 9/9 100% Reto Francioni¹2/2 100% William G. Parrett¹2/2 100% Julie G. Richardson²7/7 100% Dieter Wemmer²7/7 100% 1 Reto Francioni and William G. Parrett were members of this committee until the 2018 AGM; indicated are attended and total meetings up to the AGM. 2 Julie G. Richardson and Dieter Wemmer were elected to this committee at the 2018 AGM; indicated are attended and total meetings after their election. Compensation Committee Members in 2018 Meeting attendance Key responsibilities include: Axel A. Weber (Chairperson)6/6 100%The Corporate Culture and Responsibility Committee supports the BoD in its duties to safeguard and advance the Group’s reputation for responsible and sustainable conduct. Its function is forward-looking in that it monitors and reviews societal trends and transformational developments and assesses their potential relevance for the Group. In undertaking this assessment, it reviews stakeholder concerns and expectations pertaining to the societal performance of UBS and to the development of its corporate culture. The Corporate Culture and Responsibility Committee’s function also encompasses the monitoring of the current state and implementation of the programs and initiatives within the Group pertaining to corporate culture and corporate responsibility. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information Jeremy Anderson¹4/4 100% Reto Francioni 6/6 100% William G. Parrett²1/2 50% Beatrice Weder di Mauro 6/6 100% 1 Following the 2018 AGM, Jeremy Anderson became a member of this committee; indicated are attended and total meetings after his election. 2 William G. Parrett did not stand for re-election at the 2018 AGM; indicated are his attended and total meetings up to the AGM. Corporate Culture and Responsibility Committee 235 Governance and Nominating Committee In 2018, the Governance and Nominating Committee consisted of the Chairperson and three independent members as listed in the table below. During 2018, seven meetings and one call were held with a participation rate of 100%. On average the duration of each of the meetings and the call was approximately 60 minutes. All meetings of the Governance and Nominating Committee were attended by the Group CEO. Risk Committee In 2018, the Risk Committee comprised five independent BoD members as listed in the table below. During 2018, the Risk Committee held nine committee meetings and three calls with a participation rate of 100%. On average the duration of each of the meetings and calls was approximately 225 minutes. In 2018, the frequency and length of the meetings were the same for both UBS Group AG and UBS AG. Usually, the Group CEO, the Group CFO, the Group Chief Risk Officer and the Group General Counsel attended the meetings and calls. In 2018, the Chairperson and the committee met on a regular basis with core supervisory authorities. Members in 2018 Meeting and call attendance Key responsibilities include: Axel A. Weber (Chairperson)8/8 100% The function of the Governance and Nominating Committee is to support the BoD in fulfilling its duty to establish best practices in corporate governance across the Group, to conduct a BoD assessment (self- or external assessment), to establish and maintain a process for appointing new BoD members and GEB members (in the latter case, upon proposal of the Group CEO) and to manage the succession planning of all GEB members. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information Michel Demaré 8/8 100% Isabelle Romy 8/8 100% David Sidwell 8/8 100% Governance and Nominating Committee Members in 2018 Meeting and call attendance Key responsibilities include: David Sidwell (Chairperson)12/12 100% The function of the Risk Committee is to oversee and support the BoD in fulfilling its duty to supervise and set an appropriate risk management and control framework in the areas of: (i) risk management and control, including credit, market, country, legal, compliance, operational and conduct risks; (ii) treasury and capital management, including funding, liquidity and equity attribution; and (iii) balance sheet management. The Risk Committee considers the potential effects of the aforementioned risks on the Group’s reputation. For these purposes, the Risk Committee will receive all relevant information from the GEB and has the authority to meet with regulators / third parties in consultation with the Group CEO. Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information Reto Francioni 12/12 100% Julie G. Richardson 12/12 100% Robert W. Scully 12/12 100% Dieter Wemmer 12/12 100% Risk Committee Corporate governance and compensation 236 Corporate governance and compensation Corporate governance Roles and responsibilities of the Chairman of the Board of Directors Axel A. Weber serves as a full-time Chairman of the BoD, in line with his employment contract. The Chairman coordinates tasks within the BoD, calls BoD meetings and sets their agendas. He presides over all general meetings of shareholders and works with the committee chairpersons to coordinate the work of all BoD committees. Together with the Group CEO, the Chairman is responsible for effective communication with shareholders and other stakeholders, including government officials, regulators and public organizations. This is in addition to establishing and maintaining a close working relationship with the Group CEO and other GEB members, and providing advice and support when appropriate, including continuing to support the firm’s cultural change as a key priority on the basis of our Pillars, Principles and Behaviors. →Refer to “Employees” in the “How we create value for our stakeholders” section from page 37 and to the contents page of this report for more information on our Pillars, Principles and Behaviors In 2018, the Chairman met on a regular basis with core supervisory authorities in all major regions where UBS is active. Meetings with important supervisory authorities in other regions were scheduled on an ad hoc or needs-driven basis. Roles and responsibilities of the Vice Chairmen and the Senior Independent Director The BoD appoints one or more Vice Chairmen and a Senior Independent Director. If the BoD appoints more than one Vice Chairman, one of them must be independent. Both the Vice Chairman and the Senior Independent Director support the Chairman with his responsibilities and authorities and provide him with advice. In conjunction with the Chairman and the Governance and Nominating Committee, they facilitate good Group-wide corporate governance, as well as balanced leadership and control within the Group, the Board and the committees. Michel Demaré has been appointed as Vice Chairman, and David Sidwell has been appointed as Senior Independent Director. The Vice Chairman is required to lead and has led meetings of the BoD in the temporary absence of the Chairman. Together with the Governance and Nominating Committee, he is tasked with the ongoing monitoring and the annual evaluation of the Chairman. Furthermore, he represents UBS on behalf of the Chairman in meetings with internal or external stakeholders. The Senior Independent Director enables and supports communication and the flow of information among the independent BoD members. At least twice a year, he organizes and leads a meeting of the independent BoD members without the participation of the Chairman. In 2018, two independent BoD meetings were held for UBS Group AG and UBS AG with an average participation rate of 95% and an average duration of approximately 180 minutes. The Senior Independent Director also relays to the Chairman any issues or concerns raised by the independent BoD members and acts as a point of contact for shareholders and stakeholders seeking discussions with an independent BoD member. Important business connections of independent members of the Board of Directors As a global financial services provider and a major Swiss bank, we enter into business relationships with many large companies, including some in which our BoD members assume management or independent board responsibilities. The Governance and Nominating Committee determines in each instance whether the nature of the Group’s business relationship with such a company might compromise our BoD members’ capacity to express independent judgment. Our Organization Regulations require three-quarters of the UBS Group AG BoD members and one-third at UBS AG to be independent. For this purpose, independence is determined in accordance with the FINMA Circular 2017 / 1 “Corporate governance – banks” and the NYSE rules. In 2018, our BoD met the standards of the Organization Regulations for the percentage of directors that are considered independent under the criteria described above. Since our Chairman is employed full time by UBS Group AG, he is not considered independent. No other BoD member has a significant business connection to UBS or any of its subsidiaries. All relationships and transactions with UBS Group AG’s independent BoD members are conducted in the ordinary course of business and are on the same terms as those prevailing at the time for comparable transactions with non-affiliated persons. All relationships and transactions with BoD members’ associated companies are conducted at arm’s length. →Refer to “Note 35 Related parties” in the “Consolidated financial statements” section on page 496 of this report for more information 237 Checks and balances: Board of Directors and Group Executive Board We operate under a strict dual board structure, as mandated by Swiss banking law. The separation of responsibilities between the BoD and the GEB is clearly defined in the Organization Regulations. The BoD decides on the strategy of the Group upon recommendations by the Group CEO and exercises ultimate supervision over management, whereas the GEB, headed by the Group CEO, has executive management responsibility. The functions of Chairman of the BoD and Group CEO are assigned to two different people, leading to a separation of power. This structure establishes checks and balances and preserves the institutional independence of the BoD from the day-to-day management of the Group, for which responsibility is delegated to the GEB under the leadership of the Group CEO. No member of one board may simultaneously be a member of the other. Supervision and control of the GEB remains with the BoD. The authorities and responsibilities of the two bodies are governed by the Articles of Association and the Organization Regulations. Skills, expertise and training of the Board of Directors The BoD is composed of members with a broad spectrum of skills, educational backgrounds, experience and expertise from a range of sectors that reflect the nature and scope of the firm’s business. In accordance with the Swiss Code of Best Practice for Corporate Governance, we seek appropriate professional backgrounds and experience as well as diversity among the members of the BoD, including gender diversity. With a view to recruiting needs, the Governance and Nominating Committee uses a skills / experience matrix as a tool to identify any gaps in the competencies considered most relevant to the BoD, taking into consideration the firm’s business exposure, risk profile, strategy and geographic reach. We asked our BoD members to rate their four strongest competencies out of the following 12 categories: – banking (wealth management, asset management, personal and corporate banking) – investment banking, capital markets – insurance – finance, audit, accounting – risk management – human resources management, including compensation – legal, compliance – technology, cybersecurity – regulatory authority, central bank – corporate responsibility and sustainability – experience as chief executive officer or chairman – executive board leadership experience (e.g., as chief financial officer, chief risk officer or chief operating officer) The Governance and Nominating Committee reviews these categories and ratings annually to confirm that the BoD continues to possess the most relevant experience and competencies to perform BoD duties. For 2018, competencies in all 12 categories were represented in our BoD. Particularly strong levels of experience and expertise existed in these areas: – financial services – finance, audit, accounting – risk management Furthermore, nine of the 12 BoD members have held or currently hold chairman, CEO or other executive board-level leadership positions. Moreover, education remained an important priority for our BoD members. In addition to a comprehensive induction program for new BoD members, continuous training and topical deep dives are part of the BoD agenda. →Refer to “Risk governance” in the “Risk management and control” section from page 123 of this report for information on our risk governance framework 3 < 3 years 3 3–6 years 3 7–9 years 3 > 9 years Terms of office Geographic diversity 1 42% Switzerland 25% Europe 25% USA 8% Asia Gender 67% male 33% female Experience and competencies2 Financial services:10 Leadership:9 Technical and functional know-how:13 Finance, audit and risk management:15 a d kl fh igj e bc a) banking (personal and corporate, wealth and asset management) – b) investment banking, capital markets – c) insurance – d) finance, audit, accounting – e) risk management – f) HR management – g) legal, compliance – h) technology, cybersecurity – i) regulatory authority, central bank – j) corporate responsibility and sustainability – k) CEO / chairman – l) executive board leadership (e.g., CFO, CRO or COO) 1 In the case of two nationalities, the domicile applies. 2 The bars represent the main strengths of the BoD, up to a maximum of four competencies per member.Corporate governance and compensation 238 Information and control instruments vis-à-vis the Group Executive Board The BoD is kept informed of the activities of the GEB in various ways, including regular meetings between the Chairman and the Group CEO. The Group CEO and other GEB members also update the BoD on all significant issues at BoD meetings. Furthermore, the BoD receives comprehensive reports on a monthly basis, covering financial, capital, funding, liquidity, regulatory, compliance and legal developments, as well as performance against plan and forecasts for the remainder of the year. For important developments, BoD members are also updated by the GEB in between meetings. In addition, the Chairman receives the material and minutes of the GEB meetings. At BoD meetings, BoD members may request from other BoD or GEB members any information about matters concerning the Group that they require to fulfill their duties. Outside of meetings, BoD members may request information from other BoD and GEB members. Such requests must be routed through the Group Company Secretary and addressed to the Chairman. The BoD is supported in discharging its governance responsibilities by Group Internal Audit (GIA), which assesses the reliability of financial and operational information and the effectiveness of processes for compliance with legal, regulatory and statutory requirements. The Head GIA reports directly to the Chairman. In addition, GIA has a functional reporting line to the Audit Committee in line with its responsibilities as set forth in our Organization Regulations. The Audit Committee annually assesses and approves the appropriateness of GIA’s audit plan and objectives for the year and monitors GIA’s discharge of these objectives. The committee is also in regular contact with the Head GIA. GIA issues quarterly reports that provide: a broad overview of significant audit results and key issues; control themes and trends based on individual audit results; continuous risk assessment; and assurance results. The reports are provided to the Chairman of the BoD, members of the Audit and the Risk Committees, the GEB and other stakeholders. Furthermore, GIA issues an annual activity report providing an assessment of its activities, processes, audit plan and resourcing requirements and other important developments affecting GIA. The activity report is provided to the Chairman of the BoD and to the Audit Committee, and is an element for their assessment of GIA’s effectiveness. →Refer to “Group Internal Audit” in this section for more information →Refer to “Internal risk reporting” in the “Risk management and control” section on page 129 of this report for information on reporting to the BoD $QCTFQH&KTGEVQTUoUWEEGUUKQPRNCPPKPIRTQEGUU 5VTCVGI[GPXKTQPOGPV 'ZKUVKPIDQCTF EQORQUKVKQP 5GCTEJ 5GNGEVKQP #)/ GNGEVKQP 1PDQCTFKPI Corporate governance and compensation Corporate governance Succession planning Succession planning is one of the key responsibilities of both the BoD and the GEB. Across all divisions and regions, an inclusive talent development and succession planning process is in place that is intended to foster the personal development and Group- wide mobility of our employees. Succession plans for all leadership positions, up to and including all positions on the GEB, are managed under the lead of the Group CEO. The BoD reviews and approves the succession plans of the GEB and the management layer below. For the BoD, the Chairman leads a systematic succession planning process as illustrated in the chart below. Our strategy and the business environment constitute the main drivers in our succession planning process for new BoD members as they define the key competencies required on the BoD. Taking diversity and tenure of the existing BoD composition into account, the Governance and Nominating Committee defines the recruiting profile for the search. Both external and internal sources contribute to identifying suitable candidates. The Chairman and the members of the Governance and Nominating Committee meet with potential candidates and, with the support of the full BoD, nominations are submitted to the AGM for approval. New BoD members follow an in-depth onboarding process that is designed to enable them to integrate efficiently and become effective in their new role. As a result of this succession planning process, the composition of the BoD includes a broad spectrum of skills, educational backgrounds, experience and expertise, in line with the demanding requirements of a leading global financial services firm. 239 Group Executive Board The Board of Directors (BoD) delegates the management of the business to the Group Executive Board (GEB). Responsibilities, authorities and organizational principles of the Group Executive Board Under the leadership of the Group CEO, the GEB has executive management responsibility for the steering of the Group and its business. It assumes overall responsibility for developing the Group and business division strategies and the implementation of approved strategies. The GEB constitutes itself as the risk council of the Group. In this function, the GEB has overall responsibility for establishing and supervising the implementation of risk management and control principles, as well as for managing the risk profile of the Group as a whole, as determined by the BoD and the Risk Committee. In 2018, the GEB held 16 meetings for UBS Group AG and for UBS AG, while a further two standalone meetings were held for UBS AG. Additionally, two off-site meetings and four strategy workshops took place. →Refer to the Organization Regulations of UBS Group AG at www.ubs.com/governance for more information on the authorities of the Group Executive Board Responsibilities and authorities of the Group Asset and Liability Management Committee The Group Asset and Liability Management Committee (Group ALCO), established by the GEB, is responsible for supporting the GEB in its responsibility to promote the usage of the Group’s assets and liabilities in line with the Group’s strategy, regulatory commitments and the interests of shareholders and other stakeholders. Group ALCO proposes the framework for capital management, capital allocation, funding and liquidity risk and proposes limits and targets for the Group to the BoD for approval. It oversees the balance sheet management of the Group, its business divisions and Corporate Center. The Organization Regulations additionally specify which powers of the GEB are delegated to the Group ALCO. In 2018, the Group ALCO held 10 meetings for UBS Group AG and UBS AG. Management contracts We have not entered into management contracts with any companies or natural persons that do not belong to the Group. Members of the Group Executive Board On 22 January 2018, we announced the creation of a unified Global Wealth Management division. Martin Blessing, President Wealth Management, and Tom Naratil, President UBS Americas and Wealth Management Americas, were appointed co-Presidents of Global Wealth Management as of 1 February 2018. On 25 September 2018, we announced that Piero Novelli and Robert Karofsky had been appointed co- Presidents Investment Bank, both joining the GEB. Andrea Orcel, former President Investment Bank, stepped down from the GEB. These changes were made effective on 1 October 2018. On 25 October 2018, we announced that Markus Ronner would be joining the GEB as Group Chief Compliance and Governance Officer, effective 1 November 2018. Furthermore, we announced the decision of Kathryn Shih to retire after 32 years at UBS. Edmund Koh took over as President UBS Asia Pacific, joining the GEB of UBS Group AG and UBS AG as of 1 January 2019. The biographies on the following pages provide information about the GEB members currently in office and those in office on 31 December 2018. In addition to information on mandates, the biographies include memberships and other activities or functions, as required by the SIX Swiss Exchange Corporate Governance Directive. In line with Swiss law, article 36 of UBS Group AG’s Articles of Association limits the number of mandates that members of the GEB may hold outside the UBS Group to one board membership in a listed company and five additional mandates in non-listed companies. Mandates in companies that are controlled by UBS or that control UBS are not subject to this limitation. In addition, GEB members may not hold more than 10 mandates at a time at the request of the company and eight mandates in associations, charitable organizations, foundations, trusts and employee welfare foundations. On 31 December 2018, no member of the GEB reached the aforementioned thresholds. At UBS AG, management of the business is also delegated, and the Executive Board, under the leadership of its President, has executive management responsibility for UBS AG and its business. All members of the GEB are also members of UBS AG’s Executive Board, with the exception of Axel Lehmann, as President UBS Switzerland AG. Similar to the Group ALCO, UBS AG’s Asset and Liability Management Committee is responsible for promoting the usage of UBS AG’s financial resources in line with UBS AG’s and the Group’s strategy and regulatory requirements. At present no specific diversity policy is required or applied with respect to the composition of the GEB and UBS AG’s Executive Board. Corporate governance and compensation 240 Corporate governance and compensation Corporate governance Sergio P. Ermotti Swiss, born 1960 Function at UBS Group AG Group Chief Executive Officer Professional history and education Sergio P. Ermotti has been Group Chief Executive Officer of UBS Group AG since November 2014, having held the same position at UBS AG since November 2011 and on an interim basis between September and November 2011. Mr. Ermotti became a member of the GEB in April 2011 and was Chairman and CEO of UBS Group Europe, Middle East and Africa from April to November 2011. From 2007 to 2010, he was Group Deputy Chief Executive Officer at UniCredit, Milan, and was responsible for the strategic business areas of Corporate and Investment Banking, and Private Banking. He joined UniCredit in 2005 as Head of Markets & Investment Banking Division. His career began at Merrill Lynch in 1987, where he held various positions within equity derivatives and capital markets until 2003. In his last two years there, he served as co-Head of Global Equity Markets and as a member of the Executive Management Committee for Global Markets & Investment Banking. Mr. Ermotti is a Swiss-certified banking expert and is a graduate of the Advanced Management Programme at Oxford University. Other activities and functions –Board member of UBS Switzerland AG –Chairman of the UBS Optimus Foundation Board –Chairman of the Fondazione Ermotti, Lugano –Chairman and President of the Board of the Swiss- American Chamber of Commerce –Board member of the Global Apprenticeship Network –Member of the Institut International d’Etudes Bancaires –Member of the Saïd Business School Global Leadership Council, University of Oxford Martin Blessing German, born 1963 Function at UBS Group AG Co-President Global Wealth Management Professional history and education Martin Blessing was appointed co-President Global Wealth Management of UBS Group AG and UBS AG as of February 2018. Prior to this, he was President Wealth Management effective January 2018. He held the positions of President Personal & Corporate Banking of UBS Group AG and President UBS Switzerland as well as President of the Executive Board of UBS Switzerland AG from September 2016 to December 2017. He became a member of the GEB in September 2016. Before joining UBS, he worked for 15 years for Commerzbank AG, from 2008 to April 2016 as Chief Executive Officer. Prior to that, he held various senior management positions; from 2004 to 2008, he was Head of Corporate Banking and from 2006 onward also responsible for IT & Operations. From 2001 to 2004, he was Head of Private Clients. Before joining Commerzbank, from 2000 to 2001 he was Chief Executive Officer of Advance Bank, a subsidiary of Dresdner Bank AG. From 1997 to 2000, he acted as Dresdner Bank’s joint Head Private Clients. From 1989 to 1996, he worked for McKinsey & Company, the last two years as Partner. Martin Blessing holds an MBA from the University of Chicago and in 1987 graduated from the University of St. Gallen with a degree in business administration. Other activities and functions –Executive Board member of Baden-Baden Entrepreneur Talks Christian Bluhm German, born 1969 Function at UBS Group AG Group Chief Risk Officer Professional history and education Christian Bluhm became a member of the GEB and was appointed Group Chief Risk Officer of UBS Group AG and UBS AG in January 2016. He joined UBS from FMS Wertmanagement, where he had been Chief Risk & Financial Officer since 2010 and Spokesman of the Executive Board from 2012 to 2015. From 2004 to 2009, he worked for Credit Suisse, where he was Managing Director responsible for Credit Risk Management in Switzerland and Private Banking worldwide. Mr. Bluhm was Head of Credit Portfolio Management until 2008 and then Head of Credit Risk Management Analytics & Instruments after the financial crisis in 2008. From 2001 to 2004, he worked for Hypovereinsbank in Munich in Group Credit Portfolio Management, heading a team that specialized in Structured Finance Analytics. Before starting his banking career with Deutsche Bank in Credit Risk Management in 1999, he worked as a postdoctoral fellow at Cornell University in Ithaca and as a scientific assistant at the University of Greifswald. Mr. Bluhm holds a degree in mathematics and informatics from the University of Erlangen-Nuremberg and received his PhD in mathematics in 1996 from the same university. Other activities and functions –Board member of UBS Switzerland AG –Chairman of the Foundation Board – International Financial Risk Institute 241 Markus U. Diethelm Swiss, born 1957 Function at UBS Group AG Group General Counsel Professional history and education Markus U. Diethelm has been Group General Counsel of UBS Group AG since November 2014, having held the same position at UBS AG since September 2008, when he became a member of the GEB. He was Executive Board member of UBS Business Solutions AG from 2015 to 2016. From 1998 to 2008, he served as Group Chief Legal Officer at Swiss Re, and he was appointed to the company’s Group Executive Board in 2007. Prior to this, he was with Los Angeles-based law firm Gibson, Dunn & Crutcher and focused on corporate matters, securities transactions, litigation and regulatory investigations while working out of the firm’s Brussels and Paris offices. From 1989 to 1992, he practiced at Shearman & Sterling in New York, specializing in mergers and acquisitions. In 1988, he worked at Paul, Weiss, Rifkind, Wharton & Garrison in New York. After starting his career in 1983 with Bär & Karrer, he served as a law clerk at the District Court of Uster in Switzerland from 1984 to 1985. Mr. Diethelm holds a law degree from the University of Zurich and a master’s degree and a PhD from Stanford Law School. Mr. Diethelm is a qualified attorney-at-law admitted to the bar in Zurich, Geneva and in New York State. Other activities and functions –Chairman of the Swiss-American Chamber of Commerce’s legal committee –Chairman of the Swiss Advisory Council of the American Swiss Foundation –Member of the Foundation Council of the UBS International Center of Economics in Society –Member of the Professional Ethics Commission of the Association of Swiss Corporate Lawyers –Member of the Supervisory Board of the Fonds de Dotation LUMA / Arles Kirt Gardner American (US), born 1959 Function at UBS Group AG Group Chief Financial Officer Professional history and education Kirt Gardner became a member of the GEB and was appointed Group Chief Financial Officer of UBS Group AG and UBS AG in January 2016. He was CFO Wealth Management from 2013 to 2015. Prior to this, he held a number of leadership positions at Citigroup, including CFO and Head of Strategy within Global Transaction Services from 2010 to 2013, Head of Strategy, Planning and Risk Strategy for the Corporate and Institutional Division from 2006 to 2010 and Head of Global Strategy and Cost Management for the Consumer Bank from 2004 to 2006. Prior to this, he held the position of Global Head of Financial Services Strategy for BearingPoint, for which he worked in Asia and New York for four years. From 1994 to 2000, he was Managing Director with Barents Group, working in the US, Asia, Latin America and Europe. Mr. Gardner holds a bachelor’s degree in economics from Williams College, a master’s degree from the University of Pennsylvania and an MBA in finance from Wharton School. Other activities and functions –Board member of UBS Business Solutions AG Robert Karofsky American (US), born 1967 Function at UBS Group AG Co-President Investment Bank Professional history and education Robert Karofsky is co-President Investment Bank of UBS Group AG and UBS AG and became a member of the GEB in October 2018. He joined UBS in 2014 as Global Head Equities and has been President UBS Securities LLC since 2015. From 2011 to 2014, he was Global Head of Equity Trading at AllianceBernstein. He began his career at Morgan Stanley in 1994 and joined Deutsche Bank as Head of North American Equities in 2005, later becoming co-Head of Global Equities from 2008 to 2010. Mr. Karofsky holds a bachelor’s in economics from Hobart and William Smith Colleges and an MBA in finance and statistics from the University of Chicago’s Booth School of Business. Other activities and functions –Board member of UBS Securities LLC –Trustee of the UBS Americas Inc. Political Action Committee Corporate governance and compensation 242 Corporate governance and compensation Corporate governance Sabine Keller-Busse Swiss and German, born 1965 Function at UBS Group AG Group Chief Operating Officer Professional history and education Sabine Keller-Busse was appointed Group Chief Operating Officer of UBS Group AG and UBS AG as well as President of the Executive Board of UBS Business Solutions AG in January 2018. Ms. Keller-Busse was Group Head Human Resources from August 2014 to December 2017. She became a member of the GEB in January 2016. Having joined UBS in 2010, she served as Chief Operating Officer UBS Switzerland until 2014. Prior to this, she led Credit Suisse’s Private Clients Region Zurich division for two years. From 1995 to 2008, Ms. Keller-Busse worked for McKinsey & Company, where she had been partner since 2001. Ms. Keller-Busse holds a master’s degree in business administration from the University of St. Gallen and received a PhD in business administration from the same university. Other activities and functions –Board member of UBS Business Solutions AG –Vice-Chairman of the Board of Directors of SIX Group (chairman of the nomination & compensation committee) –Foundation Board member of the UBS Pension Fund –Foundation Board member of the University Hospital Zurich New GEB member Edmund Koh Singaporean, born 1960 Function at UBS Group AG President UBS Asia Pacific as of 1 January 2019 Professional history and education Edmund Koh became a member of the GEB and was appointed President UBS Asia Pacific of UBS Group AG and UBS AG in January 2019. He was Head Wealth Management Asia Pacific from 2016 to 2018 as well as Country Head Singapore from 2012 to 2018. Mr. Koh has more than 30 years’ experience in senior roles in financial services. He joined UBS in 2012 as Head Wealth Management South East Asia and Asia Pacific Hub and Country Head Singapore from Taiwan-based Ta Chong Bank, where he served as President and Director from 2008 to 2011. From 2001 to 2008, Mr. Koh was Managing Director and Regional Head Consumer Banking of DBS Bank in Singapore. In 2001, he became CEO of Alverdine Pte Ltd and two years earlier he held the same position for Prudential Assurance, both companies based in Singapore. Mr. Koh holds a bachelor of science degree in psychology from the University of Toronto. Other activities and functions –Member of the Wealth Management Institute at Nanyang Technological University, Singapore –Member of the Ministry of Finance’s Committee on the Future Economy Sub-Committees –Board member of Next50 Limited –Trustee of the Cultural Matching Fund –Board member of Medico Suites (S) Pte Ltd –Board member of Medico Republic (S) Pte Ltd Ulrich Körner German and Swiss, born 1962 Functions at UBS Group AG President Asset Management and President UBS Europe, Middle East and Africa Professional history and education Ulrich Körner has been President Asset Management of UBS Group AG since November 2014, having held the same position at UBS AG since January 2014. He became a member of the GEB in April 2009 and was Group Chief Operating Officer from 2009 to 2013. In addition, he was appointed President UBS Europe, Middle East and Africa in December 2011. In 1998, Mr. Körner joined Credit Suisse. He served as a member of the Credit Suisse Group Executive Board from 2003 to 2008, holding various management positions, including CFO and Chief Operating Officer. From 2006 to 2008, he was responsible for the entire Swiss client business as CEO Credit Suisse Switzerland. Mr. Körner received a PhD in business administration from the University of St. Gallen and served for several years as an auditor at Price Waterhouse and as a management consultant at McKinsey & Company. Other activities and functions –Member of the Supervisory Board of UBS Europe SE –Chairman of the Foundation Board of the UBS Pension Fund –Member of the UBS Optimus Foundation Board –Vice President of the Board of Lyceum Alpinum Zuoz –Member of the Financial Service Chapter Board of the Swiss-American Chamber of Commerce –Advisory Board member of the Department of Banking and Finance at the University of Zurich –Member of the business advisory council of the Laureus Foundation Switzerland 243 Axel P. Lehmann Swiss, born 1959 Functions at UBS Group AG President Personal & Corporate Banking and President UBS Switzerland Professional history and education Axel P. Lehmann was appointed President Personal & Corporate Banking of UBS Group AG and President UBS Switzerland as of January 2018, in addition to taking over as President of the Executive Board of UBS Switzerland AG. He became a member of the GEB and was appointed Group Chief Operating Officer of UBS Group AG and UBS AG in January 2016. He was a member of the BoD of UBS AG from 2009 to 2015 and of UBS Group AG from 2014 to 2015 and was a member of both the Risk Committee and the Governance and Nominating Committee. Mr. Lehmann became a member of Zurich Insurance Group’s (Zurich) Group Executive Committee in 2002, holding various management positions, including CEO for the European and North America businesses. From 2008 to 2015, he was Chief Risk Officer with additional responsibilities for Group IT, Regional Chairman for Europe, Middle East and Africa as well as Chairman for Farmers Group Inc. In 2001, he was appointed CEO for Northern, Central and Eastern Europe and Zurich Group Germany, having served as a member of the company’s Group Management Board since 2000 with responsibility for group-wide business development functions. In 1996, he joined Zurich as a member of the Executive Committee Switzerland, and previously, he was Head of corporate planning and controlling at SwissLife, Vice President of the Institute of Insurance Economics and a visiting professor at Bocconi University in Milan. Mr. Lehmann holds a PhD and a master’s degree in business administration and economics from the University of St. Gallen. He is also a graduate of the Advanced Management Program of the Wharton School. Other activities and functions –Co-Chair of the Global Future Council on Financial and Monetary Systems of WEF –Adjunct professor and Chairman of the Board of the Institute of Insurance Economics at the University of St. Gallen –Member of the HSG Advisory Board of the University of St. Gallen –Vice Chairman of the Swiss Finance Institute Foundation Board –Member of the IMD Foundation Board, Lausanne –Member of the Swiss-American Chamber of Commerce Chapter Doing Business in USA Tom Naratil American (US), born 1961 Functions at UBS Group AG Co-President Global Wealth Management and President UBS Americas Professional history and education Tom Naratil became co-President of Global Wealth Management of UBS Group AG and UBS AG in February 2018. In January 2018, he became CEO of UBS Americas Holding LLC. He was appointed President UBS Americas of UBS Group AG and UBS AG in January 2016 and served as President Wealth Management Americas from 2016 to 2018. He became a member of the GEB in June 2011 and was Group CFO of UBS AG from 2011 to 2015. He held the same position for UBS Group AG from 2014 to 2015. In addition to the role of Group CFO, he was Group Chief Operating Officer from 2014 to 2015. He was President of the Executive Board of UBS Business Solutions AG from 2015 to March 2016. He served as CFO and Chief Risk Officer of Wealth Management Americas from 2009 until his appointment as Group CFO in 2011. Before 2009, he held various senior management positions within UBS, including heading the Auction Rate Securities Solutions Group during the financial crisis in 2008. He was named Global Head of Marketing, Segment & Client Development in 2007, Global Head of Market Strategy & Development in 2005, and Director of Banking and Transactional Solutions, Wealth Management USA, in 2002. During this time, he was a member of the Group Managing Board. He joined Paine Webber Incorporated in 1983 and after the merger with UBS became Director of the Investment Products Group. Mr. Naratil holds an MBA in economics from New York University and a bachelor of arts in history from Yale University. Other activities and functions –Board member of UBS Americas Holding LLC –Board member of the American Swiss Foundation –Member of the Board of Consultors for the College of Nursing at Villanova University Piero Novelli Italian, born 1965 Function at UBS Group AG Co-President Investment Bank Professional history and education Piero Novelli is co-President Investment Bank of UBS Group AG and UBS AG and became a member of the GEB in October 2018. He was appointed co-Executive Chairman Global Investment Banking, Corporate Client Solutions, in 2017, and the year before became sole Global Head Advisory Services including Global Mergers and Acquisitions (M&A). Mr. Novelli rejoined UBS in 2013 as Chairman Global M&A as well as Group Managing Director. From 2011 to 2012, Mr. Novelli was Global co-Head of M&A at Nomura, having worked as Global Head M&A at UBS between 2004 and 2009. Before that he worked for Merrill Lynch and held the position of Head of European M&A and Head of European Industrials. Mr. Novelli holds a master‘s degree in management from the MIT Sloan School of Management and a master’s degree in mechanical engineering from Università degli Studi di Roma.Corporate governance and compensation 244 Markus Ronner Swiss, born 1965 Function at UBS Group AG Group Chief Compliance and Governance Officer Professional history and education Markus Ronner is Group Chief Compliance and Governance Officer of UBS Group AG and UBS AG and became a member of the GEB in November 2018. In this role, he is responsible at Group level for compliance and operational risk control, governmental and regulatory affairs as well as investigations and governance matters. He became Head Group Regulatory and Governance in 2012. During his 37 years with UBS, Markus Ronner has held various positions across the bank, including: Group-wide program manager “too big to fail” (2011–2013); Chief Operating Officer (COO) Wealth Management & Swiss Bank (2010–2011); Head Products and Services of Wealth Management & Swiss Bank (2009–2010); COO Asset Management (2007–2009); and Head Group Internal Audit (2001–2007). Mr. Ronner joined the firm as an apprentice in 1981 and holds a Swiss Banking Diploma. Kathryn Shih British, born 1958 Function at UBS Group AG President UBS Asia Pacific until 31 December 2018 Professional history and education Kathryn Shih was a member of the GEB and President UBS Asia Pacific of UBS Group AG and UBS AG from January 2016 to December 2018. She was Head Wealth Management Asia Pacific from 2002 to 2015, and CEO of UBS Hong Kong from 2003 to 2008. Prior to this, she held various leadership positions in Wealth Management Asia Pacific. She was with the firm for over 30 years, having joined Swiss Bank Corporation in 1987 as a client advisor and then served as Head Private Banking from 1994 to 1998. In the 1980s, Ms. Shih worked for Citibank in the Consumer Services Group and as an executive trainee with PCI Capital Asia Ltd. She was conferred as a Certified Private Wealth Professional by the Private Wealth Management Association, Hong Kong, in 2015 and as a Certified Financial Planner from the Institute of Financial Planners, Hong Kong, in 2001. She completed the Advanced Executive Program at Northwestern University in 1999. Ms. Shih holds a bachelor of arts degree from Indiana University in the US and a master’s degree in business management from the Asian Institute of Management in the Philippines. Other activities and functions –Board member of Kenford International Ltd. –Board member of Shih Co Charitable Foundation Ltd. –Member of the Hong Kong Trade Development Council (Financial Services Advisory Committee) Corporate governance and compensation Corporate governance Member of the GEB until 31 December 2018 245 Change of control and defense measures Our Articles of Association do not provide any measures for delaying, deferring or preventing a change of control. Duty to make an offer According to the Swiss Financial Market Infrastructure Act, an investor who has acquired more than 331⁄3% of all voting rights of a company listed in Switzerland (directly, indirectly or in concert with third parties), whether they are exercisable or not, is required to submit a takeover offer for all listed shares outstanding. We have not elected to change or opt out of this rule. Clauses on change of control Neither the employment agreement with the Chairman of the BoD nor any employment contracts with the GEB members or employees holding key functions within the company (Group Managing Directors) contain change of control clauses. All employment contracts with GEB members stipulate a notice period of six months. During the notice period, GEB members are entitled to their salaries and the continuation of existing employment benefits and may be eligible to be considered for a discretionary performance award based on their contribution during the time worked. In case of a change of control, we may, at our discretion, accelerate the vesting of and / or relax applicable forfeiture provisions of employees’ awards, and defer lapse date of options or stock appreciation rights. →Refer to the “Compensation” section of this report from page 250 for more information Corporate governance and compensation 246 Corporate governance and compensation Corporate governance Auditors Audit is an integral part of corporate governance. While safeguarding their independence, the external auditors closely coordinate their work with Group Internal Audit. The Audit Committee and, ultimately, the Board of Directors (BoD) supervise the effectiveness of audit work. →→Refer to “Board of Directors” in this section for more information on the Audit Committee External independent auditors At the Annual General Meeting (AGM) in 2018, Ernst & Young Ltd (EY) was re-elected as auditors for the Group for a one-year term of office. EY assumes virtually all auditing functions according to laws, regulatory requests and the Articles of Association. Since 2015, Marie-Laure Delarue has been the EY lead partner in charge of the Group financial audit and her incumbency is limited to five years. Since 2016, Ira S. Fitlin has been the co-signing partner for the financial statement audit, with an incumbency limit of seven years. Patrick Schwaller has been the Lead Auditor to the Swiss Financial Market Supervisory Authority (FINMA) since 2015, with an incumbency limited to six years because of prior audit service to the Group in another role. Marc Ryser has been the co-signing partner for the FINMA audit since 2012. He will be succeeded in 2019 by Daniel Martin, with an incumbency limit of seven years. During 2018, the Audit Committee held eight meetings and one call with the external auditors. The Audit Committee assesses the performance, effectiveness and independence of the external auditors on an annual basis. The assessment is based on interviews with senior management as well as survey feedback from stakeholders across the Group. Assessment criteria include quality of service delivery, quality and competence of the audit team, value added as part of the audit, insightfulness and the overall relationship with EY. Based on its own analysis and the assessment results, the Audit Committee concluded that EY’s audit has been effective. Special auditor for capital increase At the AGM on 3 May 2018, BDO AG was reappointed as special auditors for a three-year term of office. The special auditors provide audit opinions in connection with potential capital increases independently from the auditors. Fees paid to external independent auditors The fees (including expenses) paid to EY are set forth in the table below. In addition, EY received USD 30.3 million in 2018 (USD 29.4 million in 2017) for services performed on behalf of our investment funds, many of which have independent fund boards or trustees. Audit work includes all services necessary to perform the audit for the Group in accordance with applicable laws and generally accepted auditing standards, as well as other assurance services that conventionally only the auditor can provide. These include statutory and regulatory audits, attest services and the review of documents to be filed with regulatory bodies. The additional services classified as audit in 2018 included several engagements for which EY was mandated at the request of FINMA. Fees paid to external independent auditors UBS Group AG and its subsidiaries (including UBS AG) paid the following fees (including expenses) to its external independent auditors. USD thousand 31.12.18 31.12.17 Audit Global audit fees 54,716 53,557 Additional services classified as audit (services required by law or statute, including work of a non-recurring nature mandated by regulators) 16,595 13,217 Total audit1 71,310 66,774 Non-audit Audit-related fees 8,711 12,272 of which: assurance and attest services 5,390 6,496 of which: control and performance reports 3,261 5,132 of which: consultation concerning financial accounting and reporting standards 60 645 Tax fees 1,212 1,572 All other fees 536 1,943 Total non-audit1 10,459 15,788 1 Total audit and non-audit fees amounted to USD 81,770 thousand for UBS Group AG consolidated as of 31 December 2018 (31 December 2017: USD 82,562 thousand), of which USD 56,493 thousand related to UBS AG consolidated (31 December 2017: USD 62,137 thousand). 247 → Audit-related work comprises assurance and related services that are traditionally performed by the auditor, such as attest services related to financial reporting, internal control reviews, performance standard reviews and consultation concerning financial accounting and reporting standards. Tax work involves services performed by professional staff in EY’s tax division and includes tax compliance and tax consultation with respect to our own affairs. “Other” services are permitted services, which include technical IT security control reviews and assessments. Preapproval procedures To ensure EY’s independence, all services provided by EY have to be preapproved by the Audit Committee. A preapproval may be granted either for a specific mandate or in the form of a blanket preapproval authorizing a limited and well-defined type and amount of services. The Audit Committee has delegated preapproval authority to its Chairperson, and the Group Chief Financial Officer and Group Controller and Chief Accounting Officer submit all proposals for services by EY to the Chairperson of the Audit Committee for approval, unless there is a blanket preapproval in place. At each quarterly meeting, the Audit Committee is informed of the approvals granted by its Chairperson and of services authorized under blanket preapprovals. Group Internal Audit Group Internal Audit (GIA) performs the internal auditing function for the Group, and in 2018 operated with an approved average headcount of 450 full-time equivalent employees. It is an independent and objective function that supports the Group in achieving its strategic, operational, financial and compliance objectives, and the BoD in discharging its governance responsibilities. GIA independently, objectively and systematically assesses: – the effectiveness of processes to define strategy and risk appetite as well as the overall adherence to the approved strategy; – the effectiveness of governance processes; – the effectiveness of risk management, including whether risks are appropriately identified and managed; – the effectiveness of internal controls, specifically whether they are commensurate with the risks taken; – the soundness of the risk and control culture; – the effectiveness and sustainability of remediation activities, originating from any source; – the reliability and integrity of financial and operational information (i.e., whether activities are properly, accurately and completely recorded, and the quality of underlying data and models); and – the effectiveness of processes to comply with legal, regulatory and statutory requirements (such as the provisions of the Articles of Association), as well as with internal policies (including the Organization Regulations) and contracts, i.e., assessing whether such requirements are met, and the adequacy of processes to sustainably meet them. Audit reports that include significant issues are provided to the Group CEO, relevant GEB members and other responsible management. The Chairman, Audit Committee and Risk Committee of the BoD are also regularly informed of such issues. In addition, GIA assures whether issues with moderate to significant effect have been successfully remediated. This responsibility applies to issues identified by all sources: business management (first line of defense), control functions (second line of defense), GIA (third line of defense), external auditors and regulators. GIA also cooperates closely with risk control functions and internal and external legal advisors on investigations into major control issues. To maximize GIA’s independence from management, the Head GIA reports to the Chairman of the BoD and to the Audit Committee, which assesses annually whether GIA has sufficient resources to perform its function, as well as its independence and performance. In the Audit Committee’s assessment, GIA is sufficiently resourced to fulfill its mandate and complete its auditing objectives. GIA’s role, position, responsibilities and accountability are set out in our Organization Regulations and the Charter for Group Internal Audit, published at www.ubs.com/governance. The latter also applies to UBS AG’s internal audit function. GIA has unrestricted access to all accounts, books, records, systems, premises and personnel, and must be provided with all information and data that it needs to fulfill its auditing duties. The Audit Committee may order special audits to be conducted, and other BoD members, committees or the Group CEO may request such audits in consultation with the Audit Committee. GIA enhances the efficiency of its work through coordination and close cooperation with the external auditors. Corporate governance and compensation 248 Corporate governance and compensation Corporate governance Information policy We provide regular information to our shareholders and to the financial community. Financial reports for UBS Group AG are expected to be published as follows First quarter 2019 25 April 2019 Second quarter 2019 23 July 2019 Third quarter 2019 22 October 2019 The Annual General Meeting of shareholders of UBS Group AG will take place as follows 2019 2 May 2019 2020 29 April 2020 →Refer to the corporate calendar at www.ubs.com/investors for future financial report publication and other key dates, including UBS AG’s financial report publication dates We meet with institutional investors worldwide throughout the year and regularly hold results presentations, attend and present at investor conferences and, from time to time, host investor days. When appropriate, investor meetings are hosted by senior management and are attended by members of our Investor Relations team. We use various technologies, such as webcasting, audio links and cross-location videoconferencing, to widen our audience and maintain contact with shareholders globally. We make our publications available to all shareholders simultaneously to provide them with equal access to our financial information. Shareholders can download all our financial publications at www.ubs.com/investors. Shareholders may opt to receive a printed copy of our annual report or our annual review, which reflects on specific initiatives and achievements of the Group and provides an overview of the Group’s activities during the year as well as key financial information. →Refer to www.ubs.com/investors for a complete set of published reporting documents and a selection of senior management industry conference presentations →Refer to the “Information sources” section on page 535 of this report for more information →Refer to “Corporate information” and “Contacts” in the introductory part of this report for more information Financial disclosure principles We fully support transparency and consistent and informative disclosure. We aim to communicate our strategy and results in a manner that allows stakeholders to gain a good understanding of how our Group works, what our growth prospects are and the risks our businesses and our strategy entail. We assess feedback from analysts and investors on a regular basis and, where appropriate, reflect this in our disclosures. To continue achieving these goals, we apply the following principles in our financial reporting and disclosure: – transparency that enhances the understanding of economic drivers and builds trust and credibility – consistency within each reporting period and between reporting periods – simplicity that allows readers to gain a good understanding of the performance of our businesses – relevance by focusing not only on what is required by regulation or statute but also on what is relevant to our stakeholders – best practice that leads to improved standards Consistent with our financial reporting and disclosure principles, we continue to benchmark disclosures in our financial reports against recommendations issued by the Financial Stability Board’s Enhanced Disclosure Task Force in 2012. We regard the improvement of our disclosures as an ongoing commitment. 249 Financial reporting policies We report our Group’s results at the end of every quarter, including a breakdown of results by business division and disclosures or key developments relating to risk management and control, capital, liquidity and funding management. Each quarter, we publish quarterly financial reports for UBS Group AG on the same day as the earnings releases. UBS Group AG’s and UBS AG’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. →Refer to “Note 1 Summary of significant accounting policies” in the “Consolidated financial statements” section from page 327 of this report for more information on the basis of accounting We are committed to maintaining the transparency of our reported results and to allowing analysts and investors to make meaningful comparisons with prior periods. If there is a major reorganization of our business divisions or if changes to accounting standards or interpretations lead to a material change in the Group’s reported results, our results are restated for previous periods as required by applicable accounting standards. These restatements show how our results would have been reported on the new basis and provide clear explanations of all relevant changes. US disclosure requirements As a foreign private issuer, we must file reports and other information, including certain financial reports, with the US Securities and Exchange Commission (SEC) under the US federal securities laws. We file an annual report on Form 20-F and furnish our quarterly financial reports and other material information under cover of Form 6-K to the SEC. These reports are available at www.ubs.com/investors and on the SEC’s website at www.sec.gov. An evaluation was carried out under the supervision of management, including the Group CEO, the Group CFO and the Group Controller and Chief Accounting Officer, on the effectiveness of our disclosure controls and procedures (as defined in Rule 13a–15e) under the US Securities Exchange Act of 1934. Based on that evaluation, the Group CEO and Group CFO concluded that our disclosure controls and procedures were effective as of 31 December 2018. No significant changes have been made to our internal controls or to other factors that could significantly affect these controls subsequent to the date of their evaluation. →Refer to the “Consolidated financial statements” section from page 301 of this report for more information Corporate governance and compensation 250 Compensation Dear shareholders, The Board of Directors and I wish to thank you for your support once again at last year’s Annual General Meeting and for sharing your views on our compensation practices over the past year. Throughout 2018, the BoD Compensation Committee continued to oversee the compensation activities and ensure that reward reflects performance, prudent risk- taking and supports alignment with our shareholders and other stakeholders. I am pleased to present our Compensation Report for 2018, which provides further information about our compensation philosophy and approach. Shareholder engagement In 2018, we continued our engagement with shareholders and other stakeholders to listen to their perspectives about our compensation philosophy and framework. We have considered this valuable feedback in the regular review of our compensation framework and disclosure approach. We concluded that our current framework, which has remained broadly unchanged since 2012, continues to be best suited for our compensation philosophy and aligns with the interests of our investors, clients and employees. While the feedback was overall positive, it also highlighted opportunities to further increase our transparency and to provide more clarity on certain aspects of our compensation philosophy and framework. Consequently, we have enhanced our Compensation Report by introducing, among others, the following sections: – a new ”at a glance” section with key financial and compensation figures providing a clearer perspective on pay alignment with performance – a new ”shareholder engagement” section outlining frequent questions from stakeholders and our responses – a new disclosure of the realized vs. awarded pay for the Group Chief Executive Officer (CEO) demonstrating our rigorous deferral approach – a more transparent description of the judgment exercised by the Compensation Committee regarding compensation- related aspects such as performance award pool adjustments – a revised structure and sequence of the Compensation Report enhancing readability and transparency 2018 performance In 2018 we delivered strong financial results in overall challenging market conditions, demonstrating the soundness of our strategic choices and the strength of our diversified franchise. Pre-tax growth was strong, resulting in an increase of 16% in net profit attributable to shareholders to USD 4.5 billion (CHF 4.4 billion), when excluding the effect of the US tax law change in the fourth quarter of 2017. We maintained a strong capital position with a CET1 capital ratio of 12.9% and a CET1 leverage ratio of 3.8%, and also met our 2020 capital requirements one year earlier than plan. Our focus on sustainable performance, balancing cost and capital efficiency supported increased capital returns to investors. Our capital efficiency is reflected in an adjusted1 return on tangible equity excluding DTAs at 12.9%, and return on CET1 capital at 13.1%. In 2018, we bought back CHF 750 million of UBS shares, exceeding our target by CHF 200 million. The BoD intends to propose a dividend of CHF 0.70 per share for the financial year 2018, an increase of 8% compared with 2017. While UBS continues to be one of the few European banks with a share price trading around or above tangible book value per share, we are as disappointed as our shareholders about the absolute share price performance. We believe the share price movement in 2018 does not reflect our overall financial performance and the value of our franchise. At our Investor Update in October, we presented our strategy for cost and capital efficient growth, along with updated financial targets for the Group and business divisions. We are confident that we can continue to deliver profitable growth via cost discipline and leveraging technology to drive higher returns and create long-term value for our shareholders. 2018 performance award pool and expenses The Compensation Committee considered the following primary drivers for pay decisions: – Overall results for the Group and business division – Quality of results (including developments on and provisions for litigation, regulatory and similar matters) – Performance relative to peers – Affordability – Competitiveness in pay position We continue to strongly differentiate individual compensation through our pay for performance approach. Pay decisions reflect performance differences by business and geography, as well as consideration for critical roles that drive and support both current and future sustainable performance. Based on these considerations, the performance award pool for the Group is down about 1% at USD 3.1 billion / CHF 3.0 billion (compared with USD 3.2 billion / CHF 3.1 billion in the prior year). The modest decrease of the performance award pool, while reflecting the strong performance of the firm in challenging market conditions, also demonstrates our disciplined approach in managing compensation over business cycles without compromising our competitive pay position. After careful consideration the Committee has maintained the base salaries for the Group Executive Board (GEB) including the Group CEO at current levels. These salary levels have not been changed since 2011. 1 Refer to ”Group performance” in the ”Financial and operating performance” section of this report for more information on adjusted results. Advisory vote 251 1 The GEB performance award pool, including the Group CEO, was CHF 73.3 million (for reference USD 74.8 million), a reduction of 1%. As a percentage of the adjusted Group profit before tax, the GEB performance award pool was 1.2%, well below the cap of 2.5%. Reflecting the long-term nature of our deferral program, the Group CEO’s realized pay was higher for 2018 than for 2017 due to the first vesting of the Deferred Contingent Capital Plan (awarded in 2012) and vesting of deferred shares under the Equity Ownership Plan (awarded in 2014 and earlier). 2018 compensation philosophy and framework Our compensation philosophy aligns the interests of our investors, clients and employees. The consistency of our approach (largely unchanged since 2012) continues to reinforce our culture of sustainable performance, accountability and appropriate risk-taking. In addition, it provides clarity in compensation discussions with our employees as well as with our shareholders. Variable compensation is earned over the performance year and is subject to mandatory deferral for many employees. This deferral approach creates a strong direct alignment of interests between employees and stakeholders. To incentivize sustainable performance without inappropriate or excessive risk-taking, the Compensation Committee sets performance thresholds for deferred awards at levels to demonstrate the long-term quality of the past year’s performance is sustainable. If the minimum performance thresholds are not achieved, employees are subject to partial or full forfeiture. This approach is intended to discourage short-term profit making at the expense of longer-term performance. We believe UBS has one of the most rigorous deferral regimes in the industry with a deferral period of up to five years, or longer for certain regulated employees. Our deferred share awards are without upside leverage and are directly aligned with share price returns. Culture and behaviors At UBS, we believe that the right strategy and a strong culture drive strong performance. The three keys to success – our Pillars, Principles and Behaviors – embody the foundation of our strategy and culture. They define what we stand for both as a firm and individually. Six years ago we redefined our three keys and we can now say that they are well embedded across UBS. They are at the core of our bank – for all of us, every day. In a fundamental way, they represent our philosophy and the culture of the organization. The recognition of behaviors and culture is an important element of our framework. To reinforce the behaviors framework established by the BoD and the GEB, we reward not only what results were achieved, but also how they were achieved. We reward doing the right thing; collaborating across the bank and speaking up to identify opportunities and risks. We penalize instances of behavior that do not reflect our values. Gender-related initiatives UBS remains committed to hiring, retaining and promoting more women at all levels across the firm. The Compensation Committee systematically reviews any gender pay gap for equivalent roles across the workforce. Our policies and practices are impartial and equal, and we are committed to ensuring that all employees are paid fairly. In 2018, we continued to develop career support, Human Resources processes and technology solutions to help better attract, develop and retain women at all stages of their careers. Overall, while we are making progress towards our aspiration of increasing the ratio of women in management roles to one third, progress takes time and we must continue our focus on seeing more women progress into senior roles. Ann F. Godbehere Chair of the Compensation Committee of the Board of Directors Compensation Committee membership In 2018 Bill Parrett and Reto Francioni stood down from the Committee. I want to thank them both for their valuable input and perspectives that they provided to the Committee over the years. Also in 2018 we welcomed Julie Richardson and Dieter Wemmer to the Committee. Annual General Meeting 2019 At the 2019 Annual General Meeting (AGM) on 2 May, we will seek your support on the following compensation-related items: – the maximum aggregate amount of compensation for the BoD for the period from 2019 AGM to 2020 AGM – the maximum aggregate amount of fixed compensation for the GEB for 2020 – the aggregate amount of variable compensation for the GEB for 2018 – shareholder endorsement in an advisory vote for the Compensation Report Finally, this will be my last report as the Committee chair. I advised the board in February 2019 that, after 10 years’ service, I will retire at the 2019 AGM. It has been my privilege to serve in the capacity of chair of this Committee and I want to take this opportunity to thank our shareholders for their valued input and support and to recognize the tremendous support I have had from management over the years. I wish my successor and the other Committee members every success in the future. Ann F. Godbehere Chair of the Compensation Committee of the Board of Directors Corporate governance and compensation 252 Corporate governance and compensation Compensation Performance and compensation at a glance Financial achievements and strategic highlights The following highlights the main financial achievements for the performance year 2018: – delivered strong 2018 financial results in overall challenging market conditions – Group profit before tax increased by 12% and net profit attributable to shareholders increased by 16%1 – maintained a strong capital position and met the 2020 capital requirements one year early – achieved strong return on CET1 capital of 13.1% 2 – repurchased CHF 750 million of UBS shares, exceeding the 2018 target of up to CHF 550 million 11 Excluding the USD 2,939 million net write-down of deferred tax assets (DTAs) following the enactment of the US Tax Cuts and Jobs Act (TCJA) in the fourth quarter of 2017. 2 Net profit / loss attributable to shareholders divided by average CET1 capital. 3 Calculated as adjusted net profit / loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense / benefit, such as the net write-down due to the TCJA enacted in the fourth quarter of 2017, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. . Performance award year-on-year development – Group performance award pool decreased by 1% compared to previous year – Group CEO performance award of CHF 11.3 million, of which CHF 2 million in cash, bringing his total compensation to CHF 13.8 million (excluding benefits and contributions to retirement benefit plans), a decrease of 1% compared with 2017 – Group Executive Board (GEB) performance award pool, including the Group CEO, of CHF 73.3 million, a decrease of 1% Compensation decision-making approach To support sustainable shareholder value creation, our performance award decisions are based on business performance (including absolute achievement as well as relative achievement compared with prior year, established performance targets and our peers). When adjusting (positively or negatively) the performance award pool, the Compensation Committee considers the following dimensions: 2018 USD 6,063 million Adjusted Group profit before tax Profitability Capital 12.9% Adjusted Group RoTE excl. DTAs3 USD 4,516 million Net profit attributable to shareholders 12.9% CET1 capital ratio 79.5% Adjusted Group cost / income ratio USD 5,991 million Group profit before tax 3.8% CET1 leverage ratio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oUECRKVCN RQUKVKQP KPENWFKPIFKXKFGPFUCPFUJCTGDW[DCEMU 5VTCVGIKEKPKVKCVKXGU 6JG%QORGPUCVKQP%QOOKVVGGEQPUKFGTUVJG RTQITGUUCICKPUVQWTUVTCVGIKEQDLGEVKXGU KPENWFKPIECRKVCNITQYVJCPFEQUVGHƂEKGPE[ 4KUMRTQƂNG 6JG%QORGPUCVKQP%QOOKVVGGEQPUKFGTUVJGƂTOBUTKUMRTQƂNGCPF EWNVWTGCPFVJGGZVGPVVQYJKEJQRGTCVKQPCNTKUMJCUDGGPUWEEGUUHWNN[ OCPCIGFKPENWFKPITKUMTGFWEVKQPKPKVKCVKXGU )TQWRRGTHQTOCPEGCYCTFRQQN )TQWR%'1RGTHQTOCPEGCYCTF #IITGICVG)'$RGTHQTOCPEGCYCTF Advisory vote 253 1 2 3 Pay for performance Our compensation philosophy is to align the interests of investors and clients with those of our employees, thereby linking pay to longer-term sustainable performance. Strong overall performance with net profit attributable to shareholders of USD 4.5 billion, an increase of 16%1 Increased capital returns to investors with proposed dividend per share up 8% and a buyback of CHF 750 million of UBS shares, exceeding our target by CHF 200 million Managed operating expenses while investing for future growth SSustainable shareholder value Overall employee pay levels are aligned to pay competitively for comparable performance, while considering our capital position (including dividends and share buybacks) Compensation structure is aligned with strategic priorities and focused on sustainability of results A significant portion of variable compensation is delivered through a mandatory deferral over a period of five years Awarded pay is aligned with adjusted pre-tax profit and capital returns to shareholders over multiple years PPay delivery mechanisms Realized pay cannot exceed the award granted (other than for market movements and return of the instruments) Compensation framework is largely unchanged since 2012 Compensation framework approved by shareholders since 2014 (annual advisory vote at AGM) GEB compensation is governed by a rigorous process under Compensation Committee and BoD oversight CConsistent approach and strong governance Aggregate amounts of GEB compensation are subject to shareholder approval (annual binding say-on-pay vote at AGM) 1 Excluding the USD 2,939 million net write-down of DTAs following the enactment of the TCJA in the fourth quarter of 2017. Specific additional pay for performance safeguards are in place for GEB members: GEB compensation pay for performance safeguards Cap on individual performance awards (performance award for the Group CEO is capped at five times his fixed compensation and for the other GEB members at seven times) Cap on total GEB performance award pool (2.5% of adjusted profit before tax) Cap on individual cash performance award of USD / CHF 2 million Share ownership requirements At least 80% of awards are at risk of forfeiture Six-month notice period in employment contracts Long-term deferral and no leverage in compensation plans No hedging strategies allowed Corporate governance and compensation 254 Corporate governance and compensation Compensation Shareholder engagement and say on pay UBS is committed to an ongoing dialog on developments and trends in compensation and corporate governance matters. Through regular interaction with shareholders and other external stakeholders, we garner their perspectives, questions and concerns regarding our compensation philosophy and framework. This feedback is important to us when we review our compensation framework, including related disclosures, to confirm that it aligns with the interests of our investors as well as those of our employees. We have summarized frequent questions we received from different stakeholders and our responses below. How does the Compensation Committee use its discretion to determine the performance award pool? We enhanced the Compensation Report to better explain how the Compensation Committee applies judgment when determining the firm’s overall performance award pool. The performance award pool funding begins with a direct link to risk-adjusted profit as described later in this report. The Compensation Committee then applies discretionary adjustments that reflect a range of factors such as capital returns to investors, risk profile, strategic initiatives, affordability, market position and trends. Consequently, the decision balances consideration of financial performance with a range of qualitative factors including discretion to consider the quality of earnings. With regards to developments on and provisions for litigation, regulatory and similar matters, it is important to distinguish between legacy matters and financial and operating performance for the year. To enable future growth through disciplined execution of our strategy and creation of sustainable shareholder value, it is essential that pay decisions are not driven by the potential impact of legacy matters, which may take several years to be resolved. At the same time, we are mindful of the potential costs of such matters, the prudent management of them and the effect on our share price. How is the performance of the GEB members measured? We assess the Group Executive Board (GEB) members’ including the Group CEO’s performance against a number of financial targets and goals related to our Pillars, Principles, and Behaviors. The financial measures and goals reflect our strategic performance targets, which are disclosed in our Annual Report 2018. To provide further context, we enhanced the performance assessment disclosure for the Group CEO and included details on the weighting of the financial targets as well as three years of actual results. How are share price developments reflected in pay decisions? Compensation is awarded based on the assessment of performance achievement while also considering risk profile, capital returns to shareholders, strategic initiatives, affordability and the competitiveness of our pay levels and approach as described in the “at a glance“ section. We do not consider absolute share price performance, either positive or negative, directly in our pay decisions as it is not a direct measure of performance. Nevertheless, we do consider relative total shareholder returns in our decision-making process. Additionally, we consider other factors that evaluate the quality of the share price, such as that UBS continues to be one of the few European banks with a share price trading around or above tangible book value per share. Our mandatory share-based deferral program creates direct alignment with shareholder returns and therefore many employees are directly impacted by the share price. While we are disappointed with our share price performance, we believe the share price movement in 2018 does not reflect the significant progress made during the year, nor the absolute financial performance. We expect that ultimately the value of our franchise and the quality of our earnings will be positively reflected in our share price. How does UBS set minimum performance thresholds for their deferred awards? To incentivize sustainable performance and avoid inappropriate or excessive risk-taking, the Compensation Committee sets for selected populations of employees minimum performance thresholds at levels that demonstrate that the long-term quality of the past year’s performance is sustainable. Our approach reflects a level of performance that is ambitious and at the same time sustainable in terms of longer-term performance. Each year, the Compensation Committee reviews thresholds relative to historical performance, our financial plan and our ambitions, and establishes vesting with minimum performance thresholds for our Equity Ownership Plan (EOP) awards. If the minimum performance thresholds are not achieved over a multi- year period, an employee’s award is subject to partial or even full forfeiture. At the time of the award, several performance conditions relating to the respective performance year guide the level of granted variable compensation components. We believe that employees should not have to earn their variable compensation twice through the achievement of future performance targets beyond the minimum threshold level as this may encourage excessive risk-taking. Our approach is intended to discourage short-term profit making at the expense of longer-term performance. Advisory vote 255 Why does UBS use a deferral instead of a long-term incentive (LTI) plan? The Compensation Committee regularly reviews our framework to confirm it remains competitive and aligned with stakeholders’ interests. In our 2018 review, we concluded that our approach with a deferred annual performance award subject to time- based vesting and minimum performance thresholds for a selected population is best suited for our compensation philosophy. We believe our deferral approach is simple and transparent compared with alternatives such as separate annual incentives and LTI awards. In our review of alternative approaches, including where individuals would receive additional payouts based on achievement of stretch targets, we concluded these approaches are neither simple nor transparent. They are often accompanied by additional leverage where multiples of the awards are delivered for achieving these targets and are granted to employees at a discounted value. They may also encourage excessive risk-taking and are often only available to a small population of employees. Our compensation framework has no upward leverage, such as multiplier factors, and consequently does not encourage excessive risk-taking but supports sustainable performance and responsible risk-taking. The same instruments are granted to all eligible employees, although stricter performance conditions are applied to our more senior employees. This approach has allowed us to attract, retain and incentivize a talented workforce. How does UBS set the maximum aggregate amount of fixed compensation for the GEB members? We set the maximum aggregate amount of fixed compensation or budget to support the total fixed pay for each individual GEB member. Each GEB member receives a fixed base salary, which is reviewed annually by the Compensation Committee. The Group CEO’s annual base salary for 2018 was CHF 2.5 million and has remained unchanged since his appointment in 2011. The other GEB members received a base salary of CHF 1.5 million (or local currency equivalent), also unchanged since 2011. Relative to our competitors for equivalent roles, we believe this level is appropriate. A few GEB members are considered Material Risk Takers (MRTs) for UK / European entities or Senior Management Functions (SMFs) and receive role-based allowances in addition to their base salary as part of their fixed compensation. The budget also includes benefits in line with local practices for other employees. Finally, as the budget is a maximum spend, we include a reserve to consider potential future changes in GEB composition or role changes, and potential additional role-based allowances.Corporate governance and compensation 256 Corporate governance and compensation Compensation Say-on-pay votes at the AGM In line with the Swiss Ordinance against Excessive Compensation in Listed Stock Corporations, we seek binding shareholder approval for the aggregate compensation for the GEB and for the BoD. The BoD believes that prospective approval for the fixed remuneration for the BoD and the GEB provides the firm and its governing bodies with the certainty necessary to operate effectively. Furthermore, retrospective approval for the GEB’s variable compensation awards aligns total compensation for the GEB to performance and contribution, and to developments in the marketplace and across peers. The combination of the binding votes on compensation and the advisory vote on the compensation framework reflects our commitment to our shareholders having their say on pay. →Refer to “Provisions of the Articles of Association related to compensation” in the “Supplemental information” section of this report for more information Approved compensation For the performance year 2018, at the 2017 AGM, shareholders approved a maximum aggregate fixed compensation amount of CHF 31,500,000 for the members of the GEB, including base salaries and role-based allowances, estimated standard contribution to retirement benefit plans, other benefits and a buffer. The aggregate fixed compensation paid in 2018 to the GEB members did not exceed the approved amount for 2018. →Refer to “2018 total compensation for the GEB members” in the “Compensation for the Group CEO and the other GEB members” section of this report Say on pay – compensation-related votes at the 2018 AGM 2018 AGM say-on-pay voting schemes 2018 AGM actual shareholder votes Vote “for” Binding vote on GEB variable compensation Shareholders approved CHF 74,150,000 for the financial year 20171, 2, 3 82.6% Binding vote on GEB fixed compensation Shareholders approved CHF 31,500,000 for the financial year 20193 84.8% Binding vote on BoD remuneration Shareholders approved CHF 14,500,000 for the period from the 2018 AGM to the 2019 AGM1, 2, 4 86.1% Advisory vote on compensation report Shareholders approved the UBS Group AG Compensation Report 2017 in an advisory vote 81.4% 1 Local currencies are translated into Swiss francs at the exchange rates stated in “Note 34 Currency translation rates” in the “Consolidated financial statements” section of our Annual Report 2017. 2 Excludes the portion related to the legally required employer’s social security contributions. 3 Thirteen GEB members were in office on 31 December 2018 including two new GEB members appointed on 1 October 2018 and one on 1 November 2018; two GEB members stepped down on 31 December 2017 and 30 September 2018, respectively; and twelve GEB members were in office on 31 December 2017. 4 Twelve BoD members were in office on 31 December 2018. Advisory vote 257 1 2 3 4 Compensation-related proposals for 2019 At the 2019 AGM, we will ask our shareholders to vote on the variable compensation for the GEB for 2018, the fixed compensation for the GEB for 2020 and the compensation for the BoD from the 2019 AGM to the 2020 AGM. In addition, we will also ask our shareholders for an advisory vote on our Compensation Report, which describes our compensation framework, governance and policy. Both the advisory vote on our compensation policy and the binding votes on compensation reflect our commitment to transparent say on pay for our shareholders. The table below outlines our compensation proposals and includes supporting rationales that we intend to submit to the 2019 AGM for binding votes (in line with the Swiss Ordinance against Excessive Compensation in Listed Stock Corporations and our Articles of Association). Compensation-related proposals for binding votes at the 2019 AGM Item Proposal Rationale GEB variable compensation The Board of Directors proposes an aggregate amount of variable compensation of CHF 73,300,000 for the members of the GEB for the financial year 2018. The proposed amount reflects a decrease of 1% compared with the prior year. This modest decrease is in line with the decrease in the overall performance award pool of the firm and demonstrates our disciplined approach in managing GEB compensation over business cycles without compromising our competitive pay position. The proposed amount further reflects the GEB members’ achievements in delivering sustainable performance, maintaining a strong capital position and increasing payouts to shareholders in a year with challenging market conditions. GEB fixed compensation The Board of Directors proposes a maximum aggregate amount of fixed compensation of CHF 33,000,000 for the members of the GEB for the financial year 2020. The proposal to increase the budget by CHF 1,500,000 reflects the expanded GEB following the new appointments in 2018. The base salaries for the Group CEO and other GEB members have remained at the same level since 2011. The requested increase amount is aligned with the base salary for one GEB member, resulting in a reduction of the reserve amount while maintaining flexibility in light of evolving EU regulation, Brexit and competitive considerations for a potential role-based allowance. BoD compensation The Board of Directors proposes a maximum aggregate amount of compensation of CHF 14,500,000 for the members of the Board of Directors for the period from the 2019 AGM to the 2020 AGM. The proposed amount is unchanged compared to the previous 2018 / 19 period, reflecting the stable number of BoD members. The amount includes the Chairman’s compensation, which has remained unchanged since 2015, as well as fees paid to the independent BoD members. The fixed base fees are unchanged from the 2018 / 19 period and have been broadly flat since 1998.Corporate governance and compensation 258 Corporate governance and compensation Compensation Compensation philosophy and framework Our compensation philosophy Total Reward Principles Our compensation philosophy is to align the interests of our investors with those of our clients and employees, building on our three keys to success – our Pillars, Principles and Behaviors. Our Total Reward Principles establish a framework that balances sustainable performance and prudent risk-taking with a focus on conduct and sound risk management practices. Our compensation structure is aligned with our strategic priorities. It aligns the interests of our stakeholders with those of our employees and encourages our employees to focus on our clients, create sustainable value and achieve the highest standards of performance. Moreover, we reward behaviors that help build and protect the firm’s reputation – specifically integrity, collaboration and challenge. We strive for excellence and sustainable performance in everything we do. Compensation for each employee is based on individual, team, business division and Group performance, within the context of the markets in which we operate. Total Reward Principles Our Total Reward Principles apply to all employees globally. They may vary in certain locations according to local legal requirements and regulations. The table below provides a summary of our Total Reward Principles. Attract and retain a diverse, talented workforce We provide employees with pay that is appropriately balanced between fixed and variable elements, competitive in the market and paid out over an appropriate period Foster effective individual performance management and communication Thorough evaluation of individual performance and adherence to our Behaviors, combined with effective communication, ensures there is a direct connection between achievement of business objectives and compensation across the firm Align reward with sustainable performance We embrace a culture of integration and collaboration within the firm. Our approach to compensation fosters engagement among employees and serves to align their long-term interests with those of clients and stakeholders Support appropriate and controlled risk-taking Compensation is structured such that employees behave in a manner consistent with the firm’s risk framework and tolerance, thereby protecting our capital and reputation, and enhancing the quality of our financial results, in line with what our stakeholders expect from us Advisory vote 259 Our Total Reward approach At UBS, we apply a holistic approach to compensation. Our Total Reward approach consists of fixed compensation (base salary and role-based allowances, if applicable), performance awards (cash performance award and, for employees with total compensation exceeding USD / CHF 300,000, Equity Ownership Plan and Deferred Contingent Capital Plan awards), pension contribution and benefits. Performance awards, where applicable, are determined based on a number of factors, including Group, business division, team and individual performance, and awarded in line with applicable local employment conditions and at the discretion of the firm. Our Total Reward is structured to support sustainable results. A substantial portion of our performance award is deferred and vests over a period of five years, or longer for certain regulated employees. This deferral approach supports alignment of employee and investor interests, our capital base and the creation of sustainable shareholder value. 6QVCN4GYCTF 6QVCNEQORGPUCVKQP $CUGUCNCT[ ƂZGFEQORGPUCVKQP 2GTHQTOCPEGCYCTF &GHGTTGF%QPVKPIGPV %CRKVCN2NCP 'SWKV[1YPGTUJKR2NCP %CUJ 2GPUKQP CPF DGPGƂVU 5JQTVGTVGTO.QPIGTVGTOPerformance award The performance award process consists of pool funding determination, allocation and delivery and, if applicable, deferral to align reward with sustainable performance as outlined in the chart below. This process also includes additional specific pay for performance safeguards for our Group Executive Board (GEB) members. Performance award pool is determined by considering risk-adjusted and sustainable performance, including: – Overall performance including quality of earnings and capital strength – Returns to investors – Risk profile and adjustments – Progress on strategic initiatives – Affordability – Market competitiveness / position – Cap on individual performance awards and total GEB performance award pool Additional GEB pay-for-performance safeguards: Performance awards are allocated to employees based on Group, business division, team and individual performance recognizing what was achieved and how it was achieved, including: – Client focus – Financial results and capital management – Risk management – People and talent development – Pillars, Principles and Behaviors – Allocations based on a performance assessment considering financial targets and goals that includes Group / business division and / or region per formance including our Pillars, Principles and Behaviors – Performance assessment includes evaluation by a control function – At least 80% of awards are at risk of forfeiture – Cap on cash performance award – Share ownership requirements – Six-month notice period in employment contracts – No hedging strategies allowed – Binding votes on aggregate GEB compensation – Advisory vote on the Compensation Report Performance awards are delivered through a deferral to align employee interests with investor interests: – Substantial amounts of performance awards are deferred – At least 50% deferred for Key Risk Takers – Long-term deferral of up to five years, or longer for certain regulated employees – Shareholder- and debt holder-aligned vehicles – No leverage in compensation plans Pool funding determination Allocation Delivery and deferral Performance award Illustrative overview Corporate governance and compensation 260 Corporate governance and compensation Compensation Compensation framework for GEB members The graph below illustrates the compensation elements, pay mix and pay for performance safeguards for GEB members. 2018 compensation framework for GEB members (illustrative example) Up to 20% of the annual performance award is paid in the form of cash and at least 80% will be deferred over a period of five years1, with at least 50% granted under the EOP and the remaining 30% under the DCCP. 1 23 Payout of performance award¹ Key features Pay for performance and safeguards DCCP 30% 30% Notional additional tier 1 (AT1) capital instruments 30% of the performance award is granted under the Deferred Contingent Capital Plan (DCCP). The award vests after five years, subject to write-down if a trigger or viabi lity event occurs. The award is subject to 20% forfeiture for each financial year if UBS does not achieve an adjusted Group profit before tax Notional interest payments will be made annually, where regulation permits, subject to review and confirmation by the firm The award is subject to continued employment and harmful acts provisions Our compensation framework is designed to pay for performance. A performance award is based on the individual’s performance assessment against a number of fi nancial targets and goals related to Pillars, Principles and Behaviors measures At least 80% of the performance award is at risk of forfeiture Compensation plan forfeiture provisions enable the fi rm to reduce the unvested deferred portion if the compensation plans’ relevant performance conditions are not met EOP at least 50% 16% Notional shares At least 50% of the performance award is granted under the Equity Ownership Plan (EOP). The award vests in equal installments after years 3, 4 and 5, subject to both Group and business division performance. Up to 100% of the installment due to vest may be forfeited Dividend equivalents, where regulation permits, are subject to the same terms as the underlying EOP award The award is subject to continued employment and harmful acts provisions Our compensation framework contains a number of features supporting appropriate risk management with safeguards to discourage inappropriate risk-taking: – potential realized pay cannot exceed the award granted (other than for market movements and returns); no upward leverage, such as multiplier factors. The final deferred payout can be forfeited up to 100% in cases where perfor- mance conditions are not met or harmful acts provisions apply – a mix of shorter-term and longer-term performance awards with a focus on deferral – a cap on the total GEB performance award pool of 2.5% of adjusted Group profit before tax – individual caps on the proportion of fixed to variable pay for the Group CEO and other GEB members – six-month notice period included in the employment con- tracts – an evaluation of each GEB member’s risk control effectiveness and adherence to risk-related policies and guidelines as part of their individual qualitative assessment – provisions that enable the firm to trigger forfeiture of some, or all, of the unvested deferred performance award if an employee commits certain harmful acts or if the employment is terminated for cause 17% 17% Cash up to 20% 20% Up to 20% of the performance award is paid out in cash2, subject to a cash cap of USD / CHF 2 million. Any amount above the cash cap is granted under the EOP Base salary3 2018 2019 2020 2021 2022 2023 2024 Share retention 1,000,000 UBS shares for the Group CEO 500,000 UBS shares for other GEB members GEB members are required to hold a certain number of UBS shares as long as they are in office This holding has to be built up within a maximum of five years from the date of their appointment to the GEB 1 Senior Management Functions have extended deferral periods, with the deferred performance awards vesting in equal installments annually between years 3 and 7. Material Risk Takers (MRTs) have an additional 12-month blocking period on their awards post vest. 2 UK MRTs receive 50% in the form of blocked shares. 3 May include role-based allowances in line with market practice in response to regulatory requirements. Advisory vote 261 1 23 GEB share ownership requirements To align GEB members’ interests with those of our shareholders and to demonstrate commitment to the firm, we require the Group CEO and the other GEB members to hold a substantial number of UBS shares. GEB members must build up their minimum shareholding within five years from their appointment and retain it throughout their tenure. The total number of UBS shares held by a GEB member consists of any vested or unvested shares and any privately held shares. GEB members may not sell any UBS shares before they reach the minimum ownership thresholds mentioned below. At the end of 2018, GEB members met their share ownership requirements, except for those appointed during 2016 and 2018, who need to build up and meet the required share ownership level by 2021 and 2023, respectively. Other employees have no binding share ownership requirements. However, employees that are subject to mandatory deferral for their performance award, receive a significant portion of pay in shares. In addition, through our employee share purchase program, employees below the rank of Managing Director may voluntarily defer a portion of their salary and / or performance award for the purchase of UBS shares. Further, many of our employees choose to retain shares after they are vested and free of restrictions. Share ownership requirements Group CEO min. 1,000,000 shares Other GEB members min. 500,000 shares Must be built up within five years from their appointment and retained throughout their tenure. Caps on the GEB performance award pool The size of the GEB performance award pool may not exceed 2.5% of the adjusted Group profit before tax. This limits the overall GEB compensation based on the firm’s profitability. For 2018, the Group’s adjusted profit before tax was USD 6.1 billion and the total GEB performance award pool was USD 74.8 million. The performance award pool as a percentage of adjusted Group profit before tax was 1.2%, which is well below the cap of 2.5%. In line with the individual compensation caps on the proportion of fixed pay to variable pay for all GEB members (introduced in 2013), the Group CEO’s performance award is capped at five times his fixed compensation. Performance awards of other GEB members are capped at seven times their fixed compensation (or two times for GEB members who are also Material Risk Takers (MRTs)). For 2018, performance awards for GEB members and the Group CEO were, on average, 3.2 times their fixed compensation (excluding benefits and contributions to retirement benefit plans). GEB employment contracts The employment contracts of the GEB members do not include severance terms, sometimes referred to as golden parachutes, or supplementary pension plan contributions. All employment contracts for GEB members are subject to a notice period of six months. A GEB member leaving the firm before the end of a performance year may be considered for a performance award during that performance year in line with the approach described in this report. Such awards are subject to approval of the BoD, which may decide not to grant any awards. →Refer to the “Compensation for the Group CEO and the other GEB members” section of this report for more information on performance assessment Benchmarking for the Group CEO and other GEB members When recommending performance awards for the Group CEO and the other GEB members, the Compensation Committee reviews the respective total compensation for each role against a financial industry peer group selected for the comparability of their size, business mix, geographic presence and the extent to which they compete with us for talent. The Compensation Committee also considers our peers’ strategies, practices, pay levels and regulatory environment, and may periodically reference other firms’ pay levels or pay practices, including both financial and non-financial sector peers. The total compensation for a GEB member’s specific role considers the compensation paid by our peers for a comparable role and performance. The Compensation Committee periodically reviews and approves the peer group for executive compensation. The table below presents the composition of our peer group for 2018, which has been reviewed and approved by the Compensation Committee for the performance year 2018: Bank of America Goldman Sachs Barclays HSBC BlackRock JPMorgan Chase BNP Paribas Julius Baer Citigroup Morgan Stanley Credit Suisse Standard Chartered Deutsche Bank State Street 1 23 Corporate governance and compensation 262 Corporate governance and compensation Compensation Compensation framework for employees other than GEB members The graph below provides an overview of the compensation elements, pay mix and specific pay for performance safeguards for our employees other than GEB members, except where otherwise noted in this section. 2018 compensation framework for employees other than GEB members (illustrative example) A mandatory deferral framework applies to employees that receive performance awards with total compensation in excess of USD / CHF 300,000. A significant portion of the performance award is deferred over a period of five years, with at least 60% of the deferred performance award granted under the EOP and up to 40% under the DCCP1, 2. 1 2 34 56 Payout of performance award¹,² Key features Pay for performance and safeguards DCCP3 up to 40% 40% Notional additional tier 1 (AT1) instruments Not more than 40% of the deferred performance award is granted under the DCCP. The award vests in year 5, subject to forteiture if a capital ratio trigger or viability event occurs Notional interest payments will be made annually, where regulation permits, subject to review and confirmation by the firm The award is subject to continued employment and harmful acts provisions Our compensation framework is designed to pay for performance. A performance award is based on the individual’s performance assessment against a number of fi nancial targets and goals related to Pillars, Principles and Behaviors At least 60% of the deferred performance award is at risk of forfeiture Compensation plan forfeiture provisions enable the fi rm to reduce the unvested deferred portion if the compensation plans’ relevant performance conditions are not met EOP3 at least 60% 30% Notional shares5 At least 60% of the deferred performance award is granted under the Equity Ownership Plan (EOP). The award vests in equal installments after the years 2 and 3, subject to continued employment and harmful acts provsions Awards granted to GMDs, KRTs (including Highly Paid Employees) and SMFs are also subject to forteiture if Group and respective business division performance conditions over the performance period are not met6 Dividend equivalents, where regulation permits, are subject to the same terms as the underlying EOP award Mandatory deferral framework applies to employees with total compensation in excess of USD / CHF 300,000 Cash incentive is graduated, based on the relevant deferral mix. Higher performance awards result in a higher deferral rate. Any amount above the cash cap is granted under the EOP Our compensation framework contains a number of features supporting appropriate risk management with safeguards to discourage inappropriate risk-taking: – potential realized pay cannot exceed the award granted (other than for market movements and returns); no upward leverage, such as multiplier factors. The final deferred payout can be forfeited up to 100% in cases where performance conditions are not met or harmful acts provisions apply – a mix of shorter-term and longer-term performance awards with a focus on deferral – provisions that enable the firm to trigger forfeiture of some, or all, of the unvested deferred performance award if an employee commits certain harmful acts, or if the employment is terminated for cause 30% Cash Base salary4 2018 2019 2020 2021 2022 2023 2024 11 Asset Management employees in investment areas receive at least 75% of their deferred performance awards in notional funds under the EOP and up to 25% under the DCCP; Asset Management employees in non-investment areas receive at least 50% of their deferred performance awards in notional funds plus at least 25% in notional UBS shares under the EOP, and up to 25% under the DCCP. 2 Certain regulated employees, such as UK SMFs or MRTs, are subject to additional requirements (e.g., more stringent deferral requirements, additional blocking periods). 3 Graduated, based on updated 2018/19 deferral mix. 4 May include role-based allowances in line with market practice in response to regulatory requirements. 5 Notional funds for Asset Management employees. 6 Includes Asset Management employees who are Group Managing Directors (GMDs) or Key Risk Takers (KRTs) including Highly Paid Employees. Advisory vote 263 1 2 34 56 Benchmarking for employees other than GEB members We generally consider market practice in our pay decisions and framework. Our market review reflects a number of factors, including the comparability of the business division, location, scope and the diversity of our businesses. For certain businesses or roles, we may take into account practices at other major international banks, other large Swiss private banks, private equity firms, hedge funds and non-financial firms. Furthermore, we also benchmark employee compensation internally for comparable roles within and across business divisions and locations. Employee share purchase program The Equity Plus Plan is our employee share purchase program. It allows employees below the rank of Managing Director to voluntarily defer up to 30% of their base salary and / or up to 35% of their performance award (up to USD / CHF 20,000 annually) for the purchase of UBS shares. Eligible employees may buy UBS shares at market price and receive one additional share for every three shares purchased through the program. The additional shares vest after a maximum of three years, provided the employee remains employed with the firm and has retained the purchased shares throughout the holding period. →Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information Compensation for US financial advisors in Global Wealth Management In line with market practice for US wealth management businesses, the compensation for US financial advisors in Global Wealth Management is comprised of production payout and deferred compensation awards. Production payout, paid monthly, is primarily based on compensable revenue. Financial advisors may also qualify for deferred compensation awards, which generally vest over a six-year period. The awards are based on strategic performance measures, including production, length of service with the firm and net new business. Production payout rates and deferred compensation awards may be reduced for, among other things, errors, negligence or carelessness, or a failure to comply with the firm’s rules, standards, practices and policies or applicable laws and regulations. 1 2 34 56 Corporate governance and compensation 264 Corporate governance and compensation Compensation Compensation elements Overall, we look across all elements of pay when making our decisions on total compensation. We regularly review our principles and compensation framework to remain competitive and aligned with stakeholders. For 2018, we made no material changes to our overall framework. We will continue to review our approach to salaries and performance awards in light of market developments, affordability, our performance and our commitment to deliver sustainable returns to our shareholders. Our policies and practices are impartial and equal, and we are committed to ensuring that all employees are paid fairly. Base salary and role-based allowance Employees’ fixed compensation (e.g., base salary) reflects their level of skill, role and experience, as well as local market practice. Base salaries are usually paid monthly or fortnightly in line with local market practice. We offer our employees competitive base salaries that reflect the location, function and role. Salary increases generally consider promotions, skill set, performance and overall responsibility. Each GEB member receives a fixed base salary, which is reviewed annually by the Compensation Committee. The Group CEO’s annual base salary for 2018 was CHF 2.5 million and has remained unchanged since his appointment in 2011. The other GEB members received a base salary of CHF 1.5 million (or local currency equivalent), also unchanged since 2011. In addition to a base salary and as part of fixed compensation, some employees may receive a role-based allowance. This allowance represents a shift in the compensation mix between fixed and variable compensation and not an increase in total compensation. It reflects the market value of a specific role and is fixed, non-forfeitable compensation. Unlike salary, a role-based allowance is paid only as long as the employee is in a specific role. Similar to previous years, 2018 role-based allowances consisted of a cash portion and, where applicable, a blocked UBS share award. A few GEB members are considered Material Risk Takers (MRTs) for UK / European entities due to their impact on those entities, regardless of personal domicile. In addition to base salary, role-based allowances are part of their fixed compensation. At the Annual General Meeting, shareholders are asked to approve the maximum aggregate amount of fixed compensation for the members of the GEB for the following financial year. The amount requested includes a reserve to consider potential future changes in GEB composition or role changes, and potential additional role-based allowances. →Refer to the “Supplemental information” section of this report for more information on MRTs and Senior Management Functions (SMFs) →Refer to the “Shareholder engagement and say on pay” section of this report for more information on the shareholders’ vote on the GEB compensation Pensions and benefits For all employees, we offer certain benefits such as health insurance and retirement benefits. These benefits vary depending on the employee’s location and are intended to be competitive in each of the markets in which we operate. Pension contributions and pension plans also vary across locations and countries in accordance with local requirements and market practice. However, pension plan rules in any one location are generally the same for all employees, including management. For GEB members, pension contributions and benefits are in line with local practices for other employees. No enhanced or supplementary pension contributions exist for the GEB. Performance award Most of our employees are eligible for an annual performance award. The level of the award, where applicable, generally depends on the firm’s overall performance, the employee’s business division, team and individual performance, and behavior, reflecting their overall contribution to the firm’s results. In addition to the firm’s Pillars and Principles, Behaviors related to integrity, collaboration and challenge are part of the performance management approach. Therefore, when assessing performance, we take into account not only what was achieved, but also how those results were achieved. Advisory vote 265 Our deferred compensation plans To reinforce our culture, risk management approach and emphasis on sustainable performance, we deliver part of our annual variable compensation through a deferral. We believe our approach with a single incentive decision and a deferral is simple and transparent, and is best suited to implementing our compensation philosophy and delivering sustainable performance. This aligns our employees’ and stakeholders’ interests and appropriately links compensation to longer-term sustainable performance. Deferred compensation is delivered through two plans: (i) the Equity Ownership Plan (EOP), which primarily aligns employee interest with those of our shareholders, and (ii) the Deferred Contingent Capital Plan (DCCP), which aligns employee interest with the interests of debt holders. The potential realized pay cannot exceed the award granted other than for market movements and returns of the instruments. Therefore, our compensation plans have no upward leverage, such as multiplier factors, and consequently do not encourage excessive risk-taking. We believe our deferral regime has one of the longest vesting periods in the industry. The average deferral period is 4.4 years for GEB members and 3.5 years for employees below GEB level. To further promote sustainable performance, our deferred compensation components include malus conditions. These enable the firm to forfeit unvested deferred awards under certain circumstances, including performance and harmful acts. Additionally, deferred awards granted to our most senior employees and to Highly Paid Employees (employees with a total compensation exceeding USD / CHF 2.5 million) are subject to performance conditions. Under the EOP and DCCP, employees who are not Material Risk Takers (MRTs) may receive annual dividend equivalents / notional interest payments. From performance year 2017, European Banking Authority guidelines no longer permit MRTs to receive dividend or interest payments on instruments awarded as deferred variable remuneration. Where dividend payments are not permitted, the grant price of the EOP award is adjusted for the expected dividend yield over the vesting period to reflect the fair value of the non-dividend bearing award. Similarly, where interest payments are not permitted, the DCCP award reflects the fair value of the granted non-interest bearing award. For employees other than GEB members, a portion of performance awards above a total compensation of USD / CHF 300,000 is deferred in UBS notional shares and / or UBS notional instruments over a period of five years, or longer for certain regulated employees. Of the deferred annual performance award, at least 60% is deferred in UBS notional shares under the EOP and up to 40% in notional capital instruments under the DCCP. Asset Management employees in investment areas continue to receive at least 75% of their deferred performance awards in notional funds under the EOP and up to 25% under the DCCP. From performance year 2018, Asset Management employees in non-investment areas will receive at least 50% of their deferral in notional funds plus at least 25% in notional UBS shares under the EOP, and up to 25% under the DCCP. This aligns Asset Management employee compensation more closely with industry standards and also aligns the non-investment areas to Group performance. The deferred amount increases at higher marginal rates in line with the value of the performance award. The portion of the performance award paid out in cash is capped at USD / CHF 2 million (or the equivalent in other currencies). Amounts in excess of the cash cap are deferred in notional shares under the EOP. The effective deferral rate therefore depends on the amount of the performance award and the amount of total compensation. For each GEB member, at least 80% of the performance award is deferred, while a maximum of 20% can be paid out in cash, which is capped to defer a higher portion and thus further aligns GEB members’ and shareholders’ interests. For the performance year 2018, a minimum of 50% of the overall performance award is granted under the EOP, which vests in three equal installments in years 3 to 5, provided that performance conditions are met. The remaining 30% of the overall performance award is granted under the DCCP. For the GEB member whose role was considered in 2018 a UK Senior Management Function (SMF), additional provisions applied that are described under “UK Senior Managers and Certification Regime” in the “Supplemental information“ section of this report. →Refer to the “Performance conditions for EOP awards granted in 2019“ section of this report for more information on performance conditions →Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information →Refer to the “Supplemental information” section of this report for more information on MRTs and SMFs →Refer to “Vesting of outstanding awards granted in prior years subject to performance conditions” in the “Supplemental information” section of this report for more information Corporate governance and compensation 266 Corporate governance and compensation Compensation Equity Ownership Plan The Equity Ownership Plan (EOP) is a mandatory deferral plan for all employees with total compensation greater than USD / CHF 300,000. For the performance year 2018, we granted EOP awards to 4,130 employees. The plan includes provisions that allow the firm to reduce or fully forfeit the unvested deferred portion of the granted EOP award if an employee commits certain harmful acts, and in most cases trigger forfeiture where employment has been terminated. For GEB members, Group Managing Directors (GMDs), Key Risk Takers (KRTs) (including Highly Paid Employees) and Senior Management Functions (SMFs), the EOP awards granted will only vest if both Group and business division performance conditions are met. For all awards granted for the performance years 2017 (awarded in early 2018) and prior, the Group performance condition was based on the average adjusted return on tangible equity (RoTE) excluding deferred tax assets (DTAs) over the performance period. Starting with the EOP awards granted in 2019 for the performance year 2018, the Group performance condition is based on the average reported return on CET1 capital (RoCET1), consistent with our revised performance targets and ambitions, which became effective at the beginning of 2019. Business division performance is measured on the basis of their average adjusted return on attributed equity (RoAE). For Corporate Center employees, it is measured on the basis of the average operating businesses’ adjusted RoAE. The Group and business division thresholds for Performance EOP awards granted in 2019 reflect the changes announced at our 2018 Investor Update and demonstrate our commitment to sustainable performance. At the same time, it reflects moving from an adjusted to a reported Group performance measure, as well as pushing out additional costs from Corporate Center and increasing attributed equity for business divisions. On a like-for-like basis the thresholds established for 2019 are comparable to prior year thresholds. The primary measure to determine vesting of EOP awards is the average adjusted Group RoTE excluding DTAs and from 2019 onwards the average reported Group RoCET1. If the Group performance measure is equal to or above the performance threshold of 8%, the EOP award will vest in full, provided that the relevant business division performance condition has also been met. If the Group performance measure is 0% or negative, the installment will be fully forfeited regardless of any business division’s individual performance. If the Group performance measure is between 0% and 8%, the award will vest on a linear basis at 0–100%, again provided that the relevant business division performance condition is met. The secondary measure to determine vesting of EOP awards is business division adjusted RoAE. If the business division adjusted RoAE performance threshold (refer to the table on the next page) is met, the EOP award will vest in accordance with the achievement of the Group performance. However, if the business division adjusted RoAE is 0% or below, the respective awards of employees in this business division are subject to complete forfeiture. If the business division adjusted RoAE is between 0% and the business division threshold, these awards are subject to forfeiture of up to 40%. The Compensation Committee determines whether the performance conditions have been met. One of our key objectives is to deliver sustainable performance, and therefore we link the EOP award vesting with minimum performance thresholds over a multi-year time horizon. Unlike many of our competitors, who set maximum targets for their LTI plans, our deferred awards have no upward leverage. Consequently our awards are aligned with sustainable results and do not encourage excessive risk-taking. This approach promotes sustainable performance by establishing a minimum level of performance, below which awards are subject to full or partial forfeiture. →Refer to “Vesting of outstanding awards granted in prior years subject to performance conditions” in the “Supplemental information” section of this report for more information Advisory vote 267 Performance conditions for EOP awards granted in 2019 At the time of the Equity Ownership Plan (EOP) award, several performance conditions relating to the respective performance year guide the level of granted variable compensation components. In addition, the Compensation Committee sets for selected populations of employees minimum future performance thresholds at levels to demonstrate that the long-term quality of the past year’s performance is sustainable. Each year the Compensation Committee reviews thresholds relative to historical performance, our financial plan and our ambitions and establishes vesting with minimum performance thresholds for our EOP awards. If the minimum performance thresholds are not achieved over a multi-year period, an employee’s award is subject to partial or full forfeiture. Once set, the performance thresholds remain in place for all EOP performance vesting installments for that particular award year. For GEB members, the award vests in equal installments after years 3, 4 and 5. For GMDs and KRTs, including Highly Paid Employees, the award vests in equal installments after years 2 and 3. Vesting after Applicable performance period 3 years (installment 1) 2019, 2020 and 2021 4 years (installment 2) 2020, 2021 and 2022 GEB / SMF1 5 years (installment 3) 2021, 2022 and 2023 2 years (installment 1) 2019 and 2020 GMDs, Key Risk Takers (including Highly Paid Employees) 3 years (installment 2) 2019, 2020 and 2021 1 Senior Management Functions have extended deferral periods, with the deferred performance awards vesting in equal installments between years 3 and 7 (including DCCP). Average reported Group RoCET1 performance threshold Average reported Group RoCET1 ≥8% Business division adjusted RoAE performance thresholds Global Wealth Management ≥19% Personal & Corporate Banking ≥12% Asset Management ≥20% Investment Bank ≥8% Corporate Center1 ≥12% 1 For Corporate Center employees, average operating businesses adjusted RoAE performance threshold.Corporate governance and compensation 268 Corporate governance and compensation Compensation Illustrative example for EOP performance conditions The final amount of any award vesting under the EOP can vary; firstly, according to the level of achievement of the average reported RoCET1 relative to threshold, and secondly, subject to business division adjusted RoAE performance thresholds being satisfied, as applicable. In the event that average reported RoCET1 is below the minimum performance threshold requirement, and additionally, if the business division adjusted RoAE is 0% or below, the respective awards of employees in this business division are subject to full forfeiture. If the business division adjusted RoAE is between 0% and the business division performance threshold, these awards are subject to forfeiture of up to 40%. The table below illustrates full-vest, partial vest and full-forfeiture scenarios. Group Performance (RoCET1) ≤ 0%Between 0% and threshold ≥ threshold ≤ 0%Full forfeiture Full forfeiture Full forfeiture Between 0% and threshold Full forfeiture Partial vest Partial vestDivisional Performance (RoAE) ≥ threshold Full forfeiture Partial vest Full vest Advisory vote 269 Deferred Contingent Capital Plan The Deferred Contingent Capital Plan (DCCP) is a mandatory deferral plan for all employees with total compensation greater than USD / CHF 300,000. For the performance year 2018, we granted DCCP awards to 4,093 employees. Employees are awarded notional additional tier 1 (AT1) capital instruments, which at the discretion of the firm can be settled as either a cash payment or a perpetual, marketable AT1 capital instrument. Prior to granting, employees can elect to have their DCCP awards denominated in either Swiss francs or US dollars. DCCP awards vest in full after five years and up to seven years for SMFs, unless there is a trigger event. Awards are forfeited if a viability event occurs, that is, if FINMA notifies the firm in writing that the DCCP awards must be written down to prevent an insolvency, bankruptcy or failure of UBS, or if the firm receives a commitment of extraordinary support from the public sector that is necessary to prevent such an event. Additionally, they are written down if the Group’s common equity tier 1 (CET1) capital ratio falls below 10% for GEB members and below 7% for all other employees. As an additional performance condition, GEB members forfeit 20% of their award for each loss-making year during the vesting period. This means that 100% of the award is subject to risk of forfeiture. Like the EOP, the DCCP also has provisions that allow the firm to apply malus conditions on some, or all, of the unvested deferred portion of a granted award if an employee commits certain harmful acts, or in most cases trigger forfeiture where employment has been terminated. Under the DCCP, employees who are not MRTs may receive discretionary annual notional interest payments. The notional interest rate for grants in 2019 was 3.40% for awards denominated in Swiss francs and 6.85% for awards denominated in US dollars. These interest rates are based on the current market rates for similar AT1 capital instruments. Notional interest will be paid out annually, subject to review and confirmation by the Compensation Committee. Over the last five years, USD 2.0 billion of DCCP was issued, contributing to the Group’s total loss-absorbing capacity (TLAC). Therefore, DCCP awards not only support competitive pay, but also provide a loss absorption buffer that protects the firm’s capital position. The following table illustrates the impact of the DCCP on our AT1 and tier 2 capital as well as on our TLAC ratio. →Refer to the “Supplemental information” section of this report for more information on performance award- and personnel- related expenses →Refer to the “Supplemental information” section of this report for more information on longer vesting and clawback periods for MRTs and SMFs Impact of the Deferred Contingent Capital Plan on our loss-absorbing capacity1 USD million, except where indicated 331.12.18 31.12.17 31.12.16 DDeferred Contingent Capital Plan (DCCP) 2,005 2,160 2,231 of which: high-trigger loss-absorbing additional tier 1 capital 2,005 1,714 1,356 of which: high-trigger loss-absorbing tier 2 capital 2 0 447 875 DCCP contribution to the total loss-absorbing capacity ratio (%) 0.8 0.9 1.0 11 Refer to “Bondholder information” at www.ubs.com/investors for more information on the capital instruments of UBS Group AG and of UBS AG both on a consolidated and a standalone basis. 2 Relates to DCCP awards granted for the performance years 2012 and 2013 - based on Swiss SRB framework including transitional arrangements (phase-in) as of 31 December 2017 and 31 December 2016; based on the former Swiss SRB framework for 31 December 2015. As of 31 December 2018, both of these DCCP awards no longer meet the grandfathering treatment under Swiss TBTF capital requirements. Corporate governance and compensation 270 Corporate governance and compensation Compensation Other variable compensation components To support hiring and retention, particularly at senior levels, we may offer certain other compensation components. These include: – Replacement payments to compensate employees for deferred awards forfeited as a result of joining the firm. Such payments are industry practice and are often necessary to attract senior candidates, who generally have a significant portion of their awards deferred at their current employer, where continued employment is required to avoid forfeiture. – Retention payments made to key employees to induce them to stay, particularly during critical periods for the firm such as a sale or wind-down of business. – On a limited basis, guarantees may be required to attract individuals with certain skills and experience. These awards are fixed incentives subject to our standard deferral rules and are limited to the first full year of employment. – Award grants to employees hired late in the year to replace performance awards that they would have earned at their previous employers, but have foregone by joining the firm. These awards are generally structured with the same level of deferral as for employees at a similar level at UBS. – In exceptional cases, candidates may be offered a sign-on award to increase the chances of them accepting our offer. These other variable compensation components are subject to a comprehensive governance process. Authorization and responsibility may go up to the Compensation Committee, depending on the amount or type of such payments. Employees who are made redundant may receive severance payments. Our severance terms comply with the applicable local laws (legally obligated severance). In certain locations, we may provide severance packages that are negotiated with our local social partners and may go beyond the applicable minimum legal requirements (standard severance). Such payments are governed by location-specific severance policies. In addition, we may make severance payments that exceed legally obligated or standard severance payments (supplemental severance) where we believe that they are aligned with market practice and appropriate under the circumstances. No severance payments are made to members of the GEB. Sign-on payments, replacement payments, guarantees and severance payments TTotal 2018 oof which: expenses recognized in 2018 5 of which: expenses to be recognized in 2019 and later TTotal 2017 NNumber of beneficiaries USD million, except where indicated 22018 2017 TTotal sign-on payments1 30 20 11 34 178 149 of which: Key Risk Takers 2 7 4 4 25 6 15 TTotal replacement payments3 72 7 65 96 299 278 of which: Key Risk Takers 2 19 2 16 52 11 27 TTotal guarantees3 48 26 22 37 54 39 of which: Key Risk Takers 2 12 5 7 20 5 9 TTotal severance payments1,4 165 165 0 222 1,524 2,205 of which: Key Risk Takers 4 4 0 2 18 6 11 GEB members are not eligible for sign-on or severance payments. 2 Expenses for Key Risk Takers are full-year amounts for individuals in office on 31 December 2018. Key Risk Takers include employees with a total compensation exceeding USD / CHF 2.5 million (Highly Paid Employees). 3 No GEB member received replacement payments or guarantees for 2018 or 2017. 4 Severance payments include legally obligated and standard severance. 5 Expenses before post-vesting transfer restrictions. Advisory vote 271 Corporate governance and compensation Compensation 270 Other variable compensation components To support hiring and retention, particularly at senior levels, we may offer certain other compensation components. These include: – Replacement payments to compensate employees for deferred awards forfeited as a result of joining the firm. Such payments are industry practice and are often necessary to attract senior candidates, who generally have a significant portion of their awards deferred at their current employer, where continued employment is required to avoid forfeiture. – Retention payments made to key employees to induce them to stay, particularly during critical periods for the firm such as a sale or wind-down of business. – On a limited basis, guarantees may be required to attract individuals with certain skills and experience. These awards are fixed incentives subject to our standard deferral rules and are limited to the first full year of employment. – Award grants to employees hired late in the year to replace performance awards that they would have earned at their previous employers, but have foregone by joining the firm. These awards are generally structured with the same level of deferral as for employees at a similar level at UBS. – In exceptional cases, candidates may be offered a sign-on award to increase the chances of them accepting our offer. These other variable compensation components are subject to a comprehensive governance process. Authorization and responsibility may go up to the Compensation Committee, depending on the amount or type of such payments. Employees who are made redundant may receive severance payments. Our severance terms comply with the applicable local laws (legally obligated severance). In certain locations, we may provide severance packages that are negotiated with our local social partners and may go beyond the applicable minimum legal requirements (standard severance). Such payments are governed by location-specific severance policies. In addition, we may make severance payments that exceed legally obligated or standard severance payments (supplemental severance) where we believe that they are aligned with market practice and appropriate under the circumstances. No severance payments are made to members of the GEB. Sign-on payments, replacement payments, guarantees and severance payments Total 2018 of which: expenses recognized in 2018 5 of which: expenses to be recognized in 2019 and laterTotal 2017Number of beneficiaries USD million, except where indicated20182017 Total sign-on payments1 30 20 11 34 178 149 of which: Key Risk Takers 2 7 4 4 25 6 15 Total replacement payments3 72 7 65 96 299 278 of which: Key Risk Takers 2 19 2 16 52 11 27 Total guarantees3 48 26 22 37 54 39 of which: Key Risk Takers 2 12 5 7 20 5 9 Total severance payments1,4 165 165 0 222 1,524 2,205 of which: Key Risk Takers 4 4 0 2 18 6 1 GEB members are not eligible for sign-on or severance payments. 2 Expenses for Key Risk Takers are full-year amounts for individuals in office on 31 December 2018. Key Risk Takers include employees with a total compensation exceeding USD / CHF 2.5 million (Highly Paid Employees). 3 No GEB member received replacement payments or guarantees for 2018 or 2017. 4 Severance payments include legally obligated and standard severance. 5 Expenses before post-vesting transfer restrictions. 271 2018 performance and compensation funding Our performance in 2018 We delivered strong 2018 financial results in overall challenging market conditions, reflecting the strength of our business model. Profit before tax increased by 12% to USD 6.0 billion, mainly reflecting higher operating income and a reduction in operating expenses. Adjusted1 profit before tax decreased by 4% to USD 6.1 billion due to higher adjusted operating expenses, partly offset by an increase in adjusted operating income. For further details on our Group and business division performance refer to the “Financial and operating performance” section of this report. Net profit attributable to shareholders increased by 16% to USD 4.5 billion (excluding the effect of the US tax law change in the fourth quarter of 2017). Adjusted1 return on tangible equity excluding deferred tax assets (DTAs) was 12.9%. Reported return on common equity tier 1 (CET1) capital was 13.1%, which compares well with our peers. Our capital position remained strong with a CET1 capital ratio at 12.9% and a CET1 leverage ratio of 3.8%, both in line with our capital guidance of around 13% and 3.7%, respectively. We increased our total loss-absorbing capacity by USD 3.4 billion to USD 83.7 billion. For the financial year 2018, the Board of Directors intends to propose a dividend of CHF 0.70 per share, an increase of 8% on the prior year. During 2018, we repurchased CHF 750 million of shares, exceeding the 2018 target of up to CHF 550 million. 1 Refer to “Group performance” in the “Financial and operating performance” section of this report for more information on adjusted results. 2 The adjusted return on tangible equity excluding DTAs is calculated as the adjusted net profit / loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense / benefit, such as the net write-down due to the TCJA enacted in the fourth quarter of 2017, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. 0.0000 1333.3333 2666.6666 3999.9999 5333.3332 6666.6665 7999.9998 0.000000 13.333333 26.666666 39.999999 53.333332 66.666665 79.999998 0 3 6 9 12 15 Adjusted profit before tax USD million 2017 2018 2017 2018 8,000 4,000 0 (4%)(80 bps) 6,295 6,063 2017 2018 80 40 0 4% 80.3 83.7 Adjusted return on tangible equity excluding DTAs2 in % Total loss-absorbing capacity USD billion 13.7 12.9 20.0 10.0 0 271 2018 performance and compensation funding Our performance in 2018 We delivered strong 2018 financial results in overall challenging market conditions, reflecting the strength of our business model. Profit before tax increased by 12% to USD 6.0 billion, mainly reflecting higher operating income and a reduction in operating expenses. Adjusted1 profit before tax decreased by 4% to USD 6.1 billion due to higher adjusted operating expenses, partly offset by an increase in adjusted operating income. For further details on our Group and business division performance refer to the “Financial and operating performance” section of this report. Net profit attributable to shareholders increased by 16% to USD 4.5 billion (excluding the effect of the US tax law change in the fourth quarter of 2017). Adjusted1 return on tangible equity excluding deferred tax assets (DTAs) was 12.9%. Reported return on common equity tier 1 (CET1) capital was 13.1%, which compares well with our peers. Our capital position remained strong with a CET1 capital ratio at 12.9% and a CET1 leverage ratio of 3.8%, both in line with our capital guidance of around 13% and 3.7%, respectively. We increased our total loss-absorbing capacity by USD 3.4 billion to USD 83.7 billion. For the financial year 2018, the Board of Directors intends to propose a dividend of CHF 0.70 per share, an increase of 8% on the prior year. During 2018, we repurchased CHF 750 million of shares, exceeding the 2018 target of up to CHF 550 million. 1 Refer to “Group performance” in the “Financial and operating performance” section of this report for more information on adjusted results. 2 The adjusted return on tangible equity excluding DTAs is calculated as the adjusted net profit / loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense / benefit, such as the net write-down due to the TCJA enacted in the fourth quarter of 2017, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. Advisory vote Corporate governance and compensation 272 Corporate governance and compensation Compensation Performance award pool funding Our performance award pool funding framework is based on business performance, which is measured across multiple dimensions as outlined below. We assess Group and business division performance, including achievement against a set of performance targets, and we also consider performance relative to industry peers, general market competitiveness and progress against our strategic objectives, including capital growth as well as risk-weighted assets and cost efficiency. We look at the firm’s risk profile and culture, the extent to which operational risks and audit issues have been identified and resolved, and the success of risk reduction initiatives. Our compensation philosophy focuses on balancing performance with prudent risk-taking and retaining talented employees. To achieve this, as performance increases, we reduce our overall performance award funding percentage. In years of strong performance, this prevents excessive compensation, resulting in an increased proportion of profit before performance award being available for distribution to shareholders or growing the Group’s capital. In years where performance declines, the performance award pool will generally decrease; however, funding rates may increase. The performance award pool funding process starts with the accrual of a percentage of each business division’s risk-adjusted profit before performance award. In determining the final pool, we also consider progress against our strategic objectives, quality of earnings, affordability, returns to investors and market competitiveness. Business division performance is adjusted for items that do not represent underlying performance (for example, gains or losses on the sale of a property or a business). Corporate Center funding is linked to overall Group performance and reflects headcount, workforce location and demographics. For each functional area, quantitative and qualitative assessments evaluate service quality, risk management and financial achievements. To help evaluate service quality, business divisions provide input into the evaluation and assessment of Corporate Center areas; however, control functions are evaluated independently of the divisions they oversee, supervise or monitor. Ultimately, our pay decisions reflect the overall and individual performance as well as the competitive market for talent in these areas, to ensure an efficient and effective Corporate Center. Before making its final recommendation to the BoD, the Compensation Committee can apply positive or negative discretion to the performance award pool, including recommending a zero award. When adjusting the pool, the Compensation Committee considers various factors such as relative performance, market environment, shareholder returns, the effect of changes in financial accounting standards, litigation and regulatory costs as well as competitive pressure. The Compensation Committee decision balances consideration of financial performance with a range of qualitative factors and takes account of the quality of earnings including developments on and provisions for litigation, regulatory and similar matters. In that regard, it is important to distinguish between legacy matters and financial and operating performance for the year. To enable future growth through disciplined execution of our strategy and creation of sustainable shareholder value, it is essential that pay decisions are not driven by the potential impact of legacy matters which may take several years to be resolved. At the same time, we are mindful of the potential costs of such matters, the prudent management of them and the effect on our share price. As described above, reflecting the aforementioned considerations, over the past six years, the Compensation Committee applied discretionary adjustments to the performance award pool of between -6% and +2%, resulting in a downward adjustment in all but one year. An illustrative overview with more details on the process is presented in the chart on the next page. →Refer to “Group performance” in the “Financial and operating performance” section of this report for more information on adjusted results Advisory vote 273 Performance award pool funding process – illustrative overview Financial performance Risk adjustment Quantitative and qualitative adjustments Consultation of Group CEO with the business division Presidents Compensation Committee / BoD governance and decision Adjusted business division financial performance Risk-adjusted business division performance award pool Business division measures Qualitative, risk and regulatory assessment Relative performance vs peers Market position and trends Recommended performance award pools Final performance award pool 1 2 1 2 3 4 5 3 4 5 Adjusted business division financial performance The starting point for the funding process is the adjusted business division financial performance, which excludes items that are not reflective of the underlying business performance Risk-adjusted business division performance award pool Predetermined business division-specific funding rates are applied to risk-adjusted performance, incorporating market, credit and operational (including conduct) risk Business division measures Each division is assessed based on specific measures (e.g., net new money growth rate, return on attributed equity) Qualitative, risk and regulatory assessment Qualitative assessment (e.g., quality of earnings), assessment of regulatory compliance and risk assessment (such as legal, compliance, reputational and operational risk) support alignment to our Total Reward Principles Relative performance vs peers Performance is also assessed relative to our peers Market position and trends Market intelligence based on external advisors helps assess the competitiveness of our pay levels and compensation structure. It also provides a prospective view of market trends in terms of absolute compensation levels, compensation framework and industry practice Recommended per formance award pools The business division performance award pool determination process, based on quantitative and qualitative assessments, results in a recommen- dation from the Group CEO (after consultation with the business division Presidents) to the Compensation Committee for consideration Final performance award pool The Compensation Committee considers the recommen dation in the context of our overall performance, capital strength, risk profile, affordability, capital returns to investors, progress on strategic initiatives, market competitiveness / position, as well as business and geographic trends. The committee verifies it is in line with our strategy embodied in our Total Reward Principles to create sustainable shareholder value and may alter the recommendations of the Group CEO (upward or downward, including recommending a zero award) before making its fi nal recommendation to the BoD Corporate governance and compensation 274 Corporate governance and compensation Compensation Compensation for the Group CEO and the other GEB members Performance assessment Annual performance awards for the Group CEO and the other Group Executive Board (GEB) members are based on the GEB compensation determination process as illustrated below and, in aggregate, subject to shareholder approval at the AGM. We assess the GEB members’ performance against a number of financial targets and goals related to Pillars, Principles, and Behaviors. The financial measures for the Group CEO are based on overall Group performance. For the other GEB members, they are based on both Group performance and the performance of the relevant business division and / or region; for those who lead Group functions, they are assessed on the performance of the Group and the function they oversee. The weighting between Group, business division, regional and functional measures varies depending on a GEB member’s role. A significant weight is given to Group measures for all GEB members. The achievements relative to goals related to Pillars and Principles are additional factors for assessing the overall quality and sustainability of the financial results. The financial measures including Pillars and Principles account for 65% of the assessment, while Behaviors account for 35%. The “Overview of the performance assessment measures” table in this section outlines the measures on which the performance assessment is based. Overview of the GEB compensation determination process The compensation for the Group CEO and the other GEB members is governed by a rigorous process under Compensation Committee and BoD oversight. The illustration below shows how compensation for all GEB members is determined. 6JG%QORGPUCVKQP%QOOKVVGGKUKPXQNXGFCVCNNUVCIGUQHVJGRGTHQTOCPEGCPFVQVCNEQORGPUCVKQPFGEKUKQPOCMKPIRTQEGUUHQT VJG)TQWR%'1CPFVJGQVJGT)'$OGODGTUHQTTGXKGYCPFCRRTQXCND[VJG$Q& 1DLGEVKXGUGVVKPI 6JGƂPCPEKCNVCTIGVUCTGDCUGFQP)TQWRDWUKPGUU FKXKUKQPTGIKQPCNCPFQTHWPEVKQPCNRGTHQTOCPEG FGRGPFKPIQPVJGTQNGQHVJG)'$OGODGT (KPCPEKCNVCTIGVUCPFIQCNUHQT2KNNCTUCPF2TKPEKRNGU CTGDCUGFQPVJGUVTCVGIKERNCP (KPCPEKCNOGCUWTGUKPENWFKPIEQPUKFGTCVKQPQH2KNNCTU CPF2TKPEKRNGUCEEQWPVHQTYJKNG$GJCXKQTU CEEQWPVHQT 6JG%QORGPUCVKQP%QOOKVVGG sVQIGVJGTYKVJVJG$Q&%JCKTOCPGUVCDNKUJGUVJG QDLGEVKXGUHQTVJG)TQWR%'1 sVQIGVJGTYKVJVJG)TQWR%'1TGXKGYUQDLGEVKXGU HQTVJGQVJGT)'$OGODGTU 2GTHQTOCPEGCUUGUUOGPV 6JGƂPCPEKCNVCTIGVUCTGCUUGUUGFDCUGFQPCEVWCN TGUWNVUXURNCPCPF[GCTQP[GCTRGTHQTOCPEG #EJKGXGOGPVUTGNCVKXGVQIQCNUTGNCVGFVQ2KNNCTU CPF2TKPEKRNGUCTGCFFKVKQPCNHCEVQTUHQTCUUGUUKPI VJGSWCNKV[CPFUWUVCKPCDKNKV[QHƂPCPEKCNTGUWNVU $GJCXKQTUCUUGUUJQYVJGGZGEWVKXGCEJKGXGFVJG ƂPCPEKCNTGUWNVU 6JG%QORGPUCVKQP%QOOKVVGG sVQIGVJGTYKVJVJG$Q&%JCKTOCPGXCNWCVGUVJG RGTHQTOCPEGQHVJG)TQWR%'1CPFFGVGTOKPGU VJGQXGTCNNCUUGUUOGPV sVQIGVJGTYKVJVJG)TQWR%'1TGXKGYU VJGRGTHQTOCPEGCUUGUUOGPVHQTVJGQVJGT )'$OGODGTU 6JG%QORGPUCVKQP%QOOKVVGGRTQRQUGUVQVJG$Q& sVQIGVJGTYKVJVJG$Q&%JCKTOCPVJGVQVCN KPFKXKFWCNEQORGPUCVKQPHQTVJG)TQWR%'1 sVQIGVJGTYKVJVJG)TQWR%'1VJGVQVCNKPFKXKFWCN EQORGPUCVKQPHQTVJGQVJGT)'$OGODGTU 6JGƂPCNFGEKUKQPQPVJGCIITGITCVGCOQWPVKU UWDLGEVVQUJCTGJQNFGTCRRTQXCN %QORGPUCVKQPFGEKUKQPU 9JGPFGVGTOKPKPICEVWCNRC[NGXGNU VJG%QORGPUCVKQP%QOOKVVGGHCEVQTUKP sRGTHQTOCPEGCPFCHHQTFCDKNKV[ sRGTHQTOCPEGCUUGUUOGPV sTGNCVKXGRGTHQTOCPEGXURGGTU sEQORGPUCVKQPOCTMGVXCNWGCPFVTGPFU sQVJGTRCTCOGVGTUFGGOGFTGNGXCPV (KPCNEQORGPUCVKQPFGEKUKQPUHQT)'$OGODGTU EQPUKFGTVJG)TQWR%'1oUTGEQOOGPFCVKQP VJG)TQWR%'1OCMGUPQTGEQOOGPFCVKQPQP JKUQYPCYCTFU &GEKUKQPOCMKPIRTQEGUU4QNGQHVJG$Q&CPF%QORGPUCVKQP%QOOKVVGGAdvisory vote 275 The performance assessment is the starting point for determining a GEB member’s annual performance award. This approach is not mechanical, as the Compensation Committee can exercise its judgment with respect to the performance achieved relative to the prior year, the strategic plan and competitors, and considers the Group CEO’s recommendation. The Compensation Committee’s recommendations are then reviewed and subject to the approval of the BoD. The Compensation Committee, and then the full BoD, follows a similar process in setting the compensation for the Group CEO, except that the recommendation is from the Chairman of the BoD. Overview of the performance assessment measures The table below presents the measures for the 2018 performance assessment of the Group CEO and GEB members. Performance measures Group measures A range of financial measures including adjusted Group profit before tax, adjusted Group cost / income ratio, adjusted Group return on tangible equity excluding DTAs, CET1 ratios Business division, regional and / or functional measures (if applicable)1 Business division and / or regional measures vary but may include: net new money growth rate, adjusted divisional / regional profit before tax, adjusted cost / income ratio, net new business volume growth rate, net interest margin, adjusted RoAE, Basel III RWA and LRD expectations Specific functional measures for Corporate Center GEB members Capital strength Establishes and maintains capital. Generates efficiencies and deploys our capital more efficiently and effectively Efficiency and effectiveness Contributes to the development and execution of our strategy and success across all business lines, functions and regions. Considers market conditions, relative performance and other factors Pillars Risk management Reinforces risk management through an effective control framework. Captures the degree to which risks are self-identified and focuses on the individual’s success to comply with all the various regulatory frameworks. Helps shape the firm’s relationship with regulators through ongoing dialog Client focus Increases client satisfaction and maintains high levels of satisfaction over the long term. This includes promoting collaboration across business divisions and fostering the delivery of the whole firm to our clients Excellence Human Capital Management – develops successors for the most senior positions, facilitates talent mobility within the firm and promotes a diverse and inclusive workforce Product and Service Quality – strives for excellence in the products and services we offer to our clients Principles Sustainable performance Brand and Reputation – protects the Group’s reputation and reinforces full compliance with our standards and principles Culture and Growth – takes a personal role in making Principles and Behaviors front and center of the business requirements, including a focus on sustainable growth. Furthermore, this measure evaluates the individual’s ability to reinforce a culture of accountability and responsibility, demonstrating our commitment to be a responsible corporate citizen and reinforcing our collective behaviors Behaviors Integrity Is responsible and accountable for what they say and do; cares about clients, investors, and colleagues; acts as a role model Collaboration Places the interests of clients and the firm before their own and those of their business; works across the firm; respects and values diverse perspectives Challenge Encourages self and others to constructively challenge the status quo; learns from mistakes and experiences 1 Both regional and functional measures may include qualitative measures.Corporate governance and compensation 276 Corporate governance and compensation Compensation 2018 compensation for the Group Chief Executive Officer The performance award for the Group CEO, Sergio P. Ermotti, is based on the achievement of financial targets plus goal achievements relative to Pillars, Principles, and Behaviors, as described earlier in this section. These targets were set to reflect the strategic priorities determined by the Chairman and the BoD, including risk-adjusted profitability, cost / income ratio, capital position and adjusted return on tangible equity, as well as a range of measures to assess the quality and sustainability of the performance. Financial measures, including consideration of Pillars and Principles, account for 65% of Mr. Ermotti’s performance assessment, while the remaining 35% is based on behavioral measures. The table on the following page summarizes the metrics used to assess Mr. Ermotti’s performance as Group CEO for 2018. The BoD recognized Mr. Ermotti’s continued focus on managing the Group for the long term and delivering sustainable performance. In a year with challenging market conditions, he led the improvement in the firm's overall performance while maintaining its strong capital position, enabling the BoD to increase payouts to shareholders. Net profit attributable to shareholders increased 16% year-on-year to USD 4.5 billion, excluding the USD 2.9 billion net write-down in the fourth quarter of 2017 of deferred tax assets (DTAs) following the enactment of the US Tax Cuts and Jobs Act. Group profit before tax increased by 12% to USD 6.0 billion while adjusted1 profit before tax decreased by 4% to USD 6.1 billion. In addition, despite market headwinds and legacy issues leading to higher provisions for litigation, regulatory and similar matters, our overall financial results for the year were near plan. Under Mr. Ermotti’s stewardship, UBS’s profitability remained strong, with adjusted1 return on tangible equity excluding DTAs at 12.9%, and reported return on CET1 capital at 13.1%. The CET1 capital ratio of 12.9% and CET1 leverage ratio of 3.8% were both in line with our capital guidance and UBS met 2020 capital requirements one year early. The Group’s total loss- absorbing capacity was further strengthened by USD 3.4 billion to USD 83.7 billion. During 2018, UBS repurchased CHF 750 million of shares, exceeding the 2018 target of up to CHF 550 million. The BoD also acknowledged Mr. Ermotti’s achievements in 2018 as exceeding expectations related to our Pillars, Principles and Behaviors. He continued to lead cost- and capital-efficient execution, successfully sharpened the Group’s clear strategy, and spearheaded initiatives to deliver future growth. At the same time, Mr. Ermotti maintained a clear tone from the top in setting and demanding high standards in risk management and risk remediation. Mr. Ermotti successfully focused the organization on growth with the development of innovative solutions and digital offerings for clients across all businesses. He further extended his significant personal engagement with clients and promoted client centricity in the firm’s decision-making. In 2018, Mr. Ermotti reshaped the GEB. Reflecting his strong attention to talent development, succession planning and internal mobility to support continuity across the organization, all four new leadership appointments to the GEB were internal candidates. He also remained committed to further improve diversity at senior levels. The BoD recognized Mr. Ermotti at the forefront of the firm's culture and behavior program. He personally championed the behavior principles across the organization and consistently emphasized the significance of these topics to employees and in public forums. Further he continued to display a strong commitment to culture as a strategic differentiator with continuous improvement through constructive challenge and delivering the whole bank to clients through effective cross- divisional collaboration. In determining the annual compensation for the Group CEO, the BoD assessment balances consideration of financial performance with a range of qualitative factors and takes into account the quality of earnings including developments on and provisions for litigation, regulatory and similar matters, while distinguishing between legacy matters and financial and operating performance for the year. Recognizing Mr. Ermotti’s achievements in 2018, the BoD approved the proposal by the Compensation Committee to grant him a performance award of CHF 11.3 million, resulting in a total compensation for the year of CHF 13.8 million (excluding benefits and contributions to his retirement benefit plan). The performance award is subject to shareholder approval as part of the aggregate GEB 2018 variable compensation and will be delivered 18% (CHF 2 million) in cash and the remaining 82% (CHF 9.3 million) subject to deferral and forfeiture provisions, as well as meeting performance threshold conditions over five years. →Refer to the “Compensation philosophy and framework” section of this report for more information 11 Refer to “Group performance” in the “Financial and operating performance” section of this report for more information on adjusted results. Advisory vote 277 1 Performance assessment for the Group CEO The chart below illustrates the 2018 assessment of the Group CEO’s performance. When assessing the financial performance, the Compensation Committee considers additional factors to judge the quality and sustainability of the financial results. These additional factors are based on the Group CEO’s achievement of goals related to Pillars and Principles, including relative performance, market conditions, client satisfaction and talent management. For additional details on the assessment, refer to the description on the previous page. Weighting Performance Measures 2016 results 2017 results 2018 results Weighting 2018 Assessment Vs Plan 65% Adjusted Group profi t before tax USD 5,439 million USD 6,295 million USD 6,063 million 40% Adjusted Cost / income ratio 80.8% 78.2% 79.5%20% Adjusted Group return on tangible equity excluding DTAs1 11.3% 13.7% 12.9%20% Capital management CET1 capital ratio CET1 leverage ratio Post-stress CET1 ratio 13.8% 3.5% Achieved 13.8% 3.7% Achieved 12.9% 3.8% Achieved 20% Pillars and Principles Achievements Overall performance exceeded expectations, given: Mr. Ermotti’s continued focus on managing the Group for the long-term and delivering sustainable performance. In a year with challenging market conditions, he led the improvement in the firm’s overall performance while maintaining its strong capital position, enabling the BoD to increase payouts to shareholders. Further, Mr. Ermotti continued to lead cost and capital efficient execution, successfully sharpened the Group’s clear strategy, and spearheaded initiatives to deliver future growth. He also extended further his significant personal engagement with clients and promoted client centricity across the firm. Mr. Ermotti set and demanded high standards in risk management and risk remediation. In 2018 he reshaped his GEB, reflecting his strong attention to talent development, succession planning, and internal mobility; and he remained committed to further improve diversity at senior levels. 35% Behaviors Integrity Collaboration Challenge Overall performance exceeded expectations, given clear tone from top and: Mr. Ermotti remained at the forefront of the firm’s culture and behavior program. He personally championed the behavior principles across the organization and consistently emphasized the significance of these topics to employees and in public forums. Mr. Ermotti continued to display a strong commitment to culture as a strategic differentiator with continuous improvement through constructive challenge, and delivering the whole bank to clients through effective cross divisional collaboration. The BoD further acknowledged Mr. Ermotti as a role model in considering the views of clients, investors and colleagues alike, and in treating others with respect. In addition, he continued to communicate in a clear and highly consistent manner, maintained an excellent track record of delivering on his commitments, and took decisive yet considerate actions that are consistently in the best interest of the firm. 1 Calculated as adjusted net profit / loss attributable to shareholders excluding amortization and impairment of goodwill and intangible assets and deferred tax expense / benefit, such as the net write-down due to the US Tax Cuts and Jobs Act enacted in the fourth quarter of 2017, divided by average tangible equity attributable to shareholders excluding any DTAs that do not qualify as CET1 capital. 100%Corporate governance and compensation 278 Corporate governance and compensation Compensation 2018 total compensation for the GEB members The GEB performance awards are subject to approval by the BoD based on the assessment of financial targets as well as goals related to Pillars, Principles and Behaviors and, in aggregate, subject to shareholder approval. The aggregate 2018 performance award pool for the GEB was CHF 73.3 million (for reference USD 74.8 million), a decrease of 1% compared with the prior year. This decrease is in line with the decrease in the overall performance award pool of the firm. Group profit before tax increased by 12% to USD 6.0 billion while adjusted profit before tax decreased by 4% to USD 6.1 billion. The Compensation Committee has confirmed that performance conditions for all GEB members’ awards due to vest in March 2019 have been satisfied, and thus the awards will vest in full. At the 2019 AGM, shareholders will vote on the aggregate 2018 total variable compensation for the GEB in Swiss francs. Therefore, the tables below provide the awarded compensation for the Group CEO and the GEB members in Swiss francs, and for reference, the total amounts in US dollars for comparability with financial performance. The individual variable performance awards for each GEB member will only be confirmed upon shareholder approval at the AGM. →Refer to the Provisions of the Articles of Association related to compensation in the “Supplemental Information” section of this report for more information Audited | Total compensation for GEB members1 Group CEO, Sergio P. Ermotti (highest paid) CHF USD (for reference) 2 FFor the year Base salary Contribution to retirement benefit plans3 Benefits4 TTotal fixed compensa- tion Cash5 Performance award under EOP6 Performance award under DCCP7 TTotal variable compensa- tion TTotal fixed and vari- able com- pensation8 Total fixed compensa- tion Total variable compensa- tion Total fixed and vari- able com- pensation8 22018 2,500,000 261,181 62,813 2,823,994 2,000,000 5,910,000 3,390,000 11,300,000 14,123,994 2,882,971 11,535,991 14,418,962 22017 2,500,000 261,181 41,261 2,802,442 2,000,000 5,980,000 3,420,000 11,400,000 14,202,442 Aggregate of all GEB members9,10,11 CHF USD (for reference) 2 FFor the year Base salary12 Contribution to retirement benefit plans3 Benefits4 TTotal fixed compensa- tion Cash55 Performance award under EOP6 Performance award under DCCP7 TTotal variable compensa- tion TTotal fixed and vari- able com- pensation8 Total fixed compensa- tion Total variable compensa- tion Total fixed and vari- able com- pensation8 22018 22,948,016 2,540,085 2,042,509 27,530,610 14,269,889 37,040,111 21,990,000 73,300,000 100,830,610 28,105,565 74,830,812 102,936,377 22017 21,459,305 2,439,414 1,842,848 25,741,566 14,550,000 37,355,000 22,245,000 74,150,000 99,891,566 11 Local currencies have been translated into Swiss francs at the relevant year-end closing exchange rates, or at the performance award currency exchange rate. 2 Swiss franc amounts have been translated into US dollars for reference at the 2018 performance award currency exchange rate of CHF / USD 1.02. 3 Includes the portion related to the employer’s contribution to the statutory pension scheme. 4 All benefits are valued at market price. 5 For GEB members who are also MRTs or SMFs, the cash portion includes blocked shares. 6 For EOP awards for the performance year 2018, the number of shares has been determined by dividing the amount by CHF 12.622 or USD 12.610, the average closing price of UBS shares over the last ten trading days leading up to and including the grant date. For EOP awards for the performance year 2017, the number of shares was determined by dividing the amount by CHF 17.999 or USD 19.234, the average closing price of UBS shares over the last ten trading days in February 2018. Starting with performance year 2017, GEB members who are also MRTs are no longer permitted to receive dividend payments on EOP awards. Accordingly, the number of shares for these GEB members was determined by dividing the amount by the share price used for other EOP awards, adjusted for the expected dividend yield over the vesting period, which represents the fair value of the non-dividend bearing awards. 7 The amounts reflect the amount of the notional additional tier 1 (AT1) capital instrument excluding future notional interest. For DCCP awards for the performance year 2018, the notional interest rate is set at 6.85% for awards denominated in US dollars and 3.40% for awards denominated in Swiss francs. For DCCP awards for the performance year 2017, the notional interest rate is set at 5.85% for awards denominated in US dollars and 2.30% for awards denominated in Swiss francs. Starting with performance year 2017, GEB members who are also MRTs are no longer permitted to receive interest payments on DCCP awards. Accordingly, the amounts reflect the fair value of the granted non-interest bearing awards. 8 Excludes the portion related to the legally required employer’s social security contributions for 2018 and 2017, which are estimated at grant at CHF 5,175,418 and CHF 5,181,559, respectively, of which CHF 886,455 and CHF 893,257, respectively, for the highest-paid GEB member. The legally required employees’ social security contributions are included in the amounts shown in the table above, as appropriate. 9 Thirteen GEB members were in office on 31 December 2018 including two new GEB members appointed on 1 October 2018 and one on 1 November 2018; two GEB members stepped down on 31 December 2017 and 30 September 2018 respectively; and 12 GEB members were in office on 31 December 2017. 10 2018 includes compensation for six months paid under the employment contract during the notice period to one GEB member who stepped down on 31 December 2017, as well as compensation for one GEB member who stepped down on 30 September 2018 for nine months in office as a GEB member plus for three months paid under the employment contract during the notice period. No payments during notice period were made in 2017. 11 2018 includes compensation for two newly appointed GEB members for three months in office as GEB members, and for one newly appointed GEB member for two months in office as a GEB member. 12 Includes role-based allowances in line with market practice in response to regulatory requirements. Advisory vote 279 Total realized compensation for Sergio P. Ermotti To further illustrate the effect of our lengthy deferral approach in place since 2012, we disclose the annual realized compensation of Sergio P. Ermotti, including a multi-year comparison with his total awarded compensation. The realized compensation reflects the total amount paid out in the year. It includes the base salary, cash performance award payments, and all deferred performance awards vested in the year. As such, realized pay is the natural culmination of awards granted and approved by shareholders in previous years. Since our compensation plans have no upward leverage, such as multiplier factors, the potential realized pay cannot exceed the award granted (other than for market movements and returns). The table below provides information on the total awarded and realized compensation paid out to Sergio P. Ermotti since his appointment (excluding 2011 salary earned). Total realized compensation vs awarded compensation for Sergio P. Ermotti¹ CHF RRealized AAwarded FFor the year Base salary Cash award 2 Deferred cash award3,4 Performance award under equity plans4,5 Performance award under DCCP4 TTotal realized fixed and variable compensation6 Total awarded fixed and variable compensation6 22018 2,500,000 2,000,000 0 4,986,563 2,440,000 11,926,563 13,800,000 22017 2,500,000 1,000,000 0 2,951,043 0 6,451,043 13,900,000 22016 2,500,000 1,000,000 0 1,667,128 0 5,167,128 13,400,000 22015 2,500,000 0 0 1,018,440 0 3,518,440 14,000,000 22014 2,500,000 1,000,000 373,441 537,217 0 4,410,658 10,900,000 22013 2,500,000 0 349,622 423,623 0 3,273,245 10,400,000 22012 2,500,000 553,200 3 553,200 0 0 3,606,400 8,600,000 11 Appointed on 24 September 2011 as Group CEO ad interim and confirmed on 15 November 2011. 2 Paid out based on previous performance year. For 2012 this includes Cash Balance Plan installments (discontinued in 2012). 3 Cash Balance Plan installments. For 2012, due to applicable UK FSA regulations, deferred cash includes blocked shares. 4 Excludes dividend / interest payments. 5 Includes all installments paid out under the EOP, Senior Executive Equity Ownership Plan (SEEOP, discontinued in 2012) and Performance Equity Plan (PEP, discontinued in 2012). 6 Excludes contributions to retirement benefit plans and benefits. Includes social security contributions paid by Sergio P. Ermotti but excludes the portion related to the legally required social security contributions paid by UBS. The chart below further illustrates the effect of our deferral approach over time. The bars for realized pay show which components (base salary, cash, equity plans, DCCP) deliver the realized compensation and in which year the respective component had been awarded. The bars for awarded compensation show the split between fixed compensation (base salary) and variable compensation (cash component and deferred awards) and highlight that a significant portion of the variable compensation is deferred. 1 2 3 4 $CUGUCNCT[ #YCTFGF 4GCNK\GF 4GCNK\GF 4GCNK\GF 4GCNK\GF 4GCNK\GF 4GCNK\GF 4GCNK\GF#YCTFGF #YCTFGF #YCTFGF #YCTFGF #YCTFGF #YCTFGF $CUG UCNCT[ $CUG UCNCT[ $CUG UCNCT[ $CUG UCNCT[ $CUG UCNCT[ $CUG UCNCT[ %CUJ %CUJ %CUJ %CUJ &GHGTTGF &GHGTTGF &GHGTTGF &GHGTTGF &GHGTTGF &GHGTTGF $CUG UCNCT[ %CUJ &GHGTTGF %CUJ'SWKV[RNCPUXGUVKPIHTQORTGXKQWU[GCTU &%%2XGUVKPIHTQORTGXKQWU[GCTU %*(OKNNKQP 1 Excludes contributions to retirement benefit plans and benefits. Includes social security contributions paid by Sergio P. Ermotti but excludes the portion related to the legally required social security contributions paid by UBS. 2 Paid out based on previous performance year. 2012, 2013 and 2014 include Cash Balance Plan installments. 3 Includes all installments paid out under respective EOP, SEEOP and PEP plans, excludes dividend payments. 4 The first DCCP installment was paid out in March 2018 (awarded in March 2012), excludes interest payments.Corporate governance and compensation 280 Corporate governance and compensation Compensation Board of Directors governance and compensation Our compensation governance Board of Directors and Compensation Committee The Board of Directors (BoD) is ultimately responsible for approving the compensation strategy proposed by the Compensation Committee, which determines compensation- related matters in line with the principles set forth in the Articles of Association. As determined in the Articles of Association and the firm’s Organization Regulations, the Compensation Committee supports the BoD in its duties to set guidelines on compensation and benefits, to approve certain compensation and to scrutinize executive compensation. It is responsible for the governance and oversight of our compensation process and practices, including considering the alignment between pay and performance and that our compensation system does not encourage inappropriate risk-taking. Our Compensation Committee consists of four independent BoD members, who are elected annually by shareholders at the Annual General Meeting (AGM). Among other responsibilities, the Compensation Committee, on behalf of the BoD: – reviews our Total Reward Principles; – reviews and approves the design of the compensation framework; – reviews performance award funding throughout the year and proposes the final performance award pool to the BoD for approval; – together with the Group CEO, reviews performance targets and performance assessments and proposes base salaries and annual performance awards for the other Group Executive Board (GEB) members to the BoD, which approves the total compensation of each GEB member; – together with the Chairman of the BoD, establishes performance targets, evaluates performance and proposes the compensation for the Group CEO to the BoD; – approves the total compensation for the Chairman of the BoD; – together with the Chairman, proposes the total individual compensation for independent BoD members for approval by the BoD; – together with the BoD, proposes the maximum aggregate amounts of compensation for the BoD and for the GEB, to be submitted for approval by shareholders at the AGM; – approves remuneration / fee frameworks for external supervisory board members of Significant Group Entities and periodically reviews remuneration / fee frameworks for external supervisory board members of Significant Regional Entities; and – reviews the compensation report and approves any material public disclosures on compensation matters. The Compensation Committee meets at least four times a year. In 2018, the Compensation Committee held seven meetings and two conference calls. All meetings were fully attended. The Chairman of the BoD and the Group CEO attended all meetings and calls. The Chairman of the BoD and the Group CEO were not present during discussions related to their own compensation or performance evaluations. The Chair of the Compensation Committee may also invite other executives to join the meeting in an advisory capacity. No individual whose compensation is reviewed is allowed to attend meetings during which specific decisions are made about that same individual’s compensation. Such decisions are subject to approval of the Compensation Committee and the BoD. After the meetings, the Chair of the Compensation Committee reports to the BoD on the activities of the Compensation Committee and the matters discussed. In addition, where necessary, the Chairperson submits proposals for approval by the full BoD. The minutes of Compensation Committee meetings are sent to all members of the BoD. On 31 December 2018, the Compensation Committee members were Ann F. Godbehere, who chairs the committee, Michel Demaré, Julie G. Richardson and Dieter Wemmer. External advisors The Compensation Committee may retain external advisors to support it in fulfilling its duties. In 2018, HCM International Ltd. provided independent advice on compensation matters. HCM International Ltd. holds no other mandates with UBS. The compensation consulting firm Willis Towers Watson provided the Compensation Committee with data on market trends and pay levels, including in relation to GEB and BoD compensation. Various subsidiaries of Willis Towers Watson provide similar data to Human Resources in relation to compensation for employees below the BoD and GEB level. Willis Towers Watson holds no other compensation-related mandates with UBS. Advisory vote 281 The Risk Committee’s role in compensation The Risk Committee, a committee of the BoD, works closely with the Compensation Committee to reinforce that our approach to compensation reflects proper risk management and control. The Risk Committee supervises and sets appropriate risk management and risk control principles and receives regular briefings on how risk is factored into the compensation process. It also monitors Group Risk Control’s involvement in compensation and reviews risk-related aspects of the compensation process. →Refer to www.ubs.com/governance for more information Compensation Committee 2018 / 2019 key activities and timeline This table provides an overview of the Compensation Committee’s key activities from the 2018 AGM to the 2019 AGM. June July Sept Oct Nov Dec¹Jan Feb Strategy, policy and governance Total Reward Principles Three-year strategic plan on variable compensation Compensation disclosure and stakeholder communication matters AGM reward-related items Compensation Committee governance Annual compensation review Accruals and full-year forecast of the performance award pool funding Performance targets and performance assessment of the Group CEO and GEB members Group CEO and GEB members’ salaries and individual performance awards Update on market practice, trends and peer group matters Pay for performance, including governance on certain higher-paid employees, and non-standard compensation arrangements Board of Directors remuneration Compensation framework Compensation framework and deferred compensation matters Risk and regulatory Risk management in the compensation approach and joint meeting with BoD Risk Committee Regulatory activities impacting employees and engagement with regulators 1 The Compensation Committee held two meetings in December 2018. Compensation governance The table below provides an overview of compensation governance by specific role. Recipients Compensation recommendations proposed by Approved by Chairman of the BoD Chairperson of the Compensation Committee Compensation Committee1 Independent BoD members (remuneration system and fees) Compensation Committee and Chairman of the BoD BoD1 Group CEO Compensation Committee and Chairman of the BoD BoD1 Other GEB members Compensation Committee and Group CEO BoD1 Individual compensation for KRTs and senior employees: Group CEOKey Risk Takers (KRTs) / (senior) employees Respective GEB member together with functional management team Performance award pool for all employees: BoD 1 Aggregate compensation for the GEB and aggregate remuneration for the BoD are subject to shareholder approval.Corporate governance and compensation 282 Corporate governance and compensation Compensation 2018 compensation for the Board of Directors Chairman of the BoD Under the leadership of the Chairman, Axel A. Weber, the BoD determines, among other things, the strategy for the Group based on recommendations by the Group CEO, exercises ultimate supervision over management and appoints all GEB members. The Chairman presides over all general meetings of shareholders and the BoD, and works with the committee chairpersons to coordinate the work of all BoD committees. Together with the Group CEO, the Chairman is responsible for effective communication with shareholders and other stakeholders, including government officials, regulators and public organizations. This is in addition to establishing and maintaining a close working relationship with the Group CEO and other GEB members, and providing advice and support when appropriate, as well as continuing to strengthen and promote our culture through the three keys to success – our Pillars, Principles and Behaviors. The Chairman’s total compensation is contractually fixed at CHF 5.7 million, excluding benefits and pension fund contributions. His total compensation for 2018, which has remained unchanged since 2015, consisted of a cash payment of CHF 3.5 million and a share component of CHF 2.2 million delivered in 174,298 UBS shares at CHF 12.622 per share. The shares are blocked from distribution for four years. Accordingly, his total reward, including benefits and pension fund contributions for his service as Chairman for the full year 2018, was CHF 6,033,422. →Refer to “Board of Directors” in the “Corporate governance” section of this report for more information on the responsibilities of the Chairman The share component aligns the Chairman’s pay with the Group’s long-term performance. The Chairman’s employment agreement does not provide for severance terms or supplementary contributions to pension plans. Benefits for the Chairman are in line with local practices for UBS employees. The Compensation Committee approves the Chairman’s compensation annually, taking into consideration fee or compensation levels for comparable roles outside the firm. Independent BoD members All BoD members except the Chairman are deemed independent directors and receive a fixed base fee of CHF 325,000 per annum. In addition to the base fee, independent BoD members receive committee fees for their services on the firm’s various board committees. The Senior Independent Director and the Vice Chairman of the BoD each receive an additional fee of CHF 250,000. Independent BoD members must use a minimum of 50% of their fees to purchase UBS shares, which are blocked for four years. They may elect to use up to 100% of their fees to purchase blocked UBS shares. In all cases, the number of shares that independent BoD members are entitled to purchase is calculated at a discount of 15% below the average closing price of the 10 trading days leading up to and including the grant date. Independent BoD members do not receive performance awards, severance payments or benefits. The chart on the following page provides details and additional information on the remuneration framework for independent BoD members. Base fees, committee fees and any other payments to be received by independent BoD members are subject to an annual review based on a proposal submitted by the Chairman of the BoD to the Compensation Committee, which in turn submits a recommendation to the BoD for approval. The BoD proposes at each AGM for shareholder approval the aggregate amount of BoD remuneration in Swiss francs, including compensation of the Chairman, which applies until the subsequent AGM. Therefore, the tables on the next page provide the compensation for the Chairman and the independent BoD members in Swiss francs, and for reference the total amounts in US dollars. The “Remuneration details and additional information for independent BoD members” table shows the remuneration for each independent BoD member for the period from the 2018 AGM to the 2019 AGM. The fixed base fees are unchanged from the 2017 / 2018 period and have been broadly flat since 1998. Advisory vote 283 2018 / 2019 remuneration framework for independent BoD members CHF, except where indicated Base fees as well as fees for committee chair or membership and / or specific roles are paid per annum. At least 50% of the total amounts must be used to purchase UBS shares, which are blocked for four years. Pay mix 1 Delivery Fixed base fee 325,000 Blocked shares 50% Senior Independent Director 250,000 Vice Chairman 250,000 Chair Member Audit Committee 300,000 200,000 Cash 50% Compensation Committee 300,000 100,000 Governance and Nominating Committee 100,000 Corporate Culture and Responsibility Committee 50,000 Risk Committee 400,000 200,000 2018 2019 2020 2021 2022 2023 1 Independent BoD members can elect to use 100% of their remuneration to purchase blocked UBS shares. UBS blocked shares are granted with a price discount of 15% and are blocked for four years. Audited | Total payments to BoD members CHF, except where indicated USD (for reference) For the year Total1 Total1,2 2018 13,458,422 13,739,490Aggregate of all BoD members 2017 13,133,565 1 Includes social security contributions paid by the BoD members but excludes the portion related to the legally required social security contributions paid by UBS, which for 2018 is estimated at grant at CHF 831,746 and for 2017 at CHF 664,074. 2 Swiss franc amounts have been translated into US dollars for reference at the 2018 performance award currency exchange rate of CHF / USD 1.02. Audited | Compensation details and additional information for non-independent BoD members CHF, except where indicated USD (for reference) Name, function1 For the year Base salary Annual share award2 Benefits3 Contributions to retirement benefit plans4 Total5 Total5,6 2018 3,500,000 2,200,000 72,241 261,181 6,033,422 6,159,425Axel A. Weber, Chairman 2017 3,500,000 2,200,000 72,384 261,181 6,033,565 1 Axel A. Weber was the only non-independent member in office on 31 December 2018 and on 31 December 2017, respectively. 2 These shares are blocked for four years. 3 Benefits are all valued at market price. 4 Includes the portion related to UBS’s contribution to the statutory pension scheme. 5 Excludes the portion related to the legally required social security contributions paid by UBS, which for 2018 is estimated at grant at CHF 369,966 and for 2017 at CHF 367,999. The legally required social security contributions paid by the non-independent BoD members are included in the amounts shown in this table, as appropriate. 6 Swiss franc amounts have been translated into US dollars for reference at the 2018 performance award currency exchange rate of CHF / USD 1.02. Corporate governance and compensation 284 Corporate governance and compensation Compensation Audited | Remuneration details and additional information for independent BoD members CHF, except where indicated Name, function1 Audit CommitteeCompensation CommitteeCorporate Culture and Responsibility CommitteeGovernance and Nominating CommitteeRisk CommitteeFFor the period AGM to AGM Base fee Committee fee(s) Additional payments2 TTotal3 Share percentage4 Number of shares5,6 M M M 22018/2019 325,000 400,000 250,000 975,000 100 86,010 Michel Demaré, Vice Chairman M M M 22017/2018 325,000 400,000 250,000 975,000 50 31,864 M C 22018/2019 325,000 500,000 250,000 1,075,000 50 50,097 David Sidwell, Senior Independent Director M C22017/2018 325,000 500,000 250,000 1,075,000 50 35,133 C M 22018/2019 325,000 350,000 675,000 50 31,456 Jeremy Anderson, member 22017/2018 –– –––– M M 22018/2019 325,000 250,000 575,000 50 26,796 Reto Francioni, member M M M22017/2018 325,000 350,000 675,000 50 22,060 M C 22018/2019 325,000 500,000 825,000 50 38,447 Ann F. Godbehere, member M C 22017/2018 325,000 500,000 825,000 50 26,962 22018/2019 325,000 – 325,000 50 15,145 Fred Hu, member 22017/2018 –– –––– 22018/2019 ––––––William G. Parrett, former member C M M 22017/2018 325,000 450,000 775,000 50 25,328 M M 22018/2019 325,000 300,000 625,000 50 29,126 Julie G. Richardson, member M22017/2018 325,000 200,000 525,000 50 17,157 M M 22018/2019 325,000 300,000 625,000 50 29,126 Isabelle Romy, member M M 22017/2018 325,000 300,000 625,000 50 20,426 M 22018/2019 325,000 200,000 525,000 50 24,466 Robert W. Scully, member M22017/2018 325,000 200,000 525,000 50 17,157 M M 22018/2019 325,000 250,000 575,000 50 26,796 Beatrice Weder di Mauro, member M M 22017/2018 325,000 250,000 575,000 50 18,792 M M 22018/2019 325,000 300,000 625,000 50 29,126 Dieter Wemmer, member M22017/2018 325,000 200,000 525,000 50 17,157 TTotal 2018/2019 7,425,000 Total 2018/2019 in USD (for reference)7 7,580,065 TTotal 2017/2018 7,100,000 Legend: C = Chairperson of the respective Committee, M = Member of the respective Committee 11 Eleven independent BoD members were in office on 31 December 2018. At the 2018 AGM, Jeremy Anderson and Fred Hu were newly elected and William G. Parrett did not stand for re-election. Ten independent BoD members were in office on 31 December 2017. 2 These payments are associated with the Vice Chairman or the Senior Independent Director function. 3 Excludes UBS’s portion related to the legally required social security contributions, which for the period from the 2018 AGM to the 2019 AGM is estimated at grant at CHF 461,780 and which for the period from the 2017 AGM to the 2018 AGM was estimated at grant at CHF 296,075. The legally required social security contributions paid by the independent BoD members are included in the amounts shown in this table, as appropriate. 4 Fees are paid 50% in cash and 50% in blocked UBS shares. However, independent BoD members may elect to have 100% of their remuneration paid in blocked UBS shares. 5 For 2018, UBS shares, valued at CHF 12.622 (average closing price of UBS shares over the last 10 trading days leading up to and including the grant date), were granted with a price discount of 15%. These shares are blocked for four years. For 2017, UBS shares, valued at CHF 17.999 (average closing price of UBS shares at the SIX Swiss Exchange over the last 10 trading days of February 2018), were granted with a price discount of 15%. These shares are blocked for four years. 6 Number of shares is reduced in case of the 100% election to deduct legally required contributions. All remuneration payments are, where applicable, subject to social security contributions and / or withholding tax. 7 Swiss franc amounts have been translated into US dollars for reference at the 2018 performance award currency exchange rate of CHF / USD 1.02. Advisory vote 285 Supplemental information Fixed and variable compensation for GEB members Fixed and variable compensation for GEB members1, 2, 3 TTotal for 2018 NNot deferred DDeferred4 Total for 2017 CHF million, except where indicated AAmount %%AAmount %%AAmount %%Amount TTotal compensation Amount5 96 100 37 39 59 61 96 Number of beneficiaries 15 12 FFixed compensation5, 6 23 24 23 100 0 0 21 Cash-based 21 22 21 0 20 Equity-based 2 2 2 0 2 VVariable compensation 73 76 14 19 59 81 74 Cash7 14 15 14 0 15 Equity Ownership Plan (EOP)8 37 39 0 37 37 Deferred Contingent Capital Plan (DCCP)8 22 23 0 22 22 11 The figures relate to all GEB members in office during 2018. Thirteen GEB members were in office on 31 December 2018 including two new GEB members appointed on 1 October 2018 and one on 1 November 2018; two GEB members stepped down on 31 December 2017 and 30 September 2018 respectively; and twelve GEB members were in office on 31 December 2017. 2 2018 includes compensation for six months paid under the employment contract during the notice period to one GEB member who stepped down on 31 December 2017, as well as compensation for one GEB member who stepped down on 30 September 2018 for nine months in office as a GEB member plus for three months paid under the employment contract during the notice period. No payments during notice period were made in 2017. 3 2018 includes compensation for two newly appointed GEB members for three months in office as GEB members, and for one newly appointed GEB member for two months in office as a GEB member. 4 Based on the specific plan vesting and reflecting the total award value at grant, which may differ from the accounting expenses. 5 Excludes benefits and employer’s contribution to retirement benefit plans. Includes social security contributions paid by GEB members but excludes the portion related to the legally required social security contributions paid by UBS. 6 Includes base salary and role-based allowances, rounded to the nearest million. 7 Includes allocation of vested but blocked shares, in line with the remuneration section of the UK Prudential Regulation Authority Rulebook. 8 For the GEB members who are also MRTs, the awards starting with performance year 2017 are no longer permitted to include dividend and interest payments. Accordingly, the amounts reflect for the EOP the fair value of the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards. Corporate governance and compensation 286 Corporate governance and compensation Compensation Regulated staff Key Risk Takers Key Risk Takers (KRTs) are defined as those employees who, by the nature of their roles, have been determined to materially set, commit or control significant amounts of the firm’s resources and / or exert significant influence over its risk profile. This includes employees who work in front-office roles, logistics and control functions. Identifying KRTs globally is part of our risk control framework and an important element in ensuring we incentivize only appropriate risk-taking. For 2018, in addition to all GEB members, 675 employees were classified as KRTs throughout the UBS Group globally, including all GMDs and all employees with a total compensation exceeding USD / CHF 2.5 million (Highly Paid Employees) who may not have been identified as KRTs during the performance year. In line with regulatory requirements, the performance of employees identified as KRTs during the performance year is evaluated by the control functions. In addition, KRTs’ performance awards are subject to a mandatory deferral rate of at least 50%, regardless of whether the deferral threshold has been met. A KRT’s deferred compensation award will only vest if the relevant Group and / or business division performance conditions are met. Consistent with all other employees, the deferred portion of KRTs’ compensation is also subject to forfeiture or reduction if the KRT commits harmful acts. Fixed and variable compensation for Key Risk Takers1 TTotal for 2018 NNot deferred DDeferred2 Total for 2017 USD million, except where indicated AAmount %%AAmount %%AAmount %%Amount TTotal compensation Amount3 1,250 100 758 61 492 39 1,327 Number of beneficiaries 675 707 FFixed compensation3,4 417 33 417 100 0 0 435 Cash-based 395 32 395 0 408 Equity-based 22 2 22 0 28 VVariable compensation 833 67 341 41 492 59 891 Cash5 341 27 341 0 372 Equity Ownership Plan (EOP)6 305 24 0 305 320 Deferred Contingent Capital Plan (DCCP)6 186 15 0 186 200 11 Includes employees with a total compensation exceeding USD / CHF 2.5 million (Highly Paid Employees), excluding GEB members who were in office during the performance year 2018, except the three new GEB members appointed during 2018, who are included for their compensation received for their roles as KRTs prior to their GEB member appointments. 2 Based on the specific plan vesting and reflecting the total value at grant, which may differ from the accounting expenses. 3 Excludes benefits and employer's contribution to retirement benefits plan. Includes social security contributions paid by KRTs but excludes the portion related to the legally required social security contributions paid by UBS. 4 Includes base salary and role-based allowances. 5 Includes allocation of vested but blocked shares, in line with the remuneration section of the UK Prudential Regulation Authority Rulebook. 6 Starting with performance year 2017, KRTs who are also MRTs are no longer permitted to receive dividend and interest payments. Accordingly, the amounts reflect for the EOP the fair value of the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards. Advisory vote 287 Material Risk Takers For relevant EU-regulated entities we identify individuals who are deemed to be Material Risk Takers (MRTs) based on local regulatory requirements, the respective EU Commission Delegated Regulation and the EU Capital Requirements Directive of 2013 (CRD IV). This group consists of senior management, risk takers, selected staff in control or support functions and certain employees whose total compensation is above a specified threshold. For 2018, UBS identified 754 MRTs across its EU entities. Variable compensation awarded to MRTs is subject to specific requirements from local regulators such as a maximum variable to fixed compensation ratio which is set at 100% unless approved to be increased to 200% by the shareholders of the respective legal entity. UBS has obtained approval as appropriate through relevant shareholders’ votes to increase the variable to fixed pay ratio to 200%. Other applicable regulatory requirements for this population include a minimum deferral rate of 40% to 60% on performance awards and the delivery of at least 50% of any upfront performance award in UBS shares that vest immediately but are blocked for 12 months. Any notional shares granted to MRTs under the EOP and notional DCCP awards for their performance in 2018 are subject to a six- or 12-month blocking period post vesting and do not pay out dividends or interest during the deferral period. Since 2015, performance awards granted to UK MRTs have been subject to clawback provisions for a period of up to seven years from the date of grant. In line with the EBA guidelines, clawback has also been introduced in other EU jurisdictions as applicable. Under these provisions, the firm may claim repayment of both the immediate and the vested deferred element of any performance award if an individual is found to have contributed substantially to significant financial losses for the Group or corporate structure in scope, a material downward restatement of disclosed results, or engaged in misconduct and / or failed to take expected actions that contributed to significant reputational harm. UK Senior Managers and Certification Regime The Senior Managers and Certification Regime (SMCR) of the UK Prudential Regulation Authority and Financial Conduct Authority requires that individuals with specified responsibilities, performing certain significant functions and / or those in certain other identified categories be designated as Senior Management Functions (SMFs). SMFs are subject to specific compensation requirements, including longer deferral as well as longer blocking and clawback periods. The deferral period for SMFs is seven years, with the deferred performance awards vesting in equal annual installments between years three and seven. Additionally, these awards are subject to a 12-month blocking period post vesting. The clawback policy for SMFs permits clawback for up to 10 years from the date of performance award grants (applicable if an individual is subject to an investigation at the end of the initial seven-year clawback period). All SMFs are also identified as MRTs and as such subject to the same prohibitions on dividend and interest payments. Control functions and Group Internal Audit Our control functions must be independent in order to monitor risk effectively. Therefore, their compensation is determined separately from the revenue producers that they oversee, supervise or monitor. Their performance award pool is based not on the performance of these businesses, but on the performance of the Group as a whole. In addition, we consider other factors, such as how effectively the function has performed, and our market position. Decisions on individual compensation for the senior managers of the control functions are made by the function heads and approved by the Group CEO. Decisions on individual compensation for the members of Group Internal Audit (GIA) are made by the Head GIA and approved by the Chairman of the BoD. Upon proposal by the Chairman, total compensation for the Head GIA is approved by the Compensation Committee in consultation with the Audit Committee. Corporate governance and compensation 288 Corporate governance and compensation Compensation 2018 performance award pool and expenses Performance awards granted for the 2018 performance year The “Variable compensation” table below shows the amount of variable compensation awarded to employees for the performance year 2018, together with the number of beneficiaries for each type of award granted. In the case of deferred awards, the final amount paid to an employee depends on performance conditions and consideration of relevant forfeiture provisions. The deferred share award amount is based on the market value of these awards on the date of grant. Variable compensation1 Expenses recognized in the IFRS income statement Expenses deferred to future periods4 Adjustments4 Total Number of beneficiaries USD million, except where indicated 22018 2017 22018 2017 22018 2017 22018 2017 22018 2017 Non-deferred cash 2,089 2,088 0 0 0 0 2,089 2,088 51,809 45,664 Deferred compensation awards 373 399 585 594 71 73 1,029 1,067 3,967 4,922 of which: Equity Ownership Plan 217 239 325 329 71 5 73 5 613 642 3,768 4,483 of which: Deferred Contingent Capital Plan 131 135 238 238 0 0 369 373 3,934 4,891 of which: Asset Management EOP 25 25 22 27 0 0 47 52 284 439 TTotal variable compensation – performance award pool 2,461 2,487 585 594 71 73 3,118 3,154 51,819 45,671 Variable compensation – other2 162 151 180 196 ((96)6 (80)6 246 268 Financial advisor (FA) variable compensation3 3,266 3,080 484 525 0 0 3,750 3,605 6,850 6,822 TTotal variable compensation including FA variable compensation 5,889 5,718 1,250 1,316 (25) (6) 7,114 7,027 11 Expenses under “Variable compensation – other” and “Financial advisor variable compensation” are not part of UBS’s performance award pool. 2 Comprised of replacement payments, forfeiture credits, severance payments, retention plan payments and interest expense and remeasurements related to the Deferred Contingent Capital Plan. 3 Financial advisor compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure, new assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 4 Estimate. The actual amount to be expensed in future periods may vary, e.g., due to forfeitures. 5 Represents estimated post-vesting transfer restriction and forfeiture discounts. 6 Included in expenses deferred to future periods is an amount of USD 96 million (2017: USD 80 million) in interest expense and remeasurements related to the Deferred Contingent Capital Plan. As the amount recognized as performance award represents the present value of the award at the date it is granted to the employee, this amount is adjusted out in the analysis. 2018 performance award pool and expenses The performance award pool, which includes performance- based variable awards for 2018, was USD 3.1 billion, reflecting a decrease of 1% compared with 2017. Consistent with prior years, the movements in deferred tax assets (DTA), whether positive or negative, do not affect the funding of the performance award pool as DTAs do not reflect the underlying business performance and are not within management’s control. Performance award expenses for 2018 decreased by 5% to USD 3.0 billion. This decrease reflects the change in the performance award pool for 2018 as well as lower expenses related to the amortization of awards from prior years. The “Performance award pool and expenses” chart on this page compares the performance award pool with performance award expenses. →Refer to the “2018 performance and compensation funding” section of this report for more information Performance award pool and expenses USD billion (1%)1 Performance award pool Award expenses for performance year Performance award pool Performance award expenses Performance award expenses Awards for performance year deferred to future periods2 (including accounting adjustments) Awards for performance year deferred to future periods2 (including accounting adjustments) (5%) Amortization of prior-year awards Award expenses for performance year Amortization of prior-year awards 20182017 (0.7) 3.2 3.2 0.7 2.5 3.1 (0.7)0.5 2.5 3.0 1 Excluding employer-paid taxes and social security. 2 Estimate. The actual amount to be expensed in future periods may vary, e.g., due to forfeitures. Advisory vote 289 Amortization of deferred compensation Performance award expenses include all immediate expenses related to 2018 compensation awards as well as expenses deferred to 2018 related to awards made in prior years. The chart “Amortization of deferred compensation” shows the amount at the end of 2018 of awards to be amortized in subsequent years. This was USD 1.2 billion as of 31 December 2018 and USD 1.3 billion as of 31 December 2017. →Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information GEB and KRTs deferred compensation The “GEB and KRTs deferred compensation” table on the next page shows the current economic value of unvested outstanding deferred variable compensation awards subject to ex-post adjustments. For share-based plans, the economic value is determined based on the closing share price on 28 December 2018. For notional funds, it is determined using the latest available market price for the underlying funds at year-end 2018, and for deferred cash plans, it is determined based on the outstanding amount of cash owed to award recipients. The “GEB and KRTs ex-post explicit and implicit adjustments to deferred compensation in 2018” table on the next page shows the value of actual ex-post explicit and implicit adjustments to outstanding deferred compensation in the financial year 2018. Ex-post adjustments occur after an award has been granted. Ex-post explicit adjustments occur when we adjust compensation by forfeiting deferred awards. Ex-post implicit adjustments are unrelated to any action taken by the firm and occur as a result of share price movements that affect the value of an award. The total value of ex-post explicit adjustments made to UBS shares in 2018, based on the approximately 6.2 million shares forfeited during 2018, is a reduction of USD 76.8 million. The size of implicit adjustments is mainly due to a decrease in the share price. The share price as of year-end means that many of the options previously granted remain out of the money. Hence, the majority of outstanding option awards had no intrinsic value at the end of 2018. Amortization of deferred compensation USD billion (3%) 31.12.17 Awards to be amortized, including awards granted in 1Q18 for the performance year 2017 Amortized Forfeited and other adjustments Annual awards granted, including awards granted in 1Q19 for the performance year 2018 31.12.18 Awards to be amortized, including awards granted in 1Q19 for the performance year 2018 Expected amortization of prior-year awards in 2019 (4%) 1.3 (0.5) (0.1) 0.6 1.2 (0.5)Corporate governance and compensation 290 Corporate governance and compensation Compensation GEB and KRTs deferred compensation1,2 USD million, except where indicated RRelating to awards for 20183 Relating to awards for prior years4 Total of which: exposed to ex-post explicit and / or implicit adjustments Total deferred compensation year-end 20175 Total amount of deferred compensation paid out in 20186 GGEB Deferred Contingent Capital Plan7 22 96 119 100% 104 13 Equity Ownership Plan (including notional funds, if applicable)7 38 107 145 100% 181 29 Discontinued deferred compensation plans8 0 0 0 100% 0 0 KKRTs Deferred Contingent Capital Plan 186 865 1,051 100% 1,148 113 Equity Ownership Plan (including notional funds) 7 305 674 979 100% 1,535 429 Discontinued deferred compensation plans7 0 0 0 100% 0 0 TTotal GEB and KRTs 551 1,742 2,294 2,967 584 11 Based on the specific plan vesting and reflecting the economic value of the outstanding awards, which may differ from the accounting expenses. Year-to-year reconciliations would also need to consider the impacts of additional items including off-cycle awards, FX movements, population changes, and dividend equivalent reinvestments. 2 Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information. 3 Where applicable, amounts are translated into USD at the performance award currency exchange rate. For GEB members who were appointed to the GEB during 2018, awards have been pro-rated between KRT and GEB entries accordingly. 4 Takes into account the ex-post implicit adjustments, given the share price movements since grant. For GEB members who were appointed to the GEB part way through 2018, awards have been fully reflected in the GEB entries. Where applicable, amounts are translated from award currency into USD using FX rates as at 31 December 2018. 5 Values from the 2017 Compensation Report in CHF have been translated to USD using the 31 December 2017 FX rate. 6 Valued at distribution price and FX rate for all awards distributed in 2018. For GEB members who were appointed to the GEB during 2018, value of the awards paid out according to their role at the time of distribution. 7 Starting with performance year 2017, GEB members and KRTs who are also MRTs are no longer permitted to receive dividend and interest payments. Accordingly, the amounts reflect for the EOP the fair value of the non-dividend-bearing awards and for the DCCP the fair value of the granted non-interest-bearing awards. 8 Senior Executive Equity Ownership Plan (SEEOP) and Incentive Performance Plan (IPP). GEB and KRTs ex-post explicit and implicit adjustments to deferred compensation in 2018 Ex-post explicit adjustments1 Ex-post implicit adjustments to unvested awards2 USD million 31.12.18 31.12.17 31.12.18 31.12.17 GEB Deferred Contingent Capital Plan 0 0 0 0 Equity Ownership Plan (including notional funds, if applicable) 0 0 (28) 26 Discontinued deferred compensation plans 0 0 0 0 KRTs Deferred Contingent Capital Plan (17) (7) 0 0 Equity Ownership Plan (including notional funds) (13) (6) (166) 214 Discontinued deferred compensation plans 0 0 0 0 Total GEB and KRTs (30) (13) (194) 240 1 Ex-post explicit adjustments are calculated as units forfeited during the year, valued at the share price on 31 December 2018 (USD 12.38) for 2018. The 2017 data is valued using the share price on 31 December 2017 (CHF 17.94) and translated to USD using the 31 December 2017 FX rate. For the notional funds awarded to Asset Management employees under the EOP, this represents the forfeiture credits recognized in 2018 and 2017. For the DCCP, the fair value at grant of the forfeited awards during the year is reflected. For GEB members who were appointed to the GEB during 2018, awards have been fully reflected in the GEB entries. 2 Ex-post implicit adjustments for UBS shares are calculated based on the difference between the weighted average grant date fair value and the share price at year-end. The amount for notional funds is calculated using the mark-to-market change during 2018 and 2017. For GEB members who were appointed to the GEB during 2018, awards have been fully reflected in the GEB entries. Values from 2017 Compensation Report in CHF have been converted to USD using the 31 December 2017 FX rate. Advisory vote 291 Total personnel expenses for 2018 As of 31 December 2018, there were 66,888 employees (on a full- time equivalent basis), an increase of 9% compared with the prior year. This increase largely reflects our insourcing activities, which are part of our integrated workforce strategy, where roles previously performed by external staff have been brought back inside UBS in permanent employee positions. The “Personnel expenses” table below shows our total personnel expenses for 2018. It includes salaries, pension contributions and other personnel costs, social security contributions and variable compensation. Variable compensation includes cash performance awards paid in 2019 for the 2018 performance year, the amortization of unvested deferred awards granted in previous years and the cost of deferred awards granted to employees who are eligible for retirement in the context of the compensation framework at the date of grant. The performance award pool reflects the value of performance awards granted relating to the 2018 performance year, including awards that are paid out immediately and those that are deferred. To determine our variable compensation expenses, the following adjustments are required in order to reconcile the performance award pool to the expenses recognized in the Group’s financial statements prepared in accordance with International Financial Reporting Standards (IFRS): – reduction for the future amortization (including accounting adjustments) of unvested deferred awards granted in 2019 for the performance year 2018 – addition for the 2018 amortization of unvested deferred awards granted in prior years As a large part of compensation consists of deferred awards, the amortization of unvested deferred awards granted in prior years forms a significant part of the IFRS expenses in both 2017 and 2018. →Refer to “Note 6 Personnel expenses” and “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information Personnel expenses Expenses recognized in the IFRS income statement USD million RRelated to the performance year 2018 RRelated to prior performance years TTotal expenses recognized in 2018 Total expenses recognized in 2017 Total expenses recognized in 2016 SSalaries1 6,448 0 6,448 6,154 6,305 Non-deferred cash 2,089 (32) 2,057 2,062 1,799 Deferred compensation awards 373 565 938 1,088 1,215 of which: Equity Ownership Plan 217 309 526 583 708 of which: Deferred Contingent Capital Plan 131 226 357 444 435 of which: Asset Management EOP 25 28 53 57 66 of which: Other performance awards 0 2 2 4 6 TTotal variable compensation – performance awards2 2,461 534 2,995 3,151 3,013 of which: guarantees for new hires 26 17 43 36 30 Replacement payments3 7 64 72 72 87 Forfeiture credits 0 (136) (136) (107) (74) Severance payments4 123 0 123 113 220 Retention plan and other payments 33 33 66 63 76 Deferred Contingent Capital Plan: interest expense 0 119 119 111 115 TTotal variable compensation – other2 162 80 243 252 425 CContractors 489 0 489 460 426 SSocial security 788 3 791 814 755 PPension and other post-employment benefit plans5 457 0 457 723 678 FFinancial advisor variable compensation2,6 3,266 789 4,054 4,064 3,740 OOther personnel expenses 628 26 654 581 570 TTotal personnel expenses7 14,700 1,432 16,132 16,199 15,913 11 Includes role-based allowances. 2 Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information. 3 Payments made to compensate employees for deferred awards forfeited as a result of joining UBS. Includes the expenses recognized in the financial year (mainly the amortization of the award). 4 Includes legally obligated and standard severance payments. 5 Refer to “Note 29 Pension and other post-employment benefit plans” in the “Consolidated financial statements” section of this report for more information. 6 Consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure, new assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 7 Includes net restructuring expenses of USD 286 million, USD 545 million and USD 763 million for the years ended 31 December 2018, 31 December 2017 and 31 December 2016, respectively. Refer to “Note 32 Changes in organization and acquisitions and disposals of subsidiaries and businesses” in the “Consolidated financial statements” section of this report for more information.Corporate governance and compensation 292 Corporate governance and compensation Compensation Vesting of outstanding awards granted in prior years subject to performance conditions The tables below show the extent to which the performance conditions for awards granted in prior years have been met and the percentage of the awards that vest in 2019. Equity Ownership Plan (EOP) 2013 / 2014, EOP 2014 / 2015, EOP 2015 / 2016 and EOP 2016 / 2017 Performance conditions Performance achieved % of installment vesting Adjusted return on tangible equity1 and divisional return on attributed equity The Group and divisional performance conditions have been satisfied. For the EOP 2013 / 2014, the third and final installment for the Group Executive Board (GEB) members vests in full. For the EOP 2014 / 2015, the second installment for the GEB members and the second installment for all other employees covered under the plan vest in full. For the EOP 2015 / 2016, the first installment for the GEB members and the second installment for all other employees covered under the plan vest in full. For the EOP 2016 / 2017, the first installment for all other employees covered under the plan vests in full 100% 1 The assessment for vesting purposes excludes the effect of deferred tax assets (DTAs). Furthermore, DTAs, when positive, have never had an impact on the performance award vesting. Deferred Contingent Capital Plan (DCCP) 2013 / 2014 Performance conditions Performance achieved % of installment vesting Common equity tier 1 (CET1) capital ratio, viability event and additionally for GEB, Group adjusted profit before tax The performance conditions have been satisfied. The DCCP 2013 / 2014 vests in full 100% Discontinued deferred compensation plans The table below lists discontinued compensation plans that had outstanding balances as of 31 December 2018. The firm has not granted any options and SARs since 2009. The strike price for stock options awarded under prior compensation plans has not been reset. →Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of the Annual Report 2018 for more information Plan Years granted Eligible employees Instrument Performance conditions Vesting period and other conditions Status as of March 2019 Key Employee Stock Appreciation Rights Plan (KESAP) and Key Employee Stock Option Plan (KESOP) 2002–2009 Selected employees (approximately 17,000 employees between 2002 and 2009) Share-settled stock appreciation rights (SARs) or stock options None Vests in full three years after grant, subject to continued employment, non-solicitation of clients and employees and non- disclosure of proprietary information Expired (some options / SARs remain exercisable) Advisory vote 293 1 List of tables Page Share and option ownership / entitlements of GEB members 294 Total of all vested and unvested shares of GEB members 294 Number of shares of BoD members 295 Total of all blocked and unblocked shares of BoD members 295 Vested and unvested options of GEB members 296 Loans granted to GEB members 297 Loans granted to BoD members 297 Compensation paid to former BoD and GEB members 297 Corporate governance and compensation 294 Corporate governance and compensation Compensation Audited | Share and option ownership / entitlements of GEB members1 Name, function oon 31 December Number of unvested shares / at risk2 Number of vested shares TTotal number of shares Potentially conferred voting rights in % NNumber of options3 Potentially conferred voting rights in %4 22018 1,715,430 1,757,766 3,473,196 0.191 0 0.000Sergio P. Ermotti, Group Chief Executive Officer 22017 1,632,464 460,377 2,092,841 0.121 0 0.000 22018 256,356 0 256,356 0.014 0 0.000Martin Blessing, Co-President Global Wealth Management 22017 65,761 0 65,761 0.004 0 0.000 22018 259,745 0 259,745 0.014 0 0.000Christian Bluhm, Group Chief Risk Officer 22017 131,520 0 131,520 0.008 0 0.000 22018 614,222 317,516 931,738 0.051 0 0.000Markus U. Diethelm, Group General Counsel 22017 589,659 194,000 783,659 0.045 0 0.000 22018 343,120 107,472 450,592 0.025 0 0.000Kirt Gardner, Group Chief Financial Officer 22017 264,718 61,652 326,370 0.019 0 0.000 22018 500,902 254,119 755,021 0.042 0 0.000Robert Karofsky, Co-President Investment Bank 22017 –– –––––– 22018 259,762 263,362 523,124 0.029 0 0.000Sabine Keller-Busse, Group Chief Operating Officer 22017 244,676 176,602 421,278 0.024 0 0.000 22018 910,951 95,597 1,006,548 0.055 0 0.000Ulrich Körner, President Asset Management and President UBS EMEA 22017 881,979 95,597 977,576 0.057 0 0.000 22018 307,090 277,978 585,068 0.032 0 0.000Axel P. Lehmann, President Personal & Corporate Banking and President UBS Switzerland 22017 156,180 277,978 434,158 0.025 0 0.000 22018 1,132,938 484,075 1,617,013 0.089 0 0.000Tom Naratil, Co-President Global Wealth Management and President UBS Americas 22017 1,047,311 422,298 1,469,609 0.085 281,640 0.016 22018 471,049 256,367 727,416 0.040 0 0.000Piero Novelli, Co-President Investment Bank 22017 –– –––––– 22018 ––––––––Andrea Orcel, former President Investment Bank 22017 1,328,113 251,439 1,579,552 0.091 0 0.000 22018 161,152 173 161,325 0.009 0 0.000Markus Ronner, Group Chief Compliance and Governance Officer 22017 –– –––––– 22018 503,772 150,000 653,772 0.036 0 0.000Kathryn Shih, President UBS Asia Pacific 22017 581,546 0 581,546 0.034 74,599 0.004 22018 7,436,489 3,964,425 11,400,914 0.627 0 0.000TTotal 22017 6,923,927 1,939,943 8,863,870 0.513 356,239 0.021 11 Includes all vested and unvested shares and options of GEB members, including those held by related parties. 2 Includes shares granted under variable compensation plans with forfeiture provisions. The actual number of shares vesting in the future will be calculated under the terms of the plans. Refer to “Compensation philosophy and framework” section of this report for more information on the plans. 3 Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information. 4 No conversion rights outstanding. Audited | Total of all vested and unvested shares of GEB members1,2 Total of which: vested of which: vesting 2019 2020 2021 2022 2023 Shares on 31 December 2018 11,400,914 3,964,425 1,889,712 1,826,864 1,858,391 1,266,430 595,092 2018 2019 2020 2021 2022 Shares on 31 December 20173 9,840,946 1,941,018 1,796,694 1,825,372 1,992,458 1,465,516 819,888 1 Includes shares held by related parties. 2 Includes shares granted under variable compensation plans with forfeiture provisions. The actual number of shares vesting in the future will be calculated under the terms of the plans. Refer to the “Compensation philosophy and framework” section of this report for more information. 3 Includes all vested and unvested shares of Jürg Zeltner who stepped down from the GEB on 31 December 2017. Advisory vote 295 Audited | Number of shares of BoD members1 Name, function oon 31 December NNumber of shares held Voting rights in % 22018 764,329 0.042Axel A. Weber, Chairman 22017 642,100 0.037 22018 322,558 0.018Michel Demaré, Vice Chairman 22017 290,694 0.017 22018 189,805 0.010David Sidwell, Senior Independent Director 22017 154,672 0.009 22018 0 0.000Jeremy Anderson, member2 22017 ––– 22018 98,832 0.005Reto Francioni, member 22017 76,772 0.004 22018 259,225 0.014Ann F. Godbehere, member 22017 232,263 0.013 22018 0 0.000Fred Hu, member2 22017 ––– 22018 –––William G. Parrett, former member2 22017 106,916 0.006 22018 17,157 0.001Julie G. Richardson, member 22017 0 0.000 22018 114,802 0.006Isabelle Romy, member 22017 94,376 0.005 22018 47,074 0.003Robert W. Scully, member 22017 29,917 0.002 22018 145,601 0.008Beatrice Weder di Mauro, member 22017 126,809 0.007 22018 31,159 0.002Dieter Wemmer, member 22017 14,002 0.001 22018 1,990,542 0.109TTotal 22017 1,768,521 0.102 11 Includes blocked and unblocked shares held by BoD members, including those held by related parties. No options were granted in 2018 and 2017. 2 At the 2018 AGM, Jeremy Anderson and Fred Hu were newly elected and William G. Parrett did not stand for re-election. Audited | Total of all blocked and unblocked shares of BoD members1 Total of which: unblocked of which: blocked until 2019 2020 2021 2022 Shares on 31 December 2018 1,990,542 636,397 323,051 335,587 366,570 328,937 2018 2019 2020 2021 Shares on 31 December 2017 1,768,521 294,924 366,821 347,106 364,161 395,509 1 Includes shares held by related parties. Corporate governance and compensation 296 Corporate governance and compensation Compensation Audited | Vested and unvested options of GEB members1 oon 31 December TTotal number of options2 Number of options3 Year of grant Vesting date Expiry date Strike price TTom Naratil, Co-President Global Wealth Management and President UBS Americas4 22018 0 22017 281,640 181,640 2008 1.3.2011 28.2.2018 CHF 35.66 100,000 2009 1.3.2012 27.2.2019 CHF 11.35 KKathryn Shih, President UBS Asia Pacific 22018 0 22017 74,599 74,599 2008 1.3.2011 28.2.2018 CHF 35.66 11 Includes all options held by GEB members, including those held by related parties. 2 No conversion rights outstanding. 3 Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information. 4 Tom Naratil exercised his remaining 100,000 options on 28 November 2018. Advisory vote 297 Audited | Loans granted to GEB members1 In line with article 38 of the Articles of Association of UBS Group AG, Group Executive Board (GEB) members may be granted loans. Such loans are made in the ordinary course of business on substantially the same terms as those granted to other employees, including interest rates and collateral, and neither involve more than the normal risk of collectability nor contain any other unfavorable features for the firm. The total amount of such loans must not exceed CHF 20 million per GEB member. CHF, except where indicated 2 USD (for reference) Name, function on 31 December Loans3 Loans3 Ulrich Körner, President Asset Management and President UBS EMEA (highest loan in 2018)2018 8,240,000 8,380,492 Ulrich Körner, President Asset Management and President UBS EMEA (highest loan in 2017) 22017 8,240,000 2018 33,204,000 33,770,128Aggregate of all GEB members4 2017 37,442,914 1 No loans have been granted to related parties of the GEB members at conditions not customary in the market. 2 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the relevant year-end closing exchange rate. 3 All loans granted are secured loans. 4 Excludes unused uncommitted credit facilities of CHF 2,949,690 in 2018 that had been granted to one GEB member, and of CHF 4,952,596 in 2017 that had been granted to two GEB members. Audited | Loans granted to BoD members1 In line with article 33 of the Articles of Association of UBS Group AG, loans to independent Board of Directors (BoD) members are made in the ordinary course of business at general market conditions. The Chairman as a non-independent member may be granted loans in the ordinary course of business on substantially the same terms as those granted to employees, including interest rates and collateral, neither involving more than the normal risk of collectability nor containing any other unfavorable features for the firm. The total amount of such loans must not exceed CHF 20 million per BoD member. CHF, except where indicated 2 USD (for reference) on 31 December Loans3,4,5 Loans3,4,5 2018 600,000 610,230Aggregate of all BoD members 2017 3,524,370 1 No loans have been granted to related parties of the BoD members at conditions not customary in the market. 2 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the relevant year-end closing exchange rate. 3 All loans granted are secured loans. 4 CHF 600,000 for Reto Francioni in 2018 and CHF 600,000 for Reto Francioni and CHF 2,924,370 for William G. Parrett in 2017. 5 Excludes an unused uncommitted credit facility of CHF 243,698 that had been granted to one BoD member in 2017. Audited | Compensation paid to former BoD and GEB members1 CHF, except where indicated 2 USD (for reference) For the year Compensation Benefits Total Total 2018 0 0 0 0Former BoD members 2017 0 0 0 2018 0 45,556 45,556 46,333Aggregate of all former GEB members3 2017 336,789 44,636 381,425 2018 0 45,556 45,556 46,333Aggregate of all former BoD and GEB members 2017 336,789 44,636 381,425 1 Compensation or remuneration that is related to the former members’ activity on the BoD or GEB or that is not at market conditions. 2 Swiss franc and US dollar amounts disclosed represent local currency amounts translated at the relevant year-end closing exchange rate. 3 Includes a payment in 2018 to one former GEB member and payments in 2017 to two former GEB members. Corporate governance and compensation 298 Corporate governance and compensation Compensation Provisions of the Articles of Association related to compensation Under the say-on-pay provisions in Switzerland, shareholders of Swiss-listed companies have significant influence over board and management compensation. At UBS, this is achieved by means of an annual binding say-on-pay vote in accordance with the following Articles of Association provisions related to compensation: Say on pay: In line with article 43 of the Articles of Association of UBS Group AG, the General Meeting shall approve the proposals of the Board of Directors in relation to: a) the maximum aggregate amount of compensation of the Board of Directors for the period until the next Annual General Meeting; b) the maximum aggregate amount of fixed compensation of the Group Executive Board for the following financial year; and c) the aggregate amount of variable compensation of the Group Executive Board for the preceding financial year. The Board of Directors may submit for approval by the General Meeting deviating or additional proposals relating to the same or different periods. In the event the General Meeting does not approve a proposal of the Board of Directors, the Board of Directors shall determine, taking into account all relevant factors, the respective (maximum) aggregate amount or (maximum) partial amounts and submit the amount(s) so determined for approval by the General Meeting. The Corporation or companies controlled by it may pay or grant compensation prior to approval by the General Meeting, subject to subsequent approval. Principles of compensation: In line with articles 45 and 46 of the Articles of Association of UBS Group AG, compensation of the members of the Board of Directors shall comprise a base remuneration and may comprise other compensation elements and benefits. Compensation of the members of the Board of Directors is intended to recognize the responsibility and governance nature of their role, to attract and retain qualified individuals and to ensure alignment with shareholders’ interest. Compensation of the members of the Group Executive Board shall comprise fixed and variable compensation elements. Fixed compensation shall comprise the base salary and may comprise other compensation elements and benefits. Variable compensation elements shall be governed by financial and non-financial performance measures that take into account the performance of the Corporation and / or parts thereof, targets in relation to the market, other companies or comparable benchmarks, short- and long-term strategic objectives and / or individual targets. The Board of Directors or, where delegated to it, the Compensation Committee determines the respective performance measures, the overall and individual performance targets, and their achievements. The Board of Directors or, where delegated to it, the Compensation Committee aims to ensure alignment with sustainable performance and appropriate risk-taking through adequate deferrals, forfeiture conditions, caps on compensation, harmful acts provisions and similar means with regard to parts of or all of the compensation. Parts of variable compensation shall be subject to a multi- year vesting period. Additional amount for GEB members appointed after the vote on the aggregate amount of compensation by the AGM: In line with article 46 of the Articles of Association of UBS Group AG, if the maximum aggregate amount of compensation already approved by the General Meeting is not sufficient to also cover the compensation of a person who becomes a member of or is being promoted within the Group Executive Board after the General Meeting has approved the compensation, the Corporation or companies controlled by it shall be authorized to pay or grant each such Group Executive Board member a supplementary amount during the compensation period(s) already approved. The aggregate pool for such supplementary amounts per compensation period shall not exceed 40% of the average of total annual compensation paid or granted to the Group Executive Board during the previous three years. →Refer to www.ubs.com/governance for more information Advisory vote 299 Ernst & Young Ltd Aeschengraben 9 P.O. Box CH-4002 Basel Phone +41 58 286 86 86 Fax +41 58 286 86 00 www.ey.com/ch Corporate governance and compensation Consolidated financial statements Changes to functional and presentation currencies Effective from 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland changed from Swiss francs to US dollars and that of UBS AG’s London Branch from British pounds to US dollars, in compliance with the requirements of International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. The presentation currency of UBS Group AG’s consolidated financial statements has changed from Swiss francs to US dollars to align with the functional currency changes of significant Group entities. Prior periods have been restated for this change in presentation currency. →Refer to “Note 1b Changes in accounting policies, comparability and other adjustments, excluding the effects of adoption of IFRS 9 Financial Instruments” in the “Consolidated financial statements” section of this report for more information 303 Table of contents 304 Management’s report on internal control over financial reporting 305 Report of the independent registered public accounting firm on internal control over financial reporting 306 Report of the independent registered public accounting firm on the consolidated financial statements 307 Statutory auditor’s report on the audit of the consolidated financial statements 316 UBS Group AG consolidated financial statements 316 Primary financial statements 316 Income statement 317 Statement of comprehensive income 319 Balance sheet 320 Statement of changes in equity 325 Statement of cash flows 327 Notes to the UBS Group AG consolidated financial statements 327 1 Summary of significant accounting policies 377 2 Segment reporting 382 Income statement notes 382 3 Net interest income and other net income from fair value changes on financial instruments 385 4 Net fee and commission income 385 5 Other income 386 6 Personnel expenses 386 7 General and administrative expenses 387 8 Income taxes 391 9 Earnings per share (EPS) and shares outstanding 392 Balance sheet notes 392 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement 395 11 Derivative instruments 400 12 Financial assets and liabilities at fair value held for trading 400 13 Financial assets at fair value not held for trading 400 14 Financial assets measured at fair value through other comprehensive income 401 15 Property, equipment and software 402 16 Goodwill and intangible assets 405 17 Other assets 406 18 Amounts due to banks and customer deposits 406 19 Debt issued designated at fair value 407 20 Debt issued measured at amortized cost 409 21 Provisions and contingent liabilities 417 22 Other liabilities 418 Additional information 418 23 Expected credit loss measurement 429 24 Fair value measurement 450 25 Offsetting financial assets and financial liabilities 452 26 Restricted and transferred financial assets 455 27 Maturity analysis of financial liabilities 456 28 Hedge accounting 462 29 Pension and other post-employment benefit plans 477 30 Employee benefits: variable compensation 485 31 Interests in subsidiaries and other entities 493 32 Changes in organization and acquisitions and disposals of subsidiaries and businesses 494 33 Operating leases and finance leases 495 34 Guarantees, commitments and forward starting transactions 496 35 Related parties 499 36 Invested assets and net new money 500 37 Currency translation rates 500 38 Events after the reporting period 501 39 Main differences between IFRS and Swiss GAAP Financial statements 304 Management’s report on internal control over financial reporting Management’s responsibility for internal control over financial reporting The Board of Directors and management of UBS Group AG (UBS) are responsible for establishing and maintaining adequate internal control over financial reporting. UBS’s internal control over financial reporting is designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with IFRS as issued by the IASB. UBS’s internal control over financial reporting includes those policies and procedures that: – pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; – provide reasonable assurance that transactions are recorded as necessary to permit preparation and fair presentation of financial statements, and that receipts and expenditures of the company are being made only in accordance with authorizations of UBS management; and – provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management’s assessment of internal control over financial reporting as of 31 December 2018 UBS management has assessed the effectiveness of UBS’s internal control over financial reporting as of 31 December 2018 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on this assessment, management believes that, as of 31 December 2018, UBS’s internal control over financial reporting was effective. The effectiveness of UBS’s internal control over financial reporting as of 31 December 2018 has been audited by Ernst & Young Ltd, UBS’s independent registered public accounting firm, as stated in their report appearing on page 305, which expresses an unqualified opinion on the effectiveness of UBS’s internal control over financial reporting as of 31 December 2018. Reports of the statutory auditor / independent registered public accounting firm The accompanying reports of the independent registered public accounting firm on the consolidated financial statements (refer to page 306) and internal control over financial reporting (refer to page 305) of UBS Group AG are included in our filing on 15 March 2019 with the Securities and Exchange Commission on Form 20-F pursuant to US reporting obligations. The accompanying statutory auditor’s report on the audit of the consolidated financial statements (refer to pages 307 to 315) of UBS Group AG, in addition to the aforementioned reports, is included in our Annual Report 2018 available on our website and filed on 15 March 2019 with all other relevant non-US exchanges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inancial statements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inancial statements 308 "' ' ) (' #"#' %%'+&&'&. &/ "' !% && , ( '!''%#(&#"' &%(&' % && " "' (!"'+% &* " '%! " "' ) (' #"# & )"' & " "'!#("'#'+"'#$%' " #&& %%,#%*%&"'#$%' " #&&&#%. &/' %#($ &) "' " " '&" %(!&'"&' ' & ' %#($'#+('& ''+$ "" " &'%' &"%) & '&$$%# '#) ( "' &"%#" -'#' +'"' ' &$%# ' ,* (' -'##&''+ $%# '&* ' "' #&&%%,#%*%$% # #%(& "&'(' '!$#%%, %"& &' !'#('(%'+ $%# '& &&#"' "' ',&'%' $ "&" &&"& ' )'#' &&(!$' #"&! " &' !' "('(%'+ "#! "#''#' "" &''!"'& #' ""("%&'" "#' %) & ) (' #"$$%# "+(''+ $ "" "&'%' &) ('' & ""'&'' #$%' #" ' )"&&# ' %#($0& ,#"'%# &#)%#("' "#%' %) & ) (' #"$$%# ' &&(!$' #"&(& ") #$ "' "' ',&'%' $ "&"&' !' "('(% '+ "#!"'+$ "" "&'%' &&&&&' !$'' '' %) & ) (' #"$$%# "'+$ "" "&'%' & #"%%'+&"' %#($0& & #&(%& ""#' &&&&' #!$ '"&&"(%,#' '(&#%' &' !' #"&#('(% '+ "#! & " (( ' "#!$('' #"&#' !# &$$ '#' %#" ' #"$%#&&#% &"'&' "' #"'%# %!*#% %#("' !# & ")# ) &$ &'&'#&&&&' ,#"#! &&(!$' #"&! "' "' ',&'%' $ "&#!$% , "$('&(&'##%&'('(%'+ "#!'# +'%" ,) ' &'#% '"$%#%!""&&&&' &"& ' ) ',# ' #('#!&'#%&#" ,$#&& "& "&&(!$' #"& &#&&&&* ' %' %#($0& & #&(%%% "' $$ ' #"# (!"' " &' !' "%#" -"("%#" - &$$%#$% ' ,% '&' %#($0&%% '+$#& ' #"* ' ""#' #(&#"' &%(&' %#($#$%'& " "%( '#%,") %#"!"' ' ' &+$#&'#& " "' ' ' #""& ! %% & &% & "%#! &$('&"%( '#%, $%# "&( !''%&%&( ''#!",("%' "' &"' #('#!!, ( ''#$% ' &("%' "' & " %"' ,'' !#("'"' ! "#$#'"' #(' #*&* ' %&$''#' $%#) & #"&* )"&' & "#' %#"' ""' ' &)% ' $%#) & #"%$%&"'&' %#($0&&'&' !'#%+ &' " !''%&' ' )$%# "&' ! !$'#"' %#($0& "" $#& ' #" "#''#' "" &''!"'& 309 % & #$% ' &%%$ %$%% !#% %' $$ % # &!,$ * %# $ '#% !# '$ % $!# $$ $$$$% % $ (%!# '$ & %$#$# & % %!# '$ $ %$%% ! % $$ &#* %& # * # % #% *$$$&!! #% %& % $!%$ !%* %#!#%% $ % ##$! #% *# )%# & $ % $$$$% # % !# '*% # &! (&!#% *(%)%# & $ $ $$#* $ $$$$% # &!,$!# '$ $ % % %$$ $&#(% % &$ %$#&$% # &!$ *! % %$ $*$% $ # &$ $$!# $$$ #! #% # &! % &$% '$% %$ $*$% $ % % % $ &$ $$#"&# %$ & %%' $$ %$ $$ % %# $ # &! $ ! % ( $ % $*$% ! %% $# ! )* %&# ! $#$ $# %% % #% % %$ !#% %' $$ * %# $%% & '$ % !% % $%% %$ $$$$ %# %* %# %!# $$ ( &$! + &% #$ $!#% &#&%% &#&%!# &#$ &$ % #$%#&%&# !! % $# ' %% #! #% & ' &% %$ %$% % !#% %' $$ * $$ % &% % %# $ &#&%!# &#$# %% $$ &%$% &$#$$ % !#' &$#$$!# $$#%##%% $ &$#&% %% %# $ &#&%!# &#$# %% % &%$% %,$ !# # %$%!!# !!# ' #"&$%$$( $$#% &%$ &#&%!# &#$ $ &%$% % ! % $$ &#* % ( $ % $*$% '#$ & % $# %% % #% $ ' &%%$ %$%% !#% %' $$ %$*$% '#$ $( $ * # %# $ &% % %# $ % ( * ! %$*$% $ %$%% ! % $$ &#* ! $% '#$ $*$% #%#! #%$ Financial statements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inancial statements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�-3.;1"'1!*-130#5'2&',,-2# ,-2# %,-2# ! ,-2# ,",-2# #$-!31#"-,2&'1 0# #! 31#2&#!3+3* 2'4#!& ,%#12-2&#*#% *1203!230# 31',#11 !2'4'2'#1 ,"!& ,%#2-2ҳ!230 *!300#,!7+ , %#+#,2120 2#%7-$ 0-3. ," ;1# "$$'!#',5'28#0* ,"0#13*2#"', !& ,%#',$3,!2'-, *!300#,!7$0-+5'11 $0 ,!12- "-** 01 1-$ !2- #0 1'+'* 0!& ,%#2-2&#*#% *1203!230# 31',#11 !2'4'2'#1 ,"!& ,%#2-2ҳ!230 *!300#,!7+ , %#+#,2120 2#%7-$ ;1-,"-, 0 ,!&0#13*2#"', !& ,%#',$3,!2'-, *!300#,!7$0-+0'2'1&.-3,"12- "-** 01 1-$ !2- #0 ,*',#5'2&2#!& ,%#12&#.0#1#,2 2'-,!300#,!7-$2&# 0-3. !& ,%#"$0-+5'11$0 ,!12- "-** 015'2&.0'-0.#0'-"10#12 2#" #$-!31#"-,2&#$3,!2'-, *!300#,!7!& ,%# #! 31#-$2&#(3"%#+#,2',4-*4#"',2&# "#2#0+', 2'-,-$ !& ,%#',$3,!2'-, *!300#,!7', !!-0" ,!#5'2&,2#0, 2'-, *!!-3,2',% 2 ," 0" &#$$#!21-$& ,%#1',-0#'%,6!& ,%# 2#1 #$-!31#"-,2&#.0#1#,2 2'-,!300#,!7!& ,%# 12&# !!-3,2',%$-02�#20-1.#!2'4# ..*'! 2'-,-$2&#!& ,%#',.0#1#,2 2'-,!300#,!7'1!-+.*#6 &#!-+.*#6'27'1"3#2-2&# ,3+ #0-$#,2'2'#15'2&',2�-3.2& 2& 4# $3,!2'-, *!300#,!72& 2"'$$#01$0-+2&# .0#1#,2 2'-,!300#,!7-$ 0-3.2&#+ %,'23"#-$!& ,%#12-#/3'27!-+.-,#,21 ',!*3"',%-2�!-+.0#&#,1'4#',!-+#20# 13071& 0#11& 0#! .'2 *1& 0#.0#+'3+ ," 0#2 ',#"# 0,',%1 ,"2&#-.#0 2'-, *!-+.*#6'27',4-*4#"',! *!3* 2',%2&#'+. !2-$2&# !& ,%#-$.0#1#,2 2'-,!300#,!7 ##,-2# ,",-2# 2-2&#$', ,!' *12 2#+#,21 #- 2 ',#" ,3,"#012 ,"',%#4 *3 2#"2&#"#1'%, ,"2#12#"2&#-.#0 2',%#$$#!2'4#,#11 -$2�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inancial statements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inancial statements 316 Consolidated financial statements UBS Group AG consolidated financial statements Primary financial statements Audited | Income statement For the year ended USD million Note 331.12.18 31.12.17 31.12.16 Interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 3 10,100 10,422 10,379 Interest expense from financial instruments measured at amortized cost 3 (6,391) (5,404) (4,976) Interest income from financial instruments measured at fair value through profit or loss 3 6,968 4,056 3,579 Interest expense from financial instruments measured at fair value through profit or loss 3 (4,653) (2,418) (2,495) Net interest income 3 6,025 6,656 6,487 Other net income from fair value changes on financial instruments 3 5,984 5,065 5,023 Credit loss (expense) / recovery 23 (118) (131) (38) Fee and commission income 4 19,598 19,362 18,374 Fee and commission expense 4 (1,703) (1,840) (1,781) Net fee and commission income 4 17,895 17,522 16,593 Other income 5 427 511 663 Total operating income 30,213 29,622 28,729 Personnel expenses 6 16,132 16,199 15,913 General and administrative expenses 7 6,797 6,949 7,517 Depreciation and impairment of property, equipment and software 15 1,228 1,053 997 Amortization and impairment of intangible assets 16 65 71 93 Total operating expenses 24,222 24,272 24,519 Operating profit / (loss) before tax 5,991 5,351 4,209 Tax expense / (benefit) 8 1,468 4,305 777 Net profit / (loss) 4,522 1,046 3,432 Net profit / (loss) attributable to non-controlling interests 7 77 84 NNet profit / (loss) attributable to shareholders 4,516 969 3,348 Earnings per share (USD) Basic 9 1.21 0.26 0.90 Diluted 9 1.18 0.25 0.88 317 Statement of comprehensive income For the year ended USD million 331.12.18 31.12.17 31.12.16 Comprehensive income attributable to shareholders NNet profit / (loss) 4,516 969 3,348 OOther comprehensive income that may be reclassified to the income statement FForeign currency translation Foreign currency translation movements related to net assets of foreign operations, before tax (725) 1,595 (888) Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax 181 (55) 356 Foreign currency translation differences on foreign operations reclassified to the income statement 3 32 77 Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to the income statement 2 (6) (5) Income tax relating to foreign currency translations, including the effect of net investment hedges (2) (2) 2 Subtotal foreign currency translation, net of tax (541) 1,564 (458) FFinancial assets measured at fair value through other comprehensive income Net unrealized gains / (losses), before tax (56) 96 261 Impairment charges reclassified to the income statement from equity 0 15 5 Realized gains reclassified to the income statement from equity 0 (209) (376) Realized losses reclassified to the income statement from equity 0 14 26 Income tax relating to net unrealized gains / (losses) 12 (6) 26 Subtotal financial assets measured at fair value through other comprehensive income, net of tax (45) (91) (58) CCash flow hedges of interest rate risk Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax (42) 45 234 Net (gains) / losses reclassified to the income statement from equity (294) (843) (1,094) Income tax relating to cash flow hedges 67 163 176 Subtotal cash flow hedges, net of tax (269) (635) (684) TTotal other comprehensive income that may be reclassified to the income statement, net of tax (855) 838 (1,200) OOther comprehensive income that will not be reclassified to the income statement DDefined benefit plans Gains / (losses) on defined benefit plans, before tax (220) 286 (880) Income tax relating to defined benefit plans 276 11 51 Subtotal defined benefit plans, net of tax 56 296 (829) OOwn credit on financial liabilities designated at fair value Gains / (losses) from own credit on financial liabilities designated at fair value, before tax 517 (315) (134) Income tax relating to own credit on financial liabilities designated at fair value (8) (2) 4 Subtotal own credit on financial liabilities designated at fair value, net of tax 509 (317) (130) TTotal other comprehensive income that will not be reclassified to the income statement, net of tax 565 (20) (959) TTotal other comprehensive income (290) 818 (2,159) TTotal comprehensive income attributable to shareholders 4,225 1,787 1,189 Table continues on the next page.Financial statements 318 Consolidated financial statements Statement of comprehensive income (continued) Table continued from previous page. For the year ended USD million 31.12.18 31.12.17 31.12.16 Comprehensive income attributable to non-controlling interests Net profit / (loss) 7 77 84 Other comprehensive income that will not be reclassified to the income statement Foreign currency translation movements, before tax (1) 250 (22) Income tax relating to foreign currency translation movements 0 0 0 Subtotal foreign currency translation, net of tax (1) 250 (22) Total other comprehensive income that will not be reclassified to the income statement, net of tax (1) 250 (22) Total comprehensive income attributable to non-controlling interests 5 326 62 Total comprehensive income Net profit / (loss) 4,522 1,046 3,432 Other comprehensive income (292) 1,068 (2,181) of which: other comprehensive income that may be reclassified to the income statement (855) 838 (1,200) of which: other comprehensive income that will not be reclassified to the income statement 563 229 (981) Total comprehensive income 4,231 2,113 1,251 319 Balance sheet USD million Note 331.12.18 31.12.17 1.1.17 Assets Cash and balances at central banks 108,370 90,045 105,883 Loans and advances to banks 10 16,868 14,094 12,926 Receivables from securities financing transactions 10, 25 95,349 91,951 79,936 Cash collateral receivables on derivative instruments 10, 25 23,602 24,040 26,198 Loans and advances to customers 10 320,352 326,746 300,010 Other financial assets measured at amortized cost 10, 17a 22,563 37,815 27,115 TTotal financial assets measured at amortized cost 587,104 584,691 552,068 Financial assets at fair value held for trading 12, 24 104,370 129,407 90,416 of which: assets pledged as collateral that may be sold or repledged by counterparties 32,121 36,277 29,731 Derivative financial instruments 11, 24, 25 126,210 121,285 155,642 Brokerage receivables 24 16,840 Financial assets at fair value not held for trading 13, 24 82,690 60,457 64,210 TTotal financial assets measured at fair value through profit or loss 330,110 311,148 310,269 FFinancial assets measured at fair value through other comprehensive income 14, 24 6,667 8,889 15,402 Investments in associates 31b 1,099 1,045 947 Property, equipment and software 15 9,348 9,057 8,186 Goodwill and intangible assets 16 6,647 6,563 6,442 Deferred tax assets 8 10,105 10,056 13,158 Other non-financial assets 17b 7,410 7,830 12,434 TTotal assets 958,489 939,279 918,906 Liabilities Amounts due to banks 18 10,962 7,728 10,459 Payables from securities financing transactions 25 10,296 17,485 9,266 Cash collateral payables on derivative instruments 25 28,906 31,029 34,852 Customer deposits 18 419,838 419,577 416,267 Debt issued measured at amortized cost 20 132,271 143,160 101,837 Other financial liabilities measured at amortized cost 22a 6,885 37,276 37,729 TTotal financial liabilities measured at amortized cost 609,158 656,255 610,410 Financial liabilities at fair value held for trading 12, 24 28,943 31,251 22,425 Derivative financial instruments 11, 24, 25 125,723 119,137 151,121 Brokerage payables designated at fair value 24 38,420 Debt issued designated at fair value 19, 24 57,031 50,782 49,057 Other financial liabilities designated at fair value 22b, 24 33,594 16,643 14,122 TTotal financial liabilities measured at fair value through profit or loss 283,711 217,813 236,725 Provisions 21a 3,494 3,214 4,101 Other non-financial liabilities 22c 9,022 9,443 14,083 TTotal liabilities 905,386 886,725 865,320 Equity Share capital 338 338 338 Share premium 20,843 23,598 25,958 Treasury shares (2,631) (2,210) (2,362) Retained earnings 30,448 25,932 25,029 Other comprehensive income recognized directly in equity, net of tax 3,930 4,838 3,953 EEquity attributable to shareholders 52,928 52,495 52,916 Equity attributable to non-controlling interests 176 59 670 TTotal equity 53,103 52,554 53,586 TTotal liabilities and equity 958,489 939,279 918,906 Financial statements 320 Consolidated financial statements Statement of changes in equity USD million Share capital Share premium Treasury shares Retained earnings BBalance as of 1 January 2016 338 28,966 (1,806) 22,672 Issuance of share capital Acquisition of treasury shares (1,444)3 Delivery of treasury shares under share-based compensation plans (716) 840 Other disposal of treasury shares (2) 49 3 Premium on shares issued and warrants exercised 5 Share-based compensation expensed in the income statement 872 Tax (expense) / benefit 29 Dividends (3,241)2 Preferred notes Translation effects recognized directly in retained earnings 13 New consolidations / (deconsolidations) and other increases / (decreases) 45 (45) Total comprehensive income for the year 2,389 of which: net profit / (loss) 3,348 of which: other comprehensive income (OCI) that may be reclassified to the income statement, net of tax of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans (829) of which: OCI that will not be reclassified to the income statement, net of tax – own credit (130) of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation BBalance as of 31 December 2016 338 25,958 (2,362) 25,029 Issuance of share capital Acquisition of treasury shares (908)3 Delivery of treasury shares under share-based compensation plans (879) 994 Other disposal of treasury shares 1 663 Premium on shares issued and warrants exercised 19 Share-based compensation expensed in the income statement 735 Tax (expense) / benefit 21 Dividends (2,259)2 Preferred notes Translation effects recognized directly in retained earnings (46) New consolidations / (deconsolidations) and other increases / (decreases) 1 Total comprehensive income for the year 949 of which: net profit / (loss) 969 of which: other comprehensive income (OCI) that may be reclassified to the income statement, net of tax of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans 296 of which: OCI that will not be reclassified to the income statement, net of tax – own credit (317) of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation BBalance as of 31 December 2017 338 23,598 (2,210) 25,932 321 Other comprehensive income recognized directly in equity, net of tax1 of which: foreign currency translation of which: financial assets at fair value through other comprehensive income of which: cash flow hedges Total equity attributable to shareholders Non-controlling interests Total equity 5,166 3,360 171 1,635 55,336 1,992 57,328 0 0 (1,444) (1,444) 124 124 47 47 5 5 872 872 29 29 (3,241) (85) (3,326) 0 (1,299) (1,299) (13) (17) 4 0 0 0 0 0 (1,200) (458) (58) (684) 1,189 62 1,251 3,348 84 3,432 (1,200) (458) (58) (684) (1,200) (1,200) (829) (829) (130) (130) 0 (22) (22) 3,953 2,901 96 955 52,916 670 53,586 0 0 (908) (908) 115 115 67 67 19 19 735 735 21 21 (2,259) (77) (2,337) 0 (878) (878) 46 7 39 0 0 1 17 18 838 1,564 (91) (635) 1,787 326 2,113 969 77 1,046 838 1,564 (91) (635) 838 838 296 296 (317) (317) 0 250 250 4,838 4,466 13 360 52,495 59 52,554 Financial statements 322 Consolidated financial statements Statement of changes in equity (continued) USD million Share capital Share premium Treasury shares Retained earnings BBalance as of 31 December 2017 338 23,598 (2,210) 25,932 Effect of adoption of IFRS 9 (518) Effect of adoption of IFRS 15 (25) BBalance as of 1 January 2018 after the adoption of IFRS 9 and IFRS 15 338 23,598 (2,210) 25,389 Issuance of share capital 0 Acquisition of treasury shares (1,608)3 Delivery of treasury shares under share-based compensation plans (1,009) 1,137 Other disposal of treasury shares 503 Premium on shares issued and warrants exercised 22 Share-based compensation expensed in the income statement 676 Tax (expense) / benefit 4 Dividends (2,440)2 Preferred notes Translation effects recognized directly in retained earnings (21) New consolidations / (deconsolidations) and other increases / (decreases) (7) Total comprehensive income for the year 5,080 of which: net profit / (loss) 4,516 of which: other comprehensive income (OCI) that may be reclassified to the income statement, net of tax of which: OCI that will not be reclassified to the income statement, net of tax – defined benefit plans 56 of which: OCI that will not be reclassified to the income statement, net of tax – own credit 509 of which: OCI that will not be reclassified to the income statement, net of tax – foreign currency translation BBalance as of 31 December 2018 338 20,843 (2,631) 30,448 11 Excludes defined benefit plans and own credit that are recorded directly in Retained earnings. 2 Reflects the payment of an ordinary cash dividend of CHF 0.65 (2017: CHF 0.60 ordinary cash dividend; 2016: CHF 0.60 ordinary cash dividend and CHF 0.25 special cash dividend) per dividend-bearing share out of the capital contribution reserve. 3 Includes treasury shares acquired and disposed of by the Investment Bank in its capacity as a market-maker in UBS shares and related derivatives and to hedge certain issued structured debt instruments. These acquisitions and disposals are reported based on the sum of the net monthly movements. 323 Other comprehensive income recognized directly in equity, net of tax1 of which: foreign currency translation of which: financial assets at fair value through other comprehensive income of which: cash flow hedges Total equity attributable to shareholders Non-controlling interests Total equity 4,838 4,466 13 360 52,495 59 52,554 (74) (74) (591) (591) (25) (25) 4,764 4,466 (61) 360 51,879 59 51,938 0 0 (1,608) (1,608) 128 128 50 50 22 22 676 676 4 4 (2,440) (10) (2,450) 0 0 21 3 18 0 0 (7) 122 115 (855) (541) (45) (269) 4,225 5 4,231 4,516 7 4,522 (855) (541) (45) (269) (855) (855) 56 56 509 509 0 (1) (1) 3,930 3,924 (103) 109 52,928 176 53,103 Financial statements 324 Consolidated financial statements UBS Group AG shares issued and treasury shares held Number of shares 22018 2017 Shares issued Balance at the beginning of the year 3,853,096,603 3,850,766,389 Issuance of shares 2,538,146 2,330,214 BBalance at the end of the year 3,855,634,749 3,853,096,603 Treasury shares Balance at the beginning of the year 132,301,550 138,441,772 Acquisitions 103,979,927 54,828,640 Disposals (69,813,675) (60,968,862) BBalance at the end of the year 166,467,802 132,301,550 Conditional share capital As of 31 December 2018, 125,126,476 additional UBS Group AG shares could have been issued to fund UBS’s employee share option programs. Additional conditional capital up to a maximum number of 380,000,000 UBS Group AG shares was available as of 31 December 2018 for conversion rights and warrants granted in connection with the issuance of bonds or similar financial instruments. Share repurchase program As announced in January 2018, UBS has an active share repurchase program to buy back up to CHF 2 billion of its own shares over the three-year period starting from March 2018. Under this program, UBS purchased 48 million shares totaling USD 762 million in 2018. 325 Statement of cash flows1 For the year ended USD million 331.12.18 31.12.17 31.12.16 Cash flow from / (used in) operating activities Net profit / (loss) 4,522 1,046 3,432 NNon-cash items included in net profit and other adjustments: Depreciation and impairment of property, equipment and software 1,228 1,053 997 Amortization and impairment of intangible assets 65 71 93 Credit loss expense / (recovery) 118 131 38 Share of net profits of associates / joint ventures and impairment of associates (528) (69) (109) Deferred tax expense / (benefit) 425 3,414 (43) Net loss / (gain) from investing activities (46) (198) (1,223) Net loss / (gain) from financing activities (4,828) 2,109 9,967 Other net adjustments (1,179) (855) (296) NNet change in operating assets and liabilities: Loans and advances to banks / amounts due to banks 3,504 (3,234) (1,286) Securities financing transactions (11,230) (111) 945 Cash collateral on derivative instruments (1,447) (2,454) (4,182) Loans and advances to customers (5,213) (14,471) 3,662 Customer deposits 9,138 (12,962) 33,493 Financial assets and liabilities at FV held for trading and derivative financial instruments 11,107 (23,544) 8,525 Brokerage receivables and payables 11,432 Financial assets at fair value not held for trading, other financial assets and liabilities 11,115 (1,978) (77,228) Provisions, other non-financial assets and liabilities 1,682 996 5,570 Income taxes paid, net of refunds (951) (1,044) (645) NNet cash flow from / (used in) operating activities 28,913 (52,099) (18,292) Cash flow from / (used in) investing activities Purchase of subsidiaries, associates and intangible assets (287) (106) (27) Disposal of subsidiaries, associates and intangible assets2 137 339 94 Purchase of property, equipment and software (1,688) (1,627) (1,800) Disposal of property, equipment and software 114 47 182 Purchase of financial assets measured at fair value through other comprehensive income (1,999) (8,626) (7,022) Disposal and redemption of financial assets measured at fair value through other comprehensive income 1,361 15,250 54,433 Net (purchase) / redemption of debt securities measured at amortized cost (3,770) Net (purchase) / redemption of financial assets held to maturity (91) (9,224) NNet cash flow from / (used in) investing activities (6,132) 5,186 36,637 Table continues on the next page.Financial statements 326 Consolidated financial statements Statement of cash flows (continued)1 Table continued from previous page. For the year ended USD million 331.12.18 31.12.17 31.12.16 Cash flow from / (used in) financing activities Net short-term debt issued / (repaid) (12,245) 24,500 5,474 Net movements in treasury shares and own equity derivative activity (1,431) (730) (1,259) Distributions paid on UBS shares (2,440) (2,259) (3,241) Issuance of long-term debt, including debt issued designated at fair value 60,682 51,450 33,703 Repayment of long-term debt, including debt issued designated at fair value (44,344) (45,187) (33,902) Net changes in non-controlling interests and preferred notes (31) (787) (1,387) NNet cash flow from / (used in) financing activities 190 26,988 (612) Total cash flow CCash and cash equivalents at the beginning of the year 104,834 119,014 102,879 Net cash flow from / (used in) operating, investing and financing activities 22,971 (19,925) 17,733 Effects of exchange rate differences on cash and cash equivalents (1,726) 5,745 (1,598) CCash and cash equivalents at the end of the year3 126,079 104,834 119,014 of which: cash and balances at central banks 108,268 89,968 105,832 of which: loans and advances to banks 15,678 12,773 11,749 of which: money market paper 4 2,133 2,093 1,433 Additional information Net cash flow from / (used in) operating activities includes: Interest received in cash 7,705 7,735 8,002 Interest paid in cash 4,553 3,917 3,565 Dividends on equity investments, investment funds and associates received in cash5 2,322 1,828 1,618 11 Upon adoption of IFRS 9 on 1 January 2018, cash flows from certain financial assets previously classified as available-for-sale assets have been reclassified from investing to operating activities as the assets are accounted for at fair value through profit or loss effective 1 January 2018. Refer to Note 1c for more information. 2 Includes dividends received from associates. 3 USD 5,245 million, USD 2,497 million and USD 2,615 million of cash and cash equivalents (mainly reflected in Loans and advances to banks) were restricted as of 31 December 2018, 31 December 2017 and 31 December 2016, respectively. Refer to Note 26 for more information. 4 Money market paper is included in the balance sheet under Financial assets at fair value held for trading (31 December 2018: USD 366 million; 31 December 2017: USD 135 million; 31 December 2016: USD 74 million), Financial assets measured at fair value through other comprehensive income (31 December 2018: USD 8 million; 31 December 2017: USD 17 million; 31 December 2016: USD 416 million), Financial assets at fair value not held for trading and Other financial assets measured at amortized cost (31 December 2018: USD 1,760 million; 31 December 2017: USD 1,941 million; 31 December 2016: USD 942 million). 5 Includes dividends received from associates (2018: USD 42 million; 2017: USD 53 million; 2016: USD 50 million) reported within Cash flow from / (used in) investing activities. Changes in liabilities arising from financing activities USD million Debt issued measured at amortized cost of which: short-term of which: long-term Debt issued designated at fair value Over-the- counter (OTC) debt instruments2 Total Balance as of 1 January 2017 101,837 25,720 76,117 49,057 4,581 155,476 Cash flows 36,811 24,500 12,311 (5,625) (422) 30,765 Non-cash changes 4,512 2,050 2,462 7,350 268 12,130 of which: foreign currency translation 4,925 2,050 2,875 3,085 173 8,183 of which: fair value changes 0 4,265 95 4,360 of which: other (413) 0 (413) 1 0 0 (413) Balance as of 31 December 2017 143,160 52,270 90,890 50,782 4,428 198,371 Cash flows (7,402) (12,245) 4,843 13,332 (1,838) 4,092 Non-cash changes (3,488) (1,000) (2,487) (7,083) (140) (10,711) of which: foreign currency translation (3,155) (1,000) (2,155) 309 (59) (2,905) of which: fair value changes 0 0 (7,392) (82) (7,475) of which: other (332) 0 (332) 1 0 0 (332) Balance as of 31 December 2018 132,271 39,025 93,246 57,031 2,450 191,752 1 Includes the effect of fair value hedges on long-term debt issued. Refer to Note 1a item j and Note 20 for more information. 2 Included in balance sheet line Other financial liabilities designated at fair value. 327 Notes to the UBS Group AG consolidated financial statements Note 1 Summary of significant accounting policies The following table provides an overview of information included in this Note. 328 a)Significant accounting policies 328 Basis of accounting 328 1)Consolidation 328 a. Consolidation principles 329 b. Structured entities 330 2) Segment reporting 330 3) Financial instruments 330 a. Recognition 331 b. Classification, measurement and presentation 337 c. Interest income and expense 337 d. Derecognition 338 e. Securities borrowing / lending and repurchase / reverse repurchase transactions 338 f. Fair value of financial instruments 339 g. Allowances and provisions for expected credit losses 345 h. Restructured and modified financial assets 346 i. Netting 346 j. Hedge accounting 347 k. Embedded derivatives 348 l. Financial liabilities 348 m. Own credit 348 n. Loan commitments 348 o. Financial guarantee contracts 349 p. Other net income from fair value changes on financial instruments 349 4) Fee and commission income and expenses 351 5) Cash and cash equivalents 351 6) Share-based and other deferred compensation plans 352 7) Pension and other post-employment benefit plans 352 8) Income taxes 353 9) Investments in associates 354 10)Property, equipment and software 354 11)Goodwill and intangible assets 355 12)Provisions and contingent liabilities 356 13)Foreign currency translation 357 14)Equity, treasury shares and contracts on UBS Group AG shares 357 15)Leasing 358 b) Changes in accounting policies, comparability and other adjustments, excluding the effects of adoption of IFRS 9, Financial Instruments 363 c) Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9, Financial Instruments 375 d) International Financial Reporting Standards and Interpretations to be adopted in 2019 and later and other changes Accounting policies applicable prior to 1 January 2018 The accounting policies described in Note 1a have been applied consistently in all years presented unless otherwise stated in Note 1b. In addition, effective from 1 January 2018, the Group applies IFRS 9, Financial Instruments, which substantially changes the accounting for financial assets, and IFRS 15, Revenue from Contracts with Customers, which affects the Group’s revenue recognition, measurement and presentation. Within Note 1a, policies for prior periods that differ from those applied to the financial year ended 31 December 2018 are identified with a Comparative policy | signpost. A triangle symbol – – indicates the end of these comparative policy sections. Financial statements 328 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) a) Significant accounting policies This Note describes the significant accounting policies applied in the preparation of the consolidated financial statements (the “Financial Statements”) of UBS Group AG and its subsidiaries (“UBS” or the “Group”). On 14 March 2019, the Financial Statements were authorized for issue by the Board of Directors. Basis of accounting The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and are presented in US dollars (USD), which is also the functional currency of UBS Group AG, UBS AG’s Head Office, UBS AG’s London Branch and UBS’s US-based operations. Disclosures provided in the “Risk, treasury and capital management” section of this report that are marked as audited form an integral part of the Financial Statements. These disclosures relate to requirements under IFRS 7, Financial Instruments: Disclosures, and IAS 1, Presentation of Financial Statements, and are not repeated in this section. The accounting policies described in this Note have been applied consistently in all years presented unless otherwise stated in Note 1b. In addition, effective from 1 January 2018, the Group applies IFRS 9, Financial Instruments, which substantially changes the accounting for financial assets, and IFRS 15, Revenue from Contracts with Customers, which affects the Group’s revenue recognition, measurement and presentation. Within this note, policies for prior periods that differ from those applied to the financial year ended 31 December 2018 are identified as “Comparative policy.” Critical accounting estimates and judgments Preparation of these Financial Statements under IFRS requires management to apply judgment and make estimates and assumptions that affect reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets and liabilities, and may involve significant uncertainty at the time they are made. Such estimates and assumptions are based on the best available information. UBS regularly reassesses the estimates and assumptions, which encompass historical experience, expectations of the future and other pertinent factors, to determine their continuing relevance based on current conditions, updating them as necessary. Changes in those estimates and assumptions may have a significant effect on the Financial Statements. Further, actual results may differ significantly from UBS’s estimates, which could result in significant losses to the Group, beyond what was anticipated or provided for. The following areas contain estimation uncertainty or require critical judgment and have a significant effect on the amounts recognized in the Financial Statements: –fair value of financial instruments (refer to item 3f in this Note and to Note 24) –allowances and provisions for expected credit losses (refer to item 3g in this Note and to Note 23) –assessment of the business model and certain contractual features when classifying financial instruments (refer to item 3b in this Note) –pension and other post-employment benefit plans (refer to item 7 in this Note and to Note 29) –income taxes (refer to item 8 in this Note and to Note 8) –goodwill (refer to item 11 in this Note and to Note 16) –provisions and contingent liabilities (refer to item 12 in this Note and to Note 21) –consolidation of structured entities (refer to item 1 in this Note and to Note 31) –determination of the functional currency and assessing the earliest date from which it is practical to perform a restatement following a change in presentational currency (refer to item 13 in this Note and to Note 1b). 1) Consolidation a. Consolidation principles The Financial Statements comprise the financial statements of the parent company (UBS Group AG) and its subsidiaries, presented as a single economic entity, whereby intercompany transactions and balances have been eliminated. UBS consolidates all entities that it controls, including controlled structured entities (SEs), which is the case when it has (i) power over the relevant activities of the entity; (ii) exposure to an entity‘s variable returns; and (iii) the ability to use its power to affect its own returns. Where an entity is governed by voting rights, control is generally indicated by a direct shareholding of more than one- half of the voting rights. 329 Note 1 Summary of significant accounting policies (continued) In other cases, the assessment of control is more complex and requires greater use of judgment. Where UBS has an interest in an entity that exposes it to variability, UBS considers whether it has power over the relevant activities of the entity that allows it to affect the variability of its returns. Consideration is given to all facts and circumstances to determine whether the Group has power over another entity; that is, the current ability to direct the relevant activities of an entity when decisions about those activities need to be made. Factors such as the purpose and design of the entity, rights held through contractual arrangements (such as call rights, put rights or liquidation rights) as well as potential decision-making rights are all considered in this assessment. Where the Group has power over the relevant activities, a further assessment is made to determine whether, through that power, it has the ability to affect its own returns by assessing whether power is held in a principal or agent capacity. Consideration is given to: (i) the scope of decision-making authority; (ii) rights held by other parties, including removal or other participating rights; and (iii) exposure to variability, including remuneration, relative to total variability of the entity as well as whether that exposure is different from that of other investors. If, after review of these factors, UBS concludes that it can exercise its power to affect its own returns, the entity is consolidated. Subsidiaries, including SEs, are consolidated from the date when control is obtained and are deconsolidated from the date when control ceases. Control, or the lack thereof, is reassessed if facts and circumstances indicate that there is a change to one or more of the elements required to establish that control is present. →Refer to Note 31 for more information b. Structured entities UBS sponsors the formation of SEs and interacts with non- sponsored SEs for a variety of reasons, including allowing clients to obtain or be exposed to particular risk profiles, to provide funding or to sell or purchase credit risk. An SE is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Such entities generally have a narrow and well-defined objective and include those historically referred to as special-purpose entities, as well as some investment funds. UBS assesses whether an entity is an SE by considering the nature of the activities of the entity as well as the substance of voting or similar rights afforded to other parties, including investors and independent boards or directors. UBS considers rights such as the ability to liquidate the entity or remove the decision maker to be similar to voting rights when the holder has the substantive ability to exercise such rights without cause. In the absence of such rights or in cases where the existence of such rights cannot be fully established, the entity is considered to be an SE. The classes of SEs with which UBS is involved include: –Securitization structured entities are established to issue securities to investors that are backed by assets held by the SE and whereby (i) significant credit risk associated with the securitized exposures has been transferred to third parties and (ii) there is more than one risk position or tranche issued by the securitization vehicle in line with the Basel III securitization definition. All securitization entities are classified as SEs. –Client investment structured entities are established predominantly for clients to invest in specific assets or risk exposures through purchasing notes issued by the SE, predominantly on a fixed-term basis. The SE may source assets via a transfer from UBS or through an external market transaction. In some cases, UBS may enter into derivatives with the SE to either align the cash flows of the entity with the investor’s intended investment objective or to introduce other desired risk exposures. In certain cases, UBS may have interests in a third-party-sponsored SE to hedge specific risks or participate in asset-backed financing. –Investment fund structured entities have a collective investment objective, are managed by an investment manager and are either passively managed, so that any decision making does not have a substantive effect on variability, or are actively managed, and investors or their governing bodies do not have substantive voting or similar rights. UBS creates and sponsors a large number of funds in which it may have an interest through the receipt of variable management fees and / or a direct investment. In addition, UBS has interests in a number of funds created and sponsored by third parties, including exchange-traded funds and hedge funds, to hedge issued structured products. When UBS does not consolidate an SE, but has an interest in an SE or has sponsored an SE, disclosures are provided on the nature of these interests and sponsorship activities. Critical accounting estimates and judgments Each individual entity is assessed for consolidation in line with the aforementioned consolidation principles. The assessment of control can be complex and requires the use of significant judgment. As the nature and extent of UBS’s involvement are unique to each entity, there is no uniform consolidation outcome by entity. Certain entities within a class may be consolidated while others may not. When carrying out the consolidation assessment, judgment is exercised considering all the relevant facts and circumstances, including the nature and activities of the investee, as well as the substance of voting and similar rights. →Refer to Note 31 for more information Financial statements 330 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 2) Segment reporting Prior to the first quarter of 2018, UBS‘s businesses were organized globally into five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank, all of which were supported by Corporate Center. The five business divisions qualified as reportable segments for the purpose of segment reporting and, together with Corporate Center, reflected the management structure of the Group. Corporate Center – Non-core and Legacy Portfolio was managed and reported as a separate reportable unit within Corporate Center. Financial information about the five business divisions and Corporate Center (with its units: Services, Group Asset and Liability Management (Group ALM), Non-core and Legacy Portfolio) was presented separately in internal management reports to the Group Executive Board, which is considered the “chief operating decision maker” pursuant to IFRS 8, Operating Segments. Effective from the first quarter of 2018, UBS combined its Wealth Management and Wealth Management Americas business divisions into a single Global Wealth Management business division. Global Wealth Management is managed on an integrated basis, with a single set of performance targets and an integrated operating plan and management structure. Consistent with this, the operating results of Global Wealth Management are presented and assessed on an integrated basis in internal management reports to the Group Executive Board. Consequently, from 2018, Global Wealth Management qualifies as an operating and reportable segment for the purposes of segment reporting and is presented in these Financial Statements alongside Personal & Corporate Banking, Asset Management, the Investment Bank and Corporate Center (with its units Services, Group ALM and Non-core and Legacy Portfolio). Following the change in the composition of UBS’s operating segments and corresponding reportable segments, previously reported segment information has been restated. This change has no material effect on the former segments, including recognized goodwill. →Refer to item 11 in this Note and Note 16 for more information UBS’s internal accounting policies, which include management accounting policies and service level agreements, determine the revenues and expenses directly attributable to each reportable segment. Transactions between the reportable segments are carried out at internally agreed rates and are reflected in the operating results of the reportable segments. Revenue-sharing agreements are used to allocate external client revenues to reportable segments where several reportable segments are involved in the value creation chain. Commissions are credited to the reportable segments based on the corresponding client relationship. Total intersegment revenues for the Group are immaterial, as the majority of the revenues are allocated across the segments by means of revenue-sharing agreements. Interest income earned from managing UBS’s consolidated equity is allocated to the reportable segments based on average attributed equity and currency composition. Assets and liabilities of the reportable segments are funded through and invested with Corporate Center – Group ALM, and the net interest margin is reflected in the results of each reportable segment. Segment assets are based on a third-party view and do not include intercompany balances. This view is in line with internal reporting to the Group Executive Board. Certain assets managed centrally by Corporate Center – Services and Corporate Center – Group ALM may be allocated to other segments on a basis different to that on which the corresponding costs or revenues are allocated. For example, certain assets that are reported in Corporate Center – Services or Corporate Center – Group ALM may be retained on the balance sheet of these components of Corporate Center, notwithstanding that the costs or revenues associated with these assets may be entirely or partly allocated to the operating segments. Similarly, certain assets are reported in the business divisions, whereas the corresponding costs or revenues are entirely or partly allocated to Corporate Center – Services and Corporate Center – Group ALM. Non-current assets disclosed for segment reporting purposes represent assets that are expected to be recovered more than 12 months after the reporting date, excluding financial instruments, deferred tax assets and post-employment benefits. →Refer to Notes 1b and 2 for more information 3) Financial instruments a. Recognition UBS recognizes financial instruments when it becomes a party to the contractual provisions of the instrument. UBS applies settlement date accounting to all regular way purchases and sales of financial instruments. In transactions in which UBS acts as a transferee, to the extent that the transfer of a financial asset does not qualify for derecognition by the transferor, UBS does not recognize the transferred instrument as its asset. UBS also acts in a fiduciary capacity, which results in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. Unless the recognition criteria are satisfied, these assets are not recognized on UBS’s balance sheet. Consequently, the related income is excluded from these Financial Statements. Client cash balances associated with derivatives clearing and execution services are not recognized on the balance sheet if, through contractual agreement, regulation or practice, the Group neither obtains benefits from nor controls the client cash balances. 331 Note 1 Summary of significant accounting policies (continued) b. Classification, measurement and presentation All financial instruments are initially measured at fair value. In the case of financial instruments subsequently measured at amortized cost or fair value through other comprehensive income (FVOCI), the initial fair value is adjusted for directly attributable transaction costs. Policy applicable from 1 January 20181 On initial recognition, financial assets are classified as measured at amortized cost, FVOCI, or fair value through profit or loss (FVTPL). A debt instrument is measured at amortized cost if it meets the following conditions: – it is held within a business model that has an objective to hold financial assets to collect contractual cash flows; and – the contractual terms of the financial asset result in cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. A debt instrument is measured at FVOCI if it meets both of the following conditions: – it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and – the contractual terms of the financial asset result in cash flows that are SPPI on the principal amount outstanding. All other financial assets are measured at FVTPL and consist of held for trading assets, assets mandatorily measured on a fair value basis and derivatives, except to the extent that they are designated in a hedging relationship, in which case the IAS 39 hedge accounting requirements continue to apply. Business model assessment UBS determines the nature of the business model, for example if the objective is to hold the financial asset and collect the contractual cash flows, by considering the way in which the financial assets are managed to achieve a particular business objective as determined by management. Financial assets that are held for trading or managed on a fair value basis are measured at FVTPL insofar as the associated business model is neither to hold the financial assets to collect contractual cash flows nor to hold to collect contractual cash flows and sell. The Group originates loans to hold to maturity and to sell or sub-participate to other parties, resulting in a transfer of substantially all the risks and rewards, and derecognition of the loan or portions of it. The Group considers the activities of lending to hold and lending to sell or sub-participate as two separate business models, with financial assets within the former considered to be within a business model that has an objective to hold the assets to collect contractual cash flows, and those within the latter included in a trading portfolio. In certain cases, it may not be possible on origination to identify whether loans or portions of loans will be sold or sub-participated and certain loans may be managed on a fair value basis through, for instance, using credit derivatives. These financial assets are mandatorily measured at FVTPL. Critical accounting estimates and judgments UBS exercises judgment in determining the appropriate level at which to assess its business models. In general, the assessment is performed at the product level, e.g., retail and commercial mortgages. In other cases, the assessment is carried out at a more granular level, e.g., loan portfolios by region, and, if required, further disaggregation is performed by business strategy. A detailed assessment is carried out considering how the financial assets are evaluated and reported to UBS’s key management, the risks that affect the performance of the business and the way that management is compensated. In addition, UBS exercises judgment in determining the effect of sales of financial instruments on the business model assessment. In particular, an assessment is made on whether and the extent to which sales are consistent with the objective of the business model. Contractual cash flow characteristics In assessing whether the contractual cash flows are SPPI, the Group considers whether the contractual terms of the financial asset contain a term that could change the timing or amount of contractual cash flows arising over the life of the instrument, which could affect whether the instrument is considered to meet the SPPI criterion. For example, the Group holds portfolios of private mortgage contracts and corporate loans in Personal & Corporate Banking that commonly contain clauses that provide for two-way compensation if prepayment occurs. The amount of compensation paid by or to UBS reflects the effect of changes in market interest rates. The Group has determined that the inclusion of the change in market interest rates in the compensation amount is reasonable for the early termination of the contract, and therefore results in contractual cash flows that are SPPI. Critical accounting estimates and judgments UBS applies judgment when considering whether certain contractual features, such as interest rate reset frequency or non-recourse features, significantly affect future cash flows and whether compensation paid or received on early termination of lending arrangements results in cash flows that are not SPPI. A thorough analysis of all relevant facts and circumstances is assessed before concluding whether contractual cash flows of the financial instrument are consistent with payments representing principal and interest. After initial recognition, UBS classifies, measures and presents its financial assets and liabilities in accordance with IFRS 9, as described in the table on the following pages. 1 The accounting policy in this section applies from 1 January 2018, the effective date of IFRS 9. For the details of transition effects refer to Note 1c.Financial statements 332 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Classification, measurement and presentation of financial instruments from 1 January 2018 Financial assets classification Significant items included Measurement and presentation Measured at amortized cost A debt financial asset is measured at amortized cost if: – it is held in a business model that has an objective to hold assets to collect contractual cash flows; and – the contractual terms give rise to cash flows that are SPPI. This classification includes: – cash and balances at central banks – loans and advances to banks – cash collateral receivables on securities borrowed – receivables on reverse repurchase agreements – cash collateral receivables on derivative instruments – residential and commercial mortgages – corporate loans – secured loans, including Lombard loans, and unsecured loans – loans to financial advisors – debt securities held as high-quality liquid assets (HQLA) – fee and lease receivables. Measured at amortized cost using the effective interest rate (EIR) method less allowances for expected credit losses (ECL) (refer to items 3c and 3g in this Note for more information). The following items are recognized in the income statement: – interest income, which is accounted for in accordance with item 3c in this Note – ECL and reversals – foreign exchange translation gains and losses. Upfront fees and direct costs relating to loan origination, refinancing or restructuring as well as to loan commitments – when it is probable that UBS will enter into a specific lending relationship – are deferred and amortized over the life of the loan using the EIR method. When the financial asset at amortized cost is derecognized, the gain or loss is recognized in the income statement. Amounts arising from exchange-traded derivatives (ETD) and certain over- the-counter (OTC) derivatives cleared through central clearing counterparties that are either considered to be daily settled or in substance net settled on a daily basis (refer to items 3d and 3i in this Note) are presented within Cash collateral receivables on derivative instruments. Measured at FVOCI Debt instruments measured at FVOCI A debt financial asset is measured at FVOCI if: – it is held in a business model whose objective is achieved by both holding assets to collect contractual cash flows and selling the assets; and – the contractual terms give rise to cash flows that are SPPI. This classification primarily includes debt securities and certain asset- backed securities held as HQLA for which the contractual cash flows meet the SPPI criterion. Measured at fair value with unrealized gains and losses reported in Other comprehensive income, net of applicable income taxes, until such investments are derecognized (when sold, collected or otherwise disposed). Upon derecognition, any accumulated balances in Other comprehensive income are reclassified to the income statement and reported within Other income. The following items are recognized in the income statement: – interest income, which is accounted for in accordance with item 3c in this Note – ECL and reversals – foreign exchange translation gains and losses. The amounts recognized in the income statement are determined on the same basis as for financial assets measured at amortized cost. 333 Note 1 Summary of significant accounting policies (continued) Classification, measurement and presentation of financial instruments from 1 January 2018 (continued) Financial assets classification Significant items included Measurement and presentation Held for trading Financial assets held for trading include: – all derivatives with a positive replacement value, except those that are designated and effective hedging instruments; and – other financial assets acquired principally for the purpose of selling or repurchasing in the near term, or that are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking. Included in this category are debt instruments (including those in the form of securities, money market paper and traded corporate and bank loans) and equity instruments. Measured at FVTPL Mandatorily measured at FVTPL – Other A financial asset is mandatorily measured at FVTPL if: – it is not held in a business model whose objective is to hold assets to collect contractual cash flows or to hold them to collect contractual cash flows and sell; and / or – the contractual terms give rise to cash flows that are not SPPI; and / or – it is not held for trading. The following financial assets are mandatorily measured at FVTPL: – certain structured loans, certain commercial loans, receivables under reverse repurchase and cash collateral on securities borrowing agreements that are managed on a fair value basis; – loans managed on a fair value basis and hedged with credit derivatives; – certain debt securities held as HQLA and managed on a fair value basis; – certain investment fund holdings and assets held to hedge delivery obligations related to cash-settled employee compensation plans. These assets represent holdings in investment funds, whereby the contractual cash flows do not meet the SPPI criterion because the entry and exit price is based on the fair value of the fund’s assets; – brokerage receivables, for which contractual cash flows do not meet the SPPI criterion because the aggregate balance is accounted for as a single unit of account, with interest being calculated on the individual components; – auction rate securities, for which contractual cash flows do not meet the SPPI criterion because interest may be reset at rates that contain leverage; – equity instruments; and – assets held under unit-linked investment contracts. Measured at fair value with changes recognized in profit or loss. Changes in fair value, initial transaction costs and gains and losses realized on disposal or redemption are recognized in Other net income from fair value changes on financial instruments, except interest and dividend income on instruments other than derivatives (refer to item 3c in this Note for more information), interest on derivatives designated as hedging instruments in certain types of hedge accounting relationships and forward points on certain short- and long-duration foreign exchange contracts, which are reported in Net interest income. Derivative assets (including derivatives that are designated and effective hedging instruments) are generally presented as Derivative financial instruments, except those exchange-traded and OTC-cleared derivatives that are considered to be settled on a daily basis or in substance net settled on a daily basis, which are presented within Cash collateral receivables on derivative instruments. The presentation of fair value changes on derivatives that are designated and effective as hedging instruments depends on the type of hedge relationship (refer to item 3j in this Note for more information). Financial assets held for trading (other than derivatives) are presented as Financial assets at fair value held for trading. Other financial assets mandatorily measured at fair value through profit or loss are presented as Financial assets at fair value not held for trading, except for brokerage receivables, which are presented as a separate line item on the Group’s balance sheet.Financial statements 334 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Classification, measurement and presentation of financial instruments from 1 January 2018 (continued) Financial liabilities classification Significant items included Measurement and presentation Measured at amortized cost This classification includes: – demand and time deposits; – retail savings / deposits; – amounts payable under repurchase agreements; – cash collateral on securities lent; – non-structured fixed-rate bonds; – subordinated debt; – certificates of deposit and covered bonds; and – cash collateral payables on derivative instruments. Measured at amortized cost using the EIR method. Upfront fees and direct costs relating to the issuance or origination of the liability are deferred and amortized over the life of the liability using the EIR method. When the financial liability at amortized cost is derecognized, the gain or loss is recognized in the income statement. Amortized cost liabilities are presented on the balance sheet primarily as Amounts due to banks, Customer deposits, Payables from securities financing transactions and Debt issued measured at amortized cost. Amounts arising from ETD and certain OTC derivatives cleared through central clearing counterparties that are either considered to be daily settled or in substance net settled on a daily basis (refer to items 3d and 3i in this Note for more information) are presented within Cash collateral payables on derivative instruments. Held for trading Financial liabilities held for trading include: – all derivatives with a negative replacement value (including certain loan commitments), except those that are designated and effective hedging instruments; and – obligations to deliver financial instruments, such as debt and equity instruments, that UBS has sold to third parties, but does not own (short positions). Measured at fair value through profit or loss Designated at FVTPL UBS designates at FVTPL the following financial liabilities: – issued hybrid debt instruments that primarily include equity-linked, credit-linked and rates-linked bonds or notes – issued debt instruments managed on a fair value basis – certain payables under repurchase agreements and cash collateral on securities lending agreements that are managed in conjunction with associated reverse repurchase agreements and cash collateral on securities borrowed (from 1 January 2018) – amounts due under unit-linked investment contracts whose cash flows are linked to financial assets measured at FVTPL and eliminate an accounting mismatch (from 1 January 2018) – brokerage payables, which arise in conjunction with brokerage receivables and are measured at FVTPL to achieve measurement consistency (from 1 January 2018). Measurement of financial liabilities classified at FVTPL follows the same principles as for financial assets classified at FVTPL, except that the amount of change in the fair value of the financial liability that is attributable to changes in UBS’s own credit risk is presented in OCI. Financial liabilities measured at FVTPL are presented as Financial liabilities at fair value held for trading and Other financial liabilities designated at fair value, respectively, except for brokerage payables and debt issued, which are presented separately on the Group’s balance sheet. Derivative liabilities (including derivatives that are designated and effective hedging instruments) are generally presented as Derivative financial instruments, except those exchange-traded and OTC-cleared derivatives that are considered to be settled on a daily basis or in substance net settled on a daily basis, which are presented within Cash collateral payables on derivative instruments. Bifurcated embedded derivatives are measured at fair value, but are presented on the same balance sheet line as the host contract measured at amortized cost. Derivatives that are designated and effective as hedging instruments are also measured at fair value. The presentation of fair value changes differs depending on the type of hedge relationship (refer to item 3j in this Note for more information). 335 Note 1 Summary of significant accounting policies (continued) Comparative policy | Policy applicable prior to 1 January 2018 Prior to 1 January 2018, on initial recognition, UBS classified, measured and presented its financial assets and liabilities in accordance with IAS 39, Financial Instruments: Recognition and Measurement. Classification, measurement and presentation requirements in respect of financial liabilities have been substantially retained by IFRS 9 and are detailed in the table “Classification, measurement and presentation of financial instruments from 1 January 2018.” The following table sets out details of classification, measurement and presentation of financial assets prior to 1 January 2018. Classification, measurement and presentation of financial assets prior to 1 January 2018 Financial assets classification Significant items included Measurement and presentation1 Held for trading Financial assets held for trading include: – all derivatives with a positive replacement value, except those that are designated and effective hedging instruments; and – any other financial asset acquired principally for the purpose of selling or repurchasing in the near term, or part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking. Included in this category are debt instruments (including those in the form of securities, money market paper and traded corporate and bank loans), equity instruments, and assets held under unit-linked investment contracts. Designated at fair value through profit or loss A financial asset may be designated at fair value through profit or loss only upon initial recognition and this designation is irrevocable. The fair value option can be applied only if one of the following criteria is met: – the financial instrument is a hybrid instrument that includes a substantive embedded derivative; – the financial instrument is part of a portfolio that is risk managed on a fair value basis and reported to senior management on that basis; or – the application of the fair value option eliminates or significantly reduces an accounting mismatch that would otherwise arise. UBS designated at fair value through profit or loss the following financial assets: – certain structured loans, reverse repurchase and securities borrowing agreements that are managed on a fair value basis; – loans that are hedged predominantly with credit derivatives. These instruments are designated at fair value to eliminate an accounting mismatch; – certain debt securities held as high-quality liquid assets (HQLA) and managed by Corporate Center – Group ALM on a fair value basis; and – assets held to hedge delivery obligations related to cash-settled employee compensation plans. These assets are designated at fair value in order to eliminate an accounting mismatch that would otherwise arise as a result of the liability being measured on a fair value basis. Measured at fair value with changes recognized in profit or loss. Changes in fair value, initial transaction costs and gains and losses realized on disposal or redemption are recognized in Other net income from fair value changes on financial instruments, except interest and dividend income on instruments other than derivatives (refer to item 3c in this Note), interest on derivatives designated as hedging instruments in certain types of hedge accounting relationships and forward points on certain short duration foreign exchange contracts, which are reported in Net interest income. Derivative assets are generally presented as Derivative financial instruments. Bifurcated embedded derivatives are measured at fair value, but presented on the same balance sheet line as the host contract measured at amortized cost. The presentation of fair value changes on derivatives that are designated and effective hedging instruments differs depending on the type of hedge relationship (refer to item 3j in this Note for more information). Financial assets held for trading (other than derivatives) are presented as Financial assets at fair value held for trading. Financial assets designated at fair value through profit or loss are presented as Financial assets at fair value not held for trading 1 Presentation categories in this table reflect retrospective amendments to UBS Group balance sheet presentation carried out upon transition to IFRS 9 to facilitate comparability. For a detailed description of line items presented in UBS’s financial statements on or before the year ended 31 December 2017, refer to item 4 within Note 1c.Financial statements 336 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Classification, measurement and presentation of financial assets prior to 1 January 2018 (continued) Financial assets classification Significant items included Measurement and presentation Loans and receivables (amortized cost) Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are not assets for which the Group may not recover substantially all of its initial net investment for reasons other than credit deterioration. This classification includes: – cash and balances with central banks – cash collateral receivables on derivative instruments – residential and commercial mortgages – secured loans, including reverse repurchase agreements, receivables under stock borrowing and Lombard loans, and unsecured loans – certain securities held within Corporate Center – Non-core and Legacy Portfolio – trade and lease receivables. Measured at amortized cost using the effective interest rate method less allowances for credit losses (refer to items 3c and 3g in this Note). Upfront fees and direct costs relating to loan origination, refinancing or restructuring as well as to loan commitments are deferred and amortized over the life of the loan using the effective interest rate method. Loans and receivables are presented on the balance sheet primarily as Cash and balances with central banks, Loans and advances to banks, Loans and advances to customers, Receivables from securities financing transactions and Cash collateral receivables on derivative instruments. Amounts arising from exchange-traded derivatives (ETD) and certain over- the-counter (OTC) derivatives cleared through central clearing counterparties that are either considered to be daily settled or qualify for netting (refer to items 3d and 3i in this Note) are presented within Cash collateral receivables on derivative instruments. Available for sale Financial assets classified as available for sale are non-derivative financial assets that are not classified as held for trading, designated at fair value through profit or loss, or loans and receivables. This classification mainly includes debt securities held as HQLA and managed by Corporate Center – Group ALM, certain asset-backed securities managed by Corporate Center – Group ALM, investment fund holdings and strategic and commercial equity investments. Measured at fair value with unrealized gains and losses reported in Other comprehensive income, net of applicable income taxes, until such investments are sold, collected or otherwise disposed of, or until any such investment is determined to be impaired (refer to item 3g in this Note). Upon disposal, any accumulated balances in Other comprehensive income are reclassified to the income statement and reported within Other income. Interest and dividend income are recognized in the income statement in accordance with item 3c in this Note. Refer to item 13 in this Note for information on the treatment of foreign exchange translation gains and losses. Held to maturity Non-derivative financial assets with fixed or determinable payments and fixed maturities for which UBS has the positive intention and ability to hold to maturity. This classification mainly includes debt securities held as HQLA and managed by Corporate Center – Group ALM. Measured at amortized cost using the effective interest rate method less allowances for credit losses (refer to items 3c and 3g in this Note). 337 Note 1 Summary of significant accounting policies (continued) c. Interest income and expense Interest income and expense are recognized in the income statement applying the effective interest rate (EIR) method. When calculating the EIR for financial instruments (other than credit-impaired financial instruments), UBS estimates future cash flows considering all contractual terms of the instrument, but not expected credit losses. In determining interest income and expense, the EIR is applied to the gross carrying amount of the financial asset (unless the asset is credit-impaired) or the amortized cost of a financial liability (prior to 1 January 2018: amortized cost of a financial asset or financial liability). However, when a financial asset becomes credit-impaired after initial recognition, interest income is determined by applying the EIR to the amortized cost of the instrument, which represents the gross carrying amount adjusted for any credit loss allowance. Furthermore, for financial assets that were credit-impaired on initial recognition, interest is determined by applying a credit-adjusted EIR to the amortized cost of the instrument. Upfront fees, including loan commitment fees where a loan is expected to be issued, and direct costs are included within the initial measurement of a financial instrument measured at amortized cost or FVOCI (prior to 1 January 2018: financial asset classified as available for sale). Such fees and costs are therefore recognized over the expected life of the instrument as part of its EIR. Fees related to loan commitments where no loan is expected to be issued, as well as loan syndication fees where UBS does not retain a portion of the syndicated loan or where UBS does retain a portion of the syndicated loan at the same effective yield for comparable risk as other participants, are included in Net fee and commission income. →Please refer to item 4 in this Note for more information Presentation of interest in the income statement Effective from 1 January 2018, interest income or expense on financial instruments measured at amortized cost and financial assets measured at FVOCI (prior to 1 January 2018: financial assets classified as available for sale) are presented separately within Interest income from financial instruments measured at amortized cost and fair value through other comprehensive income and Interest expense from financial instruments measured at amortized cost. UBS also presents interest income and expense on financial instruments (excluding derivatives) measured at FVTPL including forward points on certain short- and long-duration foreign exchange contracts and dividends separately in Interest income (or expense) from financial instruments measured at fair value through profit or loss. Furthermore, interest income and expense on derivatives designated as hedging instruments in effective hedge relationships are presented consistently with the interest income and expense of the respective hedged item. Interest income on financial assets, excluding derivatives, is included in Interest income when positive and in Interest expense when negative, because negative interest income arising on a financial asset does not meet the definition of revenue. Similarly, interest expense on financial liabilities, excluding derivatives, is included in Interest expense, except when interest rates are negative, in which case it is included in Interest income. →Refer to item 3j in this Note and Note 3 for more information d. Derecognition Financial assets UBS derecognizes a financial asset, or a portion of a financial asset, from its balance sheet where the contractual rights to cash flows from the asset have expired, or have been transferred, usually by sale, thus exposing the purchaser to either substantially all the risks and rewards of the asset or a significant part of the risks and rewards combined with a practical ability to sell or pledge the asset. A financial asset is considered to have been transferred when UBS (i) transfers the contractual rights to receive the cash flows of the financial asset or (ii) retains the contractual rights to receive the cash flows of that asset, but assumes a contractual obligation to pay the cash flows to one or more entities. Where financial assets have been pledged as collateral or in similar arrangements, they are considered to have been transferred if the counterparty has received the contractual right to the cash flows of the pledged assets, as may be evidenced, for example, by the counterparty’s right to sell or repledge the assets. Where the counterparty to the pledged financial assets has not received the contractual right to the cash flows, UBS does not consider this to be a transfer for the purposes of derecognition. Financial statements 338 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) In transactions where substantially all of the risks and rewards of ownership of a financial asset are neither retained nor transferred, UBS derecognizes the financial asset if control over the asset is surrendered, and the rights and obligations retained following the transfer are recognized separately as assets and liabilities, respectively. In transfers where control over the financial asset is retained, UBS continues to recognize the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset following the transfer. Certain over-the-counter (OTC) derivative contracts and most exchange-traded futures and options contracts cleared through central clearing counterparties are considered to be settled on a daily basis through the daily margining process, as the payment or receipt of the variation margin represents legal or economic settlement of a derivative contract, which results in derecognition of the associated positive and negative replacement values. →Refer to Note 25 for more information Financial liabilities UBS derecognizes a financial liability from its balance sheet when it is extinguished; i.e., when the obligation specified in the contract is discharged, canceled or expires. When an existing financial liability is exchanged for a new one from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification results in derecognition of the original liability and the recognition of a new liability with any difference in the respective carrying amounts being recognized in the income statement. e. Securities borrowing / lending and repurchase / reverse repurchase transactions Securities borrowing / lending and repurchase / reverse repurchase transactions are generally entered into on a collateralized basis. In such transactions, UBS typically borrows or lends equity and debt securities in exchange for securities or cash collateral. These transactions are treated as collateralized financing transactions where the securities transferred / received are not derecognized or recognized on the balance sheet. Securities transferred / received with the right to resell or repledge are disclosed separately. In reverse repurchase and securities borrowing agreements, the cash delivered is derecognized and a corresponding receivable, including accrued interest, is recorded in the balance sheet line Receivables from securities financing transactions (prior to 1 January 2018: Reverse repurchase agreements and Cash collateral on securities borrowed), representing UBS’s right to receive the cash. Similarly, in repurchase and securities lending agreements, the cash received is recognized and a corresponding obligation, including accrued interest, is recorded in Payables from securities financing transactions (prior to 1 January 2018: Repurchase agreements and Cash collateral on securities lent). Additionally, the sale of securities that is settled by delivering securities received in reverse repurchase or securities borrowing transactions triggers the recognition of a trading liability. Repurchase and reverse repurchase transactions with the same counterparty, maturity, currency and central securities depository are generally presented net, subject to meeting the netting requirements described in item 3i of this Note. →Refer to Notes 26 and 25 for more information f. Fair value of financial instruments UBS accounts for a significant portion of its assets and liabilities at fair value. Fair value is the price on the measurement date that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market, or in the most advantageous market in the absence of a principal market. All financial instruments measured at fair value are categorized into one of three fair value hierarchy levels. Level 1 financial instruments are those for which fair values can be derived from quoted prices in active markets. Level 2 financial instruments are those for which fair values must be derived using valuation techniques for which all significant inputs are, or are based on, observable market data. Level 3 financial instruments are those for which fair values can only be derived on the basis of valuation techniques for which significant inputs are not based on observable market data. 339 Note 1 Summary of significant accounting policies (continued) Critical accounting estimates and judgments The use of valuation techniques, modeling assumptions and estimates of unobservable market inputs require significant judgment and could affect the amount of gain or loss recorded for a particular position. Valuation techniques that rely more heavily on unobservable inputs require a higher level of judgment to calculate a fair value than those entirely based on observable inputs. Valuation techniques, including models, that are used to determine fair values are periodically reviewed and validated by qualified personnel, independent of those who created them. Models are calibrated to ensure that outputs reflect observable market data, to the extent possible. Also, UBS prioritizes the use of observable inputs, when available, over unobservable inputs. Judgment is required in selecting appropriate models as well as inputs for which observable data is less readily or not available. UBS‘s governance framework over fair value measurement is described in Note 24b. The level of subjectivity and the degree of management judgment involved in the development of estimates and the selection of assumptions are more significant for instruments valued using specialized and sophisticated models and where some or all of the parameter inputs are less observable (Level 3 instruments) and may require adjustment to reflect factors that market participants would consider in estimating fair value, such as close-out costs, credit exposure, model-driven valuation uncertainty, funding costs and benefits, trading restrictions and other factors, which are presented in Note 24d. The Group provides a sensitivity analysis of the estimated effects arising from changing significant unobservable inputs in Level 3 financial instruments to reasonably possible alternative assumptions within Note 24g. →Refer to Note 24 for more information g. Allowances and provisions for expected credit losses Policy applicable from 1 January 20181 Expected credit losses (ECL) are recognized for financial assets measured at amortized cost, financial assets measured at FVOCI, fee and lease receivables, financial guarantees and loan commitments. ECL are also recognized on the undrawn portion of revolving revocable credit lines, which include UBS’s credit card limits and master credit facilities, which are customary in the Swiss market for corporate and commercial clients. UBS refers to both as “other credit lines,” with clients allowed to draw down on-demand balances (with the Swiss master credit facilities also allowing for term products) and which can be terminated by UBS at any time. Though these other credit lines are revocable, UBS is exposed to credit risk because the client has the ability to draw down funds before UBS can take credit risk mitigation actions. Recognition of expected credit losses ECL represent the difference between contractual cash flows and those UBS expects to receive, discounted at the EIR. For loan commitments and other credit facilities in scope of ECL, expected cash shortfalls are determined by considering expected future drawdowns. ECL are recognized on the following basis: – Maximum 12-month ECL are recognized from initial recognition, reflecting the portion of lifetime cash shortfalls that would result if a default occurs in the 12 months after the reporting date, weighted by the risk of a default occurring. Instruments in this category are referred to as instruments in stage 1. For instruments with a remaining maturity of less than 12 months, ECL are determined for this shorter period. – Lifetime ECL are recognized if a significant increase in credit risk (SICR) is detected subsequent to the instrument’s initial recognition, reflecting lifetime cash shortfalls that would result from all possible default events over the expected life of a financial instrument, weighted by the risk of a default occurring. Instruments in this category are referred to as instruments in stage 2. Where an SICR is no longer observed, the instrument will move back to stage 1. – Lifetime ECL are always recognized for credit-impaired financial instruments, referred to as instruments in stage 3. The IFRS 9 determination of whether an instrument is credit- impaired is based on the occurrence of one or more loss events, with lifetime ECL generally derived by estimating expected cash flows based on a chosen recovery strategy. Credit-impaired exposures may include positions for which no loss has occurred or no allowance has been recognized, for example, because they are expected to be fully recoverable through the collateral held. – Changes in lifetime ECL since initial recognition are also recognized for assets that are purchased or originated credit- impaired (POCI). POCI financial assets are initially recognized at fair value, with interest income subsequently being recognized based on a credit-adjusted EIR. POCI financial instruments include those that are newly recognized following a substantial restructuring and remain a separate category until derecognition. UBS does not apply the low-credit-risk practical expedient that allows a lifetime ECL for lease or fee receivables to be recognized irrespective of whether a significant increase in credit risk has occurred. Instead, UBS has incorporated lease and fee receivables into the standard ECL calculation. 1 The accounting policy in this section applies from 1 January 2018, the effective date of IFRS 9. For the details of transition effects refer to Note 1c.Financial statements 340 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) A write-off is made when all or part of a financial asset is deemed uncollectible or forgiven. Write-offs reduce the principal amount of a claim and are charged against previously established allowances for credit losses. Recoveries, in part or in full, of amounts previously written off are generally credited to Credit loss (expense) / recovery. Write-offs and partial write-offs represent derecognition / partial derecognition events. ECL are recognized in profit or loss with a corresponding ECL allowance reported as a decrease in the carrying value of financial assets measured at amortized cost on the balance sheet. For financial assets measured at fair value through OCI, the carrying value is not reduced, but an accumulated amount is recognized in OCI. For off-balance sheet financial instruments and other credit lines, provisions for ECL are reported in Provisions. ECL are recognized within the income statement in Credit loss (expense) / recovery. Default and credit impairment UBS applies a single definition of default for classifying assets and determining the probability of default of its obligors for risk modeling purposes. The definition of default is based on quantitative and qualitative criteria. A counterparty is classified as defaulted at the latest when material payments of interest, principal or fees are overdue for more than 90 days, or more than 180 days for certain exposures in relation to loans to private and commercial clients in Personal & Corporate Banking, and to private clients of Global Wealth Management Region Switzerland. UBS does not consider the general 90-day presumption for default recognition appropriate for these latter portfolios based on an analysis of the cure rates, which demonstrated that strict application of the 90-day criterion would not accurately reflect the inherent credit risk. Counterparties are also classified as defaulted when bankruptcy, insolvency proceedings or enforced liquidation have commenced; obligations have been restructured on preferential terms (forbearance); or there is other evidence that payment obligations will not be fully met without recourse to collateral. The latter may be the case even if, to date, all contractual payments have been made when due. If a counterparty is defaulted, generally all claims against the counterparty are treated as defaulted. An instrument is classified as credit-impaired if the counterparty is defaulted, and / or the instrument is identified as POCI. An instrument is POCI if it has been purchased with a material discount to its carrying amount following a risk event of the issuer or originated with a defaulted counterparty. Once a financial asset is classified as defaulted / credit-impaired (except when it is POCI), it is reported as a stage 3 instrument and remains as such unless all past due amounts have been rectified, additional payments have been made on time, the position is not classified as credit-restructured, and there is general evidence of credit recovery. A three-month probation period is applied before a transfer back to stages 1 or 2 can be triggered. However, most instruments remain in stage 3 for a longer period. Measurement of expected credit losses IFRS 9 ECL reflect an unbiased, probability-weighted estimate based on either loss expectations resulting from default events over a maximum 12-month period from the reporting date or over the remaining life of a financial instrument. The method used to calculate individual probability-weighted unbiased ECL is based on a combination of the following principal factors: probability of default (PD), loss given default (LGD) and exposure at default (EAD). Parameters are generally determined on an individual financial asset level. Based on the materiality of the portfolio, for credit card exposures and personal account overdrafts in Switzerland, and certain loans to financial advisors of Global Wealth Management Region Americas, a portfolio approach is applied that derives an average PD and LGD for the entire portfolio. PDs and LGDs used in the ECL calculation are point in time (PIT)-based for key portfolios and consider both current conditions and expected cyclical changes. For each instrument or group of instruments, parameter time series are generated consisting of the instruments’ PD, LGD and EAD profiles considering the respective period of exposure to credit risk. For material portfolios, PD and LGD are determined for four different scenarios, whereas EAD projections are treated as scenario independent. For the purpose of determining the ECL-relevant parameters, UBS leverages its Pillar 1 internal ratings-based (IRB) models that are also used in determining expected loss (EL) and risk- weighted assets under the Basel III framework and Pillar 2 stress loss models. Adjustments have been made to these models and new IFRS 9-related models have been developed that consider the complexity, structure and risk profile of relevant portfolios and take account of the fact that PDs and LGDs used in the ECL calculation are PIT-based, as opposed to the corresponding Basel III through-the-cycle (TTC) parameters. All models that are relevant for measuring expected credit losses have been subject to the existing model validation and oversight processes with the Group Model Governance Board as the highest approval authority. The assignment of internal counterparty rating grades and the determination of default probabilities for the purposes of Basel III are not affected by the IFRS 9 ECL calculation. Probability of default (PD): The PD represents the likelihood of a default over a specified time period. A 12-month PD represents the likelihood of default determined for the next 12 months and a lifetime PD represents the probability of default over the remaining lifetime of the instrument. The lifetime PD calculation is based on a series of 12-month PIT PDs that are derived from TTC PDs and scenario forecasts. This modeling is region-, industry- and client segment-specific and considers both scenario-systematic and client-idiosyncratic information. To derive the cumulative lifetime PD per scenario, the series of 12- month PIT PDs are transformed into marginal PIT PDs, taking any assumed default events from previous periods into account. 341 Note 1 Summary of significant accounting policies (continued) Loss given default (LGD): The LGD represents an estimate of the loss at the time of a potential default occurring during the life of a financial instrument. The determination of the LGD takes into account expected future cash flows from collateral and other credit enhancements, or expected payouts from bankruptcy proceedings for unsecured claims and, where applicable, time to realization of collateral and the seniority of claims. The LGD is commonly expressed as a percentage of the EAD. Exposure at default (EAD): The EAD represents an estimate of the exposure to credit risk at the time of a potential default occurring during the life of a financial instrument. It represents the cash flows outstanding at the time of default, considering expected repayments, interest payments and accruals, discounted at the EIR. Future drawdowns on facilities are considered through a credit conversion factor (CCF) that is reflective of historical drawdown and default patterns and the characteristics of the respective portfolios. IFRS 9-specific CCFs have been modeled to capture client segment- and product- specific patterns after removing Basel III standard-specific elements, i.e., conservatism and focus on a 12-month period prior to default. Estimation of expected credit losses Number of scenarios and estimation of scenario weights The determination of the probability-weighted ECL requires evaluating a range of diverse and relevant future economic conditions, especially with a view to modeling the non-linear effect of assumptions about macroeconomic factors on the estimate. To accommodate this requirement, UBS uses four different economic scenarios in the ECL calculation: an upside, a baseline, a mild downside and a severe downside scenario. Each scenario is represented by a specific scenario narrative, which is relevant considering the exposure of key portfolios to economic risks, and for which a set of consistent macroeconomic variables is determined. Those variables range from above-trend economic growth to severe recession. The baseline scenario is aligned to the economic and market assumptions used for UBS business planning purposes. An econometric model is used to provide an input into the scenario weight assessment process giving a first indication of the probability that the GDP forecast used for each scenario would materialize, if historically observed deviations of GDP growth from trend growth were representative. As such historical analyses of GDP development do not include an assessment of the underlying economic or political causes, management positions the model output into the context of current conditions and future expectations and applies material judgment in determining the final scenario weights. The determined weights constitute the probabilities that the respective set of macroeconomic conditions will occur and not that the chosen particular narratives with the related macroeconomic variables will materialize. Macroeconomic and other factors The range of macroeconomic, market and other factors that is modeled as part of the scenario determination is wide, and historical information is used to support the identification of the key factors. As the forecast horizon increases, the availability of information decreases and judgment increases. For cycle- sensitive PD and LGD determination purposes, UBS projects the relevant economic factors for a period of three years before reverting, over a specified period, to a cycle-neutral PD and LGD for longer-term projections. Factors relevant for the ECL calculation vary by type of exposure and are determined during the credit cycle index model development process in close alignment with expert judgment. Certain variables may only be relevant for specific types of exposures, such as house price indices for mortgage loans, while other variables have key relevance in the ECL calculation for all exposures. Regional and client segment characteristics are generally taken into account, with specific focus on Switzerland and the US considering UBS’s key ECL- relevant portfolios. For UBS, the following forward-looking macroeconomic variables represent the most relevant factors in the ECL calculation: – GDP growth rates, given their significant effect on borrowers’ performance; – house price indices, given their significant effect on mortgage collateral valuations; – unemployment rates, given their significant effect on private clients’ ability to meet contractual obligations; – interest rates, given their significant effect on the counterparties’ abilities to service their debt; – consumer price indices, given their overall relevance for companies’ performance, private clients’ purchasing power and economic stability; and – equity indices, given that they are an important factor in our corporate rating tools. The forward-looking macroeconomic assumptions used in the ECL calculation are developed by UBS economists, risk methodology personnel and credit risk officers. Assumptions and scenarios are validated and approved through a Scenario Committee and an Operating Committee, which also aim to ensure a consistent use of forward-looking information throughout UBS, including in the business planning process. ECL inputs are tested and reassessed for appropriateness at least each quarter and appropriate adjustments are made when needed. Scenario generation, review process and governance All aspects of the scenario selection, including the specific narratives, their weight for the ECL estimation, and the key macroeconomic and other factors, are subject to a formal governance and approval process. Financial statements 342 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) A team of economists, who are part of Group Risk Control, provide the basic analysis taking into account information obtained through established risk identification and assessment processes, which involve a broad range of experts, in particular, risk specialists and other in-house economists. Material risks with a high likelihood of materializing are then factored into the scenario selection process. Once narratives have been developed, key macroeconomic factors that are consistent with the severity of the case and interdependencies are determined. The scenarios, their weight and the key macroeconomic and other factors are subject to a critical assessment by members of the Scenario Committee, where senior credit officers from the divisions and representatives from Group Risk Control are represented. Important aspects for the review are the extent to which the selected scenarios reflect the vulnerabilities of the relevant portfolios; whether their transformation into PIT PD and LGD values is in line with credit risk officers’ expectations; and whether there may be pockets of exposures, where particular credit risk concerns may not be capable of being addressed systematically and require an expert-based overlay for stage allocation and ECL allowance. This also ensures a consistent use of forward-looking information throughout UBS and an alignment with the business planning process. The Operating Committee is jointly chaired by the Group Controller and Chief Accounting Officer, and the Risk Chief Operating Officer and Group Chief Risk Model Officer, and is comprised of the divisional Chief Risk Officers and divisional Chief Financial Officers as well as senior Corporate Center Risk and Finance representatives. They review the proposals submitted by the Scenario Committee and approve the final selection of scenarios and factors and any expert-based overlays as they may be required to cover temporary issues, either related to specific risk elements in a portfolio, or due to identified technical deficiencies pending remediation (model updates, data quality, etc.). The Group Model Governance Board as the highest authority under UBS’s model governance framework ratifies the decisions by the Operating Committee. ECL measurement period The period for which lifetime ECL are determined is based on the maximum contractual period that UBS is exposed to credit risk, taking into account contractual extension, termination and prepayment options. For irrevocable loan commitments and financial guarantee contracts, the measurement period represents the maximum contractual period for which UBS has an obligation to extend credit. Additionally, some financial instruments include both an on- demand loan and a revocable undrawn commitment, where the contractual cancelation right does not limit UBS’s exposure to credit risk to the contractual notice period as the client has the ability to draw down funds before UBS can take risk-mitigating actions. In such cases, UBS is required to estimate the period over which it is exposed to credit risk. This applies to UBS’s credit card limits, which do not have a defined contractual maturity date, are callable on demand and where the drawn and undrawn components are managed as one unit. The exposure arising from UBS’s credit card limits is not significant and is managed at a portfolio level, with credit actions triggered when balances are past due. An ECL measurement period of seven years is applied for credit card limits, capped at 12 months for stage 1 balances, as a proxy for the period that UBS is exposed to credit risk. Customary master credit agreements in the Swiss corporate market also include on-demand loans and revocable undrawn commitments. For smaller commercial facilities, a risk-based monitoring (RbM) approach is in place that highlights negative trends as risk events, at an individual facility level, based on a combination of continuously updated risk indicators. The risk events trigger additional credit reviews by a risk officer, allowing for informed credit decisions to be taken. Larger corporate facilities are not subject to RbM, but are reviewed at least annually through a formal credit review. UBS has assessed these credit risk management practices and considers both the RbM approach and formal credit review as substantive credit reviews resulting in a re-origination of the facility. Following this, a 12- month measurement period from the reporting date is used for both types of facilities as an appropriate proxy of the period over which UBS is exposed to credit risk, with 12 months also used as a look-back period for assessing SICR, always from the respective reporting date. Significant increase in credit risk Financial instruments subject to ECL are monitored on an ongoing basis. To determine whether the recognition of a maximum 12-month ECL continues to be appropriate, it is assessed whether an SICR has occurred since initial recognition of the financial instrument. The assessment criteria include both quantitative and qualitative factors. UBS does not make use of the expedient that no particular SICR test is required for instruments that have low credit risk at reporting date. Primarily, UBS assesses changes in an instrument’s risk of default on a quantitative basis by comparing the annualized forward-looking and scenario-weighted lifetime PD of an instrument determined at two different dates: – at the reporting date; and – at inception of the instrument. In both cases, the respective PDs are determined for the residual lifetime of the instrument, i.e., the period between the reporting date and maturity. If, based on UBS’s quantitative modeling, an increase exceeds a set threshold, an SICR is deemed to have occurred and the instrument is transferred to stage 2 with lifetime ECL being recognized. 343 Note 1 Summary of significant accounting policies (continued) The threshold applied varies depending on the original credit quality of the borrower. For instruments with lower default probabilities at inception due to good credit quality of the counterparty, the SICR threshold is set at a higher level than for instruments with higher default probabilities at inception. This implies that for instruments with initially lower default probabilities, a relatively higher deterioration in credit quality is needed to trigger an SICR than for those instruments with originally higher PDs. The SICR assessment based on PD changes is made at an individual financial asset level. A high-level overview of the SICR trigger, which is a multiple of the annualized remaining lifetime PIT PD expressed in rating downgrades that entail the same multiple of PD values, together with the corresponding ratings at origination of an instrument, is provided in the “SICR thresholds” table below. This simplified view is aligned to internal ratings as disclosed in “Internal UBS rating scale and mapping of external ratings” presented in “Credit risk” in the “Risk management and control” section of this report. The actual SICR thresholds applied are defined on a more granular level interpolating between the values shown in the table below. SICR thresholds Internal rating at origination of the instrument Rating downgrades / SICR trigger 0–3 3 4–8 2 9–13 1 →Refer to the “Risk management and control” section of this report for more details on the bank’s internal grading system Irrespective of the SICR assessment based on default probabilities, credit risk is generally deemed to have significantly increased for an instrument if the contractual payments are more than 30 days past due. For certain less material portfolios, specifically the Swiss credit card portfolio and the recruitment and retention loans to financial advisors of Global Wealth Management Region Americas, the 30-day past due criterion is used as the primary indicator of an SICR. Where instruments are transferred to stage 2 due to the 30-day past due criterion, a minimum period of six months is applied before a transfer back to stage 1 can be triggered. For instruments in Personal & Corporate Banking that are between 90 and 180 days past due but have not been reclassified to stage 3, a one-year period is applied before a transfer back to stage 1 can be triggered. Additionally, based on individual counterparty-specific indicators, external market indicators of credit risk or general economic conditions, counterparties may be moved to a watch list, which is used as a secondary qualitative indicator for an SICR and hence for a transfer to stage 2. Exception management is further applied, allowing for individual and collective adjustments on exposures sharing the same credit risk characteristics to take account of specific situations that are not otherwise fully reflected. Instruments for which an SICR since initial recognition is determined based on criteria other than changed default probabilities or watch list items remain in stage 2 for at least six months post resolution of the stage 2 trigger event. The overall SICR determination process does not apply to Lombard loans, securities financing transactions and certain other asset-based lending transactions, because of the risk management practices adopted, including daily monitoring processes with strict remargining requirements. If margin calls are not satisfied, a position is closed out and classified as a stage 3 position. Credit risk officers are responsible for ensuring that the stage allocation of instruments is in line with the requirements of the standard. Identification of an SICR for accounting purposes is in some aspects different from internal credit risk management processes for loans with increased credit risk, mainly because ECL accounting requirements are instrument-specific, such that a borrower can have multiple exposures allocated to different stages, and that maturing loans in stage 2 will migrate to stage 1 upon renewal irrespective of the actual credit risk at that time. Under a risk-based approach, a holistic counterparty credit assessment and the absolute level of risk at any given date will determine what risk mitigating actions may be warranted. →Refer to the “Risk management and control” section of this report for more information Financial statements 344 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Critical accounting estimates and judgments The calculation of ECL requires management to apply significant judgment and make estimates and assumptions that involve significant uncertainty at the time they are made. Changes to these estimates and assumptions can result in significant changes to the timing and amount of ECL to be recognized. Determination of a significant increase in credit risk IFRS 9 does not include a definition of what constitutes an SICR. UBS’s assessment of whether an SICR has occurred since initial recognition is based on reasonable and supportable forward-looking information, both qualitative and quantitative, and includes significant management judgment. More stringent criteria could significantly increase the number of instruments migrating to stage 2. An IFRS 9 Operating Committee has been established to review and challenge the SICR approach and any potential changes and determinations made in the quarter. Scenarios, scenario weights and macroeconomic factors ECL reflect an unbiased and probability-weighted amount, which UBS determines by evaluating a range of possible outcomes. Management selects forward-looking scenarios and judges the suitability of respective weights to be applied. Each of the scenarios is based on management’s assumptions around future economic conditions in the form of macroeconomic, market and other factors. Changes in the scenarios and weights, the corresponding set of macroeconomic variables and the assumptions made around those variables for the forecast horizon would have a significant effect on the ECL. An IFRS 9 Scenario Committee, in addition to the Operating Committee, has been established to derive, review and challenge the selection and weights. ECL measurement period Lifetime ECL are generally determined based upon the contractual maturity of the transaction, which significantly affects ECL. The ECL calculation is therefore sensitive to any extension of contractual maturities triggered by business decisions, consumer behaviors and an increased number of stage 2 positions. In addition, for credit card limits and Swiss callable master credit facilities, judgment is required as UBS must determine the period over which it is exposed to credit risk. A seven-year period has been applied for credit card limits, capped at 12 months for stage 1 positions, and a 12-month period has been applied for master credit facilities. Modeling and management adjustments A number of complex models have been developed or modified to calculate ECL, with additional management adjustments required. Internal counterparty rating changes, new or revised models and changes to data may significantly affect ECL. The models are governed by UBS’s model validation controls, which aim to ensure independent verification, and are approved by the Group Model Governance Board (GMGB). The management adjustments are approved by the IFRS 9 Operating Committee and endorsed by the GMGB. The Group provides a sensitivity analysis of the effect of scenario selection, scenario weights and SICR trigger points on ECL measurement within Note 23g. Comparative policy | Policy applicable prior to 1 January 2018 A claim is impaired and an allowance or provision for credit losses is recognized when objective evidence demonstrates that a loss event has occurred after the initial recognition and that the loss event has an effect on the future cash flows that can be reliably estimated (incurred loss approach). UBS considers a claim to be impaired if it will be unable to collect all amounts due on it based on the original contractual terms as a result of credit deterioration of the issuer or counterparty. A claim can be a loan or receivable carried at amortized cost, or a commitment, such as a letter of credit, a guarantee or a similar instrument. An allowance for credit losses is reported as a decrease in the carrying value of a financial asset. For an off-balance sheet item, such as a commitment, a provision for credit loss is reported in Provisions. Changes to allowances and provisions for credit losses are recognized in Credit loss (expense) / recovery. Critical accounting estimates and judgments Allowances and provisions for credit losses are evaluated at both a counterparty-specific level and collectively. Judgment is used in making assumptions about the timing and amount of impairment losses. Counterparty-specific allowances and provisions Loans are evaluated individually for impairment if objective evidence indicates that a loan may be impaired. Individual credit exposures are evaluated on the basis of the borrower’s overall financial condition, resources and payment record, the prospects of support from contractual guarantors and, where applicable, the realizable value of any collateral. The impairment loss for a loan is the excess of the carrying value of the financial asset over the estimated recoverable amount. The estimated recoverable amount is the present value, calculated using the loan’s original effective interest rate, of expected future cash flows, including amounts that may result from restructuring or the liquidation of collateral. If a loan has a variable interest rate, the discount rate for calculating the recoverable amount is the current effective interest rate. Upon impairment, interest income is accrued by applying the original effective interest rate to the impaired carrying value of the loan. 345 Note 1 Summary of significant accounting policies (continued) All impaired loans are reviewed and analyzed at least annually. Any subsequent changes to the amounts and timing of the expected future cash flows compared with prior estimates result in a change in the allowance for credit losses and are charged or credited to Credit loss (expense) / recovery. An allowance for impairment is reversed only when the credit quality has improved to such an extent that there is reasonable assurance of timely collection of principal and interest in accordance with the original contractual terms of the instrument, or the equivalent value thereof. A write-off is made when all or part of a financial asset is deemed uncollectible or forgiven. Write-offs reduce the principal amount of a claim and are charged against previously established allowances for credit losses. Recoveries, in part or in full, of amounts previously written off are credited to Credit loss (expense) / recovery. Collective allowances and provisions Collective allowances and provisions are calculated for portfolios with similar credit risk characteristics, taking into account historical loss experience and current conditions. The methodology and assumptions used are reviewed regularly to reduce any differences between estimated and actual loss experience. For all of its portfolios, UBS also assesses whether there have been any unforeseen developments that might result in impairments that are not immediately observable at a counterparty level. To determine whether an event-driven collective allowance for credit losses is required, UBS considers global economic drivers to assess the most vulnerable countries and industries. As the allowance cannot be allocated to individual loans, the loans are not considered to be impaired and interest is accrued on each loan according to its contractual terms. If objective evidence becomes available that indicates that an individual financial asset is impaired, it is removed from the group of financial assets assessed for impairment on a collective basis and is assessed separately as counterparty-specific. Impairment of financial assets classified as available for sale At each balance sheet date, UBS assesses whether indicators of impairment are present. Available-for-sale debt instruments are impaired when there is objective evidence, using the same criteria described on the previous page, that, as a result of one or more events that occurred after the initial recognition of the asset, the estimated future cash flows have decreased. Objective evidence that there has been an impairment of an available-for-sale equity instrument is a significant or prolonged decline in the fair value of the asset. UBS uses a rebuttable presumption that such instruments are impaired where there has been a decline in fair value of more than 20% below its original cost or fair value has been below original cost for more than six months. To the extent a financial asset classified as available for sale is determined to be impaired, the related cumulative net unrealized loss previously recognized in Other comprehensive income is reclassified to the income statement within Other income. For equity instruments, any further loss is recognized directly in the income statement, whereas for debt instruments, any further loss is recognized in the income statement only if there is additional objective evidence of impairment. After the recognition of an impairment on a financial asset classified as available for sale, increases in the fair value of equity instruments are reported in Other comprehensive income. For debt instruments, such increases in the fair value, up to amortized cost in the transaction currency, are recognized in Other income, provided that the fair value increase is related to an event occurring after the impairment loss was recorded. Increases in excess of that amount are reported in Other comprehensive income. h. Restructured and modified financial assets When payment default is expected or where default has already occurred, UBS may grant concessions to borrowers in financial difficulties that it would otherwise not consider in the normal course of its business, such as preferential interest rates, extension of maturity, modifying the schedule of repayments, debt / equity swap, subordination, etc. When a concession or forbearance measure is granted, each case is considered individually and the exposure is generally classified as being in default. Forbearance classification will remain until the loan is collected or written off, non-preferential conditions are granted that supersede the preferential conditions or until the counterparty has recovered and the preferential conditions no longer exceed our risk appetite. Contractual adjustments when there is no evidence of imminent payment default, or where changes to terms and conditions are within UBS’s usual risk appetite, are not considered to be in forbearance. Modifications represent contractual amendments that result in an alteration of future contractual cash flows and that can occur within UBS’s normal risk appetite or as part of a credit restructuring where a counterparty is in financial difficulties. A restructuring or modification of a financial asset could lead to a substantial change in the terms and conditions, resulting in the original financial asset being derecognized and a new financial asset being recognized. Where the modification does not result in a derecognition, any difference between the modified contractual cash flows discounted at the original EIR and the existing gross carrying value of a financial asset is recognized in profit or loss as a modification gain or loss. Further, the subsequent SICR assessment is made by comparing the risk of default at the reporting date based on the modified contractual terms of the financial asset with the risk of default at initial recognition based on the original, unmodified contractual terms of the financial asset.Financial statements 346 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) i. Netting UBS nets financial assets and liabilities on its balance sheet if (i) it has the unconditional and legally enforceable right to set off the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS and all of the counterparties, and (ii) intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Netted positions include, for example, certain derivatives and repurchase and reverse repurchase transactions with various counterparties, exchanges and clearing houses. In assessing whether UBS intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously, emphasis is placed on the effectiveness of operational settlement mechanics in eliminating substantially all credit and liquidity exposure between the counterparties. This condition precludes offsetting on the balance sheet for substantial amounts of UBS’s financial assets and liabilities, even though they may be subject to enforceable netting arrangements. For OTC derivative contracts, balance sheet offsetting is generally only permitted in circumstances in which a market settlement mechanism exists via an exchange or central clearing counterparty that effectively accomplishes net settlement through a daily exchange of collateral via a cash margining process. For repurchase arrangements and securities financing transactions, balance sheet offsetting may be permitted only to the extent that the settlement mechanism eliminates, or results in insignificant, credit and liquidity risk, and processes the receivables and payables in a single settlement process or cycle. →Refer to Note 25 for more information j. Hedge accounting The Group uses derivative and non-derivative instruments to manage exposures to interest rate and foreign currency risks, including exposures arising from forecast transactions. The Group continues to apply hedge accounting requirements as set out in IAS 39. Qualifying instruments may be designated as hedging instruments in (i) hedges of the change in fair value of recognized assets or liabilities (fair value hedges); (ii) hedges of the variability in future cash flows attributable to a recognized asset or liability or highly probable forecast transactions (cash flow hedges); or (iii) hedges of a net investment in a foreign operation (net investment hedges). At the time a financial instrument is designated in a hedge relationship, UBS formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction and the methods that will be used to assess the effectiveness of the hedging relationship. Accordingly, UBS assesses, both at the inception of the hedge and on an ongoing basis, whether the hedging instruments, primarily derivatives, have been “highly effective” in offsetting changes in the fair value or cash flows associated with the designated risk of the hedged items. A hedge is considered highly effective if the following criteria are met: (i) at inception of the hedge and throughout its life, the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk; and (ii) actual results of the hedge are within a range of 80– 125%. In the case of hedging forecast transactions, the transaction must have a high probability of occurring and must present an exposure to variations in cash flows that could ultimately affect the reported net profit or loss. UBS discontinues hedge accounting when (i) it determines that a hedging instrument is not, or has ceased to be, highly effective as a hedge; (ii) the derivative expires or is sold, terminated or exercised; (iii) the hedged item matures, is sold or repaid; or (iv) forecast transactions are no longer deemed highly probable. The Group may also discontinue hedge accounting voluntarily. Hedge ineffectiveness represents the amount by which the changes in the fair value of the hedging instrument differ from changes in the fair value of the hedged item attributable to the hedged risk, or the amount by which changes in the present value of future cash flows of the hedging instrument exceed changes in the present value of expected cash flows of the hedged item. Such ineffectiveness is recorded in current-period earnings in Other net income from fair value changes on financial instruments (prior to 1 January 2018: Net trading income). Interest from derivatives designated as hedging instruments in effective fair value hedge relationships is presented within Interest income from loans and deposits and Interest expense on debt issued, within Net interest income. Interest from derivatives designated as hedging instruments in effective cash flow hedge relationships that is reclassified from other comprehensive income when the hedged transaction affects profit or loss is presented within Interest income from derivative instruments designated as cash flow hedges. →Refer to Note 3 for more information 347 Note 1 Summary of significant accounting policies (continued) Fair value hedges For qualifying fair value hedges, the change in the fair value of the hedging instrument is recognized in the income statement along with the change in the fair value of the hedged item that is attributable to the hedged risk. In fair value hedges of interest rate risk, the fair value change of the hedged item attributable to the hedged risk is reflected as an adjustment to the carrying value of the hedged item. If the hedge accounting relationship is terminated for reasons other than the derecognition of the hedged item, the adjustment to the carrying value is amortized to the income statement over the remaining term to maturity of the hedged item using the effective interest rate method. For a portfolio hedge of interest rate risk, the equivalent change in fair value is reflected within Other financial assets measured at amortized cost or Other financial liabilities measured at amortized cost. If the portfolio hedge relationship is terminated for reasons other than the derecognition of the hedged item, the amount included in Other financial assets measured at amortized cost or Other financial liabilities measured at amortized cost is amortized to the income statement over the remaining term to maturity of the hedged items using the straight-line method. Cash flow hedges Fair value gains or losses associated with the effective portion of derivatives designated as cash flow hedges for cash flow repricing risk are recognized initially in Other comprehensive income within Equity. When the hedged forecast cash flows affect profit or loss, the associated gains or losses on the hedging derivatives are reclassified from Equity to the income statement. If a cash flow hedge of forecast transactions is no longer considered effective, or if the hedge relationship is terminated, the cumulative gains or losses on the hedging derivatives previously reported in Equity remain there until the committed or forecast transactions occur and affect profit or loss. If the forecast transactions are no longer expected to occur, the deferred gains or losses are reclassified immediately to the income statement. Hedges of net investments in foreign operations Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized directly in Equity (and presented in the statement of changes in equity and statement of comprehensive income under Foreign currency translation), while any gains or losses relating to the ineffective and / or undesignated portion (for example, the interest element of a forward contract) are recognized in the income statement. Upon disposal or partial disposal of the foreign operation, the cumulative value of any such gains or losses recognized in Equity associated with the entity is reclassified to Other income. Economic hedges that do not qualify for hedge accounting Derivative instruments that are transacted as economic hedges, but do not qualify for hedge accounting, are treated in the same way as derivative instruments used for trading purposes; i.e., realized and unrealized gains and losses are recognized in Other net income from fair value changes on financial instruments (prior to 1 January 2018: Net trading income), except for the forward points on certain short- and long-duration foreign exchange contracts, which are reported in Net interest income. →Refer to Note 11 for more information k. Embedded derivatives Derivatives may be embedded in other financial instruments (host contracts). For example, they could be represented by the conversion feature embedded in a convertible bond. Such hybrid instruments arise predominantly from the issuance of certain structured debt instruments. An embedded derivative is generally required to be separated from the host contract (from 1 January 2018: unless the host contract is a financial asset in scope of IFRS 9) and accounted for as a standalone derivative instrument at fair value through profit or loss if (i) the host contract is not carried at fair value with changes in fair value reported in the income statement; (ii) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (iii) the terms of the embedded derivative would meet the definition of a standalone derivative, were they contained in a separate contract. Typically, UBS applies the fair value option to hybrid instruments (refer to item 3b in this Note for more information), in which case bifurcation of an embedded derivative component is not required.Financial statements 348 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) l. Financial liabilities Debt issued measured at amortized cost includes contingent capital instruments that contain contractual provisions under which the principal amounts would be written down upon either a specified CET1 ratio breach or a determination by FINMA that a viability event has occurred. Such contractual provisions are not derivatives as the underlying is deemed to be a non-financial variable specific to a party to the contract. Where there is a legal bail-in mechanism for write-down or conversion into equity (as is the case, for instance, with senior unsecured debt issued by the Group that is subject to write-down or conversion under resolution authority granted to FINMA under Swiss law), such mechanism does not form part of the contractual terms and, therefore, does not affect the amortized cost accounting treatment applied to these instruments. If the debt were to be written down or converted into equity in a future period, this would result in the full or partial derecognition of the financial liabilities, with the difference between the carrying value of the debt written down or converted into equity and the fair value of any equity shares issued recognized in the income statement. In cases where, as part of the Group’s risk management activity, fair value hedge accounting is applied to fixed-rate debt instruments carried at amortized cost, their carrying amount is adjusted for changes in fair value related to the hedged exposure. Refer to item 3j for more information on hedge accounting. Debt issued and subsequently repurchased in relation to market-making or other activities is treated as redeemed. A gain or loss on redemption (depending on whether the repurchase price of the bond is lower or higher than its carrying value) is recorded in Other income. A subsequent sale of own bonds in the market is treated as a reissuance of debt. UBS uses the fair value option to designate certain issued debt instruments as financial liabilities designated at fair value through profit or loss, on the basis that such financial instruments include embedded derivatives and / or are managed on a fair value basis (refer to item 3b in this Note for more information). m. Own credit Changes in the fair value of financial liabilities designated at fair value through profit or loss related to own credit are recognized in Other comprehensive income directly within Retained earnings and will not be reclassified to the income statement in future periods. n. Loan commitments Policy applicable from 1 January 20181 Loan commitments are arrangements under which clients can borrow stipulated amounts under defined terms and conditions. Loan commitments that can be canceled at any time by UBS at its discretion are neither recognized on the balance sheet nor included in off-balance sheet disclosures. Loan commitments that cannot be canceled by UBS once the commitments are communicated to the beneficiary or that are revocable only because of automatic cancelation upon deterioration in a borrower’s creditworthiness are considered irrevocable and are classified as (i) derivative loan commitments measured at fair value through profit or loss; (ii) loan commitments designated at fair value through profit or loss; or (iii) other loan commitments. The Group recognizes ECL on non-cancelable other loan commitments. In addition, UBS also recognizes ECL on loan commitments that can be canceled at any time if UBS is exposed to credit risk (refer to item g in this Note). Corresponding ECL are presented within Provisions on the Group’s balance sheet. ECL relating to these other loan commitments are recorded in the income statement in Credit loss (expense) / recovery. When a client draws on a commitment, the resulting loan is presented within Financial assets at fair value held for trading, or within Financial assets at fair value not held for trading when the associated loan commitments are measured at fair value through profit or loss, and within Loans and advances to customers when the associated loan commitment is not measured at fair value through profit or loss. Comparative policy | Policy applicable prior to 1 January 2018 When a client draws on a commitment, the resulting loan is classified as a (i) trading asset, consistent with the associated derivative loan commitment; (ii) financial asset designated at fair value through profit or loss, consistent with the loan commitment designated at fair value through profit or loss; or as a (iii) loan when the associated loan commitment is accounted for as other loan commitment. o. Financial guarantee contracts Policy applicable from 1 January 20181 Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for an incurred loss because a specified debtor fails to make payments when due in accordance with the terms of a specified debt instrument. UBS issues such financial guarantees to banks, financial institutions and other parties on behalf of clients to secure loans, overdrafts and other banking facilities. 1 The accounting policy in this section applies from 1 January 2018, the effective date of IFRS 9. For the details of transition effects refer to Note 1c. 349 1 Note 1 Summary of significant accounting policies (continued) Certain issued financial guarantees that are managed on a fair value basis are designated at fair value through profit or loss. Financial guarantees that are not managed on a fair value basis are initially recognized in the financial statements at fair value and are subsequently measured at the higher of: – the amount of ECL (refer to item g in this Note); and – the amount initially recognized less the cumulative amount of income recognized as of the reporting date. ECL resulting from guarantees is recorded in the income statement in Credit loss (expense) / recovery. Comparative policy | Policy applicable prior to 1 January 2018 Financial guarantees that are not managed on a fair value basis are initially recognized in the financial statements at fair value and are subsequently measured at the higher of the amount initially recognized less cumulative amortization and, to the extent a payment under the guarantee has become probable, the present value of the expected payment. Any change in the liability relating to probable expected payments resulting from guarantees is recorded in the income statement in Credit loss (expense) / recovery. p. Other net income from fair value changes on financial instruments The line item Other net income from fair value changes on financial instruments includes fair value gains and losses on financial instruments at fair value through profit or loss but excluding interest income and expense on non-derivatives (refer to item 3c in this Note), as well as the effects at derecognition, trading gains and losses and intermediation income arising from certain client-driven Global Wealth Management and Personal & Corporate Banking financial transactions. In addition, foreign currency translation effects and income and expenses from precious metals are presented within this income statement line item. 4) Fee and commission income and expenses Policy applicable from 1 January 20181 UBS earns fee income from a diverse range of services it provides to its clients. Fee income can be divided into two broad categories: fees earned from services that are provided over a certain period of time, such as asset or portfolio management, custody services and certain advisory services; and fees earned from point-in-time services such as underwriting fees and brokerage fees (e.g., securities and derivative execution and clearing). →Refer to Note 4 for more information, including the disaggregation of revenues Performance obligations satisfied over time Fees earned from services that are provided over a certain period of time are recognized on a pro rata basis over the service period, provided the fees are not contingent on successfully meeting specified performance criteria that are beyond the control of UBS (see measurement below). Costs to fulfill services over time are recorded in the income statement immediately, because such services are considered to be a series of services that are substantially the same from day to day and have the same pattern of transfer. The costs to fulfill neither generate nor enhance the resources of UBS that will be used to satisfy future performance obligations and cannot be distinguished between those that relate to satisfied and unsatisfied performance obligations. Therefore, these costs do not qualify to be recognized as an asset. Where costs incurred relate to contracts that include variable consideration that is constrained by factors beyond UBS’s control (e.g., successful mergers and acquisitions (M&A) activity) or where UBS has a history of not recovering such costs on similar transactions), such costs are expensed immediately as incurred. Performance obligations satisfied at a point in time Fees earned from providing transaction-type services are recognized when the service has been completed, provided such fees are not subject to refund or another contingency beyond the control of UBS. Incremental costs to fulfill services provided at a point in time are typically incurred and recorded at the same time as the performance obligation is satisfied and revenue is earned, and are therefore not recognized as an asset, e.g., brokerage. Where recovery of costs to fulfill relates to an uncompleted point-in- time service for which the satisfaction of the performance obligation in the contract is dependent upon factors beyond the control of UBS, such as underwriting a successful securities issuance, or where UBS has a history of not recovering such costs through reimbursement on similar transactions, such costs are expensed immediately as incurred. 1 The accounting policy in this section applies from 1 January 2018, the effective date of IFRS 15. For the details of transition effects refer to Note 1b.Financial statements 350 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Measurement Fee and commission income is measured based on consideration specified in a legally enforceable contract with a customer, excluding amounts such as taxes collected on behalf of third parties. Consideration can include both fixed and variable amounts. Variable consideration includes refunds, discounts, performance bonuses and other amounts that are contingent on the occurrence or non-occurrence of a future event. Variable consideration that is contingent on an uncertain event can only be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue for a contract will not occur. This is referred to as the variable consideration constraint. UBS does not consider the highly probable criterion to be met where the contingency on which income is dependent is beyond the control of UBS. In such circumstances, UBS only recognizes revenue when the contingency has been resolved or an uncertain event has occurred. Examples include asset management performance- linked fees, which are only payable if the returns of a fund exceed a benchmark and are only recognized after the performance period has elapsed. Similarly, M&A advisory fees that are dependent on a successful client transaction are not recognized until the transaction on which the fees are dependent has been executed. Asset management fees (excluding performance-based fees) received on a periodic basis, typically quarterly, that are determined based on a fixed percentage of net asset value that has not been established at the reporting date, are estimated and accrued ratably over the period to the next invoice date, except during periods in which market volatility indicates there is a risk of significant reversal. Research revenues earned by the Investment Bank under commission-sharing or research payment account agreements are not recognized until the client has provided a definitive allocation of amounts between research providers, as prior to this UBS generally does not have an enforceable right to a specified amount of consideration. Consideration received is allocated to the separately identifiable performance obligations in a contract. Owing to the nature of UBS’s business, contracts that include multiple performance obligations are typically those that are considered to include a series of similar performance obligations fulfilled over time with the same pattern of transfer to the client, e.g., asset management. As a consequence, UBS is not required to apply significant judgment in allocating the consideration received across the various performance obligations. UBS has taken the practical expedient to not disclose information on the allocation of the transaction price to remaining performance obligations in contracts. This is because contracts are typically less than one year in duration. Where contracts have a longer duration, they are either subject to the variable consideration constraint, with fees calculated on future net asset value, which cannot be included within the transaction price for the contract, or result in revenue being recognized ratably using the output method corresponding directly to the value of the services completed to date and to which UBS would be entitled to invoice upon termination of the contract, e.g., loan commitments. Presentation of fee and commission income and expense Fee and commission income and expense are presented gross on the face of the income statement when UBS is considered to be principal in the contractual relationship with its customer and any suppliers used to fulfill such contracts. This occurs where UBS has control over such services and its relationship with suppliers prior to provision of the service to the client. UBS only considers itself to be an agent in relation to services provided by third parties, e.g., third-party execution costs for exchange-traded derivatives and fees payable to third-party research providers, where the client controls both the choice of supplier and the scope of the services to be provided. Furthermore, in order to be considered an agent UBS must not take responsibility for the quality of the service, transform or integrate the services into a UBS product. In such circumstances UBS is essentially acting as a payment agent for its client. When UBS is acting as an agent, any costs incurred are directly offset against the associated income. Presentation of expenses in the income statement UBS presents expenses primarily in line with their nature in the income statement, differentiating between expenses that are incremental and incidental to revenues, which are presented within Total operating income, and those that are related to personnel, general and administrative expenses, which are presented within Total operating expenses. Contract assets, contract liabilities and capitalized expenses UBS has applied the practical expedient of allowing for costs incurred to obtain a contract to be expensed as incurred where the amortization period for any asset recognized would be less than 12 months. Where UBS provides services to clients, consideration is due immediately upon satisfaction of a point-in-time service or at the end of a prespecified period for a service performed over time; e.g., certain asset management fees are collected monthly or quarterly, through deduction from a client account, deduction from fund assets or through separate invoicing. Where receivables are recorded, they are presented within Other financial assets measured at amortized cost. Contract liabilities relate to prepayments received from customers where UBS is yet to satisfy its performance obligation. Contract assets are recorded when an entity’s right to consideration in exchange for services transferred is conditional on something other than the passage of time, e.g., the entity’s future performance. UBS has not recognized any material contract assets, contract liabilities or capitalized expenses during the period and has therefore not provided a contract balances reconciliation. 351 Note 1 Summary of significant accounting policies (continued) Comparative policy | Policy applicable prior to 1 January 2018 Fees earned from services that are provided over a certain period of time are recognized ratably over the service period, with the exception of performance-linked fees or fee components with specific performance criteria. Such fees are recognized when, as of the reporting date, the performance benchmark has been met and when collectibility is reasonably assured. Fees earned from providing transaction-type services are recognized when the service has been completed and the fee is fixed or determinable, i.e., not subject to refund or adjustment. Fee income generated from providing a service that does not result in the recognition of a financial instrument is presented within Net fee and commission income. Fees generated from the acquisition, issue or disposal of a financial instrument are presented in the income statement in line with the balance sheet classification of that financial instrument. →Refer to Note 4 for more information 5) Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise balances with an original maturity of three months or less, including cash, money market paper and balances at central and other banks. 6) Share-based and other deferred compensation plans Share-based compensation plans UBS has established share-based compensation plans that are settled in UBS‘s equity instruments or an amount that is based on the value of such instruments. These awards are generally subject to conditions that require employees to complete a specified period of service and, for performance shares, to satisfy specified performance conditions. Compensation expense is recognized, on a per-tranche basis, over the service period based on an estimate of the number of instruments expected to vest and is adjusted to reflect actual outcomes. Where the service period is shortened, for example in the case of employees affected by restructuring programs or mutually agreed termination provisions, recognition of expense is accelerated to the termination date. Where no future service is required, such as for employees who are eligible for retirement or who have met certain age and length-of-service criteria, the services are presumed to have been received and compensation expense is recognized immediately on, or prior to, the date of grant. Such awards may remain forfeitable until the legal vesting date if certain non-vesting conditions are not met. For equity-settled awards, forfeiture events resulting from breach of a non-vesting condition do not result in an adjustment to expense. Compensation expense is measured by reference to the fair value of the equity instruments on the date of grant adjusted, when relevant, to take into account the terms and conditions inherent in the award, including dividend rights, transfer restrictions in effect beyond the vesting date, and non-vesting conditions. For equity-settled instruments, fair value is determined at the date of grant and is not remeasured unless their terms are modified such that the fair value immediately after modification exceeds the fair value immediately prior to modification. Any increase in fair value resulting from a modification is recognized as compensation expense, either over the remaining service period or, for vested awards, immediately. For cash-settled awards, fair value is remeasured at each reporting date such that the cumulative expense recognized equals the cash distributed. →Refer to Note 30 for more information Other compensation plans UBS has established deferred compensation plans that are settled in cash or financial instruments other than UBS equity, the amount of which may be fixed or may vary based on the achievement of specified performance conditions or the value of specified underlying assets. Compensation expense is recognized over the period that the employee provides services to become entitled to the award. Where the service period is shortened, for example in the case of employees affected by restructuring programs or mutually agreed termination provisions, recognition of expense is accelerated to the termination date. Where no future service is required, such as for employees who are eligible for retirement or who have met certain age and length-of- service criteria, the services are presumed to have been received and compensation expense is recognized immediately on, or prior to, the date of grant. The amount recognized is based on the present value of the amount expected to be paid under the plan and is remeasured at each reporting date, so that the cumulative expense recognized equals the cash or the fair value of respective financial instruments distributed. →Refer to Note 30 for more information Financial statements 352 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 7) Pension and other post-employment benefit plans UBS sponsors various post-employment benefit plans for its employees worldwide, which include defined benefit and defined contribution pension plans, and other post-employment benefits such as medical and life insurance benefits that are payable after the completion of employment. →Refer to Note 29 for more information Defined benefit plans UBS offers defined benefit pension and medical insurance benefits. Defined benefit plans specify an amount of benefit that an employee will receive, which usually depends on one or more factors, such as age, years of service and compensation. The defined benefit liability recognized in the balance sheet is the present value of the defined benefit obligation less the fair value of the plan assets at the balance sheet date, with changes resulting from remeasurements recorded immediately in Other comprehensive income. If the fair value of the plan assets is higher than the present value of the defined benefit obligation, the recognition of the resulting net defined benefit asset is limited to the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. UBS applies the projected unit credit method to determine the present value of its defined benefit obligations, the related current service cost and, where applicable, past service cost. The projected unit credit method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. These amounts, which take into account the specific features of each plan, including risk sharing between employee and employer, are calculated periodically by independent qualified actuaries. Critical accounting estimates and judgments The net defined benefit liability or asset at the balance sheet date and the related personnel expense depend on the expected future benefits to be provided, determined using a number of economic and demographic assumptions. A range of assumptions could be applied, and different assumptions could significantly alter the defined benefit liability or asset and pension expense recognized. The most significant assumptions include life expectancy, the discount rate, expected salary increases, pension increases and, in addition for the Swiss plan and one of the US defined benefit pension plans, interest credits on retirement savings account balances. Life expectancy is determined by reference to published mortality tables. The discount rate is determined by reference to the rates of return on high-quality fixed-income investments of appropriate currency and term at the measurement date. The assumption for salary increases reflects the long-term expectations for salary growth and takes into account historical salary development by age groups, expected inflation and expected supply and demand in the labor market. A sensitivity analysis for reasonable possible movements in each significant assumption for UBS‘s post-employment obligations is provided within Note 29. Defined contribution plans A defined contribution plan is a pension plan under which UBS pays fixed contributions into a separate entity from which post- employment and other benefits are paid. UBS has no legal or constructive obligation to pay further contributions if the plan does not hold sufficient assets to pay employees the benefits relating to employee service in the current and prior periods. UBS’s contributions are expensed when the employees have rendered services in exchange for such contributions. This is generally in the year of contribution. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. 8) Income taxes UBS is subject to the income tax laws of Switzerland and those of the non-Swiss jurisdictions in which UBS has business operations. The Group’s provision for income taxes is composed of current and deferred taxes. Current income taxes represent taxes to be paid or refunded for the current period or previous periods. Deferred taxes are recognized for temporary differences between the carrying amounts and tax bases of assets and liabilities that will result in taxable or deductible amounts in future periods and are measured using the applicable tax rates and laws that have been enacted or substantively enacted by the end of the reporting period and which will be in effect when such differences are expected to reverse. Deferred tax assets arise from a variety of sources, the most significant being: (i) tax losses that can be carried forward to be used against profits in future years; and (ii) temporary differences that will result in deductions against profits in future years. Deferred tax assets are recognized only to the extent that it is probable that sufficient taxable profits will be available against which these differences can be used. When an entity or tax group has a history of recent losses, deferred tax assets are only recognized to the extent there are sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses can be utilized. 353 Note 1 Summary of significant accounting policies (continued) Deferred tax liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities in the balance sheet that reflect the expectation that certain items will give rise to taxable income in future periods. Deferred and current tax assets and liabilities are offset when (i) they arise in the same tax reporting group; (ii) they relate to the same tax authority; (iii) the legal right to offset exists; and (iv) they are intended to be settled net or realized simultaneously. Current and deferred taxes are recognized as income tax benefit or expense in the income statement except for current and deferred taxes recognized (i) upon the acquisition of a subsidiary (for which such amounts would affect the amount of goodwill arising from the acquisition); (ii) for gains and losses on the sale of treasury shares (for which the tax effects are recognized directly in Equity); (iii) for unrealized gains or losses on financial instruments that are classified as FVOCI (prior to 1 January 2018: financial assets classified as available for sale); (iv) for changes in fair value of derivative instruments designated as cash flow hedges; (v) for remeasurements of defined benefit plans; or (vi) for certain foreign currency translations of foreign operations. Amounts relating to points (iii) through (vi) are recognized in Other comprehensive income within Equity. UBS reflects the potential effect of uncertain tax positions using expected value (i.e., a probability-weighted approach), except where the likelihood of loss is remote (less than 5%). Critical accounting estimates and judgments Tax laws are complex, and judgment and interpretations about the application of such laws are required when accounting for income taxes. UBS considers the performance of its businesses and the accuracy of historical forecasts and other factors in evaluating the recoverability of its deferred tax assets, including the remaining tax loss carry-forward period, and its assessment of expected future taxable profits in the forecast period used for recognizing deferred tax assets. Estimating future profitability is inherently subjective and is particularly sensitive to future economic, market and other conditions, which are difficult to predict. The level of deferred tax asset recognition is influenced by management’s assessment of UBS’s future profitability based on relevant business plan forecasts. Existing assessments are reviewed and, if necessary, revised to reflect changed circumstances. This review is conducted annually, in the fourth quarter of each year, but adjustments may be made at other times, if required. In a situation where recent losses have been incurred, convincing other evidence that there will be sufficient future profitability is required. If profit forecast assumptions in future periods deviate from the current outlook, the value of UBS’s deferred tax assets may be affected. Any increase or decrease in the carrying amount of deferred tax assets would primarily be recognized through the income statement but would not affect cash flows. In addition, judgment is required to assess the expected value of uncertain tax positions that are incorporated into the estimate of income and deferred tax and the assessment of the related probabilities, including in relation to the interpretation of tax laws, the resolution of any income tax-related appeals or litigation and the assessment of the related probabilities. →Refer to Note 8 for more information 9) Investments in associates Interests in entities where UBS has significant influence over the financial and operating policies of the entity, but does not have control, are classified as investments in associates and accounted for under the equity method of accounting. Typically, UBS has significant influence when it holds or has the ability to hold between 20% and 50% of a company’s voting rights. Investments in associates are initially recognized at cost, and the carrying amount is increased or decreased after the date of acquisition to recognize the Group’s share of the investee’s comprehensive income and any impairment losses. The net investment in an associate is impaired if there is objective evidence of a loss event and the carrying value of the investment in the associate exceeds its recoverable amount. →Refer to Note 31 for more information Financial statements 354 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 10) Property, equipment and software Property, equipment and software includes own-used properties, leasehold improvements, information technology hardware, externally purchased and internally generated software, as well as communication and other similar equipment. Property, equipment and software is carried at cost less accumulated depreciation and impairment losses and is reviewed at each reporting date for indication for impairment. Software development costs are capitalized only when the costs can be measured reliably and it is probable that future economic benefits will arise. Depreciation of property, equipment and software begins when they are available for use (i.e., when they are in the location and condition necessary for them to be capable of operating in the manner intended by management). Depreciation is calculated on a straight-line basis over an asset‘s estimated useful life. The estimated useful economic lives of UBS‘s property, equipment and software are: – properties, excluding land: ≤ 67 years – IT hardware and communication equipment: ≤ 7 years – other machines and equipment: ≤ 10 years – software: ≤ 10 years – leasehold improvements: shorter of the lease term or the economic life of asset (typically ≤ 20 years) →Refer to Note 15 for more information 11) Goodwill and intangible assets Goodwill represents the excess of the cost of an acquisition over the fair value of the Group‘s share of net identifiable assets of the acquired entity at the date of the acquisition. Goodwill is not amortized, but at the end of each reporting period or when indicators of impairment exist, UBS assesses whether there is any indication that goodwill is impaired. If such indicators exist, UBS is required to test the goodwill for impairment. Irrespective of whether there is any indication of impairment, UBS tests goodwill for impairment annually. For the 2017 annual test, UBS considered the segments, as they are reported in Note 2a, as separate cash-generating units, since that was the level at which the performance of investments (and the related goodwill) was reviewed and assessed by management. Following the integration in 2018 of the Wealth Management and Wealth Management Americas business divisions into the single reportable segment Global Wealth Management, UBS continued to separately monitor the goodwill previously allocated to the two former business divisions. As a consequence, for the purpose of goodwill impairment testing, the former Wealth Management and Wealth Management Americas business divisions are considered to be two separate cash-generating units referred to in Note 16 as Global Wealth Management Americas1 and Global Wealth Management ex Americas. The remaining goodwill balances continued to be tested at the level of Asset Management and the Investment Bank, respectively, consistent with the 2017 annual test. The impairment test is performed for each cash-generating unit to which goodwill is allocated by comparing the recoverable amount, based on its value-in-use, to the carrying amount of the respective cash-generating unit. An impairment charge is recognized in the income statement if the carrying amount exceeds the recoverable amount. If the estimated earnings and other assumptions in future periods deviate from the current outlook, the value of UBS‘s goodwill may become impaired in the future, giving rise to losses in the income statement. Recognition of any impairment of goodwill would reduce net profit and equity, but would not affect cash flows. Intangible assets are comprised of separately identifiable intangible items arising from business combinations and certain purchased trademarks and similar items. Intangible assets are recognized at cost. The cost of an intangible asset acquired in a business combination is its fair value at the date of acquisition. Intangible assets with a finite useful life are amortized using the straight-line method over their estimated useful life, generally not exceeding 20 years. In rare cases, intangible assets can have an indefinite useful life, in which case they are not amortized. At each reporting date, intangible assets are reviewed for indications of impairment. If such indications exist, the intangible assets are analyzed to assess whether their carrying amount is fully recoverable. An impairment loss is recognized if the carrying amount exceeds the recoverable amount. Critical accounting estimates and judgments UBS‘s methodology for goodwill impairment testing is based on a model that is most sensitive to the following key assumptions: (i) forecasts of earnings available to shareholders in years one to three; (ii) changes in the discount rates; and (iii) changes in the long-term growth rate. The key assumptions are linked to external market information, where applicable. Earnings available to shareholders are estimated on the basis of forecast results, which are part of the business plan approved by the BoD. The discount rates are determined by applying a capital asset pricing model-based approach, as well as considering quantitative and qualitative inputs from both internal and external analysts, the view of management and regional differences in risk-free rates, at the level of individual cash- generating units. Long-term growth rates are determined in a consistent manner based on nominal or real GDP growth rate forecasts, considering different regions worldwide as incorporated in the business plan approved by the BoD. The key assumptions used to determine the recoverable amounts of each cash-generating unit are tested for sensitivity by applying reasonably possible changes to those assumptions. Refer to Note 16 for details on how the reasonably possible changes may affect the results of UBS‘s model for goodwill impairment testing. →Refer to Notes 2 and 16 for more information 1 Now including the Global Wealth Management business in Latin America, previously part of the Wealth Management business division. 355 1 Note 1 Summary of significant accounting policies (continued) 12) Provisions and contingent liabilities Provisions are liabilities of uncertain timing or amount, and are recognized when: (i) UBS has a present obligation as a result of a past event; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. The majority of UBS’s provisions relate to litigation, regulatory and similar matters, restructuring, employee benefits, real estate and loan commitments and guarantees. The Group recognizes provisions for litigation, regulatory and similar matters when, in the opinion of management after seeking legal advice, the requirements for recognition have been met. Where these factors are otherwise satisfied, a provision may be established for claims that have not yet been asserted against the Group, but are nevertheless expected to be, based on the Group’s experience with similar asserted claims. Management may undertake restructuring activities, i.e., a planned and controlled program that materially changes either the scope of the business or the manner in which it is conducted. Restructuring provisions are recognized when a detailed and formal restructuring plan has been approved and a valid expectation has been raised that the restructuring will be carried out, either through commencement of the plan or announcements to affected employees. Provisions are recognized for lease contracts if the unavoidable costs of a contract exceed the benefits expected to be received under it (onerous lease contracts). For example, this may occur when a significant portion of a leased property is expected to be vacant for an extended period. Provisions for employee benefits are recognized mainly in respect of service anniversaries and sabbatical leave. Provisions are recognized at the measurement point that represents our best estimate of the consideration required to settle the present obligation at the balance sheet date. Such estimates are based on all available information and are revised over time as more information becomes available. If the effect of the time value of money is material, provisions are discounted and measured at the present value of the expenditure expected to settle or discharge the obligation, using a rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. Provisions that are similar in nature are aggregated to form a class, while the remaining provisions, including those of less significant amounts, are disclosed under Other provisions. Provisions are presented separately on the balance sheet and, when they are no longer considered uncertain in timing or amount, are reclassified to other liabilities. When all conditions required to recognize a provision are not met, a contingent liability is disclosed, unless the likelihood of an outflow of resources is remote. Contingent liabilities are also disclosed for possible obligations that arise from past events whose existence will be confirmed only by uncertain future events not wholly within the control of UBS. Such disclosures are not made if it is not practicable to do so. Critical accounting estimates and judgments Recognition of provisions often involves significant judgment in assessing the existence of an obligation that results from past events and in estimating the probability, timing and amount of any outflows of resources. This is particularly the case for litigation, regulatory and similar matters, which, due to their nature, are subject to many uncertainties making their outcome difficult to predict. Such matters may involve unique fact patterns or novel legal theories, proceedings that have not yet been initiated or are at early stages of adjudication, or as to which alleged damages have not been quantified by the claimants. Determining whether an obligation exists as a result of a past event and estimating the probability, timing and amount of any potential outflows is based on a variety of assumptions, variables, and known and unknown uncertainties. The amount of any provision recognized is sensitive to the assumptions used and there could be a wide range of possible outcomes for any particular matter. Statistical or other quantitative analytical tools are of limited use in determining whether to establish or determine the amount of provisions in the case of litigation, regulatory or similar matters. Furthermore, information currently available to management may be incomplete or inaccurate, increasing the risk of erroneous assumptions with regard to the future development of such matters. Management regularly reviews all the available information regarding such matters, including legal advice, which is a significant consideration, to assess whether the recognition criteria for provisions have been satisfied and to determine the timing and amount of any potential outflows. →Refer to Note 21 for more information Financial statements 356 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 13) Foreign currency translation Transactions denominated in a foreign currency are translated into the functional currency of the reporting entity at the spot exchange rate on the date of the transaction. At the balance sheet date, all monetary assets including those at FVOCI (prior to 1 January 2018: monetary financial assets classified as available for sale) and monetary liabilities denominated in foreign currency are translated into the functional currency using the closing exchange rate. Translation differences (which for monetary financial assets at FVOCI are determined as if they were financial assets measured at amortized cost) are reported in Other net income from fair value changes on financial instruments (prior to 1 January 2018: Net trading income). Non-monetary items measured at historical cost are translated at the exchange rate on the date of the transaction. Prior to 1 January 2018, foreign currency translation differences on non- monetary financial assets classified as available for sale were recorded directly in Equity until the asset was derecognized. Upon consolidation, assets and liabilities of foreign operations (which from 1 October 2018 also include UBS’s Swiss-based operations with Swiss franc functional currency) are translated into US dollars, UBS’s presentation currency, at the closing exchange rate on the balance sheet date, and income and expense items and other comprehensive income are translated at the average rate for the period. The resulting foreign currency translation differences attributable to shareholders are recognized in Foreign currency translation within Equity, which forms part of Total equity attributable to shareholders, whereas the foreign currency translation differences attributable to non-controlling interests are included within Equity attributable to non-controlling interests. Share capital issued, share premium and treasury shares held are translated at the historic average rate, whereby the difference between the historic average rate and the spot rate realized upon repayment of share capital or disposal of treasury shares is reported as Share premium. Cumulative amounts recognized in OCI in respect of cash flow hedges and financial assets measured at FVOCI (prior to 1 January 2018: financial assets classified as available for sale) are translated at the closing exchange rate as of balance sheet dates, with any translation effects adjusted through Retained earnings. When a foreign operation is disposed or partially disposed of and UBS no longer controls the foreign operation, the cumulative amount of foreign currency translation differences within Total equity attributable to shareholders and Equity attributable to non- controlling interests related to that foreign operation is reclassified to the income statement as part of the gain or loss on disposal. Similarly, if an investment in an associate becomes an investment in a subsidiary, the cumulative amount of foreign currency translation differences is reclassified to profit or loss. When UBS disposes of a portion of its interest in a subsidiary that includes a foreign operation but retains control, the related portion of the cumulative currency translation balance is reclassified to Equity attributable to non-controlling interests. →Refer to Note 37 for more information Critical accounting estimates and judgments The determination of an entity’s functional currency and the trigger for a change requires management to apply significant judgment and assumptions. IAS 21, The Effects of Changes in Foreign Exchange Rates, requires management to consider the underlying transactions, events and conditions that are relevant to the entity when determining the appropriate functional currency and any changes. UBS’s conclusion, in the fourth quarter of 2018, that the functional currency of UBS Group AG, UBS AG’s Head Office in Switzerland and UBS AG’s London Branch has changed was based on a detailed assessment of the primary currencies affecting and influencing the economics of each entity, considering revenue generating income streams, expenses, funding and risk management activities. In addition, determining the earliest date from which it is practicable to perform a restatement following a voluntary change in presentational currency also requires management to apply significant judgment and make estimates and assumptions. UBS’s decision in 2018 to change the presentation currency of UBS Group AG’s consolidated financial statements from Swiss francs to US dollars was made in line with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, by assessing the earliest date from which it was practicable to perform a restatement, taking into consideration whether sufficiently reliable data was available for earlier periods and whether any assumptions on management intent or significant estimates of amounts were required. UBS carried out a detailed and extensive data analysis before concluding that 1 January 2004 represented the earliest date available, with the consequence that foreign currency translation gains and losses prior to 2004 have been disregarded and foreign currency translation effects first calculated from 1 January 2004 onward. →Refer to Note 1b for more information 357 Note 1 Summary of significant accounting policies (continued) 14) Equity, treasury shares and contracts on UBS Group AG shares Non-controlling interests Net profit is split into Net profit attributable to shareholders and Net profit attributable to non-controlling interests (including net profit attributable to preferred noteholders, if any). Similarly, Equity is split into Equity attributable to shareholders and Equity attributable to non-controlling interests (including equity attributable to preferred noteholders, if any). Non-controlling interests subject to option arrangements, e.g., written puts, are generally deemed to be acquired by UBS. As a result, the amounts allocated to non-controlling interests are reduced accordingly and a liability for the options’ exercise price is recognized, with any difference between these two amounts recorded in Share premium. UBS Group AG shares held (treasury shares) UBS Group AG shares held by the Group, including those purchased as part of market-making activities, are presented in Equity as Treasury shares at their acquisition cost and are deducted from Equity until they are canceled or reissued. The difference between the proceeds from sales of treasury shares and their weighted average cost (net of tax, if any) is reported as Share premium. Net cash settlement contracts Contracts on UBS Group AG shares that require net cash settlement, or provide the counterparty or UBS with a settlement option that includes a choice of settling net in cash, are classified as held for trading derivatives, with changes in fair value reported in the income statement as Other net income from fair value changes on financial instruments. 15) Leasing UBS enters into lease contracts, or contracts that include lease components, predominantly of premises and equipment, and primarily as lessee. Leases that transfer substantially all the risks and rewards, but not necessarily legal title in the underlying assets, are classified as finance leases. All other leases are classified as operating leases. UBS is not a lessee in any material finance leases. Lease contracts classified as operating leases where UBS is the lessee include non-cancelable long-term leases of office buildings in most UBS locations. Operating lease rentals payable are recognized as an expense on a straight-line basis over the lease term, which commences with control of the physical use of the property. Lease incentives are treated as a reduction of rental expense and are recognized on a consistent basis over the lease term. Where UBS acts as lessor under a finance lease, a receivable is recognized in Other financial assets measured at amortized cost at an amount equal to the present value of the aggregate of the minimum lease payments plus any unguaranteed residual value that UBS expects to recover at the end of the lease term. Initial direct costs are also included in the initial measurement of the lease receivable. Lease payments received during the lease term are allocated to repayment of the outstanding receivable and interest income to reflect a constant periodic rate of return on UBS’s net investment using the interest rate implicit in the lease. UBS reviews the estimated unguaranteed residual value annually, and if the estimated residual value to be realized is less than the amount assumed at lease inception, a loss is recognized for the expected shortfall. Certain arrangements do not take the legal form of a lease but convey a right to use an asset in return for a payment or series of payments. For such arrangements, UBS determines at the inception of the arrangement whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets, and if so, the arrangement is accounted for as a lease. →Refer to Note 33 for more information Financial statements 358 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) b) Changes in accounting policies, comparability and other adjustments, excluding the effects of adoption of IFRS 9, Financial Instruments 1) Changes in functional and presentation currency Change in functional currencies As a consequence of legal entity structural changes over recent years – notably the transfer of the Personal & Corporate Banking and Global Wealth Management businesses booked in Switzerland from UBS AG to UBS Switzerland AG, and the creation of UBS Business Solutions AG, which houses a significant portion of the employees and associated costs that were previously held in UBS AG’s Head Office in Switzerland and UBS AG’s London Branch – a concentration of US dollar- influenced and -managed business activities now exist in UBS AG’s Head Office in Switzerland and UBS AG’s London Branch. In addition, from the fourth quarter of 2018, for risk management purposes UBS adopted the US dollar as the risk- neutral currency and has adjusted its structural risk positions accordingly. As a result of these changes, effective from 1 October 2018, the functional currency of UBS Group AG and UBS AG’s Head Office in Switzerland changed prospectively from Swiss francs to US dollars and that of UBS AG’s London Branch changed from British pounds to US dollars, in compliance with the requirements of IAS 21, The Effects of Changes in Foreign Exchange Rates. Change in presentation currency In 2018, the presentation currency of UBS Group AG’s consolidated financial statements has changed from Swiss francs to US dollars to align with the functional currency changes of significant Group entities. UBS has restated prior periods for this voluntary presentational change in line with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, from 1 January 2004. This point in time represented the earliest date from which it was practicable to perform a restatement, given the lack of sufficiently reliable data for earlier periods. As a consequence, foreign currency translation (FCT) gains or losses prior to 2004 have been disregarded, with FCT effects first calculated from 1 January 2004 onward. In addition, UBS has included a second comparative balance sheet as of 1 January 2017 in line with IAS 1, Presentation of Financial Statements. Income and expenses as well as Other comprehensive income (OCI) were translated to US dollars at the respective average exchange rates prevailing for the relevant periods. Additionally, Other income was restated to reflect releases of FCT gains or losses from OCI to the income statement when calculated under the new US dollar presentation currency. The effect of such restatements for 2018, 2017 and 2016 was not material to the income statements of these periods. Assets, liabilities and total equity were translated at closing exchange rates prevailing on the respective balance sheet dates, after reflection of deferred tax effects relating to the restatement. Share capital issued, share premium and treasury shares held were translated at historic average rates, whereby differences between historic average rate and closing exchange rate realized upon repayment of share capital or disposal of treasury shares were reported as Share premium. Cumulative amounts recognized in OCI in respect of cash flow hedges and financial assets measured at FVOCI (prior to 1 January 2018: financial assets classified as available for sale) were translated at closing exchange rate as of respective balance sheet dates, with any translation effects adjusted through Retained earnings. The restated FCT balance as of 1 October 2018 included a cumulative gain of USD 767 million related to previously applied net investment hedges entered into by UBS Group AG or UBS AG’s Head Office to hedge investments in foreign operations against their former Swiss franc functional currency. The restated basic and diluted earnings per share (EPS) were USD 0.26 and USD 0.25 for the year ended 31 December 2017, which compares to CHF 0.28 and CHF 0.27 basic and diluted EPS under the previous Swiss franc presentation currency. For the year ended 31 December 2016, restated basic and diluted EPS were USD 0.90 and USD 0.88, which compares to CHF 0.86 and CHF 0.84 basic and diluted EPS under the previous Swiss franc presentation currency. 359 Note 1 Summary of significant accounting policies (continued) Effect of the change in the Group’s presentation currency from Swiss francs to US dollars As of or for the year ended 31.12.17 In million Under a USD presentation currency (restated) (USD) USD based on a simple translation of CHF presentation currency1 Under a CHF presentation currency (CHF) Balance sheet Equity Share capital 338 395 385 Share premium 23,598 26,613 25,942 Treasury shares (2,210) (2,189) (2,133) Retained earnings 25,932 33,599 32,752 Other comprehensive income recognized directly in equity, net of tax 4,838 (5,880) (5,732) Equity attributable to shareholders 52,495 52,538 51,214 Equity attributable to non-controlling interests 59 59 57 Total equity 52,554 52,597 51,271 Income statement Other income 511 515 509 Total operating income 29,622 29,627 29,067 Operating profit / (loss) before tax 5,351 5,355 5,268 Tax expense / (benefit)4,305 4,234 4,139 Net profit / (loss)1,046 1,121 1,128 Net profit / (loss) attributable to non-controlling interests 77 77 76 Net profit / (loss) attributable to shareholders 969 1,044 1,053 As of or for the year ended 31.12.16 In million Under a USD presentation currency (restated) (USD) USD based on a simple translation of CHF presentation currency1 Under a CHF presentation currency (CHF) Balance sheet Equity Share capital 338 378 385 Share premium 25,958 27,761 28,254 Treasury shares (2,362) (2,210) (2,249) Retained earnings 25,029 31,170 31,725 Other comprehensive income recognized directly in equity, net of tax 3,953 (4,416) (4,494) Equity attributable to shareholders 52,916 52,683 53,621 Equity attributable to non-controlling interests 670 670 682 Total equity 53,586 53,353 54,302 Income statement Other income 663 603 599 Total operating income 28,729 28,669 28,320 Operating profit / (loss) before tax 4,209 4,149 4,090 Tax expense / (benefit)777 816 805 Net profit / (loss)3,432 3,333 3,286 Net profit / (loss) attributable to non-controlling interests 84 84 82 Net profit / (loss) attributable to shareholders 3,348 3,250 3,204 Financial statements 360 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Effect of the change in the Group’s presentation currency from Swiss francs to US dollars (continued) As of or for the year ended 31.12.15 In million Under a USD presentation currency (restated) (USD) USD based on a simple translation of CHF presentation currency1 Under a CHF presentation currency (CHF) Balance sheet Equity Share capital 338 384 385 Share premium 28,966 31,113 31,164 Treasury shares (1,806) (1,690) (1,693) Retained earnings 22,672 29,455 29,504 Other comprehensive income recognized directly in equity, net of tax 5,166 (4,040) (4,047) Equity attributable to shareholders 55,336 55,221 55,313 Equity attributable to non-controlling interests 1,992 1,992 1,995 Total equity 57,328 57,213 57,308 1 Amounts presented in this column represent a translation of the previously published information under a Swiss franc presentation currency, translated to US dollars using a simplified approach. Assets, liabilities and equity were translated to US dollars at closing exchange rates prevailing on the respective balance sheet dates, and income and expenses were translated at the respective average rates prevailing for the relevant periods. 361 Note 1 Summary of significant accounting policies (continued) 2) IFRS 15, Revenue from Contracts with Customers Effective from 1 January 2018, UBS adopted IFRS 15, Revenue from Contracts with Customers, which replaced IAS 18, Revenue, and establishes principles for revenue recognition that apply to all contracts with customers except those relating to financial instruments, leases and insurance contracts. The standard requires an entity to recognize revenue as performance obligations are satisfied. IFRS 15 specifies that variable consideration is only recognized when the related performance obligation has been satisfied and to the extent that it is highly probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved. IFRS 15 also provides guidance on when revenues and expenses should be presented on a gross or net basis and establishes a cohesive set of disclosure requirements for information on the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. As permitted by the transitional provisions of IFRS 15, UBS elected not to restate comparative figures. Instead, the cumulative effect of initially applying the standard was recognized as an adjustment to the opening balance of retained earnings. A transition adjustment of USD 28 million on a pre-tax basis and USD 25 million net of tax was posted to retained earnings to reverse income recognized prior to 1 January 2018 under IAS 18 that must be deferred under IFRS 15, either owing to the variable consideration constraint (asset management performance fees of USD 16 million) or because UBS does not have an enforceable right to a specified amount of consideration (commission-sharing agreements for research services of USD 11 million). The adoption of IFRS 15 resulted in changes to UBS’s accounting policies applicable from 1 January 2018 as set out in Note 1a. Following the adoption of IFRS 15, fee and commission income is presented in the income statement separately from fee and commission expense. Where UBS is acting as principal as defined by IFRS 15, costs of fulfilling contracts are required by IFRS 15 to be presented separately in the income statement within Fee and commission expense. Where UBS is acting as agent as defined by IFRS 15, costs of fulfilling contracts are required to be presented as a reduction in Fee and commission income. This resulted in a reclassification of certain brokerage fees paid in an agency capacity from Fee and commission expense to Fee and commission income from 1 January 2018, primarily relating to third-party execution costs for exchange-traded derivative transactions and fees payable to third-party research providers on behalf of clients. Other presentation changes In addition to the IFRS 15 changes, certain revenues presented within Fee and commission income, primarily distribution fees and fund management fees, have been reclassified between reporting lines in Note 4 to better reflect the nature of the revenues, with comparative-period information restated accordingly. Also, certain expenses that are incremental and incidental to revenues have been reclassified prospectively from General and administrative expenses to Fee and commission expense to improve the alignment of transaction-based costs with the associated revenue stream, primarily affecting clearing costs, client loyalty costs, and fund and custody expenses. As the effect of this reclassification was not material, prior-period information was not restated. →Refer to Note 4 for more information on the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers 3) Changes in segment reporting Effective from the first quarter of 2018, UBS combined its Wealth Management and Wealth Management Americas business divisions into a single Global Wealth Management business division. Global Wealth Management is managed on an integrated basis, with a single set of performance targets and a unified operating plan and management structure. Consistent with this, the operating results of Global Wealth Management are presented and assessed on an integrated basis in internal management reports to the Group Executive Board, which is considered the chief operating decision maker pursuant to IFRS 8, Operating Segments. Consequently, beginning from 2018, Global Wealth Management qualifies as an operating and reportable segment for the purposes of segment reporting and is presented alongside Personal & Corporate Banking, Asset Management, the Investment Bank, and Corporate Center (with its units Services, Group Asset and Liability Management and Non-core and Legacy Portfolio). Financial statements 362 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 4) IFRS 7, Financial Instruments: Disclosures IFRS 7, Financial Instruments: Disclosures, was updated in line with IFRS 9, Financial Instruments. UBS adopted the revised requirements on 1 January 2018, which is the date of initial application of IFRS 9. IFRS 9 transition disclosures as set out by IFRS 7 are presented in Note 1c. In line with amendments to IFRS 7, from 1 January 2018, UBS separately presents hedging gains and losses recognized during the period in the statement of comprehensive income and the amounts reclassified to the income statement. More specifically, the effective portion of changes in fair value of hedging instruments designated as net investment hedges (before tax) recognized in other comprehensive income and the amounts reclassified to the income statement, previously included within Foreign currency translation movements, before tax and Foreign exchange amounts reclassified to the income statement from equity, are now presented in Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax and Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to the income statement, respectively. Furthermore, the line Foreign exchange amounts reclassified to the income statement from equity was renamed to Foreign currency translation differences on foreign operations reclassified to the income statement, and the line Income tax relating to foreign currency translation movements was renamed to Income tax relating to foreign currency translations, including the effect of net investment hedges. In addition, while retaining hedge accounting under IAS 39, from 2018 the Group presents new disclosures to reflect the effects of hedge accounting on the Group’s financial statements as required by consequential amendments of IFRS 7. The enhanced disclosures are included in the “Derivatives transacted for hedging purposes” section of Note 28. Specifically, hedging disclosures now include a more extensive description of UBS’s hedging strategies as risk management tools, and effects of hedge accounting on financial position and performance are structured in tabular format. These additional disclosures are presented prospectively from 1 January 2018. 5) Amendments to IAS 1, Presentation of Financial Statements In line with amendments to IAS 1, Presentation of Financial Statements, from 1 January 2018, in the income statement, UBS presents interest income and interest expense, calculated using the effective interest method, on financial instruments measured at amortized cost and financial assets measured at fair value through other comprehensive income separately from interest income and expense on financial instruments measured at fair value through profit or loss. →Refer to Note 3 for more information 6) Change in presentation of forward points on certain long-duration foreign exchange contracts transacted as economic hedges Effective from 1 January 2018, UBS refined the presentation of forward points on certain long-duration foreign exchange contracts transacted as economic hedges, transferring the forward points from Other net income from fair value changes on financial instruments (prior to 1 January 2018: Net trading income) to Interest income from financial instruments measured at fair value through profit or loss to align with the presentation of forward points on certain short-duration foreign exchange contracts. The amount of forward points on certain long- duration foreign exchange contracts recognized in Interest income from financial instruments measured at fair value through profit or loss did not have a material effect on the Group’s financial statements and prior periods have not been restated. 7) IFRS Interpretations Committee, Payments relating to taxes other than income tax During the second quarter of 2018, UBS refined its treatment of prepayments or overpayments in relation to uncertain tax positions outside of the scope of IAS 12, Income Taxes, following the IFRS Interpretation Committee’s discussion on Payments relating to taxes other than income tax. More specifically, prepayments for uncertain tax positions that have not yet given rise to a liability are recognized as assets because UBS will either receive a cash rebate or a benefit through the extinguishment of a future liability. Adoption of the change did not have a material effect on UBS’s financial statements. 363 Note 1 Summary of significant accounting policies (continued) c) Changes in accounting policies and comparability and transition effects from the adoption of IFRS 9 Financial Instruments 1) Introduction Effective 1 January 2018, UBS adopted IFRS 9, Financial Instruments, which replaced IAS 39, Financial Instruments: Recognition and Measurement, and substantially changed accounting and financial reporting in three key areas: classification and measurement of financial assets, impairment and hedge accounting. In addition, UBS early adopted the Amendment to IFRS 9, Prepayment Features with Negative Compensation, issued in October 2017, which allows the Group to continue to apply amortized cost accounting to Swiss private mortgages and corporate loans that provide for two-way compensation if a prepayment occurs. The Group has retained hedge accounting under IAS 39 as permitted and early adopted the own credit requirements of IFRS 9 during the first quarter of 2016. As permitted by the transitional provisions of IFRS 9, UBS elected not to restate comparative figures. Any effect on the carrying amounts of financial assets and liabilities at the date of transition to IFRS 9 was recognized as an adjustment to opening retained earnings. The detailed effects of the adoption of IFRS 9 on 1 January 2018 are presented in this Note and the updated accounting policies for classification and measurement of financial instruments and impairment of financial assets as applied from 1 January 2018 are presented in Note 1a. 2) Transition effect The adoption of IFRS 9 effective 1 January 2018 has resulted in a reduction to IFRS consolidated equity as of 1 January 2018 of USD 591 million. This effect is comprised of classification and measurement changes of USD 360 million on a pre-tax basis and USD 300 million net of tax, as well as effects from the implementation of impairment requirements based on an expected credit loss (ECL) methodology of USD 357 million on a pre-tax basis and USD 291 million net of tax. →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information on the effect of the IFRS 9 transition on UBS’s capital adequacy 3) Governance The implementation of IFRS 9 has been a key strategic initiative for UBS implemented under the joint sponsorship of the Group Chief Financial Officer and the Group Chief Risk Officer. The incorporation of forward-looking information into the ECL calculation and the definition and assessment of what constitutes a significant increase in credit risk (SICR) are inherently subjective and involve the use of significant expert judgment. Therefore, UBS has developed a front-to-back governance framework over the ECL calculation process jointly owned by the Group Chief Financial Officer and the Group Chief Risk Officer and has designed controls to meet the requirements of the Sarbanes-Oxley Act. UBS has efficient credit risk management processes in place that continue to be applicable and aim to ensure that the effects of economic developments are appropriately considered, mitigation actions are taken where required and risk appetite is reassessed and adjusted as needed. →Refer to the “Risk management and control” section of this report for more information 4) Retrospective amendments to UBS Group balance sheet presentation Although the effect of IFRS 9 classification and measurement changes has been applied prospectively, UBS has made a series of changes to the presentation of its balance sheet to facilitate comparability, with information for periods ending before 1 January 2018 being presented in this revised structure. The primary changes include: – IAS 39-specific asset categories, such as Financial assets held to maturity and Financial assets available for sale, have been superseded by the new categories Financial assets measured at amortized cost and Financial assets measured at fair value through other comprehensive income. – A new line, Financial assets at fair value not held for trading, has been created to accommodate in particular financial assets previously designated at fair value, all of which are mandatorily classified at fair value through profit or loss under IFRS 9. –Other assets and Other liabilities have been split into those measured at amortized cost, measured at fair value through profit or loss and other non-financial assets and liabilities. –Cash collateral on securities borrowed and Reverse repurchase agreements have been combined into a single line, Receivables from securities financing transactions. Similarly, Cash collateral on securities lent and Repurchase agreements have been combined into a single line, Payables from securities financing transactions. – Finance lease receivables, previously presented within Loans, are now presented within Other financial assets measured at amortized cost. – Precious metal positions previously presented in Trading portfolio assets are now presented within the new line Other non-financial assets. –Financial liabilities designated at fair value have been split into two lines: Debt issued designated at fair value and Other financial liabilities designated at fair value.Financial statements 364 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) The table below illustrates the revised balance sheet presentation of assets and liabilities as of 31 December 2017 in comparison with the presentation in the Annual Report 2017. The presentation of the components of equity has not changed, and therefore, for illustration purposes, total liabilities and equity are presented in a single line in the table. The table does not reflect any of the effects of adopting the classification and measurement requirements of IFRS 9, which are presented in the “Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9” table in this Note. Retrospective amendments to UBS Group balance sheet presentation as of 31 December 2017 USD million 31.12.17 331.12.17 Assets References Former presentation RRevised presentation Cash and balances at central banks 90,045 90,045 Loans and advances to banks (formerly: Due from banks) 14,094 14,094 Receivables from securities financing transactions (new line) 1 91,951 Cash collateral on securities borrowed (newly included in Receivables from securities financing transactions) 1 12,714 Reverse repurchase agreements (newly included in Receivables from securities financing transactions) 1 79,238 Cash collateral receivables on derivative instruments 24,040 24,040 Loans and advances to customers (formerly: Loans) 2 327,833 326,746 Financial assets held to maturity (superseded) 3 9,403 Other financial assets measured at amortized cost (new line) 2, 3, 7 37,815 Total financial assets measured at amortized cost 584,691 Financial assets at fair value held for trading (formerly: Trading portfolio assets) 4 134,087 129,407 of which: assets pledged as collateral that may be sold or repledged by counterparties 36,277 36,277 Derivative financial instruments (formerly: Positive replacement values) 121,285 121,285 Brokerage receivables (new line, formerly included within Other assets) n/a nn/a Financial assets at fair value not held for trading (new line) 5 60,457 Financial assets designated at fair value 5 60,457 Total financial assets measured at fair value through profit or loss 311,148 Financial assets available for sale (superseded) 6 8,889 Financial assets measured at fair value through other comprehensive income (new line)6 8,889 Investments in associates 1,045 1,045 Property, equipment and software 9,057 9,057 Goodwill and intangible assets 6,563 6,563 Deferred tax assets 10,056 10,056 Other non-financial assets (new line) 4, 7 7,830 Other assets (superseded)7 30,474 Total assets 939,279 939,279 Liabilities Amounts due to banks 7,728 7,728 Payables from securities financing transactions (new line) 8 17,485 Cash collateral on securities lent (newly included in Payables from securities financing transactions) 8 1,835 Repurchase agreements (newly included in Payables from securities financing transactions) 8 15,650 Cash collateral payables on derivative instruments 31,029 31,029 Customer deposits (formerly: Due to customers) 419,577 419,577 Debt issued measured at amortized cost 143,160 143,160 Other financial liabilities measured at amortized cost (new line) 10 37,276 Total financial liabilities measured at amortized cost 656,255 Financial liabilities at fair value held for trading (formerly: Trading portfolio liabilities) 31,251 31,251 Derivative financial instruments (formerly: Negative replacement values) 119,137 119,137 Brokerage payables designated at fair value (new line, formerly included within Other liabilities) n/a nn/a Financial liabilities designated at fair value (superseded) 9 55,604 Debt issued designated at fair value (new line) 9 50,782 Other financial liabilities designated at fair value (new line) 9, 10 16,643 Total financial liabilities measured at fair value through profit or loss 217,813 Provisions 3,214 3,214 Other non-financial liabilities (new line) 10 9,443 Other liabilities (superseded) 10 58,540 Total liabilities 886,725 886,725 Total liabilities and equity 939,279 939,279 365 Note 1 Summary of significant accounting policies (continued) Explanatory footnotes to the table “Retrospective amendments to UBS Group balance sheet presentation” Table ref.Description of presentation changes applied retrospectively to the balance sheet as of 31 December 2017 Balance sheet assets 1 Cash collateral on securities borrowed of USD 12,714 million and reverse repurchase agreements of USD 79,238 million as of 31 December 2017 are now presented as a total of USD 91,951 million within a single line, Receivables from securities financing transactions. 2 Finance lease receivables of USD 1,086 million as of 31 December 2017, previously presented within Loans, are now presented within Other financial assets measured at amortized cost. 3 Financial assets held to maturity measured at amortized cost of USD 9,403 million as of 31 December 2017 are now presented within Other financial assets measured at amortized cost. 4 Precious metal positions of USD 4,681 million as of 31 December 2017, previously presented in Trading portfolio assets, are now presented within Other non-financial assets. 5 Financial assets designated at fair value through profit or loss of USD 60,457 million as of 31 December 2017, previously presented in a separate line, are now presented within Financial assets at fair value not held for trading. 6 Debt and equity instruments of USD 8,889 million as of 31 December 2017, previously presented in Financial assets available for sale, are now presented within Financial assets measured at fair value through other comprehensive income. 7 The reporting line Other assets has been split into two new reporting lines, Other financial assets measured at amortized cost and Other non-financial assets. – Assets of USD 30,474 million as of 31 December 2017, previously presented within Other assets, are now presented within Other financial assets measured at amortized cost (USD 27,325 million) and Other non-financial assets (USD 3,149 million). – Financial assets now presented within Other financial assets measured at amortized cost include brokerage receivables of USD 19,573 million, debt securities of USD 9,403 million, loans to financial advisors of USD 3,199 million and other assets amounting to USD 5,639 million. Refer to Note 17a for more information. – Refer to Note 17b for more information on assets now presented within Other non-financial assets. Balance sheet liabilities 8 Cash collateral on securities lent of USD 1,835 million and repurchase agreements of USD 15,650 million as of 31 December 2017 are now presented within a single line, Payables from securities financing transactions. 9 Financial liabilities designated at fair value through profit or loss of USD 55,604 million as of 31 December 2017 are now presented within Debt issued designated at fair value (USD 50,782 million) and Other financial liabilities designated at fair value (USD 4,822 million). 10 The reporting line Other liabilities has been split into three new reporting lines, Other financial liabilities measured at amortized cost, Other financial liabilities designated at fair value and Other non-financial liabilities. – Liabilities amounting to USD 58,540 million as of 31 December 2017, previously presented within Other liabilities, are now presented within Other financial liabilities measured at amortized cost (USD 37,277 million, thereof USD 30,413 million brokerage payables), within Other financial liabilities designated at fair value (amounts due under unit-linked investment contracts of USD 11,821 million) and within Other non-financial liabilities (USD 9,443 million). – Refer to Note 22a for more information on financial liabilities now presented within Other financial liabilities measured at amortized cost. – Refer to Note 22b for more information on financial liabilities now presented within Other financial liabilities designated at fair value. – Refer to Note 22c for more information on liabilities now presented within Other non-financial liabilities.Financial statements 366 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) 5) Transition to IFRS 9 as of 1 January 2018 Transition to classification and measurement requirements As set out in the amended accounting policies in Note 1a, IFRS 9 requires all financial assets, except equity instruments and derivatives, to be classified at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss (FVTPL), based on the business model for managing the respective assets and their contractual cash flow characteristics. Changes resulting from the application of IFRS 9 classification and measurement requirements as of 1 January 2018 have been applied as follows: – Determination of the business model was made based on facts and circumstances as of the 1 January 2018 transition date. – De-designations and new designations of financial instruments at FVTPL, pursuant to transition requirements of IFRS 9, have been carried out as of 1 January 2018. These reassessments resulted in: i. the de-designation of certain financial assets designated at FVTPL, as they are managed on a fair value basis, and therefore mandatorily measured at fair value, or are no longer managed on a fair value basis but held to collect the contractual cash flows and therefore measured at amortized cost; and ii. the new designation of financial liabilities at FVTPL (e.g., brokerage payables) in order to achieve measurement consistency with associated financial assets that are mandatorily measured at FVTPL (e.g., brokerage receivables). For UBS, the most significant IFRS 9 classification and measurement changes on transition to IFRS 9 were as follows: – financial assets that no longer qualify for amortized cost accounting under IFRS 9 have been classified at FVTPL because their cash flow characteristics do not satisfy the solely payments of principal and interest criterion (e.g., auction rate securities and certain brokerage receivables); – lending arrangements that no longer qualify for amortized cost accounting under IFRS 9 are classified at FVTPL because the business model within which they are managed does not have an objective to hold financial assets in order to collect the contractual cash flows or to collect contractual cash flows and sell (e.g., certain Investment Bank lending arrangements); – equity instruments classified as available for sale under IAS 39 are classified at FVTPL under IFRS 9; and – financial liabilities are newly designated under IFRS 9 at FVTPL, from amortized cost accounting, to align with conclusions reached for associated financial assets that will be measured at FVTPL (e.g., brokerage payables). Effect on UBS Group income statement presentation Upon adoption of IFRS 9, the reclassification of auction rate securities, certain loans in the Investment Bank, certain repurchase agreements and brokerage balances from amortized cost to FVTPL has resulted in the interest income from these instruments moving from Interest income (expense) from financial instruments measured at amortized cost to Interest income (expense) from financial instruments measured at fair value through profit or loss. These changes have been applied prospectively from 1 January 2018. Effect on UBS Group statement of cash flows Following the adoption of IFRS 9, changes have been made to the statement of cash flows to reflect the changes arising from financial instruments that have been reclassified on the balance sheet. In particular, cash flows from certain financial assets previously measured as available-for-sale assets at fair value through other comprehensive income have been reclassified from investing activities to operating activities as the assets are measured at fair value through profit or loss effective 1 January 2018. Transition to expected credit loss requirements As set out in the Group’s amended accounting policies in Note 1a, IFRS 9 introduced a forward-looking ECL approach, which is intended to result in an earlier recognition of credit losses compared with the incurred-loss impairment approach for financial instruments under IAS 39 and the loss-provisioning approach for financial guarantees and loan commitments under IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The majority of ECL calculated as of the transition date relate to the private and commercial mortgage portfolio and corporate lending in Switzerland within Personal & Corporate Banking. 367 Note 1 Summary of significant accounting policies (continued) Models at transition For the purpose of implementing ECL under IFRS 9, UBS has leveraged existing Pillar 1 internal ratings-based (IRB) models that are also used in determining expected loss and risk- weighted assets under the Basel III framework and Pillar 2 stress loss models. Existing models have been adapted and 29 new models have been developed for the ECL calculation that consider the complexity, structure and risk profile of relevant portfolios and take account of the fact that the probabilities of default (PD) and the loss given default (LGD) used in the ECL calculation are point-in-time-based as opposed to the corresponding Basel III through-the-cycle (TTC) parameters. Management adjustments have also been made. UBS has leveraged its existing model risk framework, including the key model validation control executed by Model Risk Management & Control. New and revised models have been approved by UBS’s Group Model Governance Board. The assignment of internal counterparty rating grades and the determination of default probabilities for the purposes of Basel III remain unchanged. →Refer to “Credit risk models” in the “Risk management and control” section of this report for more information Scenarios and scenario weights at transition As outlined in Note 1a, UBS uses four different economic scenarios in the ECL calculation: an upside, a baseline, a mild downside and a severe downside scenario. ECL calculated on transition have been determined for each of the scenarios and subsequently weighted based on the probabilities in the table “Economic scenarios and weights applied.” Economic scenarios and weights applied ECL scenario Assigned weights in % (1.1.18 ) Upside 20.0 Baseline 42.5 Mild downside 30.0 Severe downside 7.5 →Refer to Note 23b for information on weights applied to economic scenarios as at 31 December 2018 UBS has established IFRS 9 ECL Scenario and Operating Committees to propose and approve the selection of the scenarios and weights to be applied and to monitor whether appropriate governance exists. Macroeconomic and other factors at transition Assumptions around the most important forward-looking economic factors for Switzerland, the US and other regions as applied in each of the economic scenarios to determine ECL at the date of transition can be summarized as follows. For the baseline scenario, which is modeled along our business plan assumptions of a continuation of overall important global growth, Swiss GDP growth remains between 1% and 2% annually over the three years of the scenario. Moderate growth results in a very mild increase of unemployment, which stabilizes at around 3.5%. Asset price growth is also moderate, with the Swiss equity price index rising approximately 8% annually, while house prices grow by less than 1% annually. Policy rates, short- term interest rates and government bond yields increase very gradually over the three years of the scenario by approximately 50 basis points. GDP growth in the US remains relatively stable, and faster than in Switzerland. Monetary policy tightens at a similar pace to Switzerland and, combined with a modest decline in the unemployment rate, helps to keep inflation in check. US equity prices slightly underperform their Swiss counterparts, while house prices outperform relatively stagnant Swiss house price growth. In the rest of the world, growth remains buoyant, with moderating growth in both Europe and China contrasting with accelerating growth in other emerging markets. In the upside scenario, which assumes GDP growth rising above trend in most countries with only a moderate rise in inflation and ongoing accommodative monetary policies, GDP growth in Switzerland peaks at around 5% annually. Strong growth leads to a decline in unemployment to very low levels (below 1%) by 2020. Asset prices grow at a robust pace, with equity prices increasing approximately 10% annually and house prices (single-family homes) rising approximately 4% annually. Policy and short-term interest rates remain low over the entire scenario, while government bond yields experience a sustained increase. In the US and the rest of the world, the scenario shows broadly similar features, with growth accelerating in Year 1 before steadily returning toward trend by Year 3. Specifically in the US, GDP growth accelerates at a slightly faster pace than in Switzerland, although the US experiences a slightly less substantial improvement in the unemployment rate by Year 3. The degree of policy tightening is marginally greater over the scenario horizon and, as in Switzerland, long-term government bond yields rise more significantly than short-term rates, and to a greater degree.Financial statements 368 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) The mild downside scenario is based on a monetary policy tightening assumption, implemented to deflate a potential asset price bubble, causing Swiss GDP to decline by almost 1% in the first year of the scenario. The unemployment rate rises to roughly 5%. Equity prices fall by more than 20% over three years, while house prices decline by 15% over the same period. The fall of the nominal asking rent index, which is cushioned by higher interest rates, is more moderate than the decline in house prices. Short-term interest rates rise significantly as a result of monetary tightening, as well as government bond yields. In this scenario, inflation in the US accelerates rapidly, leading to a sharp rise in short-term interest rates, with a similar development in Switzerland. GDP growth and house prices decline at a similar rate in the US and Switzerland. In the rest of the world, growth is also weighed down, particularly in more vulnerable emerging markets such as Russia, Turkey and Brazil, as interest rates and credit spreads rise sharply. The severe downside scenario is modeled to mimic a severe recession caused by an event affecting Switzerland’s competitiveness in key export markets, with Swiss GDP shrinking almost 7% in the first year of the scenario. The severe recession results in a substantial increase in unemployment, which peaks at around 9%. Asset prices plummet, with the Swiss equity index falling more than 55% over three years, and house prices declining 27% over the same period. Policy and short-term interest rates remain low over the entire scenario horizon. US GDP and unemployment deteriorate by a lesser degree than in Switzerland, and while house and equity prices decline sharply, the effects are also less severe than in Switzerland. With more scope to cut rates than the Swiss National Bank, short-term rates fall in the US. In the rest of the world, growth also slows sharply, particularly in the eurozone and neighboring emerging markets, such as Turkey and Russia. →Refer to Note 23 for more information ECL measurement period at transition As set out in Note 1a, for the majority of ECL-relevant instruments, the contractual maturity is used to calculate the measurement period, with this capped at 12 months when stage 1 ECL are required. In addition, for credit card limits and Swiss callable master credit facilities, judgment is required as UBS must determine the period over which it is exposed to credit risk. A seven-year period has been applied for credit cards and 12 months for master credit facilities. UBS’s ECL-relevant financial instruments have relatively short average maturities, which significantly contribute to the level of ECL on transition. SICR determination at transition The identification of instruments for which a significant increase in credit risk (SICR) has been determined since initial recognition, and the corresponding allocation to stage 2 at transition, generally follow the principles described in the relevant accounting policy provided in Note 1a. Furthermore, the following principles have been applied. General: In estimating the retrospective lifetime PDs, the economic conditions over the relevant prior periods and the general significant uncertainty inherent in such approximation have been considered to determine the allocation of instruments to stage 2 at transition. Real estate financing: The Basel III rating methodology applied to the majority of income-producing real estate financings within Personal & Corporate Banking, which is leveraged for IFRS 9 ECL calculations, was significantly changed in 2017. As a consequence, there is no comparable rating on origination to determine whether an SICR has arisen over time. As permitted by the IFRS 9 transition requirements, a lifetime ECL allowance has therefore been recognized for certain real estate financing positions and will continue to be recognized until the positions are derecognized. Other portfolios, including private mortgages and commercial SME clients: The Basel III rating models for other key portfolios in Personal & Corporate Banking, in particular for private client mortgages and commercial clients in the small and medium- sized enterprise segment, have recently been subject to a major redesign. While the methodology remained essentially the same and the calibration to the portfolios’ average TTC PD value unchanged, the effect on the stage allocation is significant. This is due to the fact that the introduction of new models has led to a broader and different distribution of borrowers across the rating spectrum; while there was no material effect on those counterparties with an uplift in their rating, some of those that had a downward shift in their rating triggered the SICR threshold and a reclassification into stage 2 at transition. Overview of transition effects The table on the following pages provides a detailed overview of the IFRS 9 transition effects as of 1 January 2018. This includes: – reclassification of IAS 39 carrying amounts to the new categories applicable under IFRS 9; – remeasurement of carrying amounts due to reclassification (any remeasurement to fair value and / or reversal of IAS 39 allowances or IAS 37 provisions for assets moving from amortized cost to fair value); and – recognition of IFRS 9 ECL for in-scope assets, off-balance sheet positions and other credit lines. The following table also includes the effects recognized for deferred tax assets and therefore the total effect provided in Retained earnings in the table is net of tax effects. Explanatory footnotes set out after the table provide additional details on these changes. 369 Note 1 Summary of significant accounting policies (continued) Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9 31.12.17 1.1.18 USD million Classification under IAS 39 Carrying amount (IAS 39) Reclassification (of IAS 39 carrying amounts) Remeasurement due to reclassification incl. reversal of IAS 39 / IAS 37 allowances / provisions Recognition of ECL (IFRS 9) Carrying amount (IFRS 9) Assets Cash and balances at central banks Loans and receivables 90,045 0 90,045 Loans and advances to banks Loans and receivables 14,094 (17) (3) 12 14,074 to: Brokerage receivables Loans and receivables (17) 1 Receivables from securities financing transactions Loans and receivables 91,951 (5,085) (2) 12 86,864 to: Financial assets at fair value not held for trading Loans and receivables (5,085) 2 Cash collateral receivables on derivative instruments Loans and receivables 24,040 0 24,040 Loans and advances to customers Loans and receivables 326,746 (8,024) 0 (241) 12 318,480 to: Financial assets at fair value not held for trading Loans and receivables (2,747) 3 to: Brokerage receivables Loans and receivables (4,812) 1 to: Financial assets at fair value held for trading Loans and receivables (480) 4 from: Financial assets at fair value not held for trading FVTPL (designated) 9 5 0 from: Financial assets at fair value held for trading FVTPL (held for trading) 6 5 Other financial assets measured at amortized cost Loans and receivables, held to maturity 37,815 (19,004) 0 (36) 12 18,775 to: Brokerage receivables Loans and receivables (19,573) 1 from: Financial assets measured at fair value through other comprehensive income Available for sale 569 6 0 Total financial assets measured at amortized cost 584,691 (32,131) 0 (282) 552,277 Financial assets at fair value held for trading FVTPL (held for trading) 129,407 (11,135) (16) 118,256 to: Loans and advances to customers FVTPL (held for trading) (6) 5 to: Financial assets at fair value not held for trading FVTPL (held for trading) (11,609) 7 from: Loans and advances to customers Loans and receivables 480 4 (16)4 of which: assets pledged as collateral that may be sold or repledged by counterparties FVTPL (held for trading) 36,277 36,277 Derivative financial instruments FVTPL (derivatives) 121,285 121,285 Brokerage receivables Loans and receivables 24,403 24,403 from: Loans and advances to banks Loans and receivables 17 1 from: Loans and advances to customers Loans and receivables 4,812 1 from: Other financial assets measured at amortized cost Loans and receivables 19,573 1 Financial assets at fair value not held for trading FVTPL (designated) 60,457 9 20,822 (295) 80,985 to: Loans and advances to customers FVTPL (designated) (9) 5 from: Financial assets at fair value held for trading FVTPL (held for trading) 11,609 7 from: Receivables from securities financing transactions Loans and receivables 5,085 2 (1) from: Loans and advances to customers Loans and receivables 2,747 3 (293) 3 from: Financial assets measured at fair value through other comprehensive income Available for sale 1,391 8 Total financial assets measured at fair value through profit or loss 311,148 34,090 (310) 344,928 Financial assets measured at fair value through other comprehensive income Available for sale 8,889 (1,960) 6,93010 to: Other financial assets measured at amortized cost Available for sale (569) 6 to: Financial assets at fair value not held for trading Available for sale (1,391) 8 Investments in associates 1,045 1,045 Property, equipment and software 9,057 9,057 Goodwill and intangible assets 6,563 6,563 Deferred tax assets 10,056 59 11 6611 10,182 Other non-financial assets 7,830 7,830 Total assets 939,279 (251) (216) 938,812 Financial statements 370 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9 (continued) 31.12.17 1.1.18 USD million Classification under IAS 39 Carrying amount (IAS 39) Reclassification (of IAS 39 carrying amounts) Remeasurement due to reclassification incl. reversal of IAS 39 / IAS 37 allowances / provisions Recognition of ECL (IFRS 9) Carrying amount (IFRS 9) Liabilities Amounts due to banks Amortized cost 7,728 7,728 Payables from securities financing transactions Amortized cost 17,485 (5,212) 12,273 to: Other financial liabilities designated at fair value Amortized cost (5,212) 13 Cash collateral payables on derivative instruments Amortized cost 31,029 31,029 Customer deposits Amortized cost 419,577 (5,404) 414,172 to: Brokerage payables designated at fair value Amortized cost (5,404) 14 Debt issued measured at amortized cost Amortized cost 143,160 143,160 Other financial liabilities measured at amortized cost Amortized cost 37,276 (30,413) (4) 6,859 to: Brokerage payables designated at fair value Amortized cost (30,413) 14 Derecognition: deferred fees on other loan commitments Amortized cost (4) 4 Total financial liabilities measured at amortized cost 656,255 (41,030) (4) 615,222 Financial liabilities at fair value held for trading FVTPL (held for trading) 31,251 31,251 Derivative financial instruments FVTPL (derivatives) 119,137 59 119,196 Recognition: Loan commitments Amortized cost – off-balance sheet 61 4 Derecognition: Loan commitments FVTPL (derivatives) (2) 5 Brokerage payables designated at fair value Amortized cost 35,818 35,818 from: Customer deposits Amortized cost 5,404 14 from: Other financial liabilities measured at amortized cost Amortized cost 30,413 14 Debt issued designated at fair value FVTPL (designated) 50,782 50,782 Other financial liabilities designated at fair value FVTPL (designated) 16,643 5,212 (5) 21,850 from: Payables from securities financing transactions Amortized cost 5,212 13 (5) 13 Total financial liabilities measured at fair value through profit or loss 217,813 41,030 54 258,897 Provisions 3,214 76 12 3,290 Other non-financial liabilities 9,443 9,443 Total liabilities 886,725 50 76 886,851 Equity Share capital 338 338 Share premium 23,598 23,598 Treasury shares (2,210) (2,210) Retained earnings 25,932 74 8,15 (300) (291) 25,415 Other comprehensive income recognized directly in equity, net of tax 4,838 (74) 8,15 4,764 Equity attributable to shareholders 52,495 0 (300) 15 (291)15 51,905 Equity attributable to non-controlling interests 59 59 Total equity 52,554 0 (300) (291) 51,963 Total liabilities and equity 939,279 0 (251) (216) 938,812 371 Note 1 Summary of significant accounting policies (continued) Explanatory footnotes to the table “Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9” Table ref.Description of classification or remeasurement changes on adoption of IFRS 9 as of 1 January 2018 1 Certain customer and prime brokerage receivable balances, in the Investment Bank and Global Wealth Management, fail the solely payments of principal and interest (SPPI) criterion for measurement at amortized cost. These include USD 4,812 million previously included within Loans and advances to customers, USD 17 million from Loans and advances to banks and USD 19,573 million previously included within Other financial assets measured at amortized cost. The receivables are managed under a business model whose objective is to hold the assets to collect contractual cash flows. However, the reported receivables represent an aggregation of cash receivable and payable balances that form a single unit of account at the client level and generate a return that does not constitute consideration for the time value of money, credit risk and other basic lending risks. The SPPI criterion is therefore not met and under IFRS 9 the receivables are mandatorily measured at fair value through profit or loss (FVTPL) and separately presented as Brokerage receivables. There was no difference between the amortized cost carrying amount and the fair value as of 1 January 2018 and therefore no remeasurement gain or loss has been recognized. 2 Based on the business model assessment under IFRS 9, certain reverse repurchase agreements with a carrying amount of USD 5,085 million as of 31 December 2017 were determined to be managed on a fair value basis and were therefore reclassified from amortized cost to FVTPL measurement under IFRS 9. The carrying value has been reclassified from Receivables from securities financing transactions to Financial assets at fair value not held for trading as of 1 January 2018. A remeasurement loss of USD 1 million has been recorded in Retained earnings. USD 11,787 million of forward starting reverse repurchase agreements are newly accounted for as derivatives, prior to settlement, from 1 January 2018 as they are managed on a fair value basis. The fair value of the derivatives as of 1 January 2018 was immaterial. 3 Certain positions previously included within Loans and advances to customers with a carrying amount of USD 2,747 million as of 31 December 2017 were reclassified to Financial assets at fair value not held for trading upon adoption of IFRS 9. This includes: – auction rate securities (USD 2,169 million) that are held in Corporate Center and contain an embedded leverage feature triggering the failure of the SPPI criterion; and – certain loans in the Investment Bank (USD 566 million) and in Corporate Center (USD 12 million) that either fail the SPPI criterion or are held within a business model with an intent to sell or substantially hedge the primary risks. These assets are mandatorily measured at FVTPL under IFRS 9. A corresponding net remeasurement loss of USD 293 million was recognized in Retained earnings related to these reclassifications. This remeasurement loss also included reversal of specific credit loss allowances (USD 11 million). 4 Due to a change in the underlying business model, loans and advances to customers with a carrying amount of USD 480 million as of 31 December 2017 have been reclassified to Financial assets at fair value held for trading as of 1 January 2018. A corresponding net remeasurement loss of USD 16 million, which includes the reversal of specific IAS 39 credit loss allowances, was recognized in Retained earnings related to this reclassification. Irrevocable loan commitments that are contractually linked with these financial assets are now recognized as Derivative financial instruments (derivative liabilities) and are measured at FVTPL as of 1 January 2018. This reclassification resulted in a USD 61 million loss with a corresponding entry to Retained earnings. Liabilities arising from deferred fees of USD 4 million related to these loan commitments recorded as Other financial liabilities measured at amortized cost at 31 December 2017 were derecognized with a corresponding entry to Retained earnings. 5 Financial assets with a carrying amount of USD 15 million as of 31 December 2017 were reclassified to Loans and advances to customers from Financial assets at fair value not held for trading (USD 9 million) and from Financial assets at fair value held for trading (USD 6 million) given management’s intent to hold these financial assets to collect contractual cash flows. Loan commitments related to these financial assets, which were recognized as derivative liabilities with a carrying value of USD 2 million as of 31 December 2017, were accordingly derecognized on 1 January 2018 with a corresponding entry to Retained earnings. 6 Certain debt instruments with a carrying amount of USD 569 million as of 31 December 2017 were formerly classified as available for sale and measured at fair value through other comprehensive income (FVOCI) under IAS 39 but are measured at amortized cost under IFRS 9. Those positions, which are held to collect cash flows solely representing payment of principal and interest, are presented within Other financial assets measured at amortized cost as of 1 January 2018. The fair value of these assets was consistent with the amortized cost value as of 1 January 2018 and no remeasurement gain or loss has been recognized. 7 Upon adopting IFRS 9, UBS has elected to refine the assets classified within Financial assets at fair value held for trading to carve out those that are segregated from UBS’s trading activities, where UBS’s role is primarily to manage the assets on a fair value basis on behalf of others. Instead, such assets will be presented alongside others managed on a fair value basis within Financial assets at fair value not held for trading. As a consequence of this refinement, UBS has reclassified assets held to hedge unit- linked investment contracts of USD 11,609 million from Financial assets at fair value held for trading to Financial assets at fair value not held for trading as of 1 January 2018. No remeasurement gain or loss has been recognized.Financial statements 372 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Explanatory footnotes to the table “Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9” (continued) Table ref.Description of classification or remeasurement changes on adoption of IFRS 9 as of 1 January 2018 (continued) 8 UBS holds certain global and local liquidity buffers that were determined to be managed on a fair value basis as management utilizes fair value information for reporting and decision-making purposes. Therefore, assets previously classified as available for sale under IAS 39 with a carrying amount of USD 636 million as of 31 December 2017 were reclassified to Financial assets at fair value not held for trading. An unrealized gain of USD 5 million related to these positions was reclassified from Other comprehensive income to Retained earnings. Additionally, equity instruments and investment fund units previously classified as available for sale under IAS 39 with a carrying amount of USD 755 million as of 31 December 2017 were reclassified to Financial assets at fair value not held for trading under the revised IFRS 9 measurement rules. A related unrealized gain in OCI of USD 204 million has been reclassified to Retained earnings. Additionally, a net tax expense of USD 134 million was transferred from OCI to Retained earnings related to the positions above that were reclassified out of the IAS 39 available-for-sale category. 9 Assets previously designated at FVTPL with a carrying amount of USD 60,457 million as of 31 December 2017 are no longer designated as such under IFRS 9, as it was determined that these assets were either held in a business model that is managed on a fair value basis, did not meet the SPPI criterion, or did meet the SPPI criterion and are held in a hold-to-collect business model. Of the total, assets with a carrying amount of USD 60,448 million are now mandatorily measured at FVTPL and included within Financial assets at fair value not held for trading. The remaining assets with a carrying amount of USD 9 million have been de-designated and were reclassified to Loans and advances to customers, given a change in business model to hold-to-collect (refer to footnote 5). 10 Certain debt instruments with a carrying amount of USD 6,930 million as of 31 December 2017 were formerly classified as available for sale under IAS 39 and are measured at FVOCI under IFRS 9. These instruments include US government bonds, US government-sponsored mortgage-backed securities, and other forms of debt that are held in a business model whose objective is achieved by both collecting contractual cash flows and selling and that meet the SPPI criterion. These positions are now presented within Financial assets measured at fair value through other comprehensive income. 11 Deferred tax assets of USD 126 million have been recognized in connection with the adoption of IFRS 9. Of the total effect, USD 66 million relates to the recognition of ECL and USD 59 million relates to classification and measurement changes upon adoption of IFRS 9. 12 Upon adoption of the ECL requirements of IFRS 9, a transition effect of USD 357 million was recognized, consisting of USD 148 million of stage 1 allowances, USD 193 million of stage 2 allowances and an incremental increase in stage 3 allowances of USD 16 million. The effect was mainly recognized within Loans and advances to customers (USD 241 million), with effects also recognized in Other financial assets measured at amortized cost (USD 36 million), Loans and advances to banks (USD 3 million), Receivables from securities financing transactions (USD 2 million) and Provisions (USD 76 million). 13 Certain repurchase agreements with a carrying amount of USD 5,212 million as of 31 December 2017 have been designated at FVTPL as they are managed in conjunction with reverse repurchase agreements that are mandatorily measured at FVTPL under IFRS 9. These amounts are included within Other financial liabilities designated at fair value as of 1 January 2018. A remeasurement gain of USD 5 million has been recognized in Retained earnings as of 1 January 2018 related to this reclassification. USD 7,930 million of forward starting repurchase agreements are newly accounted for as derivatives, prior to settlement, from 1 January 2018 as they are managed on a fair value basis. The fair value of the derivatives as of 1 January 2018 was immaterial. 14 To achieve measurement consistency with reclassified customer and prime brokerage receivables that are measured at FVTPL following adoption of IFRS 9, certain customer deposits with a carrying amount of USD 5,404 million and prime brokerage payables with a carrying amount of USD 30,413 million as of 31 December 2017 have been designated at FVTPL and are presented within Brokerage payables designated at fair value as of 1 January 2018. There was no difference between the amortized cost carrying amount and the fair value as of 1 January 2018 and therefore no remeasurement gain or loss has been recognized. 15 The adoption of IFRS 9 has resulted in a reduction to IFRS consolidated equity as of 1 January 2018 of USD 591 million. This effect is comprised of classification and measurement changes of USD 360 million on a pre-tax basis and USD 300 million net of tax, as well as effects from the implementation of ECL methodology of USD 357 million on a pre-tax basis and USD 291 million net of tax. In addition, USD 74 million has been reclassified from Other comprehensive income recognized directly in equity, net of tax, to Retained earnings (refer to footnote 8 above), with no overall effect on equity attributable to shareholders. 373 Note 1 Summary of significant accounting policies (continued) Reconciliation of allowances and provisions on adoption of IFRS 9 as of 1 January 2018 The table below provides a reconciliation from the IAS 39 allowances / IAS 37 provisions to the IFRS 9 ECL allowances / provisions recognized as of 1 January 2018 upon adoption of IFRS 9. Reconciliation of allowances and provisions on adoption of IFRS 9 31.12.17 1.1.18 USD million Loss allowances and provisions (IAS 39 / IAS 37) Reversal of allowances (IAS 39) Recognition of ECL (IFRS 9)1 Allowances and provisions for ECL (IFRS 9) On-balance sheet Cash and balances at central banks 0 0 Loans and advances to banks (3) (3) (5) Receivables from securities financing transactions (2) (2) Cash collateral receivables on derivative instruments 0 Loans and advances to customers (675) 27 2 (241)3 (890) Other financial assets measured at amortized cost (104) 4 (36) (139) Total on-balance sheet (781) 27 (282) (1,037) Off-balance sheet financial instruments and other credit lines Guarantees (30) (8) (38) Loan commitments (4) (33) (37) Other credit lines (35) (35) Total off-balance sheet financial instruments and other credit lines (34) (76) (110) Total (815) 27 (357) (1,146) of which: stage 1 (148) (148) of which: stage 2 (193) (193) of which: stage 3 (16) 5 (806) 1 Includes stage 1 and stage 2 expected credit losses and additional stage 3 expected credit losses. 2 The reversal of USD 27 million of IAS 39 loss allowances relates to instruments reclassified from amortized cost to fair value through profit or loss on transition to IFRS 9. Refer also to footnotes 3 and 4 to the table “Reclassification and remeasurement of carrying amounts and recognition of ECL upon adoption of IFRS 9.” 3 Includes the reversal of collective allowances of USD 13 million. 4 Includes USD 84 million related to loans to financial advisors for which an allowance was reported as a direct reduction of the carrying amount as of 31 December 2017. 5 The incremental increase in stage 3 allowances of USD 16 million arises from additional consideration of forward-looking scenarios under IFRS 9.Financial statements 374 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) IFRS 9 transition effect on other comprehensive income and retained earnings as of 1 January 2018 The table below presents the transition effects recognized in OCI and retained earnings upon adoption of IFRS 9. IFRS 9 impact on other comprehensive income and retained earnings USD million Other comprehensive income recognized directly in equity, net of tax Reclassification of financial assets (available for sale to fair value through profit or loss) – equity instruments (204) Reclassification of financial assets (available for sale to fair value through profit or loss) – debt instruments (5) Tax (expense) / benefit 134 Total change in other comprehensive income (74) Retained earnings Remeasurement of financial assets (reclassified from amortized cost to fair value through profit or loss) (310) Reclassification of financial assets (reclassified from available for sale to fair value through profit or loss) 209 Recognition of ECL for on-balance sheet financial assets (282) Remeasurement of financial liabilities (reclassified from amortized cost to designated at fair value through profit or loss) 5 Recognition of derivative loan commitments measured at fair value through profit or loss (61) Derecognition of liabilities for deferred fees on other loan commitments 4 Derecognition of derivative loan commitments measured at fair value through profit or loss 2 Recognition of ECL for off-balance sheet positions (76) Tax (expense) / benefit (9) Total change in retained earnings (518) Total change in equity due to the adoption of IFRS 9 (591) 375 Note 1 Summary of significant accounting policies (continued) d) International Financial Reporting Standards and Interpretations to be adopted in 2019 and later and other changes IFRS 16, Leases UBS will adopt IFRS 16, Leases, on 1 January 2019. This will fundamentally change how UBS accounts for operating leases when acting as a lessee, with a requirement to record a lease obligation and a right-of-use asset on the balance sheet. Upon adoption of IFRS 16, assets and liabilities are expected to increase by approximately USD 3.5 billion with no material effect to the Group’s equity. Changes in Corporate Center cost allocations and equity attribution to business divisions as of the first quarter of 2019 In order to further align Group and divisional performance, UBS will adjust the methodology for the allocation of Corporate Center – Services funding costs and expenses to the business divisions. At the same time, UBS is updating its funds transfer pricing framework to better reflect the sources and usage of funding. All of these changes are effective as of 1 January 2019 and prior- period segment information will be restated. Together, these changes will decrease the business divisions’ operating results and thereby increase their adjusted cost / income ratios by approximately 1-2 percentage points, with an offsetting effect of approximately USD 0.7 billion in Corporate Center’s operating profit / (loss) before tax. Corporate Center will retain funding costs for deferred tax assets, costs relating to UBS’s legal entity transformation program and other costs not attributable to or representative of the performance of the business divisions. Alongside the update to allocations and UBS’s funds transfer pricing framework, the Group is increasing the allocation of balance sheet resources from Corporate Center to the business divisions, resulting in approximately USD 220 billion of assets allocated from Corporate Center to the business divisions in restated 2018 numbers, predominantly from high-quality liquid assets and certain other assets centrally managed on behalf of the business divisions. Upon adoption of IFRS 16, Leases, as of 1 January 2019, UBS intends to additionally allocate approximately USD 3.5 billion of newly recognized right of use assets to the business divisions. Changes to Corporate Center segment reporting effective first quarter 2019 As announced in the third quarter 2018 report, UBS will no longer separately assess the performance of Non-core and Legacy Portfolio, given its substantially reduced size and resource consumption. In addition, following the aforementioned changes to UBS’s methodology for allocating funding costs and expenses from Corporate Center – Services and Corporate Center – Group Asset and Liability Management (Group ALM) to the business divisions, the operating loss retained in Corporate Center – Services and Corporate Center – Group ALM will be significantly reduced. As a consequence and in compliance with IFRS 8, Operating Segments, beginning with the first quarter 2019 report, UBS will provide results for total Corporate Center only and will not separately report Corporate Center – Services, Group ALM and Non-core and Legacy Portfolio. Furthermore, UBS will operationally combine Group Treasury with Group ALM and call this combined unit Group Treasury. Commentary on performance of this function will be included in the Corporate Center management discussion and analysis in UBS’s quarterly and annual reporting. Former Group ALM total risk management net income after allocations will continue to be disclosed separately. Prior-period information will be restated. IFRIC 23, Uncertainty over Income Tax Treatments In June 2017, the IASB issued IFRIC Interpretation 23, Uncertainty over Income Tax Treatments (IFRIC 23), which addresses how uncertain tax positions should be accounted for under IFRS. IFRIC 23 requires that, where acceptance of the tax treatment by the relevant tax authority is considered probable, it should be assumed as an accounting recognition matter that treatment of the item will ultimately be accepted. Therefore, no tax provision would be required in such cases. However, if acceptance of the tax treatment is not considered probable, the entity is required to reflect that uncertainty using an expected value (i.e., a probability-weighted approach) or the single most likely amount. IFRIC 23 is mandatorily effective for accounting periods beginning on or after 1 January 2019 and any resulting change to the tax provisions should be recognized in retained earnings. UBS expects to recognize a net tax expense of USD 11 million in retained earnings on 1 January 2019 in respect of the adoption of IFRIC 23, which will be reflected in our first quarter 2019 report.Financial statements 376 Consolidated financial statements Note 1 Summary of significant accounting policies (continued) Amendments to IAS 19, Employee Benefits In February 2018, the IASB issued amendments to IAS 19, Employee Benefits, which address the accounting when a plan amendment, curtailment or settlement occurs during the reporting period. The amendments require entities to use the updated actuarial assumption to determine current service cost and net interest for the remainder of the annual reporting period after such an event. The amendments also clarify how the requirements for accounting for a plan amendment, curtailment or settlement affect the asset ceiling requirements. The amendments are effective prospectively for plan amendments, curtailments or settlements that occur on or after 1 January 2019. The adoption will have no effect on the Group’s financial statements on transition at 1 January 2019. Annual Improvements to IFRS Standards 2015–2017 Cycle In December 2017, the IASB issued Annual Improvements to IFRS Standards 2015–2017 Cycle, which resulted in amendments to IFRS 3, Business Combinations, IFRS 11, Joint Arrangements, IAS 12, Income Taxes, and IAS 23, Borrowing Costs. The amendments are mandatorily effective as of 1 January 2019. The adoption of these amendments will have no material effect on the Group’s financial statements on the transition date. Conceptual Framework In March 2018, the IASB issued a revised version of its Conceptual Framework for Financial Reporting (the Framework). The Framework sets out the fundamental concepts of financial reporting that guide the IASB in developing IFRS standards. The amended Framework seeks to improve the concepts for reporting assets, liabilities, income and expenses, explains how to decide when assets and liabilities should be measured using historical cost and when they should be measured at current value, and provides up-to-date tools that will help the IASB in setting IFRS standards. It underpins existing IFRS standards but does not override them. Preparers use the Framework as a point of reference to develop accounting policies in rare instances where a particular business transaction is not covered by existing IFRS standards. The IASB and the IFRS Interpretations Committee will begin to use the new Framework immediately in developing new, or amending existing, financial reporting standards and interpretations. For UBS, the Framework becomes effective in annual periods beginning on 1 January 2020. UBS is currently assessing the effect of the amended Framework on its financial accounting policies. Amendments to IFRS 3, Business Combinations In October 2018, the IASB issued Definition of a Business (Amendments to IFRS 3). The amendments clarify the definition of a business, with the objective of assisting in the determination of whether a transaction should be accounted for as a business combination or an asset acquisition. The amendments apply to transactions for which the acquisition date is on or after 1 January 2020, with early application permitted. Adoption of these amendments is not expected to have a material effect on the financial statements. 377 Note 2a Segment reporting The operational structure of the Group as of 31 December 2018 was comprised of Corporate Center and four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management and the Investment Bank. →Refer to “Segment reporting” in Note 1a for more information Global Wealth Management In the first quarter of 2018, Wealth Management and Wealth Management Americas were combined into a single unit. Global Wealth Management provides investment advice and solutions to private clients, in particular in the ultra high net worth and high net worth segments. Clients benefit from Global Wealth Management’s comprehensive set of capabilities, including wealth planning, investing, lending, asset protection, philanthropy, corporate and banking services as well as family office services in collaboration with the Investment Bank and Asset Management. Global Wealth Management has a global footprint, with the US representing its largest market. Clients are served through local offices and dedicated advisors. The ultra high net worth business is managed globally across the regions. Personal & Corporate Banking Personal & Corporate Banking provides comprehensive financial products and services to private, corporate and institutional clients and operates in Switzerland in the private and corporate loan market. Personal & Corporate Banking is central to UBS’s universal bank model in Switzerland and it works with the wealth management, investment bank and asset management businesses to help clients receive the best products and solutions for their specific financial needs. While Personal & Corporate Banking operates primarily in its home market of Switzerland, it also provides capabilities to support the growth of the international business activities of UBS’s corporate and institutional clients through local hubs in Frankfurt, New York, Hong Kong and Singapore. The business is divided into Personal Banking and Corporate & Institutional Clients (CIC). Asset Management Asset Management is a large-scale and diversified global asset manager. It offers investment capabilities and styles across all major traditional and alternative asset classes, as well as platform solutions and advisory support to institutions, wholesale intermediaries and Global Wealth Management clients around the world. Asset Management offers clients a wide range of investment products and services in different asset classes in the form of segregated, pooled or advisory mandates as well as registered investment funds in various jurisdictions. It covers the main asset management markets globally, with a presence in 23 countries grouped in four regions: the Americas; Europe, Middle East and Africa; Switzerland; and Asia Pacific. Investment Bank The Investment Bank provides a range of services to institutional, corporate and wealth management clients to help them raise capital, grow their businesses, invest and manage risks. It is focused on its traditional strengths in advisory, capital markets, equities and foreign exchange, complemented by a targeted rates and credit platform. The Investment Bank uses its research and technology capabilities to support its clients as they adapt to the evolving market structures and changes in the regulatory, technological, economic and competitive landscape. The Investment Bank delivers solutions to corporate, institutional and wealth management clients, using its intellectual capital and electronic platforms. It also provides services to Global Wealth Management, Personal & Corporate Banking and Asset Management. It has a global reach, with a presence in 33 countries and principal offices in all major financial hubs. Corporate Center Corporate Center provides services to the Group through the Corporate Center – Services and Group Asset and Liability Management (Group ALM) units. Corporate Center also includes the Non-Core and Legacy Portfolio unit. Corporate Center – Services consists of the Group Chief Operating Officer area (Group Technology, Group Corporate Services, Group Human Resources, Group Operations and Group Sourcing), Group Finance (excluding Group ALM), Group Legal, Group Risk Control, Communications & Branding, Group Compliance, Regulatory & Governance, and UBS in society. Group ALM manages the structural risk of UBS’s balance sheet, including interest rate risk, structural foreign exchange risk and collateral risk, as well as the risks associated with the Group’s liquidity and funding portfolios. Group ALM also seeks to optimize financial performance by matching assets and liabilities. Group ALM serves all business divisions and the other Corporate Center units through three main risk management areas, and its risk management is fully integrated into the Group’s risk governance framework. Non-core and Legacy Portfolio manages legacy positions from businesses exited by the Investment Bank. It is overseen by a committee chaired by the Group Chief Risk Officer.Financial statements 378 Consolidated financial statements Note 2a Segment reporting (continued) Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Corporate Center UBS USD million Services Group ALM Non-core and Legacy Portfolio For the year ended 31 December 20181 Net interest income 4,206 2,057 (31) 937 (398) (780) 35 6,025 Non-interest income 12,659 2,166 1,874 7,641 (158) (123) 246 24,306 Allocations from CC Group ALM 90 56 15 (391) 43 295 (108) 0 Income2 16,956 4,278 1,857 8,188 (513) (608) 172 30,330 Credit loss (expense) / recovery (15) (56) 0 (38) 0 (1) (8) (118) Total operating income 16,941 4,222 1,857 8,150 (513) (609) 165 30,213 Personnel expenses 7,683 803 703 2,941 3,927 41 35 16,132 General and administrative expenses 1,724 285 202 651 3,789 42 104 6,797 Services (to) / from CC and other BDs 3,852 1,208 498 2,889 (8,624) 1 176 0 of which: services from CC Services 3,740 1,285 541 2,811 (8,697) 169 153 0 Depreciation and impairment of property, equipment and software 4 14 2 8 1,199 0 0 1,228 Amortization and impairment of intangible assets3 50 0 1 12 2 0 0 65 Total operating expenses 13,313 2,310 1,406 6,501 293 84 315 24,222 Operating profit / (loss) before tax 3,628 1,912 451 1,649 (806) (693) (150) 5,991 Tax expense / (benefit) 1,468 Net profit / (loss) 4,522 Additional information Total assets 200,036 138,809 24,371 258,691 21,733 280,135 34,715 958,489 Additions to non-current assets 196 23 1 89 1,666 0 0 1,975 1 Prior-period information may not be comparable as a result of the adoption of IFRS 9 and IFRS 15, both effective 1 January 2018. Refer to Note 1b and c for more information on these changes. 2 Impairments of financial assets classified at fair value through other comprehensive income for the year ended 31 December 2018 totaled USD 0 million. 3 Refer to Note 16 for more information. 379 Note 2a Segment reporting (continued) Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Corporate Center UBS USD million Services Group ALM Non-core and Legacy Portfolio For the year ended 31 December 20171 Net interest income 3,722 1,954 (33) 1,217 (355) 128 24 6,656 Non-interest income 12,196 1,807 2,097 7,020 76 (147) 50 23,098 Allocations from CC Group ALM 377 184 19 (351) 123 (268) (84) 0 Income2 16,295 3,945 2,083 7,886 (157) (288) (11) 29,754 Credit loss (expense) / recovery (8) (20) 0 (92) 0 0 (11) (131) Total operating income 16,287 3,925 2,083 7,794 (157) (288) (22) 29,622 Personnel expenses 7,674 852 731 3,006 3,857 34 44 16,199 General and administrative expenses 1,263 296 235 675 4,336 27 117 6,949 Services (to) / from CC and other BDs 3,726 1,156 524 2,824 (8,445) (13) 228 0 of which: services from CC Services 3,626 1,251 562 2,729 (8,510) 145 198 0 Depreciation and impairment of property, equipment and software 4 13 1 10 1,024 0 0 1,053 Amortization and impairment of intangible assets3 49 0 3 12 7 0 0 71 Total operating expenses 12,717 2,317 1,495 6,527 779 48 388 24,272 Operating profit / (loss) before tax 3,571 1,607 587 1,267 (935) (336) (411) 5,351 Tax expense / (benefit) 4,305 Net profit / (loss) 1,046 Additional information Total assets 194,990 139,062 14,638 269,731 21,371 252,092 47,395 939,279 Additions to non-current assets 120 15 1 3 1,606 0 0 1,746 1 Prior-period information may not be comparable as a result of the adoption of IFRS 9 and IFRS 15, both effective 1 January 2018. Refer to Note 1b and c for more information on these changes. 2 Impairments of financial assets classified at fair value through other comprehensive income (prior to 2018 classified as financial assets available for sale) for the year ended 31 December 2017 totaled USD 15 million, of which USD 12 million was recorded in Asset Management. 3 Refer to Note 16 for more information. Financial statements 380 Consolidated financial statements Note 2a Segment reporting (continued) Global Wealth Management Personal & Corporate Banking Asset Management Investment Bank Corporate Center UBS USD million Services Group ALM Non-core and Legacy Portfolio For the year ended 31 December 20161 Net interest income 3,318 1,914 (33) 1,012 (326) 599 3 6,487 Non-interest income 11,427 1,791 1,980 7,041 186 (237) 89 22,279 Allocations from CC Group ALM 512 336 7 (264) 37 (517) (112) 0 Income2 15,257 4,042 1,955 7,790 (103) (155) (20) 28,766 Credit loss (expense) / recovery (8) (6) 0 (11) 0 0 (12) (38) Total operating income 15,249 4,035 1,955 7,779 (103) (155) (32) 28,729 Personnel expenses 7,254 855 736 3,122 3,847 31 67 15,913 General and administrative expenses 1,221 287 244 812 4,192 17 744 7,517 Services (to) / from CC and other BDs 3,627 1,093 512 2,798 (8,263) (49) 283 0 of which: services from CC Services 3,520 1,201 537 2,707 (8,303) 112 227 0 Depreciation and impairment of property, equipment and software 4 15 1 22 955 0 0 997 Amortization and impairment of intangible assets3 54 0 5 12 21 0 0 93 Total operating expenses 12,159 2,250 1,498 6,765 753 (1) 1,094 24,519 Operating profit / (loss) before tax 3,090 1,785 457 1,014 (856) (154) (1,126) 4,209 Tax expense / (benefit) 777 Net profit / (loss) 3,432 Additional information Total assets 178,250 137,467 11,817 238,066 23,488 262,530 67,288 918,906 Additions to non-current assets 31 24 1 3 1,781 0 0 1,840 1 Prior-period information may not be comparable as a result of the adoption of IFRS 9 and IFRS 15, both effective 1 January 2018. Refer to Note 1b and c for more information on these changes. 2 Impairments of financial assets classified at fair value through other comprehensive income (prior to 2018 classified as financial assets available for sale) for the year ended 31 December 2016 totaled USD 5 million, of which USD 3 million was recorded in Asset Management. 3 Refer to Note 16 for more information. 381 Note 2b Segment reporting by geographic location The operating regions shown in the table below correspond to the regional management structure of the Group. The allocation of operating income to these regions reflects, and is consistent with, the basis on which the business is managed and its performance is evaluated. These allocations involve assumptions and judgments that management considers to be reasonable, and may be refined to reflect changes in estimates or management structure. The main principles of the allocation methodology are that client revenues are attributed to the domicile of the client and trading and portfolio management revenues are attributed to the country where the risk is managed. This revenue attribution is consistent with the mandate of the regional Presidents. Certain revenues, such as those related to Corporate Center – Non-core and Legacy Portfolio, are managed at a Group level. These revenues are included in the Global line. The geographic analysis of non-current assets is based on the location of the entity in which the assets are recorded. For the year ended 31 December 2018 Total operating income Total non-current assets USD billion Share %USD billion Share % Americas 12.8 42 7.4 43 of which: USA 12.2 41 7.0 41 Asia Pacific 5.0 16 0.9 5 Europe, Middle East and Africa 6.3 21 2.0 12 Switzerland 7.3 24 6.8 40 Global (1.1) (3) 0.0 0 Total 30.2 100 17.1 100 For the year ended 31 December 20171 Total operating income Total non-current assets USD billion Share % USD billion Share % Americas 12.1 41 7.4 44 of which: USA 11.6 39 6.9 41 Asia Pacific 4.8 16 0.8 5 Europe, Middle East and Africa 6.2 21 2.0 12 Switzerland 7.0 24 6.5 40 Global (0.5) (2) 0.0 0 Total 29.6 100 16.7 100 For the year ended 31 December 20161 Total operating income Total non-current assets USD billion Share % USD billion Share % Americas 11.6 40 7.2 47 of which: USA 11.1 39 6.8 44 Asia Pacific 4.3 15 0.7 4 Europe, Middle East and Africa 6.2 22 1.8 11 Switzerland 7.0 24 5.9 38 Global (0.4) (1) 0.0 0 Total 28.7 100 15.6 100 1 2017 and 2016 figures have been restated for the change of the presentation currency from Swiss francs to US dollars. Refer to Note 1b item 1 for more information. In addition, 2017 and 2016 figures have been restated to reflect the regional representation of Global Wealth Management after combining Wealth Management and Wealth Management Americas in 2018. Refer to Note 1b item 3 for more information.Financial statements 382 Consolidated financial statements Income statement notes Note 3 Net interest income and other net income from fair value changes on financial instruments Change in presentation of net interest income and other net income from fair value changes on financial instruments The table on the following pages reflects certain presentation changes made to reflect the effects from the adoption of new standards and interpretations in 2018. These changes are summarized as follows: – In line with amendments to IAS 1, Presentation of Financial Statements, from 1 January 2018, UBS presents interest income and interest expense calculated, using the effective interest rate method, on financial instruments measured at amortized cost and financial assets measured at fair value through other comprehensive income separately from interest income and expense on financial instruments measured at fair value through profit or loss (FVTPL) in the income statement. Comparative information has been adjusted accordingly. As a result of this change, forward points on certain short-duration foreign exchange contracts are now presented within Interest income from financial instruments at fair value held for trading that were previously presented within Interest income from loans and deposits. Comparative information was restated accordingly. – Upon adoption of IFRS 9, certain assets and liabilities were reclassified from amortized cost to fair value through profit or loss (auction rate securities, certain loans in the Investment Bank, certain repurchase agreements and brokerage balances). This has resulted in the interest income from these instruments moving from Interest income (expense) from financial instruments measured at amortized cost to Interest income (expense) from financial instruments measured at fair value through profit or loss. These changes have been applied prospectively from 1 January 2018 with certain prior-period information being adjusted for comparability. Comparative information for brokerage balances now separately presents the related interest income and expense, which was formerly included within Interest income (expense) from loans and deposits. – A new line, Interest income from financial instruments at fair value not held for trading, has been included to accommodate in particular interest income from financial assets previously designated at fair value under IAS 39, which are now mandatorily classified at fair value through profit or loss under IFRS 9. Comparative information has been adjusted accordingly. – Net gains / losses from financial assets previously designated at fair value under IAS 39 (2017: net gains of USD 2,614 million; 2016: net losses of USD 174 million) are no longer separately disclosed in the table on the following pages as assets are now mandatorily classified at fair value through profit or loss under IFRS 9. 383 Note 3 Net interest income and other net income from fair value changes on financial instruments (continued) For the year ended USD million 31.12.18 31.12.17 31.12.16 Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 3,710 5,018 5,403 Net interest income from financial instruments measured at fair value through profit or loss 2,315 1,638 1,084 Other net income from fair value changes on financial instruments 5,984 5,065 5,023 Total1 12,008 11,721 11,510 Global Wealth Management 5,254 5,149 4,893 of which: net interest income 4,310 4,103 3,843 of which: transaction-based income from foreign exchange and other intermediary activity 2 944 1,046 1,050 Personal & Corporate Banking 2,514 2,510 2,563 of which: net interest income 2,106 2,127 2,225 of which: transaction-based income from foreign exchange and other intermediary activity 2 408 383 337 Asset Management (30) (24) (29) Investment Bank 4,812 4,363 4,330 Corporate Client Solutions 1,056 1,087 830 Investor Client Services 3,756 3,276 3,500 Corporate Center (541) (278) (246) CC – Services (159) (43) (90) CC – Group ALM (554) (162) (96) CC – Non-core and Legacy Portfolio 173 (72) (60) Net interest income3 Net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income Interest income from loans and deposits4,5 7,801 6,722 8,079 Interest income from brokerage balances 1,030 906 Interest income from securities financing transactions6 1,567 1,573 1,152 of which: interest income from securities financing transactions measured at fair value through profit or loss since 1 January 2018 581 260 Interest income from other financial instruments measured at amortized cost 266 99 54 Interest income from debt instruments measured at fair value through other comprehensive income 142 152 189 Interest income from derivative instruments designated as cash flow hedges 324 846 Total interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 10,100 10,422 10,379 Interest expense on loans and deposits7 1,980 1,050 689 Interest expense on brokerage balances 354 147 Interest expense on securities financing transactions8 1,130 1,473 1,251 of which: interest expense on securities financing transactions measured at fair value through profit or loss since 1 January 2018 568 241 Interest expense on debt issued 3,281 2,528 2,889 Total interest expense from financial instruments measured at amortized cost 6,391 5,404 4,976 Total net interest income from financial instruments measured at amortized cost and fair value through other comprehensive income 3,710 5,018 5,403 Net interest income from financial instruments measured at fair value through profit or loss Interest income from financial instruments at fair value held for trading4,9 3,724 3,483 3,201 Interest income from brokerage balances 1,243 Interest income from financial instruments at fair value not held for trading9 1,951 512 330 of which: interest income from securities financing transactions measured at fair value through profit or loss since 1 January 2018 10 970 Other interest income 50 61 48 Total interest income from financial instruments measured at fair value through profit or loss 6,968 4,056 3,579 Interest expense on financial instruments at fair value held for trading11 1,671 1,537 1,644 Interest expense on brokerage balances 668 Interest expense on financial instruments designated at fair value 2,314 881 851 of which: interest expense on securities financing transactions measured at fair value through profit or loss since 1 January 2018 12 765 Total interest expense from financial instruments measured at fair value through profit or loss 4,653 2,418 2,495 Total net interest income from financial instruments measured at fair value through profit or loss 2,315 1,638 1,084 Financial statements 384 Consolidated financial statements Note 3 Net interest income and other net income from fair value changes on financial instruments (continued) For the year ended USD million 31.12.18 31.12.17 31.12.16 Other net income from fair value changes on financial instruments Investment Bank Corporate Client Solutions 709 611 188 Investment Bank Investor Client Services 3,537 2,863 3,382 Other business divisions and Corporate Center 1,738 1,591 1,453 Other net income from fair value changes on financial instruments 5,984 5,065 5,023 of which: net gains / (losses) from financial liabilities designated at fair value 13 9,382 (3,979) (1,516) 1 Net interest income and other net income from fair value changes on financial instruments presented for business divisions and Corporate Center units includes allocations from Corporate Center – Group ALM. 2 Mainly includes spread-related income in connection with client-driven transactions, foreign currency translation effects and income and expenses from precious metals, which are included in the income statement line Other net income from fair value changes on financial instruments. 3 Prior-period information may not be comparable as a result of the adoption of IFRS 9, effective 1 January 2018. Refer to Note 1c for more information on these changes. Negative interest income and negative interest expense are each individually approximately 9% of net interest income (2017: approximately 8% of net interest income; 2016: approximately 5% of net interest income). 4 As a consequence of amendments to IAS 1, Presentation of Financial Statements, effective 1 January 2018, forward points on certain short-duration foreign exchange contracts previously presented within Interest income from loans and deposits are now presented within Interest income from financial instruments at fair value held for trading. Comparative information was restated accordingly. 5 Consists of interest income from cash and balances at central banks, loans and advances to banks, and negative interest on amounts due to banks and customer deposits. 6 Includes interest income on receivables from securities financing transactions and negative interest, including fees, on payables from securities financing transactions. 7 Consists of interest expense on amounts due to banks and customer deposits, and negative interest on cash and balances at central banks, loans and advances to banks. 8 Includes interest expense on payables from securities financing transactions and negative interest, including fees, on receivables from securities financing transactions. 9 Includes dividend income. 10 Includes interest income on certain reverse repurchase agreements that are measured at fair value through profit or loss since 1 January 2018 and negative interest, including fees, on the corresponding repurchase agreements. 11 Includes expense related to dividend payment obligations on financial instruments held for trading. 12 Includes interest expense on certain repurchase agreements that are measured at fair value through profit or loss since 1 January 2018 and negative interest, including fees, on the corresponding reverse repurchase agreements. 13 Excludes fair value changes of hedges related to financial liabilities designated at fair value and foreign currency translation effects arising from translating foreign currency transactions into the respective functional currency, both of which are reported within Other net income from fair value changes on financial instruments. 2018 includes a net gain of USD 2,152 million related to amounts due under unit-linked investment contracts, which are designated at fair value under IFRS 9. Refer to Note 1c for more information. 385 Note 4 Net fee and commission income1 For the year ended USD million 31.12.18 31.12.17 31.12.16 Underwriting fees 811 1,003 739 of which: equity underwriting fees 431 573 356 of which: debt underwriting fees 380 429 383 M&A and corporate finance fees 768 698 742 Brokerage fees 3,521 3,820 3,802 Investment fund fees 4,954 4,322 4,265 Portfolio management and related services 7,756 7,666 7,069 Other 1,786 1,854 1,757 Total fee and commission income2 19,598 19,362 18,374 of which: recurring 12,911 of which: transaction-based 6,594 of which: performance-based 93 Brokerage fees paid 316 673 769 Other 1,387 1,167 1,013 Total fee and commission expense 1,703 1,840 1,781 Net fee and commission income 17,895 17,522 16,593 of which: net brokerage fees 3,205 3,147 3,033 1 Upon adoption of IFRS 15, certain brokerage fees paid in an agency capacity have been reclassified from Fee and commission expense to Fee and commission income on a prospective basis from 1 January 2018, primarily relating to third-party execution costs for exchange-traded derivative transactions and fees payable to third-party research providers on behalf of clients. In addition to the IFRS 15 changes, certain revenues, primarily distribution fees and fund management fees, have been reclassified between reporting lines to better reflect the nature of the revenues, with prior-period information restated accordingly. This resulted in the following effects: For the year ended 31 December 2017, USD 316 million was reclassified from Underwriting fees to Brokerage fees and USD 1,040 million was reclassified from Portfolio management and related services to Investment fund fees. For the year ended 31 December 2016, USD 220 million was reclassified from Underwriting fees to Brokerage fees and USD 1,061 million was reclassified from Portfolio management and related services to Investment fund fees. Also, certain expenses that are incremental and incidental to revenues have been reclassified prospectively from General and administrative expenses to Fee and commission expense to improve the alignment of transaction-based costs with the associated revenue stream, primarily affecting clearing costs, client loyalty costs, fund and custody expenses. As the effect of this reclassification was not material, prior-period information was not restated. 2 Reflects third-party fee and commission income of USD 12,059 million for Global Wealth Management, USD 3,525 million for the Investment Bank, USD 2,579 million for Asset Management, USD 1,338 million for Personal & Corporate Banking and USD 97 million for Corporate Center. Note 5 Other income For the year ended USD million 31.12.18 31.12.17 31.12.16 Associates, joint ventures and subsidiaries Net gains / (losses) from acquisitions and disposals of subsidiaries1 (290)2,3 32 (96) Net gains / (losses) from disposals of investments in associates 464 0 0 Share of net profits of associates and joint ventures 5295 76 109 Impairments related to associates (7) Total 284 101 12 Financial assets measured at fair value through other comprehensive income Net gains / (losses) from disposals 0 195 350 Impairments 0 (15) (5) Total 1 180 345 Net gains / (losses) from disposals of financial assets measured at amortized cost 0 14 (3) Net income from properties (excluding net gains / (losses) from disposals)6 24 24 26 Net gains / (losses) from disposals of properties held for sale 403 0 128 Other 79 191 156 Total other income 427 511 663 1 Includes foreign exchange gains / losses reclassified from other comprehensive income related to disposed foreign subsidiaries and branches. As a result of the change in presentation currency, foreign exchange gains / losses were restated. Refer to Note 1b for more information. 2 Includes a remeasurement loss of USD 270 million related to UBS Securities China. Refer to Note 32 for more information. 3 Includes a USD 25 million gain on sale of subsidiaries and a USD 31 million pre-tax gain on sale of real estate related to the sale of Widder Hotel. Refer to Note 32 for more information. 4 Reflects a net foreign currency translation gain related to UBS Securities China. Refer to Note 32 for more information. 5 Includes a USD 460 million valuation gain on our equity ownership in SIX related to the sale of SIX Payment Services to Worldline. Refer to Note 31b for more information. 6 Includes net rent received from third parties and net operating expenses.Financial statements 386 Consolidated financial statements Note 6 Personnel expenses For the year ended USD million 31.12.18 31.12.17 31.12.16 Salaries1 6,448 6,154 6,305 Variable compensation – performance awards2 2,995 3,151 3,013 of which: guarantees for new hires 43 36 30 Variable compensation – other2 243 252 425 of which: replacement payments 3 72 72 87 of which: forfeiture credits (136) (107) (74) of which: severance payments 4 123 113 220 of which: retention plan and other payments 5 185 174 191 Financial advisor variable compensation2,6 4,054 4,064 3,740 Contractors 489 460 426 Social security 791 814 755 Pension and other post-employment benefit plans7 457 723 678 Other personnel expenses 654 581 570 Total personnel expenses 16,132 16,199 15,913 1 Includes role-based allowances. 2 Refer to Note 30 for more information. 3 Replacement payments are payments made to compensate employees for deferred awards forfeited as a result of joining UBS. 4 Includes legally obligated and standard severance payments. 5 Includes interest expense related to Deferred Contingent Capital Plan awards. 6 Financial advisor variable compensation consists of formulaic compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure, new assets and other variables. It also includes expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. 7 Changes to the pension fund of UBS in Switzerland in 2018 resulted in a reduction in the pension obligation recognized by UBS. As a consequence, a pre-tax gain of USD 241 million was recognized in the income statement in 2018, with no overall effect on total equity. Refer to Note 29 for more information. Note 7 General and administrative expenses For the year ended USD million 31.12.18 31.12.17 31.12.16 Occupancy 914 908 946 Rent and maintenance of IT and other equipment 654 570 517 Communication and market data services 638 622 634 Administration 590 612 716 of which: UK and German bank levy 1 58 20 124 Marketing and public relations 366 419 473 Travel and entertainment 425 425 428 Professional fees 1,015 1,227 1,247 Outsourcing of IT and other services 1,427 1,597 1,656 Litigation, regulatory and similar matters2 657 434 805 Other 110 135 94 Total general and administrative expenses 6,797 6,949 7,517 1 The UK bank levy expenses of USD 40 million for 2018 and USD 17 million for 2017 included a credit of USD 45 million and USD 85 million, respectively, related to prior years. 2 Reflects the net increase in provisions for litigation, regulatory and similar matters recognized in the income statement. Refer to Note 21 for more information. Also includes recoveries from third parties of USD 29 million, USD 55 million and USD 13 million for the years ended 31 December 2018, 31 December 2017 and 31 December 2016, respectively. 387 Note 8 Income taxes For the year ended USD million 31.12.18 31.12.17 31.12.16 Tax expense / (benefit) Swiss Current 469 455 465 Deferred 2,377 107 614 Non-Swiss Current 575 435 356 Deferred (1,953) 3,308 (658) Total income tax expense / (benefit) recognized in the income statement 1,468 4,305 777 Income tax recognized in the income statement An income tax expense of USD 1,468 million was recognized for the Group in 2018, which included a net Swiss tax expense of USD 2,846 million and a net non-Swiss tax benefit of USD 1,378 million. The Swiss tax expense included a deferred tax expense of USD 2,377 million, which reflected a net decrease in deferred tax assets (DTA) previously recognized in relation to tax losses carried forward and deductible temporary differences of USD 760 million following their offset against profits for the year and the write-off of a Swiss temporary difference DTA of USD 1,617 million relating to UBS AG’s investment in our US intermediate holding company (US IHC), UBS Americas Holding LLC. The write-off occurred because the deductible temporary difference between the tax and accounting values in respect of UBS AG’s investment in the US IHC is no longer expected to reverse in the foreseeable future, reflecting the expected repatriation of a significant portion of future US earnings. In addition, it included a current tax expense of USD 469 million related to taxable profits earned by Swiss subsidiaries against which no losses were available to offset. The non-Swiss tax expense included a deferred tax benefit of USD 1,953 million. This primarily reflected a net increase in US DTAs of USD 2,052 million following the review of the approach to the remeasurement of those DTAs. It also included other net deferred tax expenses of USD 99 million and a current tax expense of USD 575 million related to taxable profits earned by non-Swiss subsidiaries and branches against which no losses were available to offset. UBS considers the performance of its businesses and the accuracy of historical forecasts and other factors in evaluating the recoverability of its DTAs, including the length of time remaining until expiration for tax loss carry-forwards and its assessment of expected future taxable profits. Estimating future profitability is inherently subjective and is particularly sensitive to future economic, market and other conditions, which are difficult to predict. For the year ended USD million 31.12.18 31.12.17 31.12.16 Operating profit / (loss) before tax 5,991 5,351 4,209 of which: Swiss 1,843 2,093 2,674 of which: non-Swiss 4,148 3,258 1,535 Income taxes at Swiss tax rate of 21% 1,258 1,124 884 Increase / (decrease) resulting from: Non-Swiss tax rates differing from Swiss tax rate 55 217 73 Tax effects of losses not recognized 223 173 182 Previously unrecognized tax losses now utilized (25) (368) (38) Non-taxable and lower taxed income (430) (309) (347) Non-deductible expenses and additional taxable income 905 606 933 Adjustments related to prior years – current tax 114 (13) 22 Adjustments related to prior years – deferred tax 26 4 2 Change in deferred tax recognition (795) (165) (969) Adjustments to deferred tax balances arising from changes in tax rates 0 2,897 19 Other items 137 139 17 Income tax expense / (benefit) 1,468 4,305 777 Financial statements 388 Consolidated financial statements Note 8 Income taxes (continued) The tax expense of USD 1,468 million for 2018 was lower than the tax expense of USD 4,305 million in 2017. This was mainly because 2017 included a large net deferred tax expense of USD 3,415 million, which was primarily the result of a net write-down of DTAs related to the US federal corporate tax rate reduction included in the Tax Cuts and Jobs Act enacted in the fourth quarter of 2017. The components of operating profit before tax, and the differences between income tax expense reflected in the financial statements and the amounts calculated at the Swiss tax rate, are provided in the table on the previous page and explained below. Non-Swiss tax rates differing from Swiss tax rate To the extent that Group profits or losses arise outside Switzerland, the applicable local tax rate may differ from the Swiss tax rate. This item reflects, for such profits or losses, an adjustment from the tax expense / benefit that would arise at the Swiss tax rate and the tax expense / benefit that would arise at the applicable local tax rate. If an entity generates a profit, a tax expense arises where the local tax rate is in excess of the Swiss tax rate and a tax benefit arises where the local tax rate is below the Swiss tax rate. Conversely, if an entity incurs a loss, a tax benefit arises where the local tax rate is in excess of the Swiss tax rate and a tax expense arises where the local tax rate is less than the Swiss tax rate. Tax effects of losses not recognized This item relates to tax losses of entities arising in the year that are not recognized as DTAs. Consequently, no tax benefit arises in relation to those losses. Therefore, the tax benefit calculated by applying the local tax rate to those losses as described above is reversed. Previously unrecognized tax losses now utilized This item relates to taxable profits of the year that are offset by tax losses of previous years for which no DTAs were previously recorded. Consequently, no current tax or deferred tax expense arises in relation to those taxable profits. Therefore, the tax expense calculated by applying the local rate on those profits is reversed. Non-taxable and lower taxed income This item relates to tax deductions for the year in respect of permanent differences. These include deductions in respect of profits that are either not taxable or are taxable at a lower rate of tax than the local tax rate. They also include deductions made for tax purposes, which are not reflected in the accounts. Non-deductible expenses and additional taxable income This item relates to additional taxable income for the year in respect of permanent differences. These include income that is recognized for tax purposes by an entity, but is not included in its profit that is reported in the financial statements. In addition, they include expenses for the year that are non-deductible. For example, the costs of entertaining clients are not deductible in certain locations. Adjustments related to prior years – current tax This item relates to adjustments to current tax expense for prior years, e.g., if the tax payable for a year is agreed with the tax authorities in an amount that differs from the amount previously reflected in the financial statements. Adjustments related to prior years – deferred tax This item relates to adjustments to deferred tax positions recognized in prior years, e.g., if a tax loss for a year is fully recognized and the amount of the tax loss agreed with the tax authorities is expected to differ from the amount previously recognized as DTAs in the accounts. Change in deferred tax recognition This item relates to changes in DTAs, including those previously recognized resulting from reassessments of expected future taxable profits. It also includes changes in temporary differences in the year, for which deferred tax is not recognized. The net benefit in the year mainly relates to the upward revaluation of US DTAs, partly offset by the write-off of the Swiss temporary difference DTA relating to UBS AG’s investment in the US intermediate holding company. Adjustments to deferred tax balances arising from changes in tax rates This item relates to remeasurements of DTAs and liabilities recognized due to changes in tax rates. These have the effect of changing the future tax saving that is expected from tax losses or deductible tax differences and therefore the amount of DTAs recognized or, alternatively, changing the tax cost of additional taxable income from taxable temporary differences and therefore the deferred tax liability. Other items Other items include other differences between profits or losses at the local tax rate and the actual local tax expense or benefit, including increases in provisions for uncertain positions in relation to the current year and other items. 389 Note 8 Income taxes (continued) Income tax recognized directly in equity Certain tax expenses and benefits were recognized directly in equity during the year. These included the following items: – a net tax benefit of USD 345 million recognized in other comprehensive income (OCI) (2017: net benefit of USD 164 million), which included a tax benefit of USD 67 million related to cash flow hedges (2017: benefit of USD 163 million), a tax benefit of USD 12 million related to financial assets recognized at fair value through OCI (2017: expense of USD 6 million), a tax expense of USD 2 million related to foreign currency translation gains and losses (2017: expense of USD 2 million), a tax benefit of USD 276 million related to defined benefit pension plans (2017: benefit of USD 11 million) and a tax expense of USD 8 million related to own credit (2017: expense of USD 2 million); – a tax benefit of USD 4 million recognized in share premium (2017: benefit of USD 21 million). Deferred tax assets and liabilities The Group has gross DTAs, valuation allowances and recognized DTAs related to tax loss carry-forwards and deductible temporary differences and also deferred tax liabilities in respect of taxable temporary differences as shown in the table below. The valuation allowances reflect DTAs that were not recognized because it was not considered probable that future taxable profits will be available to utilize the related tax loss carry- forwards and deductible temporary differences. Of the recognized DTAs as of 31 December 2018, USD 9.5 billion related to the US, USD 0.3 billion related to Switzerland and USD 0.3 billion related to other locations (as of 31 December 2017, USD 7.2 billion related to the US, USD 2.5 billion related to Switzerland and USD 0.4 billion related to other locations). As of 31 December 2018, the Group has recognized DTAs of USD 53 million (31 December 2017: USD 1,263 million) in respect of entities that incurred losses in either the current or preceding year. The recognition of these DTAs is supported by projections of future taxable profits for these entities. USD million 31.12.18 31.12.17 Deferred tax assets1 Gross Valuation allowance Recognized Gross Valuation allowance Recognized Tax loss carry-forwards 15,088 (8,989) 6,099 17,372 (11,480) 5,892 Temporary differences 4,571 (565) 4,006 5,165 (1,001) 4,164 of which: related to real estate costs capitalized for US tax purposes 2,159 (25) 2,134 0 0 0 of which: related to compensation and benefits 1,150 (192) 959 1,165 (228) 937 of which: related to trading assets 390 (50) 339 485 (60) 425 of which: related to investments in subsidiaries and goodwill 202 0 202 2,392 0 2,392 of which: other 670 (298) 372 1,123 (713) 410 Total deferred tax assets 19,659 (9,554) 10,105 22,537 (12,481) 10,056 Deferred tax liabilities Goodwill and intangible assets 26 19 Other 62 35 Total deferred tax liabilities 88 54 1 Less deferred tax liabilities as applicable.Financial statements 390 Consolidated financial statements Note 8 Income taxes (continued) As of 31 December 2018, tax loss carry-forwards totaling USD 38,428 million (31 December 2017: USD 47,427 million) that are not recognized as DTAs were available to be offset against future taxable profits. These tax losses expire as outlined in the table below. Unrecognized tax loss carry-forwards USD million 31.12.18 31.12.17 Within 1 year 0 171 From 2 to 5 years 464 106 From 6 to 10 years 16,297 3,267 From 11 to 20 years 4,457 26,688 No expiry 17,210 17,195 Total 38,428 47,427 As of 31 December 2018, USD 20.0 billion of the unrecognized tax losses carried forward related to the US, USD 14.2 billion related to the UK and USD 4.2 billion related to other locations (at 31 December 2017, USD 28.6 billion related to the US, USD 14.3 billion related to the UK and USD 4.5 billion related to other locations). In general, Swiss tax losses can be carried forward for seven years, US federal tax losses incurred prior to 31 December 2017 for 20 years and US federal tax losses incurred after 31 December 2017 and also UK tax losses for an unlimited period. The amounts of US tax loss carry-forwards that are included in the above table are based on their amount for federal tax purposes rather than for state and local tax purposes. Deferred tax liabilities are recognized in respect of investments in subsidiaries, branches and associates and interests in joint arrangements, except to the extent that the Group can control the timing of the reversal of the associated taxable temporary difference and it is probable that it will not reverse in the foreseeable future. However, as of 31 December 2018, this exception was not considered to apply to any taxable temporary differences. 391 Note 9 Earnings per share (EPS) and shares outstanding As of or for the year ended 31.12.18 31.12.17 31.12.16 Basic earnings (USD million) Net profit / (loss) attributable to shareholders 4,516 969 3,348 Diluted earnings (USD million) Net profit / (loss) attributable to shareholders 4,516 969 3,348 Less: (profit) / loss on own equity derivative contracts (2) 0 0 Net profit / (loss) attributable to shareholders for diluted EPS 4,514 969 3,348 Weighted average shares outstanding Weighted average shares outstanding for basic EPS1 3,730,297,877 3,716,174,261 3,719,764,322 Effect of dilutive potential shares resulting from notional shares, in-the-money options and warrants outstanding 111,271,269 120,540,272 104,244,665 Weighted average shares outstanding for diluted EPS 3,841,569,146 3,836,714,533 3,824,008,987 Earnings per share (USD) Basic 1.21 0.26 0.90 Diluted 1.18 0.25 0.88 Shares outstanding Shares issued 3,855,634,749 3,853,096,603 3,850,766,389 Treasury shares 166,467,802 132,301,550 138,441,772 Shares outstanding 3,689,166,947 3,720,795,053 3,712,324,617 1 The weighted average shares outstanding for basic EPS are calculated by taking the number of shares at the beginning of the period, adjusted by the number of shares acquired or issued during the period, multiplied by a time-weighted factor for the period outstanding. As a result, balances are affected by the timing of acquisitions and issuances during the period. The table below outlines the potential shares which could dilute basic earnings per share in the future, but were not dilutive for the periods presented. Number of shares 31.12.18 31.12.17 31.12.16 Potentially dilutive instruments Employee share-based compensation awards 3,605,198 24,124,341 46,981,698 Other equity derivative contracts 11,912,450 9,122,496 8,419,122 Total 15,517,648 33,246,837 55,400,820 Financial statements 392 Consolidated financial statements Balance sheet notes Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement The tables on the following pages provide information on financial instruments and certain non-financial instruments (e.g., committed unconditionally revocable credit lines) that are subject to ECL. UBS has established ECL disclosure segments or “ECL segments” to disaggregate portfolios based on shared risk characteristics and on the same or similar rating methods applied. The key segments are presented in the table below. Tables provided for 31 December 2018 include additional detail on certain segments that have not been provided for balances as of 1 January 2018. →Refer to Note 1c for the comparative information as of 31 December 2017 under IAS 39 →Refer to Note 23 for more information on expected credit loss measurement →Refer to Note 23g for more details on sensitivity Segment Segment description Description of credit risk sensitivity Business division / Corporate Center Private clients with mortgages Lending to private clients secured by owner-occupied real estate and personal account overdrafts of those clients Sensitive to the interest rate environment, employment status and influence from regional effects (e.g., property values) – Personal & Corporate Banking – Global Wealth Management Real estate financing Rental or income-producing real estate financing to private and corporate clients secured by real estate Sensitive to GDP development, the interest rate environment and regional effects (e.g., property values) – Personal & Corporate Banking – Global Wealth Management Large corporate clients Lending to large corporate and multinational clients Sensitive to GDP development, seasonality and business cycles and collateral values (diverse collateral including real estate and other collateral types) – Personal & Corporate Banking – Investment Bank SME clients Lending to small and medium-sized corporate clients Sensitive to GDP development, the interest rate environment and, to some extent, seasonality and business cycles and collateral values (diverse collateral including real estate and other collateral types) – Personal & Corporate Banking Lombard Loans secured by pledges of marketable securities, guarantees and other forms of collateral Sensitive to the market (e.g., changes in collateral as well as in invested assets) – Personal & Corporate Banking – Global Wealth Management Credit cards Credit card solutions in Switzerland and the US Sensitive to the interest rate environment and employment status – Personal & Corporate Banking – Global Wealth Management Commodity trade finance Working capital financing of commodity traders, generally extended on a self- liquidating transactional basis Sensitive primarily to the strength of individual transaction structures and collateral values (price volatility of commodities) as the primary source for debt service is directly linked to the shipments financed – Personal & Corporate Banking 393 Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) For amortized cost instruments, the net carrying value represents the maximum exposure to credit risk, taking into account the allowance for credit losses. Financial assets measured at fair value through other comprehensive income (FVOCI) are also subject to ECL; however, unlike for amortized cost instruments, the allowance does not reduce the carrying value of these financial assets. The carrying value of financial assets measured at FVOCI represents the maximum exposure to credit risk. No purchased credit-impaired financial assets are recognized in the period. Originated credit-impaired financial assets were not material and are not presented in the table below and on the following page. In addition to on-balance sheet financial assets, certain off- balance sheet financial instruments and other credit lines are also subject to ECL. The maximum exposure to credit risk for off- balance sheet financial instruments is calculated based on notional amounts. USD million 31.12.18 Carrying amount1 ECL allowances Financial instruments measured at amortized cost Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Cash and balances at central banks 108,370 108,370 0 0 0 0 0 0 Loans and advances to banks 16,868 16,666 202 0 (7) (4) (1) (3) Receivables from securities financing transactions 95,349 95,349 0 0 (2) (2) 0 0 Cash collateral receivables on derivative instruments 23,602 23,602 0 0 0 0 0 0 Loans and advances to customers 320,352 298,248 20,357 1,748 (772) (69) (155) (549) of which: Private clients with mortgages 126,335 115,679 9,859 796 (138) (16) (83) (39) of which: Real estate financing 36,474 28,578 7,858 38 (59) (3) (40) (16) of which: Large corporate clients 11,390 10,845 457 88 (95) (9) (4) (82) of which: SME clients 9,924 8,029 1,263 632 (281) (13) (12) (256) of which: Lombard 111,722 111,707 0 14 (21) (4) 0 (17) of which: Credit cards 1,529 1,216 297 16 (30) (6) (13) (11) of which: Commodity trade finance 3,260 2,798 445 16 (86) (5) (3) (78) Other financial assets measured at amortized cost 22,563 21,862 223 478 (155) (43) (4) (109) of which: Loans to financial advisors 3,291 3,104 62 125 (113) (34) (2) (77) Total financial assets measured at amortized cost 587,104 564,096 20,782 2,226 (937) (117) (159) (660) Financial assets measured at fair value through other comprehensive income 6,667 6,667 0 0 0 0 0 0 Total on-balance sheet financial assets in scope of ECL requirements 593,770 570,763 20,782 2,226 (937) (117) (159) (660) Total exposure ECL provisions Off-balance sheet (in scope of ECL)Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Guarantees 18,146 17,321 611 215 (43) (7) (2) (34) of which: Large corporate clients 3,862 3,599 136 127 (8) (1) (1) (6) of which: SME clients 1,298 1,057 164 77 (26) 0 0 (25) of which: Financial intermediaries and hedge funds 7,193 7,125 67 0 (4) (3) 0 0 of which: Lombard 834 834 0 0 0 0 0 0 of which: Commodity trade finance 2,097 1,851 236 11 (1) (1) 0 0 Irrevocable loan commitments 31,212 30,590 568 53 (37) (32) (5) 0 of which: Large corporate clients 22,019 21,492 519 7 (31) (26) (4) 0 Forward starting reverse repurchase and securities borrowing agreements 937 937 0 0 0 0 0 0 Committed unconditionally revocable credit lines 36,634 35,121 1,420 93 (36) (19) (16) 0 of which: Real estate financing 2,562 2,150 401 11 (17) (4) (12) 0 of which: Large corporate clients 4,260 4,152 91 17 (2) (1) 0 0 of which: SME clients 4,505 4,163 285 57 (7) (6) (1) 0 of which: Lombard 7,402 7,402 0 0 0 (1) 0 0 of which: Credit cards 7,343 7,035 309 0 (6) (4) (2) 0 of which: Commodity trade finance 3,467 3,209 254 4 (2) (2) 0 0 Irrevocable committed prolongation of existing loans 3,339 2,861 456 22 (1) (1) 0 0 Total off-balance sheet financial instruments and other credit lines 90,268 86,830 3,055 383 (116) (59) (23) (34) Total allowances and provisions (1,054) (176) (183) (695) 1 The carrying value of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances.Financial statements 394 Consolidated financial statements Note 10 Financial assets at amortized cost and other positions in scope of expected credit loss measurement (continued) USD million 1.1.18 Carrying amount1 ECL allowances Financial instruments measured at amortized cost Total Stage 1 Stage 2 Stage 3 2 Total Stage 1 Stage 2 Stage 3 Cash and balances at central banks 90,045 90,045 0 0 0 0 0 0 Loans and advances to banks 14,074 14,055 19 0 (5) (3) 0 (3) Receivables from securities financing transactions 86,864 86,864 0 0 (2) (2) 0 0 Cash collateral receivables on derivative instruments 24,040 24,040 0 0 0 0 0 0 Loans and advances to customers 318,480 288,420 28,531 1,529 (890) (62) (167) (661) of which: Private clients with mortgages 122,652 106,554 15,394 704 (128) (12) (71) (45) of which: Real estate financing 36,824 26,888 9,907 29 (64) (4) (54) (6) of which: Large corporate clients 11,289 10,626 572 90 (71) (6) 0 (65) of which: SME clients 10,589 8,431 1,557 601 (295) (8) (24) (262) of which: Lombard 114,638 114,621 0 17 (86) (5) 0 (81) Other financial assets measured at amortized cost 18,775 18,265 33 477 (139) (30) (1) (108) of which: Loans to financial advisors 3,165 2,949 33 184 (118) (29) (1) (89) Total financial assets measured at amortized cost 552,277 521,689 28,582 2,006 (1,037) (97) (168) (772) Financial assets measured at fair value through other comprehensive income 6,930 6,930 0 0 0 0 0 0 Total on-balance sheet financial assets in scope of ECL requirements 559,208 528,619 28,582 2,006 (1,037) (97) (168) (772) Total exposure ECL provisions Off-balance sheet (in scope of ECL)Total Stage 1 Stage 2 Stage 3 2 Total Stage 1 Stage 2 Stage 3 Guarantees 17,596 16,753 649 194 (38) (6) (2) (30) Irrevocable loan commitments 31,650 30,933 679 38 (37) (25) (8) (4) of which: Large corporate clients 22,568 21,896 645 26 (28) (19) (4) (4) Forward starting reverse repurchase and securities borrowing agreements 1,247 1,247 0 0 0 0 0 0 Committed unconditionally revocable credit lines 37,639 35,362 2,213 64 (35) (19) (15) 0 of which: Real estate financing 3,184 2,151 1,033 0 (10) (2) (7) 0 of which: SME clients 4,893 4,423 416 54 (7) (5) (2) 0 Irrevocable committed prolongation of existing loans 1,677 1,676 0 1 0 0 0 0 Total off-balance sheet financial instruments and other credit lines 89,809 85,972 3,541 295 (110) (50) (25) (34) Total allowances and provisions (1,146) (148) (193) (806) 1 The carrying value of financial assets measured at amortized cost represents the total gross exposure net of the respective ECL allowances. 2 Upon adoption of IFRS 9 as of 1 January 2018, an instrument is classified as credit-impaired if the counterparty is defaulted, and / or the instrument is purchased or originated credit-impaired and includes credit-impaired exposures for which no loss has occurred or no allowance has been recognized (e.g., because they are expected to be fully recoverable through the collateral held). Refer to Note 1c for more information on the adoption of IFRS 9. 395 Note 11 Derivative instruments Derivatives: overview A derivative is a financial instrument for which the value is derived from one or more variables (underlyings). Underlyings may be indices, foreign currency exchange or interest rates, or the value of shares, commodities, bonds or other financial instruments. A derivative commonly requires little or no initial net investment by either counterparty to the trade. The majority of derivative contracts are negotiated with respect to notional amounts, tenor, price and settlement mechanisms, as is customary with other financial instruments. Over-the-counter (OTC) derivative contracts are usually traded under a standardized International Swaps and Derivatives Association (ISDA) master agreement between UBS and its counterparties. Terms are negotiated directly with counterparties and the contracts have industry standard settlement mechanisms prescribed by ISDA. Beginning in 2016, regulators in various jurisdictions began a phased introduction of rules requiring the payment and collection of initial and variation margin on certain OTC derivative contracts, which may have a bearing on their price and other relevant terms. The industry continues to promote the use of central counterparties (CCPs) to clear OTC trades. The trend toward CCP clearing and settlement will generally facilitate the reduction of systemic credit exposures. Other derivative contracts are standardized in terms of their amounts and settlement dates, and are bought and sold on regulated exchanges. These are commonly referred to as exchange-traded derivatives (ETD) contracts. Exchanges offer the benefits of pricing transparency, standardized daily settlement of changes in value and consequently reduced credit risk. For presentation purposes, the Group’s derivative contracts are subject to IFRS netting provisions. Derivative instruments are measured at fair value and generally classified on the balance sheet as Derivative financial instruments within Assets when having positive replacement values and Derivative financial instruments within Liabilities when having negative replacement values. However, ETD that are economically settled on a daily basis and OTC derivatives that are either legally settled or in substance net settled on a daily basis are classified as Cash collateral receivables on derivative instruments or Cash collateral payables on derivative instruments. Changes in the replacement values of derivatives are recorded in Other net income from fair value changes on financial instruments, except for interest on derivatives designated as hedging instruments in effective hedge accounting relationships and forward points on certain short- and long-duration foreign exchange contracts, which are recorded in Net interest income. →Refer to Note 1a items 3j and 3k for more information →Refer to Note 25 for more information on derivative financial assets and liabilities after consideration of netting potential allowed under enforceable netting arrangements The Group uses various derivative instruments for both trading and hedging purposes. Derivative product types as well as valuation principles and techniques applied by the Group are described in Note 24. Positive replacement values represent the estimated amount the Group would receive if the derivative contract were sold on the balance sheet date. Negative replacement values indicate the estimated amount the Group would pay to transfer its obligations in respect of the underlying contract were it required or entitled to do so on the balance sheet date. Derivatives embedded in other financial instruments are not included in the “Derivative instruments” table within this Note. Bifurcated embedded derivatives are presented on the same balance sheet line as the host contract. In cases where UBS applies the fair value option to hybrid instruments, bifurcation of an embedded derivative component is not required and as such this component is also not included in the “Derivative instruments” table. →Refer to Notes 19 and 24 for more information Risks of derivative instruments Derivative instruments are transacted in many trading portfolios, which generally include several types of instruments, not just derivatives. The market risk of derivatives is predominantly managed and controlled as an integral part of the market risk of these portfolios. The Group’s approach to market risk is described in the audited portions of “Market risk” in the “Risk management and control” section of this report. Derivative instruments are also transacted with many different counterparties, most of whom are also counterparties for other types of business. The credit risk of derivatives is managed and controlled in the context of the Group’s overall credit exposure to its counterparties. The Group’s approach to credit risk is described in the audited portions of “Credit risk” in the “Risk management and control” section of this report. It should be noted that, although the derivative financial assets shown on the balance sheet can be an important component of the Group’s credit exposure, the positive replacement values related to a respective counterparty are rarely an adequate reflection of the Group’s credit exposure in its derivatives business with that counterparty. This is generally the case because, on the one hand, replacement values can increase over time (potential future exposure), while on the other hand, exposure may be mitigated by entering into master netting agreements and bilateral collateral arrangements. Both the exposure measures used internally by the Group to control credit risk and the capital requirements imposed by regulators reflect these additional factors. →Refer to Note 25 for more information on derivative financial assets and liabilities after consideration of netting potential allowed under enforceable netting arrangements Financial statements 396 Consolidated financial statements Note 11 Derivative instruments (continued) Derivative instruments¹,² 31.12.18 31.12.17 USD billion PRV3 Notional values related to PRV4 NRV5 Notional values related to NRV4 Other notional values4,6 PRV3 Notional values related to PRV4 NRV5 Notional values related to NRV4 Other notional values4,6 Interest rate contracts Over-the-counter (OTC) contracts Forward contracts 0.0 1.4 0.1 3.1 2,873.9 0.1 22.6 0.3 8.5 2,381.2 Swaps 29.5 459.8 23.5 441.8 7,189.1 36.3 553.2 29.0 465.5 7,724.9 Options 7.6 562.2 9.0 550.0 8.7 572.6 10.1 561.4 Exchange-traded contracts Futures 516.1 467.3 Options 0.0 27.7 0.0 26.3 199.7 0.0 23.2 0.0 35.2 159.4 Agency transactions7 0.0 0.1 0.0 0.0 Total 37.1 1,051.1 32.7 1,021.3 10,778.8 45.2 1,171.6 39.4 1,070.5 10,732.8 Credit derivative contracts Over-the-counter (OTC) contracts Credit default swaps 1.7 68.8 2.1 73.2 2.7 87.4 3.0 96.8 1.2 Total return swaps 0.2 3.0 0.6 3.7 0.2 2.3 0.9 4.0 Options and warrants 0.0 2.7 0.0 1.4 0.0 4.4 0.0 0.1 Total 1.9 74.5 2.7 78.3 2.9 94.1 3.9 100.8 1.2 Foreign exchange contracts Over-the-counter (OTC) contracts Forward contracts 20.3 708.7 20.9 731.2 17.6 699.0 18.3 709.5 Interest and currency swaps 24.8 1,299.7 24.6 1,203.5 24.4 1,308.5 22.3 1,126.9 Options 8.3 613.8 7.8 577.4 6.3 438.1 6.0 407.9 Exchange-traded contracts Futures 0.4 0.4 Options 0.0 3.6 0.0 5.3 0.0 4.8 0.1 5.7 Agency transactions7 0.0 0.1 0.0 0.0 Total 53.5 2,625.7 53.4 2,517.3 0.4 48.4 2,450.3 46.7 2,250.0 0.4 Equity / index contracts Over-the-counter (OTC) contracts Forward contracts 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Swaps 4.7 78.5 5.6 86.3 3.4 73.0 5.7 103.0 Options 5.5 97.6 7.2 139.6 6.0 78.6 8.4 128.2 Exchange-traded contracts Futures 71.7 53.3 Options 10.1 232.8 9.0 262.8 34.1 7.1 238.6 7.1 268.0 31.8 Agency transactions7 11.2 13.3 6.3 6.3 Total 31.4 408.9 35.0 488.8 105.9 22.8 390.2 27.4 499.2 85.0 Table continues on the next page. 397 Note 11 Derivative instruments (continued) Derivative instruments (continued)¹,² Table continued from the previous page. 31.12.18 31.12.17 USD billion PRV3 Notional values related to PRV4 NRV5 Notional values related to NRV4 Other notional values4,6 PRV3 Notional values related to PRV4 NRV5 Notional values related to NRV4 Other notional values4,6 Commodity contracts Over-the-counter (OTC) contracts Forward contracts 0.1 3.2 0.1 3.4 0.1 3.0 0.1 3.9 Swaps 0.7 15.2 0.4 9.9 0.2 8.7 0.4 13.1 Options 0.4 18.6 0.3 16.1 0.3 11.6 0.1 8.1 Exchange-traded contracts Futures 8.5 8.4 Forward contracts 0.0 6.6 0.0 5.4 0.2 9.6 0.0 8.1 Options 0.1 2.9 0.0 3.7 0.1 0.0 1.0 0.1 4.6 0.3 Agency transactions7 0.4 0.7 0.9 0.9 Total 1.8 46.4 1.5 38.5 8.6 1.8 33.9 1.6 37.8 8.6 Unsettled purchases of non-derivative financial instruments8 0.2 17.0 0.1 6.0 0.1 12.4 0.1 11.2 Unsettled sales of non-derivative financial instruments8 0.4 15.1 0.2 13.2 0.1 15.2 0.1 9.0 Total derivative instruments, based on IFRS netting9 126.2 4,238.6 125.7 4,163.4 10,893.6 121.3 4,167.7 119.1 3,978.6 10,828.0 1 Derivative financial liabilities as of 31 December 2018 include USD 0.0 billion related to derivative loan commitments (31 December 2017: USD 0.0 billion). No notional amounts related to these commitments are included in this table, but they are disclosed within Note 34 under Loan commitments. 2 Upon adoption of IFRS 9 on 1 January 2018, certain forward starting repurchase and reverse repurchase agreements have been classified as measured at fair value through profit or loss and are recognized within derivative instruments. The fair value of these derivative instruments was not material as of 31 December 2018. No notional amounts related to these instruments are included in this table, but they are disclosed within Note 34 under Forward starting transactions. 3 PRV: positive replacement value. 4 In cases where replacement values are presented on a net basis on the balance sheet, the respective notional values of the netted replacement values are still presented on a gross basis. 5 NRV: negative replacement value. 6 Other notional values relate to derivatives that are cleared through either a central counterparty or an exchange. The fair value of these derivatives is presented on the balance sheet net of the corresponding cash margin under Cash collateral receivables on derivative instruments and Cash collateral payables on derivative instruments and was not material for all periods presented. 7 Notional values of exchange-traded agency transactions and OTC-cleared transactions entered into on behalf of clients are not disclosed as they have a significantly different risk profile. 8 Changes in the fair value of purchased and sold non-derivative financial instruments between trade date and settlement date are recognized as replacement values. 9 Financial assets and liabilities are presented net on the balance sheet if UBS has the unconditional and legally enforceable right to offset the recognized amounts, both in the normal course of business and in the event of default, bankruptcy or insolvency of the entity and all of the counterparties, and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Refer to Note 25 for more information on netting arrangements. The notional amount of a derivative is generally the quantity of the underlying instrument on which the derivative contract is based and is the reference against which changes in the value of the derivative are measured. Notional values in themselves are generally not a direct indication of the values that are exchanged between parties, and are therefore not a direct measure of risk or financial exposure but are viewed as an indication of the scale of the different types of derivatives entered into by the Group. On a notional value basis, approximately 56% of OTC interest rate contracts held as of 31 December 2018 (31 December 2017: 54%) mature within one year, 28% (31 December 2017: 28%) within one to five years and 16% (31 December 2017: 18%) after five years. Notional values of interest rate contracts cleared with a clearing house that qualify for IFRS balance sheet netting or are legally settled on a daily basis are presented under Other notional values and are categorized into maturity buckets on the basis of contractual maturities of the cleared underlying derivative contracts. Derivatives transacted for sales and trading purposes Most of the Group’s derivative transactions relate to sales and trading activities. Sales activities include the structuring and marketing of derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities include market-making to directly support the facilitation and execution of client activity. Market-making involves quoting bid and offer prices to other market participants with the intention of generating revenues based on spread and volume. Credit derivatives UBS is an active dealer in the fixed income market, including credit default swaps (CDS) and related products, with respect to a large number of issuers’ securities. The primary objectives of these activities are ongoing hedging of trading book exposures and market-making, primarily on behalf of clients.Financial statements 398 Consolidated financial statements Note 11 Derivative instruments (continued) Market-making activity, which is undertaken within the Investment Bank, consists of buying and selling single-name CDS, index CDS, loan CDS and related referenced cash instruments to facilitate client trading activity. UBS also actively utilizes CDS to economically hedge specific counterparty credit risks in its accrual and traded loan portfolios (including off- balance sheet loan commitments) with the aim of reducing concentrations in individual names, sectors or specific portfolios. In addition, UBS actively utilizes CDS to economically hedge specific counterparty credit risks in its OTC derivative portfolios, including financial instruments that are designated at fair value through profit or loss. The tables below provide more information on credit protection bought and sold, including replacement and notional value information by instrument type and counterparty type. The value of protection bought and sold is not, in isolation, a measure of UBS’s credit risk. Counterparty relationships are viewed in terms of the total outstanding credit risk, which relates to other instruments in addition to CDS, and in connection with collateral arrangements in place. On a notional value basis, approximately 14% of credit protection bought and sold as of 31 December 2018 matures within one year (31 December 2017: 23%), approximately 74% within one to five years (31 December 2017: 65%) and approximately 12% after five years (31 December 2017: 12%). Credit derivatives by type of instrument Protection bought Protection sold USD billion PRV NRV Notional values PRV NRV Notional values Single-name credit default swaps 0.6 0.6 43.3 0.5 1.0 44.9 Multi-name index-linked credit default swaps 0.3 0.3 29.1 0.3 0.2 24.4 Multi-name other credit default swaps 0.0 0.0 0.1 0.0 0.0 0.1 Total rate of return swaps 0.2 0.7 4.7 0.0 0.0 2.0 Options and warrants 0.0 0.0 4.1 0.0 0.0 0.1 Total 31 December 2018 1.1 1.6 81.3 0.8 1.2 71.4 of which: credit derivatives related to economic hedges 0.9 1.3 59.2 0.5 1.1 48.9 of which: credit derivatives related to market-making 0.2 0.4 22.1 0.3 0.2 22.6 Protection bought Protection sold USD billion PRV NRV Notional values PRV NRV Notional values Single-name credit default swaps 0.6 1.2 62.9 1.1 0.7 57.1 Multi-name index-linked credit default swaps 0.2 1.0 32.6 0.9 0.2 32.8 Multi-name other credit default swaps 0.0 0.0 0.1 0.0 0.0 0.0 Total rate of return swaps 0.0 0.8 4.6 0.1 0.0 1.7 Options and warrants 0.0 0.0 4.4 0.0 0.0 0.1 Total 31 December 2017 0.8 3.0 104.5 2.1 0.9 91.7 of which: credit derivatives related to economic hedges 0.8 2.5 83.7 1.6 0.9 72.3 of which: credit derivatives related to market-making 0.0 0.5 20.9 0.5 0.0 19.4 399 Note 11 Derivative instruments (continued) Credit derivatives by counterparty Protection bought Protection sold USD billion PRV NRV Notional values PRV NRV Notional values Broker-dealers 0.2 0.1 13.0 0.1 0.2 11.5 Banks 0.4 0.4 29.2 0.3 0.5 25.6 Central clearing counterparties 0.2 0.4 31.9 0.4 0.3 30.8 Other 0.3 0.7 7.2 0.0 0.3 3.5 Total 31 December 2018 1.1 1.6 81.3 0.8 1.2 71.4 Protection bought Protection sold USD billion PRV NRV Notional values PRV NRV Notional values Broker-dealers 0.2 0.2 16.6 0.2 0.1 12.6 Banks 0.3 0.8 38.0 0.6 0.4 32.4 Central clearing counterparties 0.1 1.1 42.5 1.0 0.1 41.6 Other 0.3 0.9 7.4 0.3 0.2 5.0 Total 31 December 2017 0.8 3.0 104.5 2.1 0.9 91.7 UBS’s CDS trades are documented using industry standard forms of documentation or equivalent terms documented in a bespoke agreement. The agreements that govern CDS generally do not contain recourse provisions that would enable UBS to recover from third parties any amounts paid out by UBS. The types of credit events that would require UBS to perform under a CDS contract are subject to agreement between the parties at the time of the transaction. However, nearly all transactions are traded with reference to credit events that are applicable under certain market conventions based on the type of reference entity to which the transaction relates. Applicable credit events according to market conventions include bankruptcy, failure to pay, restructuring, obligation acceleration and repudiation / moratorium. Contingent collateral features of derivative liabilities Certain derivative instruments contain contingent collateral or termination features triggered upon a downgrade of the published credit ratings of the Group in the normal course of business. Based on UBS’s credit ratings as of 31 December 2018, USD 0.0 billion, USD 0.3 billion and USD 1.0 billion would have been required for contractual obligations related to OTC derivatives in the event of a one-notch, two-notch and three- notch reduction in long-term credit ratings, respectively. In evaluating UBS’s liquidity requirements, UBS considers additional collateral or termination payments that would be required in the event of a reduction in UBS’s long-term credit ratings, and a corresponding reduction in UBS’s short-term ratings. Financial statements 400 Consolidated financial statements Note 12 Financial assets and liabilities at fair value held for trading USD million 31.12.18 31.12.17 Financial assets at fair value held for trading1 Government bills / bonds 11,161 13,186 Corporate and municipal bonds 6,768 8,785 Loans 3,566 3,946 Investment fund units 9,716 9,881 Asset-backed securities 392 377 Equity instruments 72,768 81,623 Financial assets for unit-linked investment contracts2 11,609 Total financial assets at fair value held for trading 104,370 129,407 Financial liabilities at fair value held for trading1 Government bills / bonds 2,839 5,549 Corporate and municipal bonds 3,530 3,629 Investment fund units 689 841 Equity instruments 21,886 21,230 Other 0 2 Total financial liabilities at fair value held for trading 28,943 31,251 1 Refer to Note 24c for more information on product type and fair value hierarchy categorization. 2 Financial assets for unit-linked investment contracts were reclassified from Financial assets at fair value held for trading to Financial assets at fair value not held for trading upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. Note 13 Financial assets at fair value not held for trading USD million 31.12.18 31.12.17 Financial assets at fair value not held for trading1 Government bills / bonds 22,493 26,633 Corporate and municipal bonds 17,236 22,022 Financial assets for unit-linked investment contracts2 21,446 Loans 8,132 10,405 Securities financing transactions3 9,937 298 Auction rate securities4 1,664 Investment fund units 710 597 Equity instruments5 702 Other 369 501 Total financial assets at fair value not held for trading 82,690 60,457 1 Refer to Note 24c for more information on product type and fair value hierarchy categorization. 2 Financial assets for unit-linked investment contracts were reclassified from Financial assets at fair value held for trading to Financial assets at fair value not held for trading upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 3 Certain reverse repurchase agreements were reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 4 Auction rate securities have been reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 5 Upon adoption of IFRS 9 on 1 January 2018, equity instruments that were formerly classified as available for sale under IAS 39 were reclassified to Financial assets at fair value not held for trading. Refer to Note 1c for more information. Note 14 Financial assets measured at fair value through other comprehensive income USD million 31.12.18 31.12.17 Financial assets measured at fair value through other comprehensive income1 Debt instruments Government and government agencies 6,463 7,181 of which: USA 6,101 6,739 Banks 149 307 Corporates and other 54 842 Total debt instruments 6,667 8,330 Equity instruments2 560 Total financial assets measured at fair value through other comprehensive income 6,667 8,889 Unrealized gains – before tax 4 221 Unrealized (losses) – before tax (146) (108) Net unrealized gains / (losses) – before tax (143) 114 Net unrealized gains / (losses) – after tax (104) 6 1 Refer to Note 24c for more information on product type and fair value hierarchy categorization. Refer also to Note 10 and Note 23 for more information on expected credit loss measurement. 2 Comparative- period information includes equity instruments that were formerly classified as available for sale under IAS 39 and have been reclassified to Financial assets at fair value not held for trading upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 401 Note 15 Property, equipment and software At historical cost less accumulated depreciation USD million Own-used properties Leasehold improvements IT hardware and communications equipment Internally generated software Purchased software Other machines and equipment Projects in progress 2018 2017 Historical cost Balance at the beginning of the year 7,923 3,375 1,615 4,266 432 861 1,050 19,522 17,842 Additions1 21 20 182 1 50 21 1,406 1,702 1,638 Disposals / write-offs2 (17) (386) (213) (108) (15) (111) 0 (849) (634) Reclassifications (174) 152 8 1,054 12 36 (1,283) (195)7 (47) Foreign currency translation (74) (40) (25) (41) (9) (8) (16) (213) 724 Balance at the end of the year 7,679 3,122 1,568 5,173 469 799 1,157 19,966 19,522 Accumulated depreciation Balance at the beginning of the year 4,528 2,069 1,131 1,854 272 610 0 10,465 9,656 Depreciation 159 198 172 498 61 65 0 1,153 1,035 Impairment3 0 2 3 66 4 0 0 75 18 Disposals / write-offs2 (16) (380) (213) (108) (15) (108) 0 (840) (626) Reclassifications (129) 4 0 0 0 0 0 (124)7 (5) Foreign currency translation (42) (21) (18) (18) (7) (6) 0 (111) 387 Balance at the end of the year 4,500 1,873 1,077 2,291 316 561 0 10,619 10,465 Net book value Net book value at the beginning of the year 3,394 1,306 483 2,412 159 251 1,050 9,057 8,186 Net book value at the end of the year4,5 3,179 1,249 491 2,882 153 238 1,1576 9,348 9,057 1 Includes USD 7 million additional assets related to acquisition of businesses in 2018. 2 Includes write-offs of fully depreciated assets. 3 Impairment charges recorded in 2018 relate to assets for which the recoverable amount was determined based on value-in-use. Recoverable amounts for these impaired assets were not material as of 31 December 2018. 4 As of 31 December 2018, contractual commitments to purchase property in the future amounted to approximately USD 0.3 billion (31 December 2017: approximately USD 0.3 billion). 5 Includes USD 26 million related to leased assets, mainly Own-used properties. 6 Consists of USD 803 million related to Internally generated software, USD 295 million related to Own-used properties and USD 59 million related to Leasehold improvements. 7 Reflects reclassifications to Properties held for sale (USD 70 million on a net basis) of properties sold in 2018. Financial statements 402 Consolidated financial statements Note 16 Goodwill and intangible assets Introduction UBS performs an impairment test on its goodwill assets on an annual basis or when indicators of impairment exist. For annual tests prior to 2018, UBS considered the segments, as they were reported in Note 2a, as separate cash- generating units, as that was the level at which the performance of investments (and the related goodwill) was reviewed and assessed by management. Following the integration in 2018 of the Wealth Management and Wealth Management Americas business divisions into the single reportable segment Global Wealth Management, UBS continued to separately monitor the goodwill previously allocated to the two former business divisions. As a consequence, for the purposes of goodwill impairment testing, the former Wealth Management and Wealth Management Americas business divisions are considered to be two separate cash-generating units, referred to in this Note as Global Wealth Management Americas1 and Global Wealth Management ex Americas. The remaining goodwill balances continued to be tested at the level of Asset Management and the Investment Bank, respectively, consistent with the 2017 annual test. The impairment test is performed for each cash-generating unit to which goodwill is allocated by comparing the recoverable amount, based on its value-in-use, with the carrying amount of the respective cash-generating unit. An impairment charge is recognized if the carrying amount exceeds the recoverable amount. As of 31 December 2018, total goodwill recognized on the balance sheet was USD 6.4 billion, of which USD 3.7 billion was carried by the Global Wealth Management Americas cash- generating unit, USD 1.2 billion was carried by the Global Wealth Management ex Americas cash-generating unit, USD 1.4 billion was carried by Asset Management and USD 0.1 billion was carried by the Investment Bank. Based on the impairment testing methodology described below, UBS concluded that the goodwill balances as of 31 December 2018 allocated to these cash-generating units are not impaired. Methodology for goodwill impairment testing The recoverable amounts are determined using a discounted cash flow model, which has been adapted to use inputs that consider features of the banking business and its regulatory environment. The recoverable amount of a cash-generating unit is the sum of the discounted earnings attributable to shareholders from the first three forecast years and the terminal value, adjusted for the effect of the capital assumed to be needed over the next three years and to support growth beyond this period. The terminal value, which covers all periods beyond the third year, is calculated on the basis of the forecast of third- year profit, the discount rate and the long-term growth rate, as well as the implied perpetual capital growth. The carrying amount for each cash-generating unit is determined by reference to the Group’s equity attribution framework. Within this framework, which is described in the “Capital management” section of this report, we attribute equity to the businesses on the basis of their risk-weighted assets and leverage ratio denominator, their goodwill and intangible assets as well as equity directly associated with activity that Corporate Center – Group Asset and Liability Management manages centrally on behalf of the business divisions. The framework is primarily used for purposes of measuring the performance of the businesses and includes certain management assumptions. Attributed equity equals the capital that a cash-generating unit requires to conduct its business and is currently considered a reasonable approximation of the carrying value of the cash-generating units. The attributed equity methodology is aligned with the business planning process, the inputs from which are used in calculating the recoverable amounts of the respective cash-generating unit. →Refer to the “Capital management” section of this report for more information on the equity attribution framework Assumptions Valuation parameters used within the Group’s impairment test model are linked to external market information, where applicable. The model used to determine the recoverable amount is most sensitive to changes in the forecast earnings available to shareholders in years one to three, to changes in the discount rates and to changes in the long-term growth rate. The applied long-term growth rate is based on long-term economic growth rates for different regions worldwide. Earnings available to shareholders are estimated on the basis of forecast results, which are part of the business plan approved by the Board of Directors. The discount rates are determined by applying a capital asset pricing model-based approach, as well as considering quantitative and qualitative inputs from both internal and external analysts and the view of management. 1 Now including the Global Wealth Management business in Latin America, previously part of the Wealth Management business division. 403 1 Note 16 Goodwill and intangible assets (continued) Following the change of the Group’s presentation currency to US dollars, UBS has refined its assumptions on long-term growth rates and discount rates. The discount rates now take into account regional differences in risk-free rates, at the level of individual cash-generating units. Consistently, long-term growth rates are determined based on nominal or real GDP growth rate forecasts, depending on region. The change to nominal GDP forecasts for some regions results in higher long-term growth rates and thus higher recoverable amounts for all cash- generating units. The change did not affect the outcome of the impairment test. Key assumptions used to determine the recoverable amounts of each cash-generating unit are tested for sensitivity by applying a reasonably possible change to those assumptions. Forecast earnings available to shareholders were changed by 20%, the discount rates were changed by 1.5 percentage points and the long-term growth rates were changed by 0.75 percentage points. Under all scenarios, reasonably possible changes in key assumptions did not result in an impairment of goodwill or intangible assets that would be material to the consolidated financial statements or to the reported financial performance of any of the business divisions. As of 31 December 2018, the Investment Bank’s recoverable amount exceeded its carrying amount by USD 2.5 billion. A reasonably possible change in the forecast earnings or the discount rate used in the calculation of the Investment Bank’s recoverable amount would cause its carrying amount to exceed the recoverable amount. More specifically, if forecast earnings used in the calculation of the Investment Bank’s recoverable amount were reduced by approximately 12% or the discount rate increased by 1.4 percentage points, then the Investment Bank’s recoverable amount would be equal to its carrying amount. If the estimated earnings and other assumptions in future periods deviate from the current outlook, the value of goodwill may become impaired in the future, giving rise to losses in the income statement. Recognition of any impairment of goodwill would reduce IFRS equity and net profit. It would not affect cash flows and, as goodwill is required to be deducted from capital under the Basel III capital framework, no effect would be expected on the Group’s capital ratios. Discount and growth rates Discount rates Growth rates In %31.12.18 31.12.17 31.12.18 31.12.17 Global Wealth Management Americas 9.5 9.0 3.2 2.4 Global Wealth Management ex Americas 8.5 9.0 3.0 1.7 Asset Management 9.0 9.0 2.7 2.4 Investment Bank 11.0 11.0 3.5 2.4 Goodwill Intangible assets USD million Total Infrastructure 1 Customer relationships, contractual rights and other Total 2018 2017 Historical cost Balance at the beginning of the year 6,342 760 786 1,546 7,888 7,687 Additions 161 109 109 270 105 Disposals (40) (5) (5) (45) (63) Write-offs (7) (7) (7) 0 Foreign currency translation (71) (17) (17) (88) 160 Balance at the end of the year 6,392 760 865 1,625 8,018 7,888 Accumulated amortization and impairment Balance at the beginning of the year 653 672 1,325 1,325 1,245 Amortization 38 24 62 62 71 Impairment2 4 4 4 0 Disposals (1) (1) (1) (16) Write-offs (7) (7) (7) 0 Foreign currency translation (12) (12) (12) 26 Balance at the end of the year 691 679 1,371 1,371 1,325 Net book value at the end of the year 6,392 68 186 254 6,647 6,563 1 Consists of the branch network intangible asset recognized in connection with the acquisition of PaineWebber Group, Inc. 2 Impairment charges recorded in 2018 and 2017 relate to assets for which the recoverable amount was determined based on value-in-use (recoverable amount of the impaired assets: USD 18 million for 2018 and USD 0 million for 2017).Financial statements 404 Consolidated financial statements Note 16 Goodwill and intangible assets (continued) The table below presents goodwill and intangible assets by cash-generating unit for the year ended 31 December 2018. USD million Global Wealth Management Americas Global Wealth Management ex Americas Investment Bank Asset Management Corporate Center – Services Total Goodwill Balance at the beginning of the year 3,742 1,148 35 1,418 6,342 Additions 79 82 0 161 Disposals (13) 0 (27) (40) Foreign currency translation (8) (21) (5) (37) (71) Balance at the end of the year 3,721 1,206 112 1,354 6,392 Intangible assets Balance at the beginning of the year 164 25 29 1 2 221 Additions / transfers 22 86 1 109 Disposals 0 (4) 0 (4) Amortization (44) (6) (10) (1) (2) (62) Impairment 0 0 (3) 0 (4) Foreign currency translation (4) 0 (1) 0 0 (5) Balance at the end of the year 138 104 11 0 1 254 The table below presents estimated aggregated amortization expenses for intangible assets. USD million Intangible assets Estimated, aggregated amortization expenses for: 2019 65 2020 52 2021 21 2022 21 2023 18 Thereafter 76 Not amortized due to indefinite useful life 2 Total 254 405 Note 17 Other assets a) Other financial assets measured at amortized cost USD million 31.12.18 31.12.17 Prime brokerage receivables1 19,573 Debt securities 13,562 9,403 of which: government bills / bonds 8,778 6,632 Loans to financial advisors2 3,291 3,199 Fee- and commission-related receivables 1,643 1,826 Finance lease receivables 1,091 1,086 Settlement and clearing accounts 1,050 735 Accrued interest income 694 592 Other 1,233 1,401 Total other financial assets measured at amortized cost 22,563 37,815 1 Upon adoption of IFRS 9 on 1 January 2018, prime brokerage receivables and payables were reclassified from amortized cost to fair value through profit or loss. Brokerage receivables and payables are now presented separately on the balance sheet. Refer to Note 1c for more information. 2 Related to financial advisors in the US and Canada. b) Other non-financial assets USD million 31.12.18 31.12.17 Precious metals and other physical commodities 4,298 4,681 Bail deposit1 1,312 1,371 Prepaid expenses 990 1,039 VAT and other tax receivables 334 368 Properties and other non-current assets held for sale 82 98 Other 395 273 Total other non-financial assets 7,410 7,830 1 Refer to item 1 in Note 21b for more information. Financial statements 406 Consolidated financial statements Note 18 Amounts due to banks and customer deposits USD million 31.12.18 31.12.17 Amounts due to banks 10,962 7,728 Customer deposits 419,838 419,577 of which: demand deposits 181,869 193,457 of which: retail savings / deposits 165,790 166,013 of which: time deposits 53,624 48,617 of which: fiduciary deposits 18,556 11,490 Total amounts due to banks and customer deposits 430,801 427,305 Note 19 Debt issued designated at fair value USD million 31.12.18 31.12.17 Issued debt instruments Equity-linked1 34,392 35,046 Rates-linked 12,073 5,961 Credit-linked 3,282 3,013 Fixed-rate 5,099 4,022 Other 2,185 2,740 Total debt issued designated at fair value 57,031 50,782 of which: issued by UBS AG with original maturity greater than one year 2 40,289 38,230 of which: life-to-date own credit (gain) / loss (270) 163 1 Includes investment fund unit-linked instruments issued. 2 Issued by the legal entity UBS AG. Based on original contractual maturity without considering any early redemption features. More than 99% of the balance as of 31 December 2018 was unsecured (31 December 2017: more than 99% of the balance was unsecured). As of 31 December 2018 and 31 December 2017, the contractual redemption amount at maturity of debt issued designated at fair value through profit or loss was not materially different from the carrying value. The table below shows the residual contractual maturity of the carrying value of debt issued designated at fair value, split between fixed-rate and floating-rate instruments based on the contractual terms, and does not consider any early redemption features. Interest rate ranges for future interest payments related to debt issued designated at fair value have not been included in the table below as a majority of the debt instruments issued are structured products, and therefore the future interest payments are highly dependent upon the embedded derivative and prevailing market conditions at the point in time that each interest payment is made. →Refer to Note 27 for maturity information on an undiscounted cash flow basis Contractual maturity of carrying value USD million 2019 2020 2021 2022 2023 2024–2028 Thereafter Total 31.12.18 Total 31.12.17 UBS AG1 Non-subordinated debt Fixed-rate 3,904 1,509 1,178 447 274 802 3,694 11,807 9,664 Floating-rate 19,921 4,669 3,947 1,610 2,758 5,544 5,113 43,562 39,063 Subtotal 23,825 6,178 5,126 2,057 3,031 6,346 8,807 55,370 48,728 Other subsidiaries2 Non-subordinated debt Fixed-rate 805 25 66 7 0 321 6 1,230 1,437 Floating-rate 13 119 83 6 26 0 183 431 617 Subtotal 818 145 149 13 26 321 189 1,662 2,054 Total 24,643 6,322 5,275 2,070 3,058 6,668 8,996 57,031 50,782 1 Comprises instruments issued by the legal entity UBS AG. 2 Comprises instruments issued by subsidiaries of UBS AG. 407 Note 20 Debt issued measured at amortized cost USD million 31.12.18 31.12.17 Certificates of deposit 7,980 24,447 Commercial paper 27,514 24,140 Other short-term debt 3,531 3,683 Short-term debt1 39,025 52,270 Senior unsecured debt that contributes to total loss-absorbing capacity (TLAC) 29,988 27,937 Senior unsecured debt other than TLAC 33,018 33,102 of which: issued by UBS AG with original maturity greater than one year2 32,133 33,090 Covered bonds 3,947 4,218 Subordinated debt 17,665 16,983 of which: high-trigger loss-absorbing additional tier 1 capital instruments 7,785 5,321 of which: low-trigger loss-absorbing additional tier 1 capital instruments 2,369 2,445 of which: low-trigger loss-absorbing tier 2 capital instruments 6,808 8,500 of which: non-Basel III-compliant tier 2 capital instruments 703 718 Debt issued through the Swiss central mortgage institutions 8,569 8,561 Other long-term debt 58 89 of which: issued by UBS AG with original maturity greater than one year2 52 68 Long-term debt3 93,246 90,890 Total debt issued measured at amortized cost4 132,271 143,160 1 Debt with an original maturity of less than one year. 2 Issued by the legal entity UBS AG. Based on original contractual maturity without considering any early redemption features. As of 31 December 2018, 100% of the balance was unsecured (31 December 2017: 100% of the balance was unsecured). 3 Debt with original maturity greater than or equal to one year. The classification of debt issued into short-term and long-term does not consider any early redemption features. 4 Net of bifurcated embedded derivatives, the fair value of which was not material for the periods presented. The Group uses interest rate and foreign exchange derivatives to manage the risks inherent in certain debt instruments held at amortized cost. In certain cases, the Group applies hedge accounting for interest rate risk as discussed in Note 1a item 3j and Note 28. As a result of applying hedge accounting, the life- to-date adjustment to the carrying value of debt issued was a decrease of USD 298 million as of 31 December 2018 and an increase of USD 35 million as of 31 December 2017, reflecting changes in fair value due to interest rate movements.Financial statements 408 Consolidated financial statements Note 20 Debt issued measured at amortized cost (continued) Subordinated debt consists of unsecured debt obligations that are contractually subordinated in right of payment to all other present and future non-subordinated obligations of the respective issuing entity. All of the subordinated debt instruments outstanding as of 31 December 2018 pay a fixed rate of interest. The table below shows the residual contractual maturity of the carrying value of debt issued, split between fixed-rate and floating-rate based on the contractual terms, and does not consider any early redemption features. The effects from interest rate swaps, which are used to hedge various fixed-rate debt issuances by changing the repricing characteristics into those similar to floating-rate debt, are also not considered in the table below. →Refer to Note 27 for maturity information on an undiscounted cash flow basis Contractual maturity of carrying value USD million 2019 2020 2021 2022 2023 2024–2028 Thereafter Total 31.12.18 Total 31.12.17 UBS Group AG1 Subordinated debt Fixed-rate 7,7664 Subtotal 0 0 0 0 0 0 0 0 7,766 UBS AG2 Non-subordinated debt Fixed-rate 21,287 9,397 4,078 2,726 1,635 0 985 40,108 57,566 Floating-rate 25,450 6,482 1,964 0 369 0 770 35,035 31,930 Subordinated debt Fixed-rate 0 0 0 1,945 0 5,566 0 7,511 9,217 Subtotal 46,737 15,879 6,042 4,671 2,005 5,566 1,755 82,654 98,714 Other subsidiaries3 Non-subordinated debt Fixed-rate 765 2,200 2,955 4,512 4,882 17,569 646 33,529 30,561 Floating-rate 0 300 998 2,506 2,128 0 0 5,933 6,120 Subordinated debt Fixed-rate 0 0 0 0 0 0 10,154 10,1544 0 Subtotal 765 2,500 3,953 7,017 7,011 17,569 10,801 49,616 36,681 Total 47,502 18,379 9,994 11,688 9,015 23,135 12,556 132,271 143,160 1 Comprises debt issued by the legal entity UBS Group AG. 2 Comprises debt issued by the legal entity UBS AG. 3 Comprises debt issued by other direct subsidiaries of UBS Group AG and by subsidiaries of UBS AG. 4 Originally issued by UBS Group AG, which was replaced by UBS Group Funding (Switzerland) AG as issuer on 25 May 2018. 409 Note 21 Provisions and contingent liabilities a) Provisions The table below presents an overview of total provisions recognized under both IAS 37 and IFRS 9. USD million 31.12.18 31.12.17 Provisions recognized under IAS 37 3,377 3,180 Provisions for off-balance sheet financial instruments1 79 34 Provisions for other credit lines1 37 0 Total provisions 3,494 3,214 1 Provisions recognized in 2018 relate to exposures in the scope of the expected credit loss requirements of IFRS 9. Refer to Notes 1c, 10 and 23 for more information. 2017 provisions for off-balance sheet financial instruments relate to loss provisions recognized under IAS 37. The following table presents additional information for provisions recognized under IAS 37. USD million Operational risks1 Litigation, regulatory and similar matters2 Restruc- turing Real estate Employee benefits5 Other Total 2018 Total 2017 Balance at the beginning of the year 44 2,508 331 137 70 91 3,180 4,048 Additions from acquired companies 0 0 0 2 0 0 2 7 Increase in provisions recognized in the income statement 27 905 174 4 10 35 1,155 1,004 Release of provisions recognized in the income statement (5) (220) (65) (1) (7) (14) (311) (347) Provisions used in conformity with designated purpose (20) (350) (214) (10) 0 (33) (628) (1,632) Capitalized reinstatement costs 0 0 0 1 0 0 1 8 Foreign currency translation / unwind of discount 0 (16) (1) (1) (2) (1) (21) 94 Balance at the end of the year 46 2,827 2243 1314 70 78 3,377 3,180 1 Comprises provisions for losses resulting from security risks and transaction processing risks. 2 Comprises provisions for losses resulting from legal, liability and compliance risks. 3 Primarily consists of personnel-related restructuring provisions of USD 50 million as of 31 December 2018 (31 December 2017: USD 85 million) and provisions for onerous lease contracts of USD 170 million as of 31 December 2018 (31 December 2017: USD 241 million). 4 Consists of reinstatement costs for leasehold improvements of USD 89 million as of 31 December 2018 (31 December 2017: USD 95 million) and provisions for onerous lease contracts of USD 42 million as of 31 December 2018 (31 December 2017: USD 42 million). 5 Includes provisions for sabbatical and anniversary awards. Restructuring provisions primarily relate to onerous lease contracts and severance payments. The use of onerous lease provisions is driven by the maturities of the underlying lease contracts. Severance-related provisions are used within a short time period, usually within six months, but potential changes in amount may be triggered when natural staff attrition reduces the number of people affected by a restructuring and therefore the estimated costs. Information on provisions and contingent liabilities in respect of litigation, regulatory and similar matters, as a class, is included in Note 21b. There are no material contingent liabilities associated with the other classes of provisions. b) Litigation, regulatory and similar matters The Group operates in a legal and regulatory environment that exposes it to significant litigation and similar risks arising from disputes and regulatory proceedings. As a result, UBS (which for purposes of this Note may refer to UBS Group AG and / or one or more of its subsidiaries, as applicable) is involved in various disputes and legal proceedings, including litigation, arbitration, and regulatory and criminal investigations. Such matters are subject to many uncertainties, and the outcome and the timing of resolution are often difficult to predict, particularly in the earlier stages of a case. There are also situations where the Group may enter into a settlement agreement. This may occur in order to avoid the expense, management distraction or reputational implications of continuing to contest liability, even for those matters for which the Group believes it should be exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows for both matters with respect to which provisions have been established and other contingent liabilities. The Group makes provisions for such matters brought against it when, in the opinion of management after seeking legal advice, it is more likely than not that the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required, and the amount can be reliably estimated. Where these factors are otherwise satisfied, a provision may be established for claims that have not yet been asserted against the Group, but are nevertheless expected to be, based on the Group’s experience with similar asserted claims. If any of those conditions is not met, such matters result in contingent liabilities. If the amount of an obligation cannot be reliably estimated, a liability exists that is not recognized even if an outflow of resources is probable. Accordingly, no provision is established even if the potential outflow of resources with respect to such matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but prior to the issuance of financial statements, which affect management’s assessment of the provision for such matter (because, for example, the developments provide evidence of conditions that existed at the end of the reporting period), are adjusting events after the reporting period under IAS 10 and must be recognized in the financial statements for the reporting period. Financial statements 410 Consolidated financial statements Note 21 Provisions and contingent liabilities (continued) Specific litigation, regulatory and other matters are described below, including all such matters that management considers to be material and others that management believes to be of significance due to potential financial, reputational and other effects. The amount of damages claimed, the size of a transaction or other information is provided where available and appropriate in order to assist users in considering the magnitude of potential exposures. In the case of certain matters below, we state that we have established a provision, and for the other matters, we make no such statement. When we make this statement and we expect disclosure of the amount of a provision to prejudice seriously our position with other parties in the matter because it would reveal what UBS believes to be the probable and reliably estimable outflow, we do not disclose that amount. In some cases we are subject to confidentiality obligations that preclude such disclosure. With respect to the matters for which we do not state whether we have established a provision, either (a) we have not established a provision, in which case the matter is treated as a contingent liability under the applicable accounting standard; or (b) we have established a provision but expect disclosure of that fact to prejudice seriously our position with other parties in the matter because it would reveal the fact that UBS believes an outflow of resources to be probable and reliably estimable. With respect to certain litigation, regulatory and similar matters for which we have established provisions, we are able to estimate the expected timing of outflows. However, the aggregate amount of the expected outflows for those matters for which we are able to estimate expected timing is immaterial relative to our current and expected levels of liquidity over the relevant time periods. The aggregate amount provisioned for litigation, regulatory and similar matters as a class is disclosed in the “Provisions” table in Note 21a above. It is not practicable to provide an aggregate estimate of liability for our litigation, regulatory and similar matters as a class of contingent liabilities. Doing so would require us to provide speculative legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories, that have not yet been initiated or are at early stages of adjudication, or as to which alleged damages have not been quantified by the claimants. Although we therefore cannot provide a numerical estimate of the future losses that could arise from litigation, regulatory and similar matters, we believe that the aggregate amount of possible future losses from this class that are more than remote substantially exceeds the level of current provisions. Litigation, regulatory and similar matters may also result in non-monetary penalties and consequences. For example, the non-prosecution agreement described in item 5 of this Note, which we entered into with the US Department of Justice (DOJ), Criminal Division, Fraud Section in connection with our submissions of benchmark interest rates, including, among others, the British Bankers’ Association London Interbank Offered Rate (LIBOR), was terminated by the DOJ based on its determination that we had committed a US crime in relation to foreign exchange matters. As a consequence, UBS AG pleaded guilty to one count of wire fraud for conduct in the LIBOR matter, paid a fine and is subject to probation through January 2020. A guilty plea to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may require us to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory authorities to limit, suspend or terminate licenses and regulatory authorizations, and may permit financial market utilities to limit, suspend or terminate our participation in such utilities. Failure to obtain such waivers, or any limitation, suspension or termination of licenses, authorizations or participations, could have material consequences for UBS. The risk of loss associated with litigation, regulatory and similar matters is a component of operational risk for purposes of determining our capital requirements. Information concerning our capital requirements and the calculation of operational risk for this purpose is included in the “Capital management” section of this report. Provisions for litigation, regulatory and similar matters by business division and Corporate Center unit1 USD million Global Wealth Manage- ment Personal & Corporate Banking Asset Manage- ment Investment Bank CC – Services CC – Group ALM CC – Non-core and Legacy Portfolio Total 2018 Total 2017 Balance at the beginning of the year 569 81 1 354 246 0 1,256 2,508 3,204 Increase in provisions recognized in the income statement 659 41 0 83 32 0 90 905 703 Release of provisions recognized in the income statement (33) (1) (1) (146) (38) 0 0 (220) (214) Provisions used in conformity with designated purpose (184) (3) 0 (18) (1) 0 (143) (350) (1,251) Foreign currency translation / unwind of discount (9) (1) 0 (3) (2) 0 (1) (16) 66 Balance at the end of the year 1,003 117 0 269 236 0 1,202 2,827 2,508 1 Provisions, if any, for the matters described in this Note are recorded in Global Wealth Management (items 3 and 4), the Investment Bank (item 7) and Corporate Center – Non-core and Legacy Portfolio (item 2). Provisions, if any, for the matters described in items 1 and 6 of this Note are allocated between Global Wealth Management and Personal & Corporate Banking, and provisions, if any, for the matters described in this Note in item 5 are allocated between the Investment Bank, Corporate Center – Services and Corporate Center – Non-core and Legacy Portfolio. 411 Note 21 Provisions and contingent liabilities (continued) 1. Inquiries regarding cross-border wealth management businesses Tax and regulatory authorities in a number of countries have made inquiries, served requests for information or examined employees located in their respective jurisdictions relating to the cross-border wealth management services provided by UBS and other financial institutions. It is possible that the implementation of automatic tax information exchange and other measures relating to cross-border provision of financial services could give rise to further inquiries in the future. UBS has received disclosure orders from the Swiss Federal Tax Administration (FTA) to transfer information based on requests for international administrative assistance in tax matters. The requests concern a number of UBS account numbers pertaining to current and former clients and are based on data from 2006 and 2008. UBS has taken steps to inform affected clients about the administrative assistance proceedings and their procedural rights, including the right to appeal. The requests are based on data received from the German authorities, who seized certain data related to UBS clients booked in Switzerland during their investigations and have apparently shared this data with other European countries. UBS expects additional countries to file similar requests. The Swiss Federal Administrative Court ruled in 2016 that, in the administrative assistance proceedings related to a French bulk request, UBS has the right to appeal all final FTA client data disclosure orders. On 30 July 2018, the Swiss Federal Administrative Court granted UBS’s appeal by holding the French administrative assistance request inadmissible. The FTA filed a final appeal with the Swiss Federal Supreme Court. Since 2013, UBS (France) S.A., UBS AG and certain former employees have been under investigation in France for alleged complicity in having illicitly solicited clients on French territory, regarding the laundering of proceeds of tax fraud, and of banking and financial solicitation by unauthorized persons. In connection with this investigation, the investigating judges ordered UBS AG to provide bail (“caution”) of EUR 1.1 billion and UBS (France) S.A. to post bail of EUR 40 million, which was reduced on appeal to EUR 10 million. In March 2017, the investigating judges issued a trial order (“ordonnance de renvoi”) that charges UBS AG and UBS (France) S.A., as well as various former employees, with illicit solicitation of clients on French territory and with participation in the laundering of the proceeds of tax fraud. The trial on these charges in the court of first instance took place from 8 October 2018 until 15 November 2018. During the trial, the prosecutors and the French State requested penalties and civil monetary damages in connection with the money laundering charges aggregating EUR 5.3 billion. On 20 February 2019, the court announced a verdict finding UBS AG guilty of illicitly soliciting clients on French territory and laundering the proceeds of tax fraud, and UBS France S.A. guilty of aiding and abetting unlawful solicitation and laundering the proceeds of tax fraud. The court imposed fines aggregating EUR 3.7 billion on UBS AG and UBS France S.A. and awarded EUR 800 million of civil damages to the French state. UBS has appealed the decision. Under French law, the judgment is suspended while the appeal is pending. The Court of Appeal will retry the case de novo as to both the law and the facts and the fines and penalties can be greater than or less than those imposed by the court of first instance. A subsequent appeal to the Cour de Cassation, France’s highest court, is possible with respect to questions of law. UBS believes that based on both the law and the facts the judgment of the court of first instance should be reversed. UBS believes it followed its obligations under Swiss and French law as well as the European Savings Tax Directive. Even assuming liability, which it contests, UBS believes the penalties and damage amounts awarded greatly exceeded the amounts that could be supported by the law and the facts. In particular, UBS believes the court incorrectly based the penalty on the total regularized assets rather than on any unpaid taxes on those assets for which a fraud has been characterized, and further incorrectly awarded damages based on costs that were not proven by the civil party. Notwithstanding that UBS believes it should be acquitted, our balance sheet at 31 December 2018 reflected provisions with respect to this matter in an amount of USD 516 million. The wide range of possible outcomes in this case contributes to a high degree of estimation uncertainty. The provision reflected on our balance sheet at 31 December 2018 reflects our best estimate of possible financial implications, although it is reasonably possible that actual penalties and civil damages could exceed the provision amount. In 2016, UBS was notified by the Belgian investigating judge that it is under formal investigation (“inculpé”) regarding the laundering of proceeds of tax fraud, of banking and financial solicitation by unauthorized persons, and of serious tax fraud. In 2018, tax authorities and a prosecutor’s office in Italy asserted that UBS is potentially liable for taxes and penalties as a result of its activities in Italy from 2012 to 2017. UBS has, and reportedly numerous other financial institutions have, received inquiries from authorities concerning accounts relating to the Fédération Internationale de Football Association (FIFA) and other constituent soccer associations and related persons and entities. UBS is cooperating with authorities in these inquiries. Our balance sheet at 31 December 2018 reflected provisions with respect to matters described in this item 1 in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized.Financial statements 412 Consolidated financial statements Note 21 Provisions and contingent liabilities (continued) 2. Claims related to sales of residential mortgage-backed securities and mortgages From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was a substantial issuer and underwriter of US residential mortgage-backed securities (RMBS) and was a purchaser and seller of US residential mortgages. A subsidiary of UBS, UBS Real Estate Securities Inc. (UBS RESI), acquired pools of residential mortgage loans from originators and (through an affiliate) deposited them into securitization trusts. In this manner, from 2004 through 2007, UBS RESI sponsored approximately USD 80 billion in RMBS, based on the original principal balances of the securities issued. UBS RESI also sold pools of loans acquired from originators to third-party purchasers. These whole loan sales during the period 2004 through 2007 totaled approximately USD 19 billion in original principal balance. UBS was not a significant originator of US residential loans. A branch of UBS originated approximately USD 1.5 billion in US residential mortgage loans during the period in which it was active from 2006 to 2008, and securitized less than half of these loans. Lawsuits related to contractual representations and warranties concerning mortgages and RMBS: When UBS acted as an RMBS sponsor or mortgage seller, it generally made certain representations relating to the characteristics of the underlying loans. In the event of a material breach of these representations, UBS was in certain circumstances contractually obligated to repurchase the loans to which the representations related or to indemnify certain parties against losses. In 2012, certain RMBS trusts filed an action in the US District Court for the Southern District of New York seeking to enforce UBS RESI’s obligation to repurchase loans in the collateral pools for three RMBS securitizations issued and underwritten by UBS with an original principal balance of approximately USD 2 billion. In July 2018, UBS and the trustee entered into an agreement under which UBS will pay USD 850 million to resolve this matter. A significant portion of this amount will be borne by other parties that indemnified UBS. The settlement remains subject to court approval and proceedings to determine how the settlement funds will be distributed to RMBS holders. After giving effect to this settlement, UBS considers claims relating to substantially all loan repurchase demands to be resolved, and believes that new demands to repurchase US residential mortgage loans are time- barred under a decision rendered by the New York Court of Appeals. Mortgage-related regulatory matters: Since 2014, the US Attorney’s Office for the Eastern District of New York has sought information from UBS pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), related to UBS’s RMBS business from 2005 through 2007. On 8 November 2018, the DOJ filed a civil complaint in the District Court for the Eastern District of New York. The complaint seeks unspecified civil monetary penalties under FIRREA related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006 and 2007. UBS moved to dismiss the civil complaint on 6 February 2019. Our balance sheet at 31 December 2018 reflected a provision with respect to matters described in this item 2 in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of this matter cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized. 3. Madoff In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) S.A. (now UBS Europe SE, Luxembourg branch) and certain other UBS subsidiaries have been subject to inquiries by a number of regulators, including the Swiss Financial Market Supervisory Authority (FINMA) and the Luxembourg Commission de Surveillance du Secteur Financier. Those inquiries concerned two third-party funds established under Luxembourg law, substantially all assets of which were with BMIS, as well as certain funds established in offshore jurisdictions with either direct or indirect exposure to BMIS. These funds faced severe losses, and the Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various roles, including custodian, administrator, manager, distributor and promoter, and indicates that UBS employees serve as board members. In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS entities, non-UBS entities and certain individuals, including current and former UBS employees, seeking amounts totaling approximately EUR 2.1 billion, which includes amounts that the funds may be held liable to pay the trustee for the liquidation of BMIS (BMIS Trustee). A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases. In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the two Luxembourg funds and one of the offshore funds. The total amount claimed against all defendants in these actions was not less than USD 2 billion. In 2014, the US Supreme Court rejected the BMIS Trustee’s motion for leave to appeal decisions dismissing all claims except those for the recovery of fraudulent conveyances and preference payments. In 2016, the bankruptcy court dismissed the remaining claims against the UBS entities. The BMIS Trustee appealed. 413 Note 21 Provisions and contingent liabilities (continued) 4. Puerto Rico Declines since 2013 in the market prices of Puerto Rico municipal bonds and of closed-end funds (funds) that are sole- managed and co-managed by UBS Trust Company of Puerto Rico and distributed by UBS Financial Services Incorporated of Puerto Rico (UBS PR) have led to multiple regulatory inquiries, as well as customer complaints and arbitrations with aggregate claimed damages of USD 2.9 billion, of which claims with aggregate claimed damages of USD 1.9 billion have been resolved through settlements, arbitration or withdrawal of the claim. The claims have been filed by clients in Puerto Rico who own the funds or Puerto Rico municipal bonds and / or who used their UBS account assets as collateral for UBS non-purpose loans; customer complaint and arbitration allegations include fraud, misrepresentation and unsuitability of the funds and of the loans. A shareholder derivative action was filed in 2014 against various UBS entities and current and certain former directors of the funds, alleging hundreds of millions of US dollars in losses in the funds. In 2015, defendants’ motion to dismiss was denied and a request for permission to appeal that ruling was denied by the Puerto Rico Supreme Court. In 2014, a federal class action complaint also was filed against various UBS entities, certain members of UBS PR senior management and the co-manager of certain of the funds, seeking damages for investor losses in the funds during the period from May 2008 through May 2014. Following denial of the plaintiffs’ motion for class certification, the case was dismissed in October 2018. In 2014 and 2015, UBS entered into settlements with the Office of the Commissioner of Financial Institutions for the Commonwealth of Puerto Rico, the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority in relation to their examinations of UBS’s operations. We also understand that the DOJ is conducting a criminal inquiry into the impermissible reinvestment of non-purpose loan proceeds. We are cooperating with the authorities in this inquiry. In 2011, a purported derivative action was filed on behalf of the Employee Retirement System of the Commonwealth of Puerto Rico (System) against over 40 defendants, including UBS PR, which was named in connection with its underwriting and consulting services. Plaintiffs alleged that defendants violated their purported fiduciary duties and contractual obligations in connection with the issuance and underwriting of USD 3 billion of bonds by the System in 2008 and sought damages of over USD 800 million. In 2016, the court granted the System’s request to join the action as a plaintiff, but ordered that plaintiffs must file an amended complaint. In 2017, the court denied defendants’ motion to dismiss the amended complaint. Beginning in 2015, and continuing through 2017, certain agencies and public corporations of the Commonwealth of Puerto Rico (Commonwealth) defaulted on certain interest payments on Puerto Rico bonds. In 2016, US federal legislation created an oversight board with power to oversee Puerto Rico’s finances and to restructure its debt. The oversight board has imposed a stay on the exercise of creditors’ rights. In 2017, the oversight board placed certain of the bonds into a bankruptcy- like proceeding under the supervision of a Federal District Judge. These events, further defaults, any further legislative action to create a legal means of restructuring Commonwealth obligations or to impose additional oversight on the Commonwealth’s finances, or any restructuring of the Commonwealth’s obligations, may increase the number of claims against UBS concerning Puerto Rico securities, as well as potential damages sought. Our balance sheet at 31 December 2018 reflected provisions with respect to matters described in this item 4 in amounts that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provisions that we have recognized.Financial statements 414 Consolidated financial statements Note 21 Provisions and contingent liabilities (continued) 5. Foreign exchange, LIBOR and benchmark rates, and other trading practices Foreign exchange-related regulatory matters: Beginning in 2013 numerous authorities commenced investigations concerning possible manipulation of foreign exchange markets and precious metals prices. In 2014 and 2015, UBS reached settlements with the UK Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) in connection with their foreign exchange investigations, FINMA issued an order concluding its formal proceedings relating to UBS’s foreign exchange and precious metals businesses, and the Board of Governors of the Federal Reserve System (Federal Reserve Board) and the Connecticut Department of Banking issued a Cease and Desist Order and assessed monetary penalties against UBS AG. In 2015, the DOJ’s Criminal Division terminated the 2012 non- prosecution agreement with UBS AG related to UBS’s submissions of benchmark interest rates and UBS AG pleaded guilty to one count of wire fraud, paid a fine and is subject to probation through January 2020. UBS has ongoing obligations to cooperate with these authorities and to undertake certain remediation measures. UBS has also been granted conditional immunity by the Antitrust Division of the DOJ and by authorities in other jurisdictions in connection with potential competition law violations relating to foreign exchange and precious metals businesses. Investigations relating to foreign exchange and precious metals matters by certain authorities remain ongoing notwithstanding these resolutions. Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in US federal courts and in other jurisdictions against UBS and other banks on behalf of putative classes of persons who engaged in foreign currency transactions with any of the defendant banks. UBS has entered into a settlement agreement that would resolve US federal court class actions relating to foreign currency transactions with the defendant banks and persons who transacted in foreign exchange futures contracts and options on such futures. The settlement agreement, which has been approved by the court, requires, among other things, that UBS pay an aggregate of USD 141 million and provide cooperation to the settlement classes. Certain class members have excluded themselves from that settlement and have filed individual actions in US and English courts against UBS and other banks alleging violations of US and European competition laws and unjust enrichment. In 2015, a putative class action was filed in federal court against UBS and numerous other banks on behalf of persons and businesses in the US who directly purchased foreign currency from the defendants and alleged co-conspirators for their own end use. In March 2017, the court granted UBS’s (and the other banks’) motions to dismiss the complaint. The plaintiffs filed an amended complaint in August 2017. In March 2018, the court denied the defendants’ motions to dismiss the amended complaint. In 2016, a putative class action was filed in federal court in New York against UBS and numerous other banks on behalf of persons and entities who had indirectly purchased foreign exchange instruments from a defendant or co-conspirator in the US. The complaint asserts claims under federal and state antitrust laws. In response to defendants’ motion to dismiss, plaintiffs agreed to dismiss their complaint. In 2017, two new putative class actions were filed in federal court in New York against UBS and numerous other banks on behalf of different proposed classes of indirect purchasers of currency, and a consolidated complaint was filed in June 2017. In March 2018, the court dismissed the consolidated complaint. In October 2018, the court granted plaintiffs’ motion seeking leave to file an amended complaint. Putative class actions were also filed against UBS and other banks in federal court in New York and other jurisdictions on behalf of putative classes of persons who had bought or sold physical precious metals and various precious metal products and derivatives. The complaints in these lawsuits asserted claims under the antitrust laws and the Commodity Exchange Act (CEA), and other claims. In July 2018, the court in New York granted UBS’s motions to dismiss amended complaints in the putative class actions relating to gold and silver. In 2017, the court granted UBS’s motion to dismiss the platinum and palladium action. Plaintiffs in the platinum and palladium action subsequently filed an amended complaint that did not allege claims against UBS. 415 Note 21 Provisions and contingent liabilities (continued) LIBOR and other benchmark-related regulatory matters: Numerous government agencies, including the SEC, the CFTC, the DOJ, the FCA, the UK Serious Fraud Office, the Monetary Authority of Singapore, the Hong Kong Monetary Authority, FINMA, various state attorneys general in the US and competition authorities in various jurisdictions, have conducted or are continuing to conduct investigations regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at certain times. In 2012, UBS reached settlements relating to benchmark interest rates with the UK Financial Services Authority, the CFTC and the Criminal Division of the DOJ, and FINMA issued an order in its proceedings with respect to UBS relating to benchmark interest rates. In addition, UBS entered into settlements with the European Commission and with the Swiss Competition Commission (WEKO) regarding its investigation of bid-ask spreads in connection with Swiss franc interest rate derivatives. UBS has ongoing obligations to cooperate with the authorities with whom we have reached resolutions and to undertake certain remediation measures with respect to benchmark interest rate submissions. In December 2018, UBS entered into a settlement agreement with the New York and other state attorneys general under which it will pay USD 68 million to resolve claims by the attorneys general related to LIBOR. UBS has been granted conditional leniency or conditional immunity from authorities in certain jurisdictions, including the Antitrust Division of the DOJ and WEKO, in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not reached a final settlement with WEKO as the Secretariat of WEKO has asserted that UBS does not qualify for full immunity. LIBOR and other benchmark-related civil litigation: A number of putative class actions and other actions are pending in the federal courts in New York against UBS and numerous other banks on behalf of parties who transacted in certain interest rate benchmark-based derivatives. Also pending in the US and in other jurisdictions are a number of other actions asserting losses related to various products whose interest rates were linked to LIBOR and other benchmarks, including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral, loans, depository accounts, investments and other interest-bearing instruments. The complaints allege manipulation, through various means, of certain benchmark interest rates, including USD LIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR, USD and SGD SIBOR and SOR and Australian BBSW, and seek unspecified compensatory and other damages under varying legal theories. USD LIBOR class and individual actions in the US: In 2013 and 2015, the district court in the USD LIBOR actions dismissed, in whole or in part, certain plaintiffs’ antitrust claims, federal racketeering claims, CEA claims, and state common law claims. Although the Second Circuit vacated the district court’s judgment dismissing antitrust claims, the district court again dismissed antitrust claims against UBS in 2016. Certain plaintiffs have appealed that decision to the Second Circuit. Separately, in 2018, the Second Circuit reversed in part the district court’s 2015 decision dismissing certain individual plaintiffs’ claims. UBS entered into an agreement in 2016 with representatives of a class of bondholders to settle their USD LIBOR class action. The agreement has received preliminary court approval and remains subject to final approval. In 2018, the district court denied plaintiffs’ motions for class certification in the USD class actions for claims pending against UBS, and plaintiffs sought permission to appeal that ruling to the Second Circuit. In July 2018, the Second Circuit denied the petition to appeal of the class of USD lenders and in November 2018 denied the petition of the USD exchange class. In January 2019, a putative class action was filed in the District Court for the Southern District of New York against UBS and numerous other banks on behalf of US residents who, from 1 February 2014 through the present, directly transacted with a defendant bank in USD LIBOR instruments. The complaint asserts antitrust and unjust enrichment claims. Other benchmark class actions in the US: In 2014, the court in one of the Euroyen TIBOR lawsuits dismissed certain of the plaintiff’s claims, including a federal antitrust claim, for lack of standing. In 2015, this court dismissed the plaintiff’s federal racketeering claims on the same basis and affirmed its previous dismissal of the plaintiff’s antitrust claims against UBS. In 2017, this court also dismissed the other Yen LIBOR / Euroyen TIBOR action in its entirety on standing grounds, as did the court in the CHF LIBOR action. Also in 2017, the courts in the EURIBOR lawsuit dismissed the cases as to UBS and certain other foreign defendants for lack of personal jurisdiction. In October 2018, the court in the SIBOR / SOR action dismissed all but one of plaintiffs’ claims against UBS. Plaintiffs in the CHF LIBOR and SIBOR / SOR actions have filed amended complaints following the dismissals, which UBS and other defendants have moved to dismiss. In November 2018, the court in the BBSW lawsuit dismissed the case as to UBS and certain other foreign defendants for lack of personal jurisdiction. Following that dismissal, plaintiffs in the BBSW action moved in January 2019 to file an amended complaint seeking to re-name UBS and certain other banks as defendants. UBS and other defendants also moved to dismiss the GBP LIBOR action in December 2016, but that motion was denied as to UBS in December 2018. UBS moved for reconsideration of that decision in January 2019. Government bonds: Putative class actions have been filed since 2015 in US federal courts against UBS and other banks on behalf of persons who participated in markets for US Treasury securities since 2007. A consolidated complaint was filed in 2017 in the US District Court for the Southern District of New York alleging that the banks colluded with respect to, and manipulated prices of, US Treasury securities sold at auction and in the secondary market and asserting claims under the antitrust laws and for unjust enrichment. Defendants’ motions to dismiss the consolidated complaint are pending. Financial statements 416 Consolidated financial statements Note 21 Provisions and contingent liabilities (continued) UBS and reportedly other banks are responding to investigations and requests for information from various authorities regarding US Treasury securities and other government bond trading practices. As a result of its review to date, UBS has taken appropriate action. With respect to additional matters and jurisdictions not encompassed by the settlements and orders referred to above, our balance sheet at 31 December 2018 reflected a provision in an amount that UBS believes to be appropriate under the applicable accounting standard. As in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized. 6. Swiss retrocessions The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, that distribution fees paid to a firm for distributing third-party and intra-group investment funds and structured products must be disclosed and surrendered to clients who have entered into a discretionary mandate agreement with the firm, absent a valid waiver. FINMA has issued a supervisory note to all Swiss banks in response to the Supreme Court decision. UBS has met the FINMA requirements and has notified all potentially affected clients. The Supreme Court decision has resulted, and may continue to result, in a number of client requests for UBS to disclose and potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken into account when assessing these cases include, among other things, the existence of a discretionary mandate and whether or not the client documentation contained a valid waiver with respect to distribution fees. Our balance sheet at 31 December 2018 reflected a provision with respect to matters described in this item 6 in an amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure will depend on client requests and the resolution thereof, factors that are difficult to predict and assess. Hence, as in the case of other matters for which we have established provisions, the future outflow of resources in respect of such matters cannot be determined with certainty based on currently available information and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that we have recognized. 7. Investigation of UBS’s role in initial public offerings in Hong Kong The Hong Kong Securities and Futures Commission (SFC) has been conducting investigations into UBS’s role as a sponsor of certain initial public offerings listed on the Hong Kong Stock Exchange. The SFC has previously indicated that it intended to take enforcement action against UBS and certain employees in relation to certain of these offerings. In March 2018, the SFC issued a decision notice in relation to one of the offerings under investigation. On 13 March 2019, UBS Securities Hong Kong Limited and UBS AG entered into a settlement agreement with the SFC resolving all of the SFC’s pending investigations related to sponsorship of initial public offerings (IPOs) by UBS. The agreement provides for a fine of HKD 375 million (USD 48 million) and the suspension of UBS Securities Hong Kong Limited’s ability to act as a sponsor for Hong Kong-listed IPOs for one year. 417 Note 22 Other liabilities a) Other financial liabilities measured at amortized cost USD million 31.12.18 31.12.17 Prime brokerage payables1 30,413 Other accrued expenses 2,192 2,507 Accrued interest expenses 1,544 1,552 Settlement and clearing accounts 1,486 1,432 Other 1,663 1,373 Total other financial liabilities measured at amortized cost 6,885 37,276 1 Upon adoption of IFRS 9 on 1 January 2018, prime brokerage receivables and payables were reclassified from amortized cost to fair value through profit or loss. Brokerage receivables and payables are now presented separately on the balance sheet. Refer to Note 1c for more information. b) Other financial liabilities designated at fair value USD million 31.12.18 31.12.17 Amounts due under unit-linked investment contracts 21,679 11,821 Securities financing transactions1 9,461 384 Over-the-counter debt instruments 2,450 4,428 of which: life-to-date own credit (gain) / loss (51) 37 Other 5 9 Total other financial liabilities designated at fair value2 33,594 16,643 1 Certain repurchase agreements were reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 as of 1 January 2018. Refer to Note 1c for more information. 2 As of 31 December 2018 and 31 December 2017, the contractual redemption amount at maturity of other financial liabilities designated at fair value through profit or loss was not materially different from the carrying value. c) Other non-financial liabilities USD million 31.12.18 31.12.17 Compensation-related liabilities 7,278 7,873 of which: accrued expenses 2,696 2,740 of which: Deferred Contingent Capital Plan 1,983 2,044 of which: other deferred compensation plans 1,823 2,140 of which: net defined benefit pension and post-employment liabilities 1 775 949 Current and deferred tax liabilities2 1,002 935 VAT and other tax payables 431 426 Deferred income 215 153 Other 98 55 Total other non-financial liabilities 9,022 9,443 1 Refer to Note 29 for more information. 2 Refer to Note 8 for more information. Financial statements 418 Consolidated financial statements Additional information Note 23 Expected credit loss measurement a) Expected credit losses in the period Total net credit loss expenses amounted to USD 118 million in 2018, reflecting expected credit losses (ECL) of USD 23 million related to stage 1 and 2 positions and net losses of USD 95 million related to credit-impaired (stage 3) positions. In the Investment Bank and Global Wealth Management, increased stage 1 and 2 ECL provisions recognized over the year primarily relate to loans and credit facilities originated during 2018 and to a lesser extent to changes in credit quality of existing assets. In Personal & Corporate Banking, ECL remained unchanged over the year primarily because increased ECL from new transactions and minor changes in applied credit risk models were offset by ECL net recoveries as a lower proportion of transactions was subject to stage 2 classification. Stage 3 net losses of USD 95 million were recognized across a number of defaulted positions, mainly in Personal & Corporate Banking (USD 56 million) and to a lesser extent in the Investment Bank (USD 29 million). b) Changes to ECL models, scenarios, scenario weights and key inputs Refer to Note 1a and 1c for information on ECL models, scenarios, scenario weights and key inputs applied at transition to IFRS 9 as of 1 January 2018. No changes were applied to the determination of a significant increase in credit risk (SICR) and the ECL measurement period during the year 2018. Apart from updating market data, such as house prices, equity indices and foreign exchange rates, and macroeconomic factors, such as gross domestic product (GDP) and unemployment rates, no significant changes were applied to the models used to calculate ECL during the year 2018. The four scenarios and the related macroeconomic factors were reviewed in light of the economic and political conditions prevailing at year-end 2018. UBS has determined that the fundamental risk assessment made upon transition to IFRS 9 on 1 January 2018 is still appropriate and that potential developments remain suitably covered by the baseline scenario, which is aligned with the business plan, and the three additional scenarios introduced to capture potential non-linearity of credit losses required under IFRS 9. The key parameters (e.g., the real GDP growth, consumer price inflation, unemployment rate) of each scenario have been updated over the course of the year, but remained materially unchanged from what was applied at transition (refer to Note 1c). The key parameters applied as of 31 December 2018 are summarized in the table on the following page. The determination of the scenario weights is subject to the process and governance outlined in Note 1a Section 3g. An econometric model is used to provide an input into the scenario weight assessment process giving a first indication of the probability that the GDP forecast used for each scenario would materialize, if historically observed deviations of GDP growth from trend growth were representative. As such historical analyses of GDP development do not include an assessment of the underlying economic or political causes, management positions the model output into the context of current conditions and future expectations and applies judgment in determining the final scenario weights. The reviews during 2018 reflected the increasing probability of a weakening economy in key markets, after a long spell of substantial expansion, and the uncertainties about the influence that several political developments with unforeseeable outcomes may have on future growth. At year-end 2018, management reflected these developments by giving more weight to the mild and severe downside scenarios compared to transition date. Non-linearity of credit losses in relation to macroeconomic factors is usually most pronounced in portfolios that are most sensitive to interest rates, especially in the areas of mortgage loans to private clients and real estate financing. The mild downside scenario reflects a significant rise of interest rates as a key component and is also particularly relevant for credit risk management purposes. As noted above, scenario weights are a reflection of risks identified during management’s assessment of economic and geopolitical risks and not a specific expectation that a particular narrative with its defined macroeconomic factors (e.g., interest rates) will materialize. Other scenarios for a mild downside with less focus on interest rates would, however, not have been representative of the potential asymmetry of loan losses in a downturn. A more severe recession can be triggered by political factors that cannot be modeled based on observed history; given this consideration, the weight assigned to the severe downside case was based on management’s assessment of the geopolitical risks that might affect all of our key markets and portfolios. ECL scenario Assigned weights in % 31.12.18 1.1.18 Upside 10.0 20.0 Baseline 45.0 42.5 Mild downside 35.0 30.0 Severe downside 10.0 7.5 419 Note 23 Expected credit loss measurement (continued) 1-year shock 3-year cumulative shock Key parameters Upside Baseline Mild downside Severe downside Upside Baseline Mild downside Severe downside Real GDP growth (% change) United States 5.5 2.8 (0.5) (5.2) 9.9 7.0 0.0 (3.6) Eurozone 4.3 1.8 (0.3) (10.4) 8.5 4.7 0.7 (13.4) Switzerland 5.0 2.0 (0.8) (7.0) 9.4 5.5 (0.1) (6.9) Consumer price inflation (% change) United States 3.5 2.1 4.9 (1.0) 10.4 5.5 11.1 0.6 Eurozone 2.4 1.6 2.8 (1.1) 8.1 5.3 6.2 (1.4) Switzerland 1.4 0.9 1.8 (1.8) 7.1 2.8 4.2 (1.2) Unemployment rate (%, average) United States (1.7) (0.6) 0.6 3.4 (1.5) (0.5) 1.8 2.9 Eurozone (1.0) (0.5) 0.0 3.2 (1.9) (0.9) 0.1 3.7 Switzerland (1.5) (0.3) 0.6 4.3 (1.4) 0.1 1.6 5.3 Fixed income: 10-year government bonds (bps) USD 61.0 3.9 187.5 (160.0) 249.1 5.7 262.5 (135.0) EUR 40.0 22.0 75.0 (20.0) 146.7 60.7 225.0 (10.0) CHF 48.0 19.7 187.5 (75.0) 208.0 53.2 262.5 (40.0) Equity indices (% change) S&P 500 14.8 5.8 (20.3) (50.1) 38.7 15.1 (23.5) (48.2) EuroStoxx 50 17.0 6.0 (15.5) (63.7) 38.4 15.6 (14.7) (65.9) SPI 13.9 4.2 (19.0) (56.2) 37.1 10.4 (24.0) (56.7) Swiss real estate (% change) Single-Family Homes 4.5 (0.3) (7.3) (15.2) 14.1 1.4 (15.8) (27.0) Other real estate (% change) United States (S&P/Case-Shiller) 10.3 6.9 (2.7) (16.0) 30.9 17.7 (17.0) (22.1) Eurozone (Housing Price Index) 4.9 1.9 (0.2) (9.5) 15.4 8.2 3.0 (18.3) c) Development of ECL allowances and provisions The ECL allowances and provisions recognized in the period are impacted by a variety of factors, such as: – origination of new instruments during the period; – effect of passage of time as the ECL on an instrument for the remaining lifetime reduces (all other factors remaining the same); – credit impairment: increased ECL as default is certain and PD increases to 100%; – discount unwind within ECL as it is measured on a present value basis; – derecognition of instruments in the period; – change in individual asset quality of instruments; – portfolio effect of updating forward-looking scenarios and the respective weights; – movements from a “maximum 12-month ECL” to the recognition of “lifetime ECL” (and vice versa) following transfers between the stages 1, 2 and 3 (SICR or credit- impairment status); – changes in credit risk and / or economic forecasting models or updates to model parameters; – foreign exchange translations for assets denominated in foreign currencies and other movements.Financial statements 420 Consolidated financial statements Note 23 Expected credit loss measurement (continued) The following table explains the changes in the ECL allowances and provisions for Loans and advances to customers, Loans to financial advisors and off-balance sheet financial instruments and other credit lines between the beginning and the end of the period due to the factors listed on the previous page. Development of ECL allowances and provisions USD million Total Stage 1 Stage 2 Stage 3 Balance as of 1 January 2018 (1,117) (141) (193) (783) ECL movements due to stage transfer (profit or loss neutral)1 0 (97) 95 2 ECL movements with profit or loss impact2 (104) 66 (83) (88) Net movement from new and derecognized transactions3 (10) (44) 15 19 of which: Private clients with mortgages (3) (6) 4 0 of which: Real estate financing (3) (8) 5 0 of which: Large corporate clients 2 (6) 1 8 of which: SME clients (10) (14) 4 0 Book quality movements (89) 112 (87) (114) Remeasurements due to stage transfers4 (16) 95 (103) (7) of which: Private clients with mortgages (11) 54 (63) (1) of which: Real estate financing 5 24 (19) 0 of which: Large corporate clients (1) 0 (3) 1 of which: SME clients 1 7 (7) 0 Remeasurements without stage transfers5 (73) 17 16 (106) of which: Private clients with mortgages (9) 2 (3) (7) of which: Real estate financing 8 4 12 (8) of which: Large corporate clients (56) (2) (6) (48) of which: SME clients (55) 9 6 (70) Model and methodology changes6 (13) (2) (11) 0 Other allowance and provision movements 227 10 1 216 Write-offs / recoveries7 200 1 0 199 Reclassifications8 25 7 3 15 Foreign exchange movements9 8 0 0 8 Other (6) 2 (1) (6) Balance as of 31 December 2018 (1,002) (162) (180) (661) 1 Represents ECL allowances and provisions prior to ECL remeasurement due to stage transfer. 2 Includes ECL movements from new and derecognized transactions, book quality changes, model and methodology changes and foreign exchange rates. 3 Represents the increase and decrease in allowances and provisions resulting from financial instruments (including guarantees and facilities) that were newly originated, purchased or renewed and from the final derecognition of loans or facilities on their maturity date or earlier. 4 Represents the remeasurement between 12-month and lifetime ECL due to stage transfers. 5 Represents the change in allowances and provisions related to changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions, changes in the exposure profile, PD and LGD changes, and unwinding of the time value. 6 Represents the change in the allowances and provisions related to changes in models and methodologies. 7 Represents the decrease in allowances and provisions resulting from write-offs of the ECL allowance against the gross carrying amount when all or part of a financial asset is deemed uncollectible or forgiven. 8 Represents reclassifications to Other assets measured at amortized cost. 9 Represents the change in allowances and provisions related to movements in foreign exchange rates. 421 Note 23 Expected credit loss measurement (continued) d) Maximum exposure to credit risk The tables on the following pages provide the Group’s maximum exposure to credit risk for financial instruments subject to ECL and the respective collateral and other credit enhancements mitigating credit risk for these classes of financial instruments. The maximum exposure to credit risk includes the carrying amounts of financial instruments recognized on the balance sheet subject to credit risk and the notional amounts for off- balance sheet arrangements. Where information is available, collateral is presented at fair value. For other collateral, such as real estate, a reasonable alternative value is used. Credit enhancements, such as credit derivative contracts and guarantees, are included at their notional amounts. Both are capped at the maximum exposure to credit risk for which they serve as security. The “Risk management and control” section of this report describes management’s view of credit risk and the related exposures, which can differ in certain respects from the requirements of IFRS. Maximum exposure to credit risk 31.12.18 Collateral Credit enhancements USD billion Maximum exposure to credit risk Cash collateral received Collateralized by securities Secured by real estate Other collateral1 Netting Credit derivative contracts Guarantees Exposure to credit risk after collateral and credit enhancements Financial assets measured at amortized cost on the balance sheet Cash and balances at central banks 108.4 108.4 Loans and advances to banks2 16.9 0.1 16.8 Receivables from securities financing transactions 95.3 92.5 2.5 0.3 Cash collateral receivables on derivative instruments3,4 23.6 14.5 9.1 Loans and advances to customers5 320.4 17.0 104.4 167.1 16.2 0.0 1.2 14.3 Other financial assets measured at amortized cost 22.6 0.1 0.4 0.0 1.1 20.9 Total financial assets measured at amortized cost 587.1 17.2 197.4 167.2 19.9 14.5 0.0 1.2 169.8 Financial assets measured at fair value through other comprehensive income – debt 6.7 6.7 Total maximum exposure to credit risk reflected on the balance sheet in scope of ECL 593.8 17.2 197.4 167.2 19.9 14.5 0.0 1.2 176.5 Guarantees6 18.1 1.3 2.5 0.1 1.2 2.7 10.2 Loan commitments6 31.2 0.4 2.8 1.5 5.7 0.2 0.7 19.8 Forward starting transactions, reverse repurchase and securities borrowing agreements 0.9 0.9 0.0 Committed unconditionally revocable credit lines 36.6 1.1 6.5 4.2 3.9 21.0 Total maximum exposure to credit risk not reflected on the balance sheet, in scope of ECL 86.8 2.8 12.7 5.8 10.8 0.0 0.2 3.4 51.0 Financial statements 422 Consolidated financial statements Note 23 Expected credit loss measurement (continued) Maximum exposure to credit risk (continued) 31.12.17 Collateral Credit enhancements USD billion Maximum exposure to credit risk Cash collateral received Collateralized by securities Secured by real estate Other collateral1 Netting Credit derivative contracts Guarantees Exposure to credit risk after collateral and credit enhancements Financial assets measured at amortized cost on the balance sheet Cash and balances at central banks 90.0 90.0 Loans and advances to banks2 14.1 0.1 0.0 14.0 Receivables from securities financing transactions 92.0 87.2 4.3 0.4 Cash collateral receivables on derivative instruments3,4 24.0 12.8 11.3 Loans and advances to customers5 326.7 16.5 114.3 164.3 15.2 0.0 1.4 15.1 Other financial assets measured at amortized cost 37.8 0.1 20.0 1.1 16.7 Total financial assets measured at amortized cost 584.7 16.6 221.6 164.3 20.7 12.8 0.0 1.4 147.4 Financial assets measured at fair value through other comprehensive income – debt 8.1 8.1 Total maximum exposure to credit risk reflected on the balance sheet in scope of ECL 592.8 16.6 221.6 164.3 20.7 12.8 0.0 1.4 155.6 Guarantees6 17.7 1.0 2.1 0.2 1.3 0.0 3.1 9.9 Loan commitments6 32.1 0.0 2.9 1.1 5.8 0.1 1.2 21.0 Forward starting transactions, reverse repurchase and securities borrowing agreements 13.0 12.8 0.3 Total maximum exposure to credit risk not reflected on the balance sheet, in scope of ECL 62.8 1.1 17.8 1.2 7.1 0.0 0.1 4.3 31.2 1 Includes but is not limited to life insurance contracts, inventory, accounts receivable, mortgage loans, patents and copyrights. 2 Loans and advances to banks include amounts held with third-party banks on behalf of clients. The credit risk associated with these balances may be borne by those clients. 3 Included within Cash collateral receivables on derivative instruments are margin balances due from exchanges or clearing houses. Some of these margin balances reflect amounts transferred on behalf of clients who retain the associated credit risk. 4 The amount shown in the “Netting” column represents the netting potential not recognized on the balance sheet. Refer to Note 25 for more information. 5 Collateral arrangements generally incorporate a range of collateral, including cash, securities, property and other collateral. 6 The amount shown in the “Guarantees” column largely relates to sub-participations. Refer to Note 34 for more information. Prior-period information is presented under IAS 39 requirements. 423 Note 23 Expected credit loss measurement (continued) e) Financial assets subject to credit risk by rating category The table below shows the credit quality and the maximum exposure to credit risk based on the Group’s internal credit rating system and year-end stage classification. With the transition to IFRS 9, the credit risk rating reflects the Group’s assessment of the probability of default of individual counterparties, prior to substitutions. The amounts presented are gross of impairment allowances. →Refer to the “Risk management and control” section of this report for more details on the Group’s internal grading system Financial assets subject to credit risk by rating category USD million 31.12.18 Rating category1 0–1 2–3 4–5 6–8 9–13 Credit- impaired (defaulted) Total gross carrying amount ECL allowances Net carrying amount (maximum exposure to credit risk) Financial assets measured at amortized cost Cash and balances at central banks 103,635 4,735 0 0 0 0 108,370 0 108,370 of which: stage 1 103,635 4,735 0 0 0 0 108,370 0 108,370 Loans and advances to banks 829 13,462 1,347 927 307 3 16,875 (7) 16,868 of which: stage 1 829 13,462 1,347 763 268 0 16,669 (4) 16,666 of which: stage 2 0 0 0 164 39 0 203 (1) 202 of which: stage 3 0 0 0 0 0 3 3 (3) Receivables from securities financing transactions 29,065 24,653 13,602 26,865 1,165 0 95,350 (2) 95,349 of which: stage 1 29,065 24,653 13,602 26,865 1,165 0 95,350 (2) 95,349 Cash collateral receivables on derivative instruments 5,136 10,042 5,282 3,040 101 0 23,601 0 23,602 of which: stage 1 5,136 10,042 5,282 3,040 101 0 23,601 0 23,602 Loans and advances to customers 3,642 172,742 52,566 73,863 16,014 2,297 321,124 (772) 320,352 of which: stage 1 3,621 172,002 49,277 62,305 11,111 0 298,316 (69) 298,248 of which: stage 2 20 740 3,289 11,558 4,903 0 20,510 (155) 20,357 of which: stage 3 0 0 0 0 0 2,297 2,297 (549) 1,748 Other financial assets measured at amortized cost 13,409 676 313 7,460 274 586 22,718 (155) 22,563 of which: stage 1 13,409 676 313 7,235 272 0 21,905 (43) 21,862 of which: stage 2 0 0 0 225 2 0 227 (4) 223 of which: stage 3 0 0 0 0 0 586 586 (109) 478 Total financial assets measured at amortized cost 155,716 226,310 73,110 112,155 17,861 2,886 588,039 (937) 587,104 On-balance sheet financial instruments Financial assets measured at FVOCI – debt instruments 3,889 2,702 0 76 0 0 6,667 0 6,667 Total on-balance sheet financial instruments 159,605 229,012 73,110 112,231 17,861 2,886 594,706 (937) 593,771 1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories.Financial statements 424 Consolidated financial statements Note 23 Expected credit loss measurement (continued) Off-balance sheet positions subject to expected credit loss by rating category USD million 31.12.18 Rating category1 0–1 2–3 4–5 6–8 9–13 Credit- impaired (defaulted) Total carrying amount (maximum exposure to credit risk)ECL provision Off-balance sheet financial instruments Guarantees 979 6,673 3,859 5,415 1,006 215 18,147 (43) of which: stage 1 978 6,670 3,849 5,012 811 17,320 (7) of which: stage 2 3 10 402 195 0 610 (2) of which: stage 3 0 0 0 0 215 215 (34) Irrevocable loan commitments 2,088 11,667 6,519 6,479 4,404 55 31,212 (37) of which: stage 1 2,088 11,667 6,519 6,296 4,019 1 30,590 (32) of which: stage 2 0 0 0 183 385 0 568 (5) of which: stage 3 0 0 0 0 53 53 0 Forward starting reverse repurchase and securities borrowing agreements 25 510 150 251 0 0 936 0 Total off-balance sheet financial instruments 3,092 18,850 10,528 12,145 5,410 270 50,295 (80) Other credit lines Committed unconditionally revocable credit lines 776 10,899 5,282 11,499 8,084 93 36,633 (35) of which: stage 1 768 10,871 5,152 10,727 7,603 35,121 (19) of which: stage 2 8 28 130 772 481 0 1,419 (16) of which: stage 3 0 0 93 93 Irrevocable committed prolongation of existing loans 27 1,346 889 902 154 21 3,339 (1) of which: stage 1 27 1,315 680 701 137 0 2,860 (1) of which: stage 2 0 31 209 200 17 0 457 0 of which: stage 3 0 0 0 21 21 0 Total other credit lines 803 12,245 6,171 12,401 8,238 114 39,972 (36) 1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories. 425 Note 23 Expected credit loss measurement (continued) Financial assets subject to credit risk by rating category USD billion 31.12.17 Gross carrying amount per rating category Rating category1 0–1 2–3 4–5 6–8 9–13 Credit- impaired (defaulted) Total gross carrying amount Financial assets measured at amortized cost Cash and balances at central banks 89.6 0.5 0.0 90.0 Loans and advances to banks 0.6 10.8 1.4 0.9 0.3 14.1 Receivables from securities financing transactions 24.9 37.3 17.2 10.7 1.8 92.0 Cash collateral receivables on derivative instruments 6.6 10.0 5.7 1.6 0.1 24.0 Loans and advances to customers 3.2 165.9 66.9 71.3 17.9 1.5 326.7 Other financial assets measured at amortized cost 9.4 1.1 8.9 17.1 1.0 0.3 37.8 Total financial assets measured at amortized cost 134.4 225.6 100.1 101.5 21.1 1.9 584.7 On-balance sheet financial instruments Financial assets measured at FVOCI – debt instruments 7.0 1.0 0.1 8.1 Total on-balance sheet financial instruments 141.4 226.6 100.1 101.6 21.1 1.9 592.8 1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories. Off-balance sheet positions subject to expected credit loss by rating category USD billion 31.12.17 Gross carrying amount per rating category Rating category1 0–1 2–3 4–5 6–8 9–13 Credit- impaired (defaulted) Total carrying amount (maximum exposure to credit risk) Off-balance sheet financial instruments Guarantees 1.2 8.5 4.2 2.8 0.8 0.2 17.7 Irrevocable loan commitments 2.0 13.5 7.8 5.2 3.6 32.1 Forward starting reverse repurchase and securities borrowing agreements 13.0 13.0 Total off-balance sheet financial instruments 3.2 34.9 12.0 8.1 4.4 0.2 62.8 1 Refer to the “Internal UBS rating scale and mapping of external ratings” table in the “Risk management and control” section of this report for more information on rating categories. Prior-period information is presented under IAS 39 requirements.Financial statements 426 Consolidated financial statements Note 23 Expected credit loss measurement (continued) f) Credit-impaired financial instruments at amortized cost The credit risk in the Group’s portfolio is actively managed by taking collateral against exposures and by utilizing credit hedging. Collateral held against the credit-impaired loan exposure (stage 3) mainly consisted of real estate and securities. It is the Group’s policy to dispose of foreclosed real estate as soon as practicable. The carrying amount of foreclosed property recorded in our balance sheet at the end of 2018 and 2017 amounted to USD 60 million and USD 61 million, respectively. The Bank seeks to liquidate collateral held in the form of financial assets expeditiously and at prices considered fair. This may require us to purchase assets for our own account, where permitted by law, pending orderly liquidation. Financial assets that are credit-impaired and related collateral held in order to mitigate potential losses are shown in the table below. USD million 31.12.18 Gross carrying amount Allowance for expected credit losses Net carrying amount Collateral / credit enhancements Loans and advances to banks 3 (3) 0 0 Loans and advances to customers 2,297 (549) 1,748 1,654 of which: Private clients with mortgages 836 (39) 796 796 of which: Real estate financing 54 (16) 38 30 of which: Large corporate clients 170 (82) 88 79 of which: SME clients 888 (256) 632 561 of which: Lombard 31 (17) 14 14 Other financial assets measured at amortized cost 586 (109) 478 12 Total credit-impaired financial assets measured at amortized cost 2,8861 (660)1 2,226 1,666 Guarantees 215 (34) 84 of which: Large corporate clients 127 (6) 79 of which: SME clients 77 (25) 5 Loan commitments 53 0 8 Committed unconditionally revocable credit lines 93 0 9 Irrevocable committed prolongation of existing loans 22 0 0 Total off-balance sheet financial instruments and other credit lines 3831 (34)1 102 31.12.17 USD million Gross carrying amount Allowance for expected credit losses Net carrying amount Collateral / credit enhancements Loans and advances to customers 1,104 (672) 432 210 Guarantees and loan commitments 204 (34) 5 Total credit-impaired financial assets 1,3082 (706)2 432 215 1 Upon adoption of IFRS 9 as of 1 January 2018, an instrument is classified as credit-impaired if the counterparty is defaulted, and / or the instrument is purchased or originated credit-impaired and includes credit- impaired exposures for which no loss has occurred or no allowance has been recognized (e.g., because they are expected to be fully recoverable through the collateral held). Refer to Note 1c for more information on the adoption of IFRS 9. 2 December 2017 numbers do not include exposure of USD 0.3 billion presented on the balance sheet as other assets. 427 Note 23 Expected credit loss measurement (continued) g) Sensitivity analysis As outlined in Note 1a, ECL estimates involve significant uncertainties at the time they are made. ECL model The models applied to determine point-in-time PD and LGD rely on market and statistical data, which have been found to correlate well with historically observed defaults in sufficiently homogeneous segments. The risk sensitivity of each of our IFRS 9 reporting segments to such factors has been summarized in Note 10. Emerging new systematic risk factors may not be sufficiently taken into account by existing models and affect their responsiveness to a changing environment. This risk is deemed to be immaterial and monitored through regular model review processes; in particular, it is deemed to be of less importance for the large books of mortgage loans, where risk drivers tend to be stable. Statistically derived models, which perform well on a reasonably sized and homogeneous portfolio, may show weakness in smaller-sized sub-portfolios, for which other or differently weighted factors may be more relevant criteria. Where risk experts conclude that the output of a general model is not in line with what they would have expected for a specific portfolio segment, and that this would be material for ECL, overlays would be recommended based on management judgment. ECL estimations for segments where the PD is homogeneous, but the credit exposure is not, may prove to be inaccurate – even though all parameters were accurately predicted – as the actual amount of loss depends on the exposure of the position that defaulted. This observation is less relevant in retail-type portfolios with smaller individual exposures from mortgage loans or financings of SME, but may become important in the large corporate client portfolios in the Investment Bank and Personal & Corporate Banking. Forward-looking scenarios Depending on the scenario selection and related macro- economic assumptions for the risk factors, the components of the relevant weighted average ECL change. This is particularly relevant for interest rates, which can take both directions under a given growth assumption (for example, low growth with high interest rates in a stagflation scenario, versus low growth and falling interest rates in a recession). Management will look for scenario narratives that are expected to address the risks of a credit portfolio, while at the same time meeting the requirements of IFRS 9 to avoid bias. As forecasting models are complex due to the combination of multiple factors, simple what-if analyses by changing individual parameters do not provide reasonable information on the exposure of segments to changes in the macroeconomy. Portfolio-specific analyses based on their key risk factors would also not be additive as potential compensatory effects in other segments would be ignored. Sensitivities at Group level can only be meaningfully assessed in the context of coherent scenarios with consistently developed macroeconomic factors. The table below indicates the potential effect of changing economic conditions on ECL for stage 1 and stage 2 positions by disclosing for each scenario (see Note 23b) and material portfolio the corresponding ECL output. The effect of applying scenarios is not linear across the portfolio, with a significant impact observed in the mortgage loan books as the potential effect of rising interest rates manifests itself in the mild downside scenario, with high unemployment rates combined with a marked correction of house prices contributing to high expected losses in the severe downside scenario. Potential effect of changing economic conditions Scenarios Weighted average Baseline Upside Mild downside Severe downside USD million, unless otherwise indicated ECL in % of baseline ECL in % of baseline ECL in % of baseline ECL in % of baseline ECL in % of baseline Segmentation Private clients with mortgages 102 275 37 100 29 78 173 468 365 988 Real estate financing 61 150 41 100 32 79 80 198 119 293 Large corporate clients 47 133 35 100 31 89 46 130 108 308 SME clients 34 118 29 100 28 97 39 135 63 216 Other segments 115 122 95 100 83 88 135 142 171 180 Total 359 152 237 100 204 86 473 200 826 349 Financial statements 428 Consolidated financial statements Note 23 Expected credit loss measurement (continued) The forecasting horizon is limited to three years, with a model-based mean reversion of PD and LGD assumed thereafter. Changes to these timelines may have an effect on ECL; depending on the cycle, a longer or shorter forecasting horizon will lead to different annualized lifetime PD and average LGD estimations. This is currently not deemed to be material for UBS as a large share of positions, including mortgages in Switzerland, have a maturity that is within the forecasting horizon. Scenario weights ECL is sensitive to changing scenario weights, in particular, if narratives and parameters are selected that are not close to the baseline scenario, highlighting the non-linearity of credit losses. As shown in the table on the previous page, the ECL for stage 1 and stage 2 positions would have been USD 237 million instead of USD 359 million if ECL had been determined solely on the baseline scenario. The weighted average ECL amounts therefore to 152% of the baseline value. Stage allocation and SICR The determination of what constitutes an SICR is based on management judgment as explained in Note 1a. Changing the SICR trigger will have a direct effect on ECL as more or fewer positions would be subject to lifetime ECL under any scenario. Maturity profile The maturity profile of the assets is an important driver for changes in ECL due to transfers to stage 2. The current maturity profile of most lending books is relatively short; hence a movement to stage 2 may have a limited effect on ECL. A significant portion of our lending to SME is documented under frame credit agreements, which allow for various forms of utilization but are unconditionally cancelable by UBS at any time. The relevant maturity for drawings under such agreements with a fixed maturity is the respective term, or maximum 12 months in stage 1. For unused credit lines and all drawings that have no fixed maturity (e.g., current accounts), UBS generally applies a 12-month maturity from the reporting date, given the credit review policies, which require either continuous monitoring of key indicators and behavioral patterns for smaller positions or an annual formal review for any other limit. The ECL for these products is sensitive to shortening or extending the maturity assumption. 429 Note 24 Fair value measurement This Note provides fair value measurement information for both financial and non-financial instruments and is structured as follows: a) Valuation principles b) Valuation governance c) Fair value hierarchy d) Valuation adjustments e) Transfers between Level 1 and Level 2 f) Level 3 instruments: valuation techniques and inputs g) Level 3 instruments: sensitivity to changes in unobservable input assumptions h) Level 3 instruments: movements during the period i) Maximum exposure to credit risk for financial instruments measured at fair value j) Financial instruments not measured at fair value Adoption of IFRS 9 Adoption of IFRS 9 on 1 January 2018 resulted in the reclassification of certain financial assets and liabilities from amortized cost to fair value through profit or loss. This included: – brokerage receivables and payables held in the Investment Bank and Global Wealth Management; – auction rate securities held in Corporate Center; and – certain loans held in the Investment Bank. Some of those financial assets and liabilities are designated as Level 3 in the fair value hierarchy. Refer to the tables and text within this Note for more information. An immaterial amount of financial assets were reclassified from Financial assets at fair value held for trading and Financial assets at fair value not held for trading to Loans and advances to customers upon adoption of IFRS 9. An immaterial amount of associated loan commitments, which were recognized as derivative liabilities as of 31 December 2017, were also derecognized from the balance sheet. No material fair value gains or losses would have been recognized in the income statement in 2018 had these instruments not been reclassified. Similarly, no material fair value gains or losses would have been recognized in Other comprehensive income related to debt instruments that were reclassified from Financial assets available for sale to Other financial assets measured at amortized cost upon adoption of IFRS 9. →Refer to Note 1c for more information a) Valuation principles Fair value is defined as the price that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or most advantageous market, in the absence of a principal market) as of the measurement date. In measuring fair value, the Group uses various valuation approaches and applies a hierarchy for prices and inputs that maximizes the use of observable market data, if available. All financial and non-financial assets and liabilities measured or disclosed at fair value are categorized into one of three fair value hierarchy levels. In certain cases, the inputs used to measure fair value may fall within different levels of the fair value hierarchy. For disclosure purposes, the level in the hierarchy within which the instrument is classified in its entirety is based on the lowest level input that is significant to the position’s fair value measurement: – Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities; – Level 2 – valuation techniques for which all significant inputs are, or are based on, observable market data; or – Level 3 – valuation techniques for which significant inputs are not based on observable market data.Financial statements 430 Consolidated financial statements Note 24 Fair value measurement (continued) If available, fair values are determined using quoted prices in active markets for identical assets or liabilities. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing data on an ongoing basis. Assets and liabilities that are quoted and traded in an active market are valued at the currently quoted price multiplied by the number of units of the instrument held. Where the market for a financial instrument or non-financial asset or liability is not active, fair value is established using a valuation technique, including pricing models. Valuation techniques involve the use of estimates, the extent of which depends on the complexity of the instrument and the availability of market-based data. Valuation adjustments may be made to allow for additional factors, including model, liquidity, credit and funding risks, which are not explicitly captured within the valuation technique, but which would nevertheless be considered by market participants when establishing a price. The limitations inherent in a particular valuation technique are considered in the determination of an asset or liability’s classification within the fair value hierarchy. Many cash instruments and over-the-counter (OTC) derivative contracts have bid and offer prices that can be observed in the marketplace. Bid prices reflect the highest price that a party is willing to pay for an asset. Offer prices represent the lowest price that a party is willing to accept for an asset. In general, long positions are measured at a bid price and short positions at an offer price, reflecting the prices at which the instruments could be transferred under normal market conditions. Offsetting positions in the same financial instrument are marked at the mid-price within the bid-offer spread. Generally, the unit of account for a financial instrument is the individual instrument, and UBS applies valuation adjustments at an individual instrument level, consistent with that unit of account. However, if certain conditions are met, UBS may estimate the fair value of a portfolio of financial assets and liabilities with substantially similar and offsetting risk exposures on the basis of the net open risks. For transactions where the valuation technique used to measure fair value requires significant inputs that are not based on observable market data, the financial instrument is initially recognized at the transaction price. This initial recognition amount may differ from the fair value obtained using the valuation technique. Any such difference is deferred and not recognized in the income statement and referred to as deferred day-1 profit or loss. →Refer to Note 24d for more information b) Valuation governance UBS’s fair value measurement and model governance framework includes numerous controls and other procedural safeguards that are intended to maximize the quality of fair value measurements reported in the financial statements. New products and valuation techniques must be reviewed and approved by key stakeholders from risk and finance control functions. Responsibility for the ongoing measurement of financial and non-financial instruments at fair value resides with the business divisions. In carrying out their valuation responsibilities, the businesses are required to consider the availability and quality of external market data and to provide justification and rationale for their fair value estimates. Fair value estimates are validated by risk and finance control functions, which are independent of the business divisions. Independent price verification is performed by Finance through benchmarking the business divisions’ fair value estimates with observable market prices and other independent sources. Controls and a governance framework are in place and are intended to ensure the quality of third-party pricing sources where used. For instruments where valuation models are used to determine fair value, independent valuation and model control groups within Finance and Risk Control evaluate UBS’s models on a regular basis, including valuation and model input parameters as well as pricing. As a result of the valuation controls employed, valuation adjustments may be made to the business divisions’ estimates of fair value to align with independent market data and the relevant accounting standard. →Refer to Note 24d for more information 431 Note 24 Fair value measurement (continued) c) Fair value hierarchy The table below provides the fair value hierarchy classification of financial and non-financial assets and liabilities measured at fair value. The narrative that follows describes the different product types, valuation techniques used in measuring their fair value, including significant valuation inputs and assumptions used, and the factors determining their classification within the fair value hierarchy. Determination of fair values from quoted market prices or valuation techniques1 31.12.18 31.12.17 USD million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets measured at fair value on a recurring basis Financial assets at fair value held for trading 88,452 13,956 1,962 104,370 111,780 15,604 2,023 129,407 of which: Government bills / bonds 9,554 1,607 0 11,161 12,244 941 0 13,186 Corporate and municipal bonds 558 5,559 651 6,768 38 8,180 566 8,785 Loans 0 2,886 680 3,566 0 3,433 513 3,946 Investment fund units 6,074 3,200 442 9,716 7,409 1,886 586 9,881 Asset-backed securities 0 248 144 392 0 199 178 377 Equity instruments 72,266 455 46 72,768 81,324 190 108 81,623 Financial assets for unit-linked investment contracts2 10,764 774 71 11,609 Derivative financial instruments 753 124,033 1,424 126,210 470 119,227 1,589 121,285 of which: Interest rate contracts 0 36,658 418 37,076 1 45,049 138 45,188 Credit derivative contracts 0 1,444 476 1,920 0 2,325 564 2,889 Foreign exchange contracts 311 53,148 30 53,489 212 47,957 194 48,363 Equity / index contracts 3 30,905 496 31,404 16 22,099 693 22,807 Commodity contracts 0 1,768 2 1,769 0 1,772 0 1,772 Brokerage receivables3 0 16,840 0 16,840 Financial assets at fair value not held for trading4 35,458 42,819 4,413 82,690 23,628 35,373 1,456 60,457 of which: Government bills / bonds 17,687 4,806 0 22,493 22,632 4,000 0 26,633 Corporate and municipal bonds 781 16,455 0 17,236 785 21,237 0 22,022 Financial assets for unit-linked investment contracts2 16,694 4,751 0 21,446 Loans 0 6,380 1,752 8,132 0 9,627 778 10,405 Securities financing transactions5 0 9,899 39 9,937 0 121 177 298 Auction rate securities3 0 0 1,664 1,664 Investment fund units 173 428 109 710 210 387 0 597 Equity instruments6 123 62 517 702 Other 0 38 331 369 0 0 501 501 Financial assets measured at fair value through other comprehensive income on a recurring basis Financial assets measured at fair value through other comprehensive income4 2,319 4,347 0 6,667 3,078 5,291 521 8,889 of which: Government bills / bonds 2,171 69 0 2,239 2,804 136 0 2,940 Corporate and municipal bonds 149 348 0 497 124 1,087 9 1,220 Asset-backed securities 0 3,931 0 3,931 0 3,980 0 3,980 Other6 0 0 0 0 150 88 512 749 Non-financial assets measured at fair value on a recurring basis Precious metals and other physical commodities 4,298 0 0 4,298 4,681 0 0 4,681 Non-financial assets measured at fair value on a non-recurring basis Other non-financial assets7 0 82 0 82 0 55 43 98 Total assets measured at fair value 131,280 202,077 7,800 341,156 143,636 175,550 5,631 324,818 Financial statements 432 Consolidated financial statements Note 24 Fair value measurement (continued) Determination of fair values from quoted market prices or valuation techniques (continued)1 31.12.18 31.12.17 USD million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities measured at fair value on a recurring basis Financial liabilities at fair value held for trading 24,406 4,468 69 28,943 26,710 4,421 120 31,251 of which: Government bills / bonds 2,423 416 0 2,839 5,286 263 0 5,549 Corporate and municipal bonds 126 3,377 27 3,530 51 3,542 36 3,629 Investment fund units 551 137 0 689 555 269 16 841 Equity instruments 21,306 537 42 21,886 20,817 345 68 21,230 Derivative financial instruments 580 122,933 2,210 125,723 409 115,849 2,879 119,137 of which: Interest rate contracts 7 32,511 226 32,743 5 39,184 191 39,380 Credit derivative contracts 0 2,203 519 2,722 0 3,278 617 3,895 Foreign exchange contracts 322 52,964 86 53,372 218 46,318 125 46,662 Equity / index contracts 1 33,669 1,371 35,041 43 25,445 1,945 27,433 Commodity contracts 0 1,487 0 1,487 0 1,601 1 1,602 Financial liabilities designated at fair value on a recurring basis Brokerage payables designated at fair value3 0 38,420 0 38,420 Debt issued designated at fair value 0 46,074 10,957 57,031 0 39,616 11,166 50,782 Other financial liabilities designated at fair value 0 32,569 1,025 33,594 0 14,651 1,991 16,643 of which: Amounts due under unit-linked investment contracts 0 21,679 0 21,679 0 11,821 0 11,821 Securities financing transactions5 0 9,461 0 9,461 0 382 4 385 Over-the-counter debt instruments 0 1,427 1,023 2,450 0 2,447 1,980 4,427 Non-financial liabilities measured at fair value on a non-recurring basis Other non-financial liabilities 0 0 0 0 0 1 0 1 Total liabilities measured at fair value 24,986 244,465 14,260 283,711 27,119 174,538 16,157 217,813 1 Bifurcated embedded derivatives are presented on the same balance sheet lines as their host contracts and are not included in this table. The fair value of these derivatives was not material for the periods presented. 2 Financial assets for unit-linked investment contracts were reclassified from Financial assets at fair value held for trading to Financial assets at fair value not held for trading upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 3 Comparative-period information is not disclosed for financial assets and liabilities that were measured at amortized cost prior to the adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 4 As of 31 December 2018, USD 23 billion of Financial assets at fair value not held for trading and USD 6 billion of Financial assets measured at fair value through other comprehensive income are expected to be recovered or settled after 12 months. As of 31 December 2017, USD 24 billion of Financial assets at fair value not held for trading and USD 7 billion of Financial assets measured at fair value through other comprehensive income were expected to be recovered or settled after 12 months. 5 The increases in Securities financing transactions primarily relate to the reclassification of certain balances from amortized cost to fair value through profit or loss upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 6 Upon adoption of IFRS 9 on 1 January 2018, equity instruments that were formerly classified as available for sale under IAS 39 were reclassified to Financial assets at fair value not held for trading. Refer to Note 1c for more information. 7 Other non-financial assets primarily consist of properties and other non-current assets held for sale, which are measured at the lower of their net carrying amount or fair value less costs to sell. 433 Note 24 Fair value measurement (continued) Valuation techniques Valuation techniques are used to value positions for which a market price is not available from market sources. This includes certain less liquid debt and equity instruments, certain exchange- traded derivatives and all derivatives transacted in the OTC market. UBS uses widely recognized valuation techniques for determining the fair value of financial and non-financial instruments that are not actively traded and quoted. The most frequently applied valuation techniques include discounted value of expected cash flows, relative value and option pricing methodologies. Discounted value of expected cash flows is a valuation technique that measures fair value using estimated expected future cash flows from assets or liabilities and then discounts these cash flows using a discount rate or discount margin that reflects the credit and / or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a present value. When using such valuation techniques, expected future cash flows are estimated using an observed or implied market price for the future cash flows or by using industry standard cash flow projection models. The discount factors within the calculation are generated using industry standard yield curve modeling techniques and models. Relative value models measure fair value based on the market prices of equivalent or comparable assets or liabilities, making adjustments for differences between the characteristics of the observed instrument and the instrument being valued. Option pricing models incorporate assumptions regarding the behavior of future price movements of an underlying referenced asset or assets to generate a probability-weighted future expected payoff for the option. The resulting probability- weighted expected payoff is then discounted using discount factors generated from industry standard yield curve modeling techniques and models. The option pricing model may be implemented using a closed-form analytical formula or other mathematical techniques (e.g., binomial tree or Monte Carlo simulation). Where available, valuation techniques use market-observable assumptions and inputs. If such data is not available, inputs may be derived by reference to similar assets in active markets, from recent prices for comparable transactions or from other observable market data. In such cases, the inputs selected are based on historical experience and practice for similar or analogous instruments, derivation of input levels based on similar products with observable price levels and knowledge of current market conditions and valuation approaches. For more complex instruments and instruments not traded in an active market, fair values may be estimated using a combination of observed transaction prices, consensus pricing services and relevant quotes. Consideration is given to the nature of the quotes (e.g., indicative or firm) and the relationship of recently evidenced market activity to the prices provided by consensus pricing services. UBS also uses internally developed models, which are typically based on valuation methods and techniques recognized as standard within the industry. Assumptions and inputs used in valuation techniques include benchmark interest rate curves, credit and funding spreads used in estimating discount rates, bond and equity prices, equity index prices, foreign exchange rates, levels of market volatility and correlation. Refer to Note 24f for more information. The discount curves used by the Group incorporate the funding and credit characteristics of the instruments to which they are applied. Financial instruments excluding derivatives: product description, valuation and classification in the fair value hierarchy Government bills and bonds Product description: government bills and bonds include fixed- rate, floating-rate and inflation-linked bills and bonds issued by sovereign governments. Valuation: these instruments are generally valued using prices obtained directly from the market. Instruments that cannot be priced directly using active-market data are valued using discounted cash flow valuation techniques that incorporate market data for similar government instruments. Fair value hierarchy: government bills and bonds are generally traded in active markets with prices that can be obtained directly from these markets, resulting in classification as Level 1, while the remaining positions are classified as Level 2. Corporate and municipal bonds Product description: corporate bonds include senior, junior and subordinated debt issued by corporate entities. Municipal bonds are issued by state and local governments. While most instruments are standard fixed- or floating-rate securities, some may have more complex coupon or embedded option features. Valuation: corporate and municipal bonds are generally valued using prices obtained directly from the market for the security, or similar securities, adjusted for seniority, maturity and liquidity. When prices are not available, instruments are valued using discounted cash flow valuation techniques incorporating the credit spread of the issuer or similar issuers. For convertible bonds where no directly comparable price is available, issuances may be priced using a convertible bond model. Fair value hierarchy: corporate and municipal bonds are generally classified as Level 1 or Level 2 depending on the depth of trading activity behind price sources. Level 3 instruments have no suitable pricing information available and also cannot be referenced to other securities issued by the same issuer. Therefore, such instruments are measured based on price levels for similar issuers adjusted for relative tenor and issuer quality. Traded loans and loans designated at fair value Product description: these instruments include fixed-rate loans, corporate loans, recently originated commercial real estate loans and contingent lending transactions. Financial statements 434 Consolidated financial statements Note 24 Fair value measurement (continued) Valuation: loans are valued directly using market prices that reflect recent transactions or quoted dealer prices, where available. Where no market price data is available, loans are valued by relative value benchmarking using pricing derived from debt instruments in comparable entities or different products in the same entity, or by using a credit default swap valuation technique, which requires inputs for credit spreads, credit recovery rates and interest rates. Recently originated commercial real estate loans are measured using a securitization approach based on rating agency guidelines. The valuation of the contingent lending transactions is dependent on actuarial mortality levels and actuarial life insurance policy lapse rates. Mortality and lapse rate assumptions are based on external actuarial estimations for large homogeneous pools, and contingencies are derived from a range relative to the actuarially expected amount. Fair value hierarchy: instruments with suitably deep and liquid pricing information are classified as Level 2, while any positions requiring the use of valuation techniques, or for which the price sources have insufficient trading depth, are classified as Level 3. Investment fund units Product description: investment fund units are pools of assets, generally equity instruments and bonds, broken down to redeemable units. Valuation: investment fund units are predominantly exchange-traded, with readily available quoted prices in liquid markets. Where market prices are not available, fair value may be measured using net asset values (NAV), taking into account any restrictions imposed upon redemption. Fair value hierarchy: listed units are classified as Level 1, provided there is sufficient trading activity to justify active- market classification, while other positions are classified as Level 2. Positions for which NAV are not available or that are not redeemable at the measurement date or shortly thereafter are classified as Level 3. Asset-backed securities Product description: asset-backed securities (ABS) include residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other ABS and are instruments generally issued through the process of securitization of underlying interest-bearing assets. Valuation: for liquid securities, the valuation process will use trade and price data, updated for movements in market levels between the time of trading and the time of valuation. Less liquid instruments are measured using discounted expected cash flows incorporating price data for instruments or indices with similar risk profiles. Inputs to discounted expected cash flow techniques include asset prepayment rates, discount margin or discount yields and asset default and recovery rates. Fair value hierarchy: CDO, RMBS, CMBS and other ABS are generally classified as Level 2. However, if significant inputs are unobservable, or if market or fundamental data is not available, they are classified as Level 3. Auction rate securities Product description: there are two types of auction rate securities (ARS): auction preferred securities (APS) and auction rate certificates (ARC). ARC are issued by municipalities and are used by investors as tax-exempt alternatives to money market instruments. Interest rates for these instruments are reset through a periodic Dutch auction. APS are similar to ARC with the primary difference being that they are issued from closed-end funds. Valuation: ARS are valued using market prices that reflect recent transactions after applying an adjustment for trade size or quoted dealer prices, where available. Fair value hierarchy: suitably deep and liquid pricing information is generally not available for ARS securities. As a result, these securities are classified as Level 3. Equity instruments Product description: equity instruments include stocks and shares, private equity positions and units held in hedge funds. Valuation: listed equity instruments are generally valued using prices obtained directly from the market. Unlisted equity holdings, including private equity positions, are initially marked at their transaction price and are revalued when reliable evidence of price movement becomes available or when the position is deemed to be impaired. Fair value for units held in hedge funds is measured based on their published NAV, taking into account any restrictions imposed upon redemption. Fair value hierarchy: the majority of equity securities are actively traded on public stock exchanges where quoted prices are readily and regularly available, resulting in Level 1 classification. Units held in hedge funds are classified as Level 2, except for positions for which published NAV are not available or that are not redeemable at the measurement date or shortly thereafter, in which case such positions are classified as Level 3. Financial assets for unit-linked investment contracts Product description: unit-linked investment contracts allow investors to invest in a pool of assets through issued investment units. Valuation: the majority of assets are listed on exchanges and fair values are determined using quoted prices. Fair value hierarchy: most assets are classified as Level 1 if actively traded, or Level 2 if trading is not active. However, instruments for which prices are not readily available are classified as Level 3. 435 Note 24 Fair value measurement (continued) Securities financing transactions Product description: securities financing transactions include (reverse) repurchase agreements (securities purchased under resale agreements and securities sold under repurchase agreements) that are managed on a fair value basis. Valuation: These instruments are valued using discounted expected cash flow techniques. The discount rate applied is based on funding curves that are relevant to the collateral eligibility terms for the contract in question. Fair value hierarchy: Collateral funding curves for these instruments are generally observable and, as a result, these positions are classified as Level 2. Where the collateral terms are non-standard the funding curve may be considered unobservable and classified Level 3. Brokerage receivables and payables Product description: brokerage receivables and payables include callable, on-demand balances, including long cash credits, short cash debits, margin debit balances and short sale proceeds. Valuation: fair value is determined based on the value of the underlying balances. Fair value hierarchy: due to their on-demand nature, these receivables and payables are designated as Level 2. Financial liabilities designated at fair value Product description: debt instruments, primarily comprised of equity-, rates- and credit-linked issued notes, which are held at fair value under the fair value option. These instruments are tailored specifically to the holder’s risk or investment appetite with structured coupons or payoffs. Valuation: the risk management and the valuation approaches for these instruments are closely aligned with the equivalent derivatives business and the underlying risk, and the valuation techniques used for this component are the same as the relevant valuation techniques described below. For example, equity-linked notes should be referenced to equity / index contracts and credit- linked notes should be referenced to credit derivative contacts. Fair value hierarchy: observability is closely aligned with the equivalent derivatives business and the underlying risk. →Refer to Notes 19 and 22 for information on debt issued designated at fair value and other financial liabilities designated at fair value →Refer to Note 24d for more information on own credit adjustments related to financial liabilities designated at fair value Amounts due under unit-linked investment contracts Product description: the financial liability represents the amounts due to unit holders. Valuation: the fair values of investment contract liabilities are determined by reference to the fair value of the corresponding assets. Fair value hierarchy: the liabilities themselves are not actively traded, but are mainly referenced to instruments that are actively traded and are therefore classified as Level 2. Derivative instruments: product description, valuation and classification in the fair value hierarchy The curves used for discounting expected cash flows in the valuation of collateralized derivatives reflect the funding terms associated with the relevant collateral arrangement for the instrument being valued. These collateral arrangements differ across counterparties with respect to the eligible currency and interest terms of the collateral. The majority of collateralized derivatives are measured using a discount curve that is based on funding rates derived from overnight interest in the cheapest eligible currency for the respective counterparty collateral agreement. Uncollateralized and partially collateralized derivatives are discounted using the LIBOR (or equivalent) curve for the currency of the instrument. As described in Note 24d, the fair value of uncollateralized and partially collateralized derivatives is then adjusted by CVA, DVA and FVA as applicable, to reflect an estimation of the effect of counterparty credit risk, UBS’s own credit risk and funding costs and benefits. Interest rate contracts Product description: interest rate swap contracts include interest rate swaps, basis swaps, cross-currency swaps, inflation swaps and interest rate forwards, often referred to as forward rate agreements (FRA). Interest rate option contracts include caps and floors, swaptions, swaps with complex payoff profiles and other more complex interest rate options. Valuation: interest rate swap contracts are valued by estimating future interest cash flows and discounting those cash flows using a rate that reflects the appropriate funding rate for the position being measured. The yield curves used to estimate future index levels and discount rates are generated using market standard yield curve models using interest rates associated with current market activity. The key inputs to the models are interest rate swap rates, FRA rates, short-term interest rate futures prices, basis swap spreads and inflation swap rates. Interest rate option contracts are valued using various market standard option models, using inputs that include interest rate yield curves, inflation curves, volatilities and correlations. The volatility and correlation inputs within the models are implied from market data based on market-observed prices for standard option instruments trading within the market. Option models used to value more exotic products have a number of model parameter inputs that require calibration to enable the exotic model to price standard option instruments to the price levels observed in the market. When the maturity of the interest rate swap or option contract exceeds the term for which standard market quotes are observable for a significant input parameter, the contracts are valued by extrapolation from the last observable point using standard assumptions or by reference to another observable comparable input parameter to represent a suitable proxy for that portion of the term.Financial statements 436 Consolidated financial statements Note 24 Fair value measurement (continued) Fair value hierarchy: the majority of interest rate swaps are classified as Level 2 as the standard market contracts that form the inputs for yield curve models are generally traded in active and observable markets. Options are generally treated as Level 2 as the calibration process enables the model output to be validated to active-market levels. Models calibrated in this way are then used to revalue the portfolio of both standard options and more exotic products. In most cases, there are active and observable markets for the standard market instruments that form the inputs for yield curve models as well as the financial instruments from which volatility and correlation inputs are derived. Exotic options for which appropriate volatility or correlation input levels cannot be implied from observable market data are classified as Level 3. Interest rate swap or option contracts are classified as Level 3 when the term exceeds standard market-observable quotes. Credit derivative contracts Product description: a credit derivative is a financial instrument that transfers credit risk related to a single underlying entity, a portfolio of underlying entities or a pool of securitized referenced assets. Credit derivative products include credit default swaps (CDS) on single names, indices and securitized products, plus first to default swaps and certain total return swaps. Valuation: credit derivative contracts are valued using industry standard models based primarily on market credit spreads, upfront pricing points and implied recovery rates. Where a derivative credit spread is not directly available, it may be derived from the price of the reference cash bond. Asset-backed credit derivatives are valued using a similar valuation technique to the underlying security with an adjustment to reflect the funding differences between cash and synthetic form. Inputs include prepayment rates, default rates, loss severity, discount margin / rate. Fair value hierarchy classification: single-entity and portfolio credit derivative contracts are classified as Level 2 when credit spreads and recovery rates are determined from actively traded observable market data. Where the underlying reference name(s) are not actively traded and the correlation cannot be directly mapped to actively traded tranche instruments, these contracts are classified as Level 3. Asset-backed credit derivatives follow the characteristics of the underlying security and are therefore distributed across Level 2 and Level 3. Foreign exchange contracts Product description: this includes open spot and forward foreign exchange (FX) contracts and OTC FX option contracts. OTC FX option contracts include standard call and put options, options with multiple exercise dates, path-dependent options, options with averaging features, options with discontinuous payoff characteristics, options on a number of underlying FX rates and multi-dimensional FX option contracts, which have a dependency on multiple FX pairs. Valuation: open spot FX contracts are valued using the FX spot rate observed in the market. Forward FX contracts are valued using the FX spot rate adjusted for forward pricing points observed from standard market-based sources. OTC FX option contracts are valued using market standard option valuation models. The models used for shorter-dated options (i.e., maturities of five years or less) tend to be different than those used for longer-dated options because the models needed for longer-dated OTC FX contracts require additional consideration of interest rate and FX rate interdependency. Inputs to the option valuation models include spot FX rates, FX forward points, FX volatilities, interest rate yield curves, interest rate volatilities and correlations. The inputs for volatility and correlation are implied through the calibration of observed prices for standard option contracts trading within the market. The valuation for multi-dimensional FX options uses a multi-local volatility model, which is calibrated to the observed FX volatilities for all relevant FX pairs. Fair value hierarchy: the markets for both FX spot and FX forward pricing points are both actively traded and observable and therefore such FX contracts are generally classified as Level 2. A significant proportion of OTC FX option contracts are classified as Level 2 as inputs are derived mostly from standard market contracts traded in active and observable markets. OTC FX option contracts classified as Level 3 include multi- dimensional FX options and long-dated FX exotic option contracts where there is no active market from which to derive volatility or correlation inputs. Equity / index contracts Product description: equity / index contracts are equity forward contracts and equity option contracts. Equity option contracts include market standard single or basket stock or index call and put options as well as equity option contracts with more complex features. 437 Note 24 Fair value measurement (continued) Valuation: equity forward contracts have a single stock or index underlying and are valued using market standard models. The key inputs to the models are stock prices, estimated dividend rates and equity funding rates (which are implied from prices of forward contracts observed in the market). Estimated cash flows are then discounted using market standard discounted cash flow models using a rate that reflects the appropriate funding rate for that portion of the portfolio. When no market data is available for the instrument maturity, they are valued by extrapolation of available data, use of historical dividend data, or use of data for a related equity. Equity option contracts are valued using market standard models that estimate the equity forward level as described for equity forward contracts and incorporate inputs for stock volatility and for correlation between stocks within a basket. The probability- weighted expected option payoff generated is then discounted using market standard discounted cash flow models applying a rate that reflects the appropriate funding rate for that portion of the portfolio. When volatility, forward or correlation inputs are not available, they are valued using extrapolation of available data, historical dividend, correlation or volatility data, or the equivalent data for a related equity. Fair value hierarchy: as inputs are derived mostly from standard market contracts traded in active and observable markets, a significant proportion of equity forward contracts are classified as Level 2. Equity option positions for which inputs are derived from standard market contracts traded in active and observable markets are also classified as Level 2. Level 3 positions are those for which volatility, forward or correlation inputs are not observable. Commodity contracts Product description: commodity derivative contracts include forward, swap and option contracts on individual commodities and on commodity indices. Valuation: commodity forward and swap contracts are measured using market standard models that use market forward levels on standard instruments. Commodity option contracts are measured using market standard option models that estimate the commodity forward level as described for commodity forward and swap contracts, incorporating inputs for the volatility of the underlying index or commodity. For commodity options on baskets of commodities or bespoke commodity indices, the valuation technique also incorporates inputs for the correlation between different commodities or commodity indices. Fair value hierarchy: individual commodity contracts are typically classified as Level 2 because active forward and volatility market data is available. →Refer to Note 11 for more information on derivative instruments d) Valuation adjustments The output of a valuation technique is always an estimate of a fair value that cannot be measured with complete certainty. As a result, valuations are adjusted, where appropriate and when such factors would be considered by market participants in estimating fair value, to reflect close-out costs, credit exposure, model-driven valuation uncertainty, funding costs and benefits, trading restrictions and other factors. Valuation adjustments are an important component of fair value for assets and liabilities that are measured using valuation techniques. Such adjustments are applied to reflect uncertainties within the fair value measurement process, to adjust for an identified model simplification or to incorporate an aspect of fair value that requires an overall portfolio assessment rather than an evaluation based on an individual instrument level characteristic. Deferred day-1 profit or loss reserves For new transactions where the valuation technique used to measure fair value requires significant inputs that are not based on observable market data, the financial instrument is initially recognized at the transaction price. The transaction price may differ from the fair value obtained using a valuation technique, where any such difference is deferred and not initially recognized in the income statement. These day-1 profit or loss reserves are reflected, where appropriate, as valuation adjustments. Deferred day-1 profit or loss related to financial instruments other than financial assets measured at fair value through other comprehensive income is released into Other net income from fair value changes on financial instruments when pricing of equivalent products or the underlying parameters become observable or when the transaction is closed out. Deferred day-1 profit or loss related to financial assets measured at fair value through other comprehensive income is released into Other comprehensive income when pricing of equivalent products or the underlying parameters become observable and is released into Other income when the assets are sold. In the second quarter of 2018, a day-1 profit or loss reserve release of USD 196 million was recognized in the income statement related to long-dated UBS-issued structured notes, which are reported within Debt issued designated at fair value on the balance sheet. The day-1 profit or loss reserve release was driven by increased observability of the own credit adjustment (OCA) curve used to value these positions following the issuance of a 30-year senior unsecured bond in the second quarter of 2018. The table on the next page summarizes the changes in deferred day-1 profit or loss reserves during the respective period. Financial statements 438 Consolidated financial statements Note 24 Fair value measurement (continued) Deferred day-1 profit or loss reserves USD million 2018 2017 2016 Reserve balance at the beginning of the year 338 365 420 Profit / (loss) deferred on new transactions 341 247 257 (Profit) / loss recognized in the income statement (417) (279) (293) (Profit) / loss recognized in other comprehensive income (23) Foreign currency translation (6) 6 4 Reserve balance at the end of the year 255 338 365 Own credit In addition to considering the valuation of the derivative risk component, the valuation of financial liabilities designated at fair value also requires consideration of the funded component and specifically the own credit component of fair value. Own credit risk is reflected in the valuation of UBS’s fair value option liabilities where this component is considered relevant for valuation purposes by UBS’s counterparties and other market participants. However, own credit risk is not reflected in the valuation of UBS’s liabilities that are fully collateralized or for other obligations for which it is established market practice not to include an own credit component. Changes in the fair value of financial liabilities designated at fair value through profit or loss related to own credit are recognized in Other comprehensive income directly within Retained earnings. As the Group does not hedge changes in own credit arising on financial liabilities designated at fair value, presenting own credit within Other comprehensive income does not create or increase an accounting mismatch in the income statement. The unrealized and any realized own credit recognized in Other comprehensive income will not be reclassified to the income statement in future periods. Own credit is estimated using an OCA curve, which incorporates observable market data, including market-observed secondary prices for UBS senior debt, UBS credit default swap (CDS) spreads and senior debt curves of peers. The table below summarizes the effects of own credit adjustments related to financial liabilities designated at fair value. The change in unrealized own credit consists of changes in fair value that are attributable to the change in UBS’s credit spreads, as well as the effect of changes in fair values attributable to factors other than credit spreads, such as redemptions, effects from time decay and changes in interest and other market rates. Realized own credit is recognized when an instrument with an associated unrealized own credit adjustment is repurchased prior to the contractual maturity date. Life-to-date amounts reflect the cumulative unrealized change since initial recognition. In June 2018, UBS AG issued a 30-year senior unsecured bond as part of its ongoing funding requirements. The market- observable secondary prices for this bond have been incorporated into the OCA curve construction, resulting in a widening of the curve at the long end. An own credit gain of USD 253 million was recognized in Other comprehensive income in the second quarter of 2018, mainly reflecting this OCA curve change. →Refer to Note 19 for more information on debt issued designated at fair value Own credit adjustments on financial liabilities designated at fair value For the year ended Included in Other comprehensive income USD million 31.12.18 31.12.17 31.12.16 Recognized during the year: Realized gain / (loss) (3) 22 18 Unrealized gain / (loss) 519 (337) (152) Total gain / (loss), before tax 517 (315) (134) As of USD million 31.12.18 31.12.17 31.12.16 Recognized on the balance sheet as of the end of the year: Unrealized life-to-date gain / (loss) 320 (200) 139 439 Note 24 Fair value measurement (continued) Credit valuation adjustments In order to measure the fair value of OTC derivative instruments, including funded derivative instruments that are classified as Financial assets at fair value not held for trading, credit valuation adjustments (CVA) are necessary to reflect the credit risk of the counterparty inherent in these instruments. This amount represents the estimated fair value of protection required to hedge the counterparty credit risk of such instruments. A CVA is determined for each counterparty, considering all exposures to that counterparty, and is dependent on the expected future value of exposures, default probabilities and recovery rates, applicable collateral or netting arrangements, break clauses and other contractual factors. Funding valuation adjustments Funding valuation adjustments (FVA) reflect the costs and benefits of funding associated with uncollateralized and partially collateralized derivative receivables and payables and are calculated as the valuation effect from moving the discounting of the uncollateralized derivative cash flows from LIBOR to OCA using the CVA framework. An FVA is also applied to collateralized derivative assets in cases where the collateral cannot be sold or repledged. Debit valuation adjustments A debit valuation adjustment (DVA) is estimated to incorporate own credit in the valuation of derivatives, effectively consistent with the CVA framework. A DVA is determined for each counterparty, considering all exposures with that counterparty and taking into account collateral netting agreements, expected future mark-to-market movements and UBS’s credit default spreads. Other valuation adjustments Instruments that are measured as part of a portfolio of combined long and short positions are valued at mid-market levels to ensure consistent valuation of the long- and short- component risks. A liquidity valuation adjustment is then made to the overall net long or short exposure to move the fair value to bid or offer as appropriate, reflecting current levels of market liquidity. The bid-offer spreads used in the calculation of this valuation adjustment are obtained from market transactions and other relevant sources and are updated periodically. Uncertainties associated with the use of model-based valuations are incorporated into the measurement of fair value through the use of model reserves. These reserves reflect the amounts that the Group estimates should be deducted from valuations produced directly by models to incorporate uncertainties in the relevant modeling assumptions, in the model and market inputs used, or in the calibration of the model output to adjust for known model deficiencies. In arriving at these estimates, the Group considers a range of market practices, including how it believes market participants would assess these uncertainties. Model reserves are reassessed periodically in light of data from market transactions, consensus pricing services and other relevant sources. In the second quarter of 2018, a USD 65 million expense was recognized in the income statement reflecting the model valuation adjustment recorded to capture the spread between OCA and LIBOR volatility affecting the valuation of certain structured note issuances. Valuation adjustments on financial instruments As of Life-to-date gain / (loss), USD million 31.12.18 31.12.17 Credit valuation adjustments1 (90) (116) Funding valuation adjustments (85) (51) Debit valuation adjustments 1 2 Other valuation adjustments (716) (733) of which: liquidity (388) (477) of which: model uncertainty (327) (256) 1 Amounts do not include reserves against defaulted counterparties.Financial statements 440 Consolidated financial statements Note 24 Fair value measurement (continued) e) Transfers between Level 1 and Level 2 The amounts provided below reflect transfers between Level 1 and Level 2 for instruments that were held for the entire reporting period. Assets totaling approximately USD 0.6 billion, which were mainly comprised of financial assets held for trading, predominantly investment fund units as well as corporate and municipal bonds, were transferred from Level 2 to Level 1 during 2018, generally resulting from increased levels of trading activity observed within the market. Transfers of financial liabilities from Level 2 to Level 1 during 2018 were not significant. Assets totaling approximately USD 0.7 billion, which were mainly comprised of financial assets held for trading, predominantly investment fund units and equity instruments, were transferred from Level 1 to Level 2 during 2018, generally resulting from diminished levels of trading activity observed within the market. Transfers of financial liabilities from Level 1 to Level 2 during 2018 were not significant. 441 Note 24 Fair value measurement (continued) f) Level 3 instruments: valuation techniques and inputs The table below presents material Level 3 assets and liabilities together with the valuation techniques used to measure fair value, the significant inputs used in a given valuation technique that are considered unobservable and a range of values for those unobservable inputs. Several inputs disclosed in prior periods are not disclosed in the table below because they are not considered significant to the respective valuation technique as of 31 December 2018. The range of values represents the highest- and lowest-level input used in the valuation techniques. Therefore, the range does not reflect the level of uncertainty regarding a particular input, but rather the different underlying characteristics of the relevant assets and liabilities. The ranges will therefore vary from period to period and parameter to parameter based on characteristics of the instruments held at each balance sheet date. Further, the ranges of unobservable inputs may differ across other financial institutions, reflecting the diversity of the products in each firm’s inventory. Valuation techniques and inputs used in the fair value measurement of Level 3 assets and liabilities Fair value Range of inputs Assets Liabilities 31.12.18 31.12.17 USD billion 31.12.18 31.12.17 31.12.18 31.12.17 Valuation technique(s) Significant unobservable input(s)1 low high weighted average2 low high weighted average2 unit1 Financial assets and liabilities at fair value held for trading and Financial assets at fair value not held for trading3 Corporate and municipal bonds 0.7 0.6 0.0 0.0 Relative value to market comparable Bond price equivalent 0 134 89 0 133 92 points Traded loans, loans designated at fair value, loan commitments and guarantees 2.7 1.7 0.0 0.0 Relative value to market comparable Loan price equivalent 0 100 99 50 102 98 points Discounted expected cash flows Credit spread 301 513 23 124 basis points Market comparable and securitization model Discount margin 1 14 2 0 14 2 % Auction rate securities 4 1.7 0.0 Relative value to market comparable Bond price equivalent 79 99 89 points Investment fund units 5 0.6 0.7 0.0 0.0 Relative value to market comparable Net asset value Equity instruments 5 0.6 0.5 0.0 0.1 Relative value to market comparable Price Debt issued designated at fair value6 11.0 11.2 Other financial liabilities designated at fair value6 1.0 2.0 Derivative financial instruments Interest rate contracts 0.4 0.1 0.2 0.2 Option model Volatility of interest rates7 50 81 28 70 basis points Credit derivative contracts 0.5 0.6 0.5 0.6 Discounted expected cash flows Credit spreads 4 545 6 550 basis points Bond price equivalent 3 99 2 102 points Equity / index contracts 0.5 0.7 1.4 1.9 Option model Equity dividend yields 0 12 0 13 % Volatility of equity stocks, equity and other indices 4 93 0 172 % Equity-to-FX correlation (39) 67 (39) 70 % Equity-to-equity correlation (50) 97 (50) 97 % 1 The ranges of significant unobservable inputs are represented in points, percentages and basis points. Points are a percentage of par (e.g., 100 points would be 100% of par). 2 Weighted averages are provided for non-derivative financial instruments and were calculated by weighting inputs based on the fair values of the respective instruments. Weighted averages are not provided for inputs related to derivative contracts as this would not be meaningful. 3 Comparative-period information includes equity instruments that were formerly classified as available for sale under IAS 39 and have been reclassified to Financial assets at fair value not held for trading upon adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 4 Comparative-period information is not disclosed for financial assets and liabilities that were measured at amortized cost prior to the adoption of IFRS 9. Refer to Note 1c for more information. 5 The range of inputs is not disclosed as there is a dispersion of values given the diverse nature of the investments. 6 Valuation techniques, significant unobservable inputs and the respective input ranges for Debt issued designated at fair value and Other financial liabilities designated at fair value, which are primarily comprised of over-the-counter debt instruments, are the same as the equivalent derivative or structured financing instruments presented elsewhere in this table. 7 Effective in 2018, the range of inputs reported for this significant unobservable input is based on normal volatility and the unit has been updated to basis points. Log-normal volatility with the unit as points was reported previously. Prior-period information has been restated to reflect this change in presentation.Financial statements 442 Consolidated financial statements Note 24 Fair value measurement (continued) Significant unobservable inputs in Level 3 positions This section discusses the significant unobservable inputs used in the valuation of Level 3 instruments and assesses the potential effect that a change in each unobservable input in isolation may have on a fair value measurement, including information to facilitate an understanding of factors that give rise to the input ranges shown. Relationships between observable and unobservable inputs have not been included in the summary below. Bond price equivalent Where market prices are not available for a bond, fair value is measured by comparison with observable pricing data from similar instruments. Factors considered when selecting comparable instruments include credit quality, maturity and industry of the issuer. Fair value may be measured either by a direct price comparison or by conversion of an instrument price into a yield (either as an outright yield or as a spread to LIBOR). Bond prices are expressed as points of the nominal, where 100 represents a fair value equal to the nominal value (i.e., par). For corporate and municipal bonds, the range represents the range of prices from reference issuances used in determining fair value. Bonds priced at 0 are distressed to the point that no recovery is expected, while prices significantly in excess of 100 or par relate to inflation-linked or structured issuances that pay a coupon in excess of the market benchmark as of the measurement date. For credit derivatives, the bond price range represents the range of prices used for reference instruments that are typically converted to an equivalent yield or credit spread as part of the valuation process. Loan price equivalent Where market prices are not available for a traded loan, fair value is measured by comparison with observable pricing data for similar instruments. Factors considered when selecting comparable instruments include industry segment, collateral quality, maturity and issuer-specific covenants. Fair value may be measured either by a direct price comparison or by conversion of an instrument price into a yield. The range represents the range of prices derived from reference issuances of a similar credit quality used in measuring fair value for loans classified as Level 3. Loans priced at 0 are distressed to the point that no recovery is expected, while a current price of 100 represents a loan that is expected to be repaid in full. Credit spread Valuation models for many credit derivatives require an input for the credit spread, which is a reflection of the credit quality of the associated referenced underlying. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either US Treasury or LIBOR, and is generally expressed in terms of basis points. An increase / (decrease) in credit spread will increase / (decrease) the value of credit protection offered by CDS and other credit derivative products. The income statement effect from such changes depends on the nature and direction of the positions held. Credit spreads may be negative where the asset is more creditworthy than the benchmark against which the spread is calculated. A wider credit spread represents decreasing creditworthiness. The range represents a diverse set of underlyings, with the lower end of the range representing credits of the highest quality (e.g., approximating the risk of LIBOR) and the upper end of the range representing greater levels of credit risk. Discount margin (DM) The DM spread represents the discount rates used to present value cash flows of an asset to reflect the market return required for uncertainty in the estimated cash flows. DM spreads are a rate or rates applied on top of a floating index (e.g., LIBOR) to discount expected cash flows. Generally, a decrease / (increase) in the DM in isolation would result in a higher / (lower) fair value. The high end of the range relates to securities that are priced low within the market relative to the expected cash flow schedule. This indicates that the market is pricing an increased risk of credit loss into the security that is greater than what is being captured by the expected cash flow generation process. The low ends of the ranges are typical of funding rates on better-quality instruments. Funding spread Structured financing transactions are valued using synthetic funding curves that best represent the assets that are pledged as collateral for the transactions. They are not representative of where UBS can fund itself on an unsecured basis, but provide an estimate of where UBS can source and deploy secured funding with counterparties for a given type of collateral. The funding spreads are expressed in terms of basis points over or under LIBOR, and if funding spreads widen, this increases the effect of discounting. A small proportion of structured debt instruments and non- structured fixed-rate bonds within financial liabilities designated at fair value had an exposure to funding spreads that was longer in duration than the actively traded market. 443 Note 24 Fair value measurement (continued) Volatility Volatility measures the variability of future prices for a particular instrument and is generally expressed as a percentage, where a higher number reflects a more volatile instrument for which future price movements are more likely to occur. The minimum level of volatility is 0% and there is no theoretical maximum. Volatility is a key input into option models, where it is used to derive a probability-based distribution of future prices for the underlying instrument. The effect of volatility on individual positions within the portfolio is driven primarily by whether the option contract is a long or short position. In most cases, the fair value of an option increases as a result of an increase in volatility and is reduced by a decrease in volatility. Generally, volatility used in the measurement of fair value is derived from active- market option prices (referred to as implied volatility). A key feature of implied volatility is the volatility “smile” or “skew,” which represents the effect of pricing options of different option strikes at different implied volatility levels. The volatility of interest rates reflects the range of unobservable volatilities across different currencies and related underlying interest rate levels. Volatilities of low interest rates tend to be much higher than volatilities of high interest rates. In addition, different currencies may have significantly different implied volatilities. The volatility of equity stocks, equity and other indices reflects the range of underlying stock volatilities. Correlation Correlation measures the interrelationship between the movements of two variables. It is expressed as a percentage between –100% and +100%, where +100% represents perfectly correlated variables (meaning a movement of one variable is associated with a movement of the other variable in the same direction) and –100% implies the variables are inversely correlated (meaning a movement of one variable is associated with a movement of the other variable in the opposite direction). The effect of correlation on the measurement of fair value depends on the specific terms of the instruments being valued, reflecting the range of different payoff features within such instruments. Equity-to-FX correlation is important for equity options based on a currency different than the currency of the underlying stock. Equity-to-equity correlation is particularly important for complex options that incorporate, in some manner, different equities in the projected payoff. Equity dividend yields The derivation of a forward price for an individual stock or index is important for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings, and, to a lesser extent, the relevant funding rates applicable to the stock in question. Dividend yields are generally expressed as an annualized percentage of the share price with the lowest limit of 0% representing a stock that is not expected to pay any dividend. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price.Financial statements 444 Consolidated financial statements Note 24 Fair value measurement (continued) g) Level 3 instruments: sensitivity to changes in unobservable input assumptions The table below summarizes those financial assets and liabilities classified as Level 3 for which a change in one or more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, and the estimated effect thereof. The table shown presents the favorable and unfavorable effects for each class of financial assets and liabilities for which the potential change in fair value is considered significant. The sensitivity data presented represent an estimation of valuation uncertainty based on reasonably possible alternative values for Level 3 inputs at the balance sheet date and do not represent the estimated effect of stress scenarios. Typically, these financial assets and liabilities are sensitive to a combination of inputs from Levels 1–3. Although well-defined interdependencies may exist between Levels 1–2 and Level 3 parameters (e.g., between interest rates, which are generally Level 1 or Level 2, and prepayments, which are generally Level 3), these have not been incorporated in the table. Further, direct interrelationships between the Level 3 parameters discussed below are not a significant element of the valuation uncertainty. Sensitivity data are estimated using a number of techniques, including the estimation of price dispersion among different market participants, variation in modeling approaches and reasonably possible changes to assumptions used within the fair value measurement process. The sensitivity ranges are not always symmetrical around the fair values as the inputs used in valuations are not always precisely in the middle of the favorable and unfavorable range. Sensitivity data are determined at a product or parameter level and then aggregated assuming no diversification benefit. The calculated sensitivity is applied to both the outright position and any related Level 3 hedge. The main interdependencies across different Level 3 products to a single unobservable input parameter have been included in the basis of netting exposures within the calculation. Aggregation without allowing for diversification involves the simple summation of individual results with the total sensitivity, therefore representing the effect of all unobservable inputs that, if moved to a reasonably possible favorable or unfavorable level at the same time, would result in a significant change in the valuation. Diversification would incorporate estimated correlations across different sensitivity results and, as such, would result in an overall sensitivity that would be less than the sum of the individual component sensitivities. The Group believes that, while there are diversification benefits within the portfolios representing these sensitivity numbers, they are not significant to this analysis. Sensitivity of fair value measurements to changes in unobservable input assumptions 31.12.18 31.12.17 USD million Favorable changes Unfavorable changes Favorable changes Unfavorable changes Traded loans, loans designated at fair value, loan commitments and guarantees 99 (44) 81 (12) Securities financing transactions 17 (11) 35 (35) Auction rate securities1 81 (81) Asset-backed securities 27 (23) 19 (15) Equity instruments 155 (94) 81 (54) Interest rate derivative contracts, net 8 (39) 13 (27) Credit derivative contracts, net 33 (37) 66 (102) Foreign exchange derivative contracts, net 10 (5) 12 (6) Equity / index derivative contracts, net 213 (225) 195 (198) Other 19 (19) 13 (13) Total 661 (578) 515 (462) 1 Comparative-period information as of 31 December 2017 is not disclosed for financial assets that were measured at amortized cost prior to the adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 445 Note 24 Fair value measurement (continued) h) Level 3 instruments: movements during the period Significant changes in Level 3 instruments The table on the following pages presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis. Level 3 assets and liabilities may be hedged with instruments classified as Level 1 or Level 2 in the fair value hierarchy and, as a result, realized and unrealized gains and losses included in the table may not include the effect of related hedging activity. Furthermore, the realized and unrealized gains and losses presented within the table are not limited solely to those arising from Level 3 inputs, as valuations are generally derived from both observable and unobservable parameters. Assets and liabilities transferred into or out of Level 3 are presented as if those assets or liabilities had been transferred at the beginning of the year. Upon adoption of IFRS 9 on 1 January 2018, certain financial assets and liabilities were newly classified at fair value through profit or loss and were designated as Level 3 in the fair value hierarchy. These financial instruments are presented in the table on the following pages, including the associated effect upon adoption. This includes auction rate securities held in Corporate Center and certain loans held in the Investment Bank. In addition to various financial assets and liabilities being newly classified at fair value through profit or loss, certain equity investments and investment fund units measured at fair value through other comprehensive income were reclassified to Financial assets at fair value not held for trading under the revised IFRS 9 classification and measurement rules, which resulted in an opening balance reclassification between reporting lines in the table on the following pages. Assets transferred into and out of Level 3 totaled USD 1.4 billion and USD 0.4 billion, respectively. Transfers into Level 3 were primarily comprised of corporate and municipal bonds, reflecting decreased observability of the respective bond price equivalent. Transfers out of Level 3 were primarily comprised of equity / index contracts resulting from increased observability of the respective equity volatility inputs. Liabilities transferred into and out of Level 3 totaled USD 2.5 billion and USD 4.8 billion, respectively. Transfers into Level 3 were primarily comprised of rates-linked and equity-linked issued debt instruments, reflecting decreased observability of the respective rates volatility and equity volatility inputs. Transfers out of Level 3 were primarily comprised of rates-linked fixed-rate and equity-linked issued debt instruments resulting from changes in the observability of the OCA curve and equity volatility inputs used to determine the fair value of these instruments. In the second quarter of 2018, USD 2.9 billion of UBS-issued structured notes, which are reported within Debt issued designated at fair value on the balance sheet, were transferred from Level 3 to Level 2 in the fair value hierarchy, reflecting increased observability of the OCA curve used to value these notes.Financial statements 446 Consolidated financial statements Note 24 Fair value measurement (continued) Movements of Level 3 instruments Total gains / (losses) included in comprehensive income USD billion Balance as of 31 December 2016 Net gains / (losses) included in income1 of which: related to Level 3 instruments held at the end of the reporting period Purchases Sales Issuances Settlements Transfers into Level 3 Transfers out of Level 3 Foreign currency translation Financial assets at fair value held for trading 1.7 (0.1) 0.0 0.7 (3.9) 2.7 0.0 1.0 (0.2) 0.1 of which: Corporate and municipal bonds 0.6 0.1 0.1 0.5 (0.7) 0.0 0.0 0.1 0.0 0.0 Loans 0.7 (0.1) (0.1) 0.1 (2.8) 2.7 0.0 0.0 (0.1) 0.0 Investment fund units 0.1 (0.1) 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 Other 0.3 0.0 0.0 0.2 (0.3) 0.0 0.0 0.2 0.0 0.0 Financial assets at fair value not held for trading 2.0 0.2 0.2 0.0 0.0 0.4 (1.3) 0.1 (0.1) 0.1 of which: Loans 1.2 0.2 0.2 0.0 0.0 0.1 (0.7) 0.0 (0.1) 0.0 Auction rate securities 3 Equity instruments 4 Other 0.9 (0.1) (0.1) 0.0 0.0 0.3 (0.6) 0.1 0.0 0.0 Financial assets measured at fair value through other comprehensive income 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 Derivative financial instruments – assets 2.5 (0.3) (0.4) 0.0 0.0 1.0 (1.2) 0.4 (0.9) 0.1 of which: Interest rate contracts 0.3 0.0 (0.1) 0.0 0.0 0.0 (0.1) 0.1 (0.1) 0.0 Credit derivative contracts 1.3 (0.2) (0.2) 0.0 0.0 0.0 (0.3) 0.0 (0.4) 0.1 Equity / index contracts 0.7 (0.1) (0.1) 0.0 0.0 0.9 (0.7) 0.3 (0.4) 0.0 Other 0.2 0.0 0.0 0.0 0.0 0.0 (0.1) 0.0 0.0 0.0 Derivative financial instruments – liabilities 3.9 0.3 0.1 0.0 0.0 0.7 (1.4) 0.5 (1.4) 0.2 of which: Credit derivative contracts 1.5 0.0 (0.2) 0.0 0.0 0.1 (0.4) 0.2 (0.8) 0.1 Equity / index contracts 1.8 0.3 0.3 0.0 0.0 0.6 (0.6) 0.2 (0.5) 0.1 Other 0.6 0.0 0.0 0.0 0.0 0.0 (0.4) 0.1 (0.1) 0.1 Debt issued designated at fair value 9.5 1.4 0.9 0.0 0.0 5.3 (5.0) 1.2 (1.7) 0.4 Other financial liabilities designated at fair value 1.3 0.0 0.0 0.0 0.0 1.5 (0.8) 0.1 (0.2) 0.1 1 Net gains / (losses) included in comprehensive income are comprised of Net interest income, Other net income from fair value changes on financial instruments and Other income. 2 Total Level 3 assets as of 31 December 2018 were USD 7.8 billion (31 December 2017: USD 5.6 billion). Total Level 3 liabilities as of 31 December 2018 were USD 14.3 billion (31 December 2017: USD 16.2 billion). 3 Comparative-period information is not disclosed for items that were measured at amortized cost prior to the adoption of IFRS 9 on 1 January 2018. Refer to Note 1c for more information. 4 Upon adoption of IFRS 9 on 1 January 2018, equity instruments that were formerly classified as available for sale under IAS 39 were reclassified to Financial assets at fair value not held for trading. Refer to Note 1c for more information. 447 Note 24 Fair value measurement (continued) Total gains / (losses) included in comprehensive income Balance as of 31 December 2017 Reclassifi- cations and remeasure- ments upon adoption of IFRS 9 Balance as of 1 January 2018 Net gains / (losses) included in income1 of which: related to Level 3 instruments held at the end of the reporting period Purchases Sales Issuances Settlements Transfers into Level 3 Transfers out of Level 3 Foreign currency translation Balance as of 31 December 20182 2.0 0.4 2.4 (0.2) (0.2) 2.1 (7.1) 4.2 0.0 0.7 (0.2) 0.0 2.0 0.6 0.6 0.0 0.0 0.6 (0.9) 0.0 0.0 0.5 0.0 0.0 0.7 0.5 0.4 0.9 0.1 0.0 0.9 (5.6) 4.2 0.0 0.1 0.0 0.0 0.7 0.6 0.6 (0.1) (0.1) 0.2 (0.3) 0.0 0.0 0.1 (0.1) 0.0 0.4 0.4 0.4 (0.1) (0.1) 0.4 (0.4) 0.0 0.0 0.0 0.0 0.0 0.2 1.5 3.0 4.4 0.0 0.0 1.7 (1.9) 0.0 0.0 0.1 (0.1) 0.1 4.4 0.8 0.6 1.4 (0.2) (0.2) 1.5 (1.0) 0.0 0.0 0.1 0.0 0.0 1.8 1.9 1.9 0.1 0.1 0.0 (0.4) 0.0 0.0 0.0 0.0 0.1 1.7 0.4 0.4 0.1 0.1 0.2 (0.2) 0.0 0.0 0.0 0.0 0.0 0.5 0.7 0.1 0.8 0.0 0.0 0.0 (0.4) 0.0 0.0 0.0 (0.1) 0.0 0.5 0.5 (0.5) 1.6 1.6 0.0 0.0 0.0 0.0 1.0 (1.5) 0.5 (0.1) 0.0 1.4 0.1 0.1 0.1 0.1 0.0 0.0 0.0 (0.1) 0.3 0.0 0.0 0.4 0.6 0.6 0.0 0.0 0.0 0.0 0.3 (0.4) 0.0 0.0 0.0 0.5 0.7 0.7 0.0 0.0 0.0 0.0 0.8 (1.0) 0.1 (0.1) 0.0 0.5 0.2 0.2 (0.1) (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.9 0.0 2.9 (0.3) (0.2) 0.0 0.0 1.3 (1.5) 0.3 (0.5) 0.0 2.2 0.6 0.6 0.0 0.0 0.0 0.0 0.1 (0.2) 0.1 0.0 0.0 0.5 2.0 2.0 (0.3) (0.2) 0.0 0.0 1.2 (1.2) 0.3 (0.5) 0.0 1.4 0.3 0.0 0.3 0.0 0.1 0.0 0.0 0.0 (0.1) 0.0 0.0 0.0 0.3 11.2 11.2 0.5 0.0 0.0 0.0 5.8 (4.3) 2.2 (4.3) (0.2) 11.0 2.0 2.0 0.0 0.0 0.0 0.0 1.1 (2.0) 0.0 0.0 0.0 1.0 Financial statements 448 Consolidated financial statements Note 24 Fair value measurement (continued) i) Maximum exposure to credit risk for financial instruments measured at fair value The tables below provide the Group’s maximum exposure to credit risk for financial instruments measured at fair value and the respective collateral and other credit enhancements mitigating credit risk for these classes of financial instruments. The maximum exposure to credit risk includes the carrying amounts of financial instruments recognized on the balance sheet subject to credit risk and the notional amounts for off- balance sheet arrangements. Where information is available, collateral is presented at fair value. For other collateral, such as real estate, a reasonable alternative value is used. Credit enhancements, such as credit derivative contracts and guarantees, are included at their notional amounts. Both are capped at the maximum exposure to credit risk for which they serve as security. The “Risk management and control” section of this report describes management’s view of credit risk and the related exposures, which can differ in certain respects from the requirements of IFRS. Maximum exposure to credit risk 31.12.18 Collateral Credit enhancements USD billion Maximum exposure to credit risk Cash collateral received Collateral- ized by securities Secured by real estate Other collateral1 Netting Credit derivative contracts Guarantees Exposure to credit risk after collateral and credit enhancements Financial assets measured at fair value on the balance sheet Financial assets at fair value held for trading – debt instruments2,3 21.9 21.9 Derivative financial instruments4 126.2 4.1 110.8 11.4 Brokerage receivables 16.8 0.0 16.5 0.3 Financial assets at fair value not held for trading – debt instruments6 59.8 16.7 0.1 43.1 Total financial assets measured at fair value 224.8 0.0 37.3 0.0 0.1 110.8 0.0 0.0 76.6 Guarantees7 1.6 0.2 1.4 Loan commitments7 3.5 2.4 0.2 0.1 0.7 Forward starting transactions, reverse repurchase and securities borrowing agreements 8.1 8.1 0.0 Total maximum exposure to credit risk not reflected on the balance sheet 13.3 0.0 8.1 0.0 2.4 0.0 0.2 0.4 2.1 31.12.17 Collateral Credit enhancements USD billion Maximum exposure to credit risk Cash collateral received Collateral- ized by securities Secured by real estate Other collateral1 Netting Credit derivative contracts Guarantees Exposure to credit risk after collateral and credit enhancements Financial assets measured at fair value on the balance sheet Financial assets at fair value held for trading – debt instruments2,5 26.3 26.3 Derivative financial instruments4 121.3 4.1 102.8 14.4 Financial assets at fair value not held for trading – debt instruments3,6 59.9 10.1 49.8 Total financial assets measured at fair value 207.4 0.0 14.1 0.0 0.0 102.8 0.0 0.0 90.5 Guarantees7 1.7 1.7 Loan commitments7 8.0 3.9 1.0 0.2 2.8 Total maximum exposure to credit risk not reflected on the balance sheet 9.6 0.0 0.0 0.0 3.9 0.0 1.0 0.2 4.5 1 Includes but is not limited to life insurance contracts, inventory, accounts receivable, mortgage loans, patents and copyrights. 2 These positions are generally managed under the market risk framework. For the purpose of this disclosure, collateral and credit enhancements were not considered. 3 Does not include investment fund units. 4 The amount shown in the “Netting” column represents the netting potential not recognized on the balance sheet. Refer to Note 25 for more information. 5 Does not include debt instruments held for unit-linked investment contracts and investment fund units. 6 Financial assets at fair value not held for trading collateralized by securities consisted of structured loans and reverse repurchase and securities borrowing agreements. 7 The amount shown in the “Guarantees” column largely relates to sub- participations. Refer to Note 34 for more information. 449 Note 24 Fair value measurement (continued) j) Financial instruments not measured at fair value The table below provides the estimated fair values of financial instruments not measured at fair value. Financial instruments not measured at fair value 31.12.18 31.12.17 Carrying value Fair value Carrying value Fair value USD billion Total Total Level 1 Level 2 Level 3 Total Total Level 1 Level 2 Level 3 Assets1 Cash and balances at central banks 108.4 108.4 108.4 0.0 0.0 90.0 90.0 90.0 0.0 0.0 Loans and advances to banks 16.9 16.9 16.3 0.6 0.0 14.1 14.1 13.4 0.7 0.0 Receivables from securities financing transactions 95.3 95.4 0.0 91.9 3.4 92.0 92.0 0.0 89.4 2.5 Cash collateral receivables on derivative instruments 23.6 23.6 0.0 23.6 0.0 24.0 24.0 0.0 24.0 0.0 Loans and advances to customers 320.4 320.9 0.0 171.2 149.7 326.7 328.2 0.0 181.2 147.0 Other financial assets measured at amortized cost2 22.6 22.4 8.4 10.7 3.3 37.8 37.7 6.5 30.2 1.0 Liabilities Amounts due to banks 11.0 11.0 8.9 1.9 0.2 7.7 7.7 6.6 1.1 0.0 Payables from securities financing transactions 10.3 10.3 0.0 10.3 0.0 17.5 17.5 0.0 17.5 0.0 Cash collateral payables on derivative instruments 28.9 28.9 0.0 28.9 0.0 31.0 31.0 0.0 31.0 0.0 Customer deposits 419.8 419.9 0.0 419.8 0.1 419.6 419.6 0.0 419.6 0.0 Debt issued measured at amortized cost 132.3 135.0 0.0 133.6 1.4 143.2 147.2 0.0 142.7 4.5 Other financial liabilities measured at amortized cost2 6.9 6.9 0.0 6.8 0.1 37.2 37.2 0.0 37.2 0.0 1 As of 31 December 2018, USD 0 billion of Loans and advances to banks, USD 1 billion of Receivables from securities financing transactions, USD 139 billion of Loans and advances to customers and USD 15 billion of Other financial assets measured at amortized cost are expected to be recovered or settled after 12 months. As of 31 December 2017, USD 0 billion of Loans and advances to banks, USD 2 billion of Receivables from securities financing transactions, USD 137 billion of Loans and advances to customers and USD 7 billion of Other financial assets measured at amortized cost were expected to be recovered or settled after 12 months. 2 Upon adoption of IFRS 9 on 1 January 2018, prime brokerage receivables and payables were reclassified from amortized cost to fair value through profit or loss. Refer to Note 1c for more information. The fair values included in the table above were calculated for disclosure purposes only. The valuation techniques and assumptions described below relate only to the fair value of UBS’s financial instruments not measured at fair value. Other institutions may use different methods and assumptions for their fair value estimation, and therefore such fair value disclosures cannot necessarily be compared from one financial institution to another. The following principles were applied when determining fair value estimates for financial instruments not measured at fair value: – For financial instruments with remaining maturities greater than three months, the fair value was determined from quoted market prices, if available. – Where quoted market prices were not available, the fair values were estimated by discounting contractual cash flows using current market interest rates or appropriate yield curves for instruments with similar credit risk and maturity. These estimates generally include adjustments for counterparty credit risk or UBS’s own credit. – For short-term financial instruments with remaining maturities of three months or less, the carrying amount, which is net of credit loss allowances, is generally considered a reasonable estimate of fair value. The following financial instruments not measured at fair value had remaining maturities of three months or less as of 31 December 2018: 100% of cash and balances at central banks, 96% of loans and advances to banks, 89% of receivables from securities financing transactions, 100% of cash collateral receivables on derivative instruments, 48% of loans and advances to customers, 26% of other financial assets measured at amortized cost, 81% of amounts due to banks, 97% of payables from securities financing transactions, 100% of cash collateral payables on derivative instruments, 97% of customer deposits, 7% of debt issued measured at amortized cost and 100% of other financial liabilities measured at amortized cost. – The fair value estimates for repurchase and reverse repurchase agreements with variable and fixed interest rates, for all maturities, include the valuation of the interest rate component of these instruments. Credit and debit valuation adjustments have not been included in the valuation given the short-term nature of these instruments. Financial statements 450 Consolidated financial statements Note 25 Offsetting financial assets and financial liabilities UBS enters into netting agreements with counterparties to manage the credit risks associated primarily with repurchase and reverse repurchase transactions, securities borrowing and lending, over-the-counter derivatives and exchange-traded derivatives. These netting agreements and similar arrangements generally enable the counterparties to set off liabilities against available assets received in the ordinary course of business and / or in the event that the counterparty to the transaction is unable to fulfill its contractual obligations. The right of setoff is a legal right to settle or otherwise eliminate all or a portion of an amount due by applying an amount receivable from the same counterparty against it, thus reducing credit exposure. The table below provides a summary of financial assets subject to offsetting, enforceable master netting arrangements and similar agreements, as well as financial collateral received to mitigate credit exposures for these financial assets. The gross financial assets of the Group that are subject to offsetting, enforceable netting arrangements and similar agreements are reconciled to the net amounts presented within the associated balance sheet line, after giving effect to financial liabilities with the same counterparties that have been offset on the balance sheet and other financial assets not subject to an enforceable netting arrangement or similar agreement. Further, related amounts for financial liabilities and collateral received that are not offset on the balance sheet are shown to arrive at financial assets after consideration of netting potential. The Group engages in a variety of counterparty credit mitigation strategies in addition to netting and collateral arrangements. Therefore, the net amounts presented in the tables on this and on the next page do not purport to represent their actual credit exposure. Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements Assets subject to netting arrangements Netting recognized on the balance sheet Netting potential not recognized on the balance sheet4 Assets not subject to netting arrangements5 Total assets As of 31.12.18, USD billion Gross assets before netting Netting with gross liabilities3 Net assets recognized on the balance sheet Financial liabilities Collateral received Assets after consideration of netting potential Assets recognized on the balance sheet Total assets after consideration of netting potential Total assets recognized on the balance sheet Receivables from securities financing transactions1 88.5 (13.0) 75.5 (4.4) (71.2) 0.0 19.8 19.8 95.3 Derivative financial instruments 124.3 (4.3) 120.0 (90.8) (24.0) 5.2 6.2 11.4 126.2 Cash collateral receivables on derivative instruments2 24.6 (2.3) 22.3 (13.5) (1.0) 7.8 1.3 9.1 23.6 Financial assets at fair value not held for trading1 85.4 (77.5) 7.8 (1.4) (6.4) 0.0 74.9 74.9 82.7 of which: reverse repurchase agreements 85.3 (77.5) 7.8 (1.4) (6.4) 0.0 2.1 2.1 9.9 Total assets 322.9 (97.2) 225.7 (110.0) (102.6) 13.0 102.2 115.2 327.9 As of 31.12.17, USD billion Receivables from securities financing transactions1 147.9 (78.8) 69.1 (7.7) (61.4) 0.0 22.8 22.8 92.0 Derivative financial instruments 117.2 (2.1) 115.1 (85.6) (21.3) 8.2 6.2 14.4 121.3 Cash collateral receivables on derivative instruments2 22.2 (1.1) 21.1 (12.0) (0.8) 8.3 2.9 11.2 24.0 Financial assets at fair value not held for trading1 0.4 0.0 0.4 0.0 (0.2) 0.2 60.0 60.3 60.5 Total assets 287.8 (82.0) 205.8 (105.4) (83.7) 16.8 91.9 108.7 297.7 1 Certain reverse repurchase agreements were reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 as of 1 January 2018. This has resulted in an increase in amounts presented on the line “Financial assets at fair value not held for trading” and a decrease in amounts presented on the line “Receivables from securities financing transactions.” Refer to Note 1c for more information. 2 The net amount of Cash collateral receivables on derivative instruments recognized on the balance sheet includes certain OTC derivatives that are net settled on a daily basis either legally or in substance under IAS 32 principles and exchange-traded derivatives that are economically settled on a daily basis. 3 The logic of the table results in amounts presented in the “Netting with gross liabilities” column corresponding directly to the amounts presented in the “Netting with gross assets” column in the liabilities table presented on the following page. Netting in this column for reverse repurchase agreements presented within the lines “Receivables from securities financing transactions” and “Financial assets at fair value not held for trading” taken together corresponds to the amounts presented for repurchase agreements in the “Payables from securities financing transactions” and “Other financial liabilities designated at fair value” lines in the liabilities table presented on the following page. 4 For the purpose of this disclosure, the amounts of financial instruments and cash collateral presented have been capped by the relevant netting agreement so as not to exceed the net amount of financial assets presented on the balance sheet; i.e., over-collateralization, where it exists, is not reflected in the table. 5 Includes assets not subject to enforceable netting arrangements and other out-of-scope items. 451 Note 25 Offsetting financial assets and financial liabilities (continued) The table below provides a summary of financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements, as well as financial collateral pledged to mitigate credit exposures for these financial liabilities. The gross financial liabilities of UBS that are subject to offsetting, enforceable netting arrangements and similar agreements are reconciled to the net amounts presented within the associated balance sheet line, after giving effect to financial assets with the same counterparties that have been offset on the balance sheet and other financial liabilities not subject to an enforceable netting arrangement or similar agreement. Further, related amounts for financial assets and collateral pledged that are not offset on the balance sheet are shown to arrive at financial liabilities after consideration of netting potential. Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements Liabilities subject to netting arrangements Netting recognized on the balance sheet Netting potential not recognized on the balance sheet4 Liabilities not subject to netting arrangements5 Total liabilities As of 31.12.18, USD billion Gross liabilities before netting Netting with gross assets3 Net liabilities recognized on the balance sheet Financial assets Collateral pledged Liabilities after consideration of netting potential Liabilities recognized on the balance sheet Total liabilities after consideration of netting potential Total liabilities recognized on the balance sheet Payables from securities financing transactions1 20.6 (12.4) 8.3 (3.6) (4.7) 0.0 2.0 2.0 10.3 Derivative financial instruments 124.1 (4.3) 119.8 (90.8) (20.9) 8.1 5.9 14.0 125.7 Cash collateral payables on derivative instruments2 29.0 (2.3) 26.7 (14.2) (1.2) 11.3 2.2 13.5 28.9 Other financial liabilities designated at fair value1 86.6 (78.2) 8.4 (2.1) (5.9) 0.4 25.2 25.6 33.6 of which: repurchase agreements 86.1 (78.2) 7.9 (2.1) (5.9) 0.0 1.6 1.6 9.5 Total liabilities 260.4 (97.2) 163.2 (110.7) (32.6) 19.8 35.4 55.2 198.5 As of 31.12.17, USD billion Payables from securities financing transactions1 92.5 (78.8) 13.7 (7.7) (6.0) 0.0 3.8 3.8 17.5 Derivative financial instruments 114.3 (2.1) 112.2 (85.6) (15.4) 11.2 6.9 18.1 119.1 Cash collateral payables on derivative instruments2 30.2 (1.1) 29.2 (16.7) (1.2) 11.3 1.9 13.1 31.0 Other financial liabilities designated at fair value1 1.9 0.0 1.9 0.0 (0.1) 1.8 14.7 16.5 16.6 Total liabilities 239.0 (82.0) 157.0 (110.0) (22.7) 24.3 27.3 51.6 184.3 1 Certain repurchase agreements were reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 as of 1 January 2018. This has resulted in an increase in amounts presented on the line “Other financial liabilities designated at fair value” and a decrease in amounts presented on the line “Payables from securities financing transactions.” Refer to Note 1c for more information. 2 The net amount of Cash collateral payables on derivative instruments recognized on the balance sheet includes certain exchange-traded derivatives that are net settled on a daily basis either legally or in substance under IAS 32 principles and exchange-traded derivatives that are economically settled on a daily basis. 3 The logic of the table results in amounts presented in the “Netting with gross assets” column corresponding to the amounts presented in the “Netting with gross liabilities” column in the assets table presented on the previous page. Netting in this column for repurchase agreements presented within the lines “Payables from securities financing transactions” and “Other financial liabilities designated at fair value” taken together corresponds to the amounts presented for reverse repurchase agreements in the “Receivables from securities financing transactions” and “Financial assets at fair value not held for trading” lines in the assets table presented on the previous page. 4 For the purpose of this disclosure, the amounts of financial instruments and cash collateral presented have been capped by the relevant netting agreement so as not to exceed the net amount of financial liabilities presented on the balance sheet; i.e., over-collateralization, where it exists, is not reflected in the table. 5 Includes liabilities not subject to enforceable netting arrangements and other out-of-scope items. Financial statements 452 Consolidated financial statements Note 26 Restricted and transferred financial assets This Note provides information on restricted financial assets (Note 26a), transfers of financial assets (Note 26b and 26c) and financial assets that are received as collateral with the right to resell or repledge these assets (Note 26d). a) Restricted financial assets Restricted financial assets consist of assets pledged as collateral against an existing liability or contingent liability and other assets that are otherwise explicitly restricted such that they cannot be used to secure funding. Financial assets are mainly pledged as collateral in securities lending transactions, in repurchase transactions, against loans from Swiss mortgage institutions and in connection with the issuance of covered bonds. The Group generally enters into repurchase and securities lending arrangements under standard market agreements. For securities lending, the cash received as collateral may be more or less than the fair value of the securities loaned, depending on the nature of the transaction. For repurchase agreements, the fair value of the collateral sold under an agreement to repurchase is generally in excess of the cash borrowed. Pledged mortgage loans serve as collateral for existing liabilities against Swiss central mortgage institutions and for existing covered bond issuances of USD 12,516 million as of 31 December 2018 (31 December 2017: USD 12,779 million). Other restricted financial assets include assets protected under client asset segregation rules, assets held by the Group’s insurance entities to back related liabilities to the policy holders, assets held in certain jurisdictions to comply with explicit minimum local asset maintenance requirements and assets held in consolidated bankruptcy remote entities such as certain investment funds and other structured entities. The carrying value of the liabilities associated with these other restricted financial assets is generally equal to the carrying value of the assets, with the exception of assets held to comply with local asset maintenance requirements, for which the associated liabilities are greater. Restricted financial assets USD million 31.12.18 31.12.17 Financial assets pledged as collateral Financial assets at fair value held for trading 43,292 47,414 of which: assets pledged as collateral that may be sold or repledged by counterparties 32,121 36,277 Loans and advances to customers1 18,804 18,087 Financial assets at fair value not held for trading 0 174 Total financial assets pledged as collateral2 62,096 65,676 Other restricted financial assets Loans and advances to banks 5,140 3,364 Financial assets at fair value held for trading3 3,589 12,591 Cash collateral receivables on derivative instruments 3,205 3,921 Loans and advances to customers 935 1,289 Financial assets at fair value not held for trading3 23,514 2,669 Financial assets measured at fair value through other comprehensive income 171 253 Other 203 97 Total other restricted financial assets 36,758 24,183 Total financial assets pledged and other restricted financial assets 98,854 89,859 1 All related to mortgage loans that serve as collateral for existing liabilities against Swiss central mortgage institutions and for existing covered bond issuances. Of these pledged mortgage loans, approximately USD 3.2 billion for 31 December 2018 (31 December 2017: approximately USD 2.2 billion) could be withdrawn or used for future liabilities or covered bond issuances without breaching existing collateral requirements. 2 Does not include assets placed with central banks related to undrawn credit lines and for payment, clearing and settlement purposes (31 December 2018: USD 0.3 billion; 31 December 2017: USD 2.6 billion). 3 Financial assets for unit-linked investment contracts were reclassified from Financial assets at fair value held for trading to Financial assets at fair value not held for trading upon adoption of IFRS 9 as of 1 January 2018. Refer to Note 1c for more information. In addition to restrictions on financial assets, UBS Group AG and its subsidiaries are, in certain cases, subject to regulatory requirements that affect the transfer of dividends and capital within the Group. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis, such as the Federal Reserve Board’s Comprehensive Capital Analysis and Review (CCAR) process, which affects UBS Americas Holding LLC, and may limit the ability of the intermediate holding company sub-group to make distributions of capital based on the results of those tests. In June 2018, the Federal Reserve Board released the 2018 CCAR results and did not object to UBS Americas Holding LLC’s capital plan. 453 Note 26 Restricted and transferred financial assets (continued) Certain regulated subsidiaries are required to maintain capital and / or liquidity to comply with local regulations and may be subject to prudential limitations by regulators that limit the amount of funds that they can distribute or otherwise transfer. Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities of subsidiaries. Non-regulated subsidiaries are generally not subject to such requirements and transfer restrictions. However, restrictions can also be the result of different legal, regulatory, contractual, entity- or country-specific arrangements and / or requirements. →Refer to “Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups” in the “Significant regulated subsidiary and sub-group information” section of this report for financial information on significant regulated subsidiaries of the Group b) Transferred financial assets that are not derecognized in their entirety The table below presents information for financial assets that have been transferred but are subject to continued recognition in full, as well as recognized liabilities associated with those transferred assets. Transferred financial assets subject to continued recognition in full USD million 31.12.18 31.12.17 Carrying value of transferred assets Carrying value of associated liabilities recognized on balance sheet Carrying value of transferred assets Carrying value of associated liabilities recognized on balance sheet Financial assets at fair value held for trading that may be sold or repledged by counterparties 32,121 4,674 36,277 13,277 relating to securities lending and repurchase agreements in exchange for cash received 4,726 4,674 13,485 13,277 relating to securities lending agreements in exchange for securities received 26,234 0 21,684 0 relating to other financial asset transfers 1,161 0 1,109 0 Financial assets at fair value not held for trading that may be sold or repledged by counterparties 0 0 174 173 Total financial assets transferred 32,121 4,674 36,451 13,450 Transactions in which financial assets are transferred, but continue to be recognized in their entirety on UBS’s balance sheet include securities lending and repurchase agreements as well as other financial asset transfers. Repurchase and securities lending arrangements are, for the most part, conducted under standard market agreements and are undertaken with counterparties subject to UBS’s normal credit risk control processes. →Refer to Note 1a item 3e for more information on repurchase and securities lending agreements As of 31 December 2018, approximately 14% of the transferred financial assets were assets held for trading transferred in exchange for cash, in which case the associated recognized liability represents the amount to be repaid to counterparties. For securities lending and repurchase agreements, a haircut between 0% and 15% is generally applied to the transferred assets, which results in associated liabilities having a carrying value below the carrying value of the transferred assets. The counterparties to the associated liabilities presented in the table above have full recourse to UBS. In securities lending arrangements entered into in exchange for the receipt of other securities as collateral, neither the securities received nor the obligation to return them are recognized on UBS’s balance sheet, as the risks and rewards of ownership are not transferred to UBS. In cases where such financial assets received are subsequently sold or repledged in another transaction, this is not considered to be a transfer of financial assets. Other financial asset transfers primarily include securities transferred to collateralize derivative transactions, for which the carrying value of associated liabilities is not provided in the table above because those replacement values are managed on a portfolio basis across counterparties and product types, and therefore there is no direct relationship between the specific collateral pledged and the associated liability. Transferred financial assets that are not subject to derecognition in full, but remain on the balance sheet to the extent of the Group’s continuing involvement, were not material as of 31 December 2018 and as of 31 December 2017. Financial statements 454 Consolidated financial statements Note 26 Restricted and transferred financial assets (continued) c) Transferred financial assets that are derecognized in their entirety with continuing involvement Continuing involvement in a transferred and fully derecognized financial asset may result from contractual provisions in the transfer agreement or from a separate agreement with the counterparty or a third party entered into in connection with the transfer. Purchased and retained interests in securitization vehicles In cases where UBS has transferred assets into a securitization vehicle and retained or purchased interests therein, UBS has a continuing involvement in those transferred assets. As of 31 December 2018, the majority of the retained continuing involvement related to securitization positions held as financial assets at fair value held for trading, primarily collateralized debt obligations, US commercial mortgage-backed securities and residential mortgage-backed securities. The fair value and carrying amount of UBS’s continuing involvement related to these purchased and retained interests was USD 6 million as of 31 December 2018, and UBS recognized gains of USD 3 million in 2018 related to these positions. As of 31 December 2018, life-to-date losses of USD 1,198 million were recorded related to the positions held as of 31 December 2018. As of 31 December 2017, the fair value and carrying amount of UBS’s continuing involvement related to purchased and retained interests in securitization vehicles was USD 8 million, and UBS recognized gains of USD 4 million in 2017 related to these positions. As of 31 December 2017, life-to-date losses of USD 1,200 million were recorded related to the positions held as of 31 December 2017. The maximum exposure to loss related to purchased and retained interests in securitization structures was USD 10 million as of 31 December 2018, compared with USD 15 million as of 31 December 2017. Undiscounted cash outflows of USD 4 million may be payable to the transferee in future periods as a consequence of holding the purchased and retained interests. The earliest period in which payment may be required is less than one month. d) Off-balance sheet assets received The table below presents assets received from third parties that can be sold or repledged, that are not recognized on the balance sheet, but that are held as collateral, including amounts that have been sold or repledged. Off-balance sheet assets received USD million 31.12.18 31.12.17 Fair value of assets received that can be sold or repledged 483,688 481,265 received as collateral under reverse repurchase, securities borrowing and lending arrangements, derivative and other transactions1 473,302 474,420 received in unsecured borrowings 10,385 6,845 Thereof sold or repledged2 356,745 346,243 in connection with financing activities 315,402 300,880 to satisfy commitments under short sale transactions 28,943 31,251 in connection with derivative and other transactions1 12,400 14,112 1 Includes securities received as initial margin from its clients that UBS is required to remit to central counterparties, brokers and deposit banks through its exchange-traded derivative clearing and execution services. 2 Does not include off-balance sheet securities (31 December 2018: USD 24.5 billion; 31 December 2017: USD 28.8 billion) placed with central banks related to undrawn credit lines and for payment, clearing and settlement purposes for which there are no associated liabilities or contingent liabilities. 455 Note 27 Maturity analysis of financial liabilities The contractual maturities for non-derivative and non-trading financial liabilities as of 31 December 2018 are based on the earliest date on which UBS could be contractually required to pay. The total amounts that contractually mature in each time band are also shown for 31 December 2017. Derivative positions and trading liabilities, predominantly made up of short sale transactions, are assigned to the column Due within 1 month, as this provides a conservative reflection of the nature of these trading activities. The contractual maturities may extend over significantly longer periods. Maturity analysis of financial liabilities 31.12.18 USD billion Due within 1 month Due between 1 and 3 months Due between 3 and 12 months Due between 1 and 5 years Due after 5 years Total Financial liabilities recognized on balance sheet1 Amounts due to banks 7.9 1.0 1.6 0.5 0.0 11.0 Payables from securities financing transactions 9.5 0.6 0.3 0.0 10.4 Cash collateral payables on derivative instruments 28.9 28.9 Customer deposits 395.8 13.1 7.0 4.4 0.0 420.4 Debt issued measured at amortized cost2 4.6 6.3 39.9 57.6 37.8 146.2 Other financial liabilities measured at amortized cost 5.6 5.6 Total financial liabilities measured at amortized cost 452.4 21.0 48.8 62.6 37.8 622.6 Financial liabilities at fair value held for trading3,4 28.9 28.9 Derivative financial instruments3 125.7 125.7 Brokerage payables designated at fair value 38.4 38.4 Debt issued designated at fair value5 15.7 18.1 10.2 7.4 8.0 59.4 Other financial liabilities designated at fair value 30.0 0.4 1.1 1.2 1.0 33.7 Total financial liabilities measured at fair value through profit or loss 238.8 18.5 11.3 8.6 9.0 286.2 Total 691.2 39.5 60.1 71.2 46.8 908.8 Guarantees, commitments and forward starting transactions6 Loan commitments7 34.1 0.3 0.3 0.0 34.7 Guarantees7 19.8 19.8 Forward starting transactions Reverse repurchase agreements7 9.0 0.0 9.0 Securities borrowing agreements 0.0 0.0 Total 62.9 0.3 0.4 0.0 0.0 63.6 31.12.17 Financial liabilities recognized on balance sheet1 Amounts due to banks 6.3 0.4 1.0 0.1 0.0 7.7 Payables from securities financing transactions 13.9 3.1 0.6 0.0 0.0 17.7 Cash collateral payables on derivative instruments 31.0 31.0 Customer deposits 403.2 10.5 5.3 0.7 0.1 419.7 Debt issued measured at amortized cost2 4.2 15.4 46.4 52.1 39.1 157.1 Other financial liabilities measured at amortized cost 36.0 36.0 Total financial liabilities measured at amortized cost 494.6 29.4 53.3 52.9 39.2 669.3 Financial liabilities at fair value held for trading3,4 31.3 31.3 Derivative financial instruments3 119.1 119.1 Debt issued designated at fair value5 18.3 10.0 10.3 7.7 6.2 52.6 Other financial liabilities designated at fair value 12.4 0.6 1.5 1.4 1.0 17.0 Total financial liabilities measured at fair value through profit or loss 181.1 10.6 11.9 9.1 7.3 219.9 Total 675.7 40.0 65.1 61.9 46.4 889.2 Guarantees, commitments and forward starting transactions6 Loan commitments7 39.2 0.2 0.2 0.1 39.7 Guarantees7 19.3 0.0 19.3 Forward starting transactions Reverse repurchase agreements7 13.0 13.0 Securities borrowing agreements 0.0 0.0 Total 71.5 0.2 0.2 0.1 0.0 72.0 1 Except for financial liabilities at fair value held for trading and derivative financial instruments (see footnote 3), the amounts presented generally represent undiscounted cash flows of future interest and principal payments. 2 The time bucket Due after 5 years includes perpetual loss-absorbing additional tier 1 capital instruments. 3 Carrying value is fair value. Management believes that this best represents the cash flows that would have to be paid if these positions had to be settled or closed out. Refer to Note 28 for undiscounted cash flows of derivatives designated in hedge accounting relationships. 4 Contractual maturities of financial liabilities at fair value held for trading are: USD 28.3 billion due within one month (2017: USD 30.3 billion), USD 0.6 billion due between one month and one year (2017: USD 0.8 billion) and USD 0 billion due between 1 and 5 years (2017: USD 0.1 billion). 5 Future interest payments on variable-rate liabilities are determined by reference to the applicable interest rate prevailing as of the reporting date. Future principal payments that are variable are determined by reference to the conditions existing at the reporting date. 6 Comprises the maximum irrevocable amount of guarantees, commitments and forward starting transactions. 7 Loan commitments measured at fair value of USD 3.5 billion, guarantees measured at fair value of USD 1.6 billion and forward starting reverse repurchase agreements measured at fair value of USD 8.1 billion are under the time bucket Due within 1 month. Financial statements 456 Consolidated financial statements Note 28 Hedge accounting Derivatives transacted for hedging purposes The Group enters into derivative transactions for the purpose of hedging risks inherent in assets, liabilities and forecast transactions. The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and whether the hedge qualifies as such for accounting purposes. Derivative transactions that qualify and are designated as hedges for accounting purposes are described under the corresponding risk category headings in this Note (interest rate risk hedge accounting and structural foreign exchange risk hedge accounting). In addition, UBS designates certain non- derivative financial assets and liabilities as hedging instruments in structural foreign exchange risk hedge accounting, as described under the corresponding risk category headings of this Note. The Group has also executed various hedging strategies utilizing derivatives for which hedge accounting has not been applied. These economic hedges include interest rate swaps and other interest rate derivatives (e.g., futures) for day-to-day economic interest rate risk management purposes. In addition, the Group has used equity futures, options and, to a lesser extent, swaps in a variety of equity trading strategies to offset underlying equity and equity volatility exposure. The Group has also entered into credit default swaps that provide economic hedges for credit risk exposures (refer to “Credit derivatives” in Note 11). The Group’s accounting policies for derivatives designated and accounted for as hedging instruments or economic hedges that do not qualify for hedge accounting are described in Note 1a item 3j, where terms used in the following sections are explained. 457 Note 28 Hedge accounting (continued) Interest rate risk hedge accounting Fair value hedges: interest rate risk related to debt instruments The Group issues various long-term, fixed-rate debt instruments measured at amortized cost, such as senior unsecured debt, covered bonds and subordinated debt, that are exposed to changes in fair value due to movements in market interest rates. Interest rate swaps are used as fair value hedges to protect against changes in the fair value of the issued debt. Fair value hedges of interest rate risk related to debt instruments involve swapping fixed cash flows associated with the debt issued to floating cash flows by entering into interest rate swaps that receive fixed and pay floating cash flows. The variable future cash flows are based on the following benchmark rates: USD LIBOR, CHF LIBOR, EURIBOR, GBP LIBOR, AUD LIBOR, JPY LIBOR and SGD LIBOR. The issued debt and interest rate swaps are designated in a fair value hedge relationship. The notional of the designated hedging instrument matches the notional of the hedged item. The hedged risk is determined as the change in the fair value of the debt issued arising solely from changes in the designated benchmark interest rate (e.g., one-month or three-month LIBOR). Such change is usually the largest component of the overall change in the fair value of the hedged position in transaction currency. Hedge effectiveness is assessed by comparing changes in the fair value of the debt issued attributable to changes in the designated benchmark interest rate with the changes in the fair value of the interest rate swaps. Hedge ineffectiveness can arise from different curves used for the discounting of the hedging instruments and the hedged items, or from mismatches of critical terms between fixed-term lending products and hedging interest rate swaps. Hedging instruments and hedged items USD million 31.12.18 31.12.17 Hedging instruments: interest rate swaps Nominal amount1 63,816 Carrying amount Derivative financial assets 27 49 Derivative financial liabilities 1 2 Hedged items: debt issued measured at amortized cost Carrying amount1 63,785 of which: accumulated amount of fair value hedge adjustment (298) 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. Hedge ineffectiveness For the year ended USD million 31.12.18 31.12.17 31.12.16 Changes in fair value of hedging instruments1 (341) (16) 166 Changes in fair value of hedged items1 329 (4) (170) Net gains / (losses) related to hedge ineffectiveness recognized in Other net income from fair value changes on financial instruments (11) (20) (4) 1 For prior periods, the amounts included offsetting accrued interest, which did not have any effect on net gains / (losses) related to hedge ineffectiveness. Profile of the timing of the nominal amount of the hedging instrument USD billion Due within 1 month Due between 1 and 3 months Due between 3 and 12 months Due between 1 and 5 years Due after 5 years Total Interest rate swaps 4 43 17 64 Financial statements 458 Consolidated financial statements Note 28 Hedge accounting (continued) Fair value hedges: portfolio interest rate risk related to loans The Group has a portfolio of long-term fixed-rate mortgage loans in CHF that are measured at amortized cost and exposed to changes in the fair value attributable to movements in market interest rates. Interest rate swaps that pay a fixed rate of interest and receive a floating rate of interest are used as fair value hedges to protect against changes in the fair value of the originated loans. The portfolio of mortgage loans and interest rate swaps are designated in a fair value hedge relationship. The notional of the designated hedging instrument matches the notional of the hedged item. The hedging strategy involves an open portfolio of hedged items, i.e., mortgage loans. Both the hedged items and the hedging instruments are adjusted on a monthly basis to reflect changes in size and the maturity profile of the hedged portfolio. The existing hedging relationship is discontinued and a new one is designated. Changes in the portfolio are driven by new loans originated or existing loans repaid. The hedged risk is determined as the change in the fair value of the loans arising solely from changes in the designated benchmark interest rate (e.g., one-month or three-month LIBOR). Such change is usually the largest component of the overall change in the fair value of the hedged position in transaction currency. Hedge effectiveness is assessed by comparing changes in the fair value of the hedged portfolio of loans attributable to changes in the designated benchmark interest rate with the changes in the fair value of the interest rate swaps. Hedge ineffectiveness can arise from different curves used for the discounting of the hedging instruments and the hedged items, or from mismatches of critical terms between fixed-term lending products and hedging interest rate swaps. Hedging instruments and hedged items USD million 31.12.18 31.12.17 Hedging instruments: interest rate swaps Nominal amount1 10,318 Carrying amount Derivative financial assets 0 0 Derivative financial liabilities 31 33 Hedged items: loans and advances to customers Carrying amount1 10,299 of which: accumulated amount of fair value hedge adjustment on the portfolio that was subject to hedge accounting 2 200 of which: accumulated amount of fair value hedge adjustment, subject to amortization attributable to the portion of the portfolio that ceased to be part of hedge accounting 2 89 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. 2 Amounts presented within Other financial assets measured at amortized cost and Other financial liabilities measured at amortized cost. Hedge ineffectiveness For the year ended USD million 31.12.18 31.12.17 31.12.16 Changes in fair value of hedging instruments1 (22) (10) (132) Changes in fair value of hedged items1 16 3 119 Net gains / (losses) related to hedge ineffectiveness recognized in Other net income from fair value changes on financial instruments (6) (7) (13) 1 For prior periods, the amounts included offsetting accrued interest, which had no effect on net gains / (losses) related to hedge ineffectiveness. 459 Note 28 Hedge accounting (continued) Cash flow hedges of forecast transactions The Group is exposed to variability in future interest cash flows on non-trading financial assets and liabilities that bear interest at variable rates or are expected to be refinanced or reinvested in the future, due to movements in future market rates. The amounts and timing of future cash flows, representing both principal and interest flows, are projected on the basis of contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate principal balances and interest cash flows across all portfolios over time form the basis for identifying the non-trading interest rate risk of the Group, which is hedged with interest rate swaps, the maximum maturity of which is 10 years. The group of forecast cash flows and interest rate swaps are designated in cash flow hedge relationships. The notional of the designated hedging instrument matches the notional of the hedged item for newly transacted swaps. For swaps that are re- designated, the ratio of the designation is determined based on the swap sensitivity. The hedging strategy involves designation of each interest rate swap in a separate hedge relationship against a group of hedged items that share the same risk. The hedged items giving rise to the hedged cash flows are fungible and could be substituted for each other over the lifetime of the hedge. Cash flow forecasts and risk exposures are monitored and adjusted on an ongoing basis, and consequently hedging instruments are added or taken out of the program accordingly. The hedged risk is determined as the variability of future cash flows arising solely from changes in the designated benchmark interest rate, i.e., overnight index swap rate / one-month or three-month LIBOR. Hedge effectiveness is assessed by comparing changes in the fair value of the hedged cash flows attributable to changes in the designated benchmark interest rate with the changes in the fair value of the interest rate swaps. Hedge ineffectiveness can arise from differences in the reference index of the hedging instruments and hedged items, or from inception of the hedge relationship after the trade date of the hedging derivative. Hedging instruments USD million 31.12.18 31.12.17 Hedging instruments: interest rate swaps Nominal amount1 70,149 Carrying amount Derivative financial assets 24 31 Derivative financial liabilities 1 2 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. Hedge ineffectiveness For the year ended USD million 31.12.18 31.12.17 31.12.16 Changes in fair value of hedging instruments1 97 Changes in fair value of hedged items (73) Effective portion of changes in fair value of hedging instruments recognized as Other comprehensive income (42) 45 234 Ineffectiveness recognized as Other net income from fair value changes on financial instruments 25 8 11 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. Other comprehensive income recognized directly in equity related to cash flow hedges USD million 2018 2017 2016 Balance at the beginning of the year 360 955 1,635 Effective portion of changes in fair value of hedging instruments recognized in OCI (42) 45 234 Amount reclassified to Net interest income when the hedged item affected net profit / (loss) (294) (843) (1,094) of which: reclassified to interest income on amortized-cost instruments 1 (293) of which: reclassified to interest income on FVTPL instruments 1 (1) Translation effects recognized directly in retained earnings 18 39 4 Income tax related to cash flow hedges 67 163 176 Balance at the end of the year 109 360 955 of which: related to hedging relationships for which hedge accounting continues to be applied 1,2 74 of which: related to hedging relationships for which hedge accounting is no longer applied 1,2 73 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. 2 Amounts are disclosed on a pre-tax basis.Financial statements 460 Consolidated financial statements Note 28 Hedge accounting (continued) Structural foreign exchange risk hedge accounting Hedges of net investments in foreign operations The Group applies hedge accounting for certain net investments in foreign operations. For this purpose, foreign exchange (FX) derivatives, mainly FX forwards and FX swaps, as well as non- derivative financial assets or liabilities are used and designated as hedging instruments. The notional of the designated hedging instrument matches the notional of the hedged item. Based on UBS’s risk management strategy, the hedges are adjusted on at least a monthly basis to reflect the changes in the hedged position. The hedged risk is determined as the change in the carrying amount of net assets of foreign operations arising solely from changes in spot foreign exchange rates. Consequently, the Group only designates the spot element of the FX forwards as hedging instruments. Changes in the fair value of the hedging instruments attributable to changes in forward points and the effect of discounting are not part of a hedge accounting designation. These amounts, therefore, do not form part of the effectiveness assessment and are recognized directly in profit or loss. The effective portion of gains and losses of these FX swaps, i.e., the spot element, is transferred directly to OCI to offset foreign currency translation (FCT) gains and losses on the net investments in foreign branches and subsidiaries. As such, these FX swaps hedge the structural FX exposure, resulting in the accumulation of FCT at the level of individual foreign branches and subsidiaries, which make up the total FCT OCI of the Group. When UBS designates as hedging instruments certain non- derivative foreign currency financial assets and liabilities of foreign branches or subsidiaries, the FX translation difference recorded in FCT OCI of the non-derivative hedging instrument of one foreign entity offsets the structural FX exposure of another foreign entity. Therefore, the aggregated FCT OCI of the Group is unchanged from this hedge designation. Due to the fact that only the spot element of hedging instruments is designated in hedging relationships, ineffectiveness is unlikely unless the hedged net assets fall below the designated hedged amount. The exceptions are hedges where the hedging currency is not the same as the currency of the foreign operation, where the currency basis may cause ineffectiveness. As of 31 December 2017, the notional amount of hedging instruments exceeded the underlying hedged structural FX exposures, due to the fact that non-US dollar structural FX exposures were hedged against the US dollar first and then against Swiss francs, the former functional currency of the parent entity. As of 31 December 2018 all structural FX exposures are hedged directly against the US dollar. Hedging instruments USD million 31.12.18 31.12.17 Hedging instruments: derivative financial instruments Nominal amount 11,537 13,374 Carrying amount Derivative financial assets 56 80 Derivative financial liabilities 48 133 Hedging instruments: non-derivative foreign currency assets and liabilities Nominal amount 229 2,969 Carrying amount1 Receivables from securities financing transactions 115 Payables from securities financing transactions 115 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. Hedge ineffectiveness For the year ended USD million 31.12.18 Changes in fair value of hedging instruments1 205 Changes in fair value of hedged items1 (205) Effective portion of changes in fair value of hedging instruments recognized in Foreign currency translation OCI1 181 Ineffectiveness recognized as Other net income from fair value changes on financial instruments1 24 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. 461 Note 28 Hedge accounting (continued) Foreign currency translation reserve USD million 31.12.18 31.12.17 31.12.16 Foreign currency translation reserve 3,924 4,466 2,901 of which: effective portion of changes in fair value of hedging instruments related to investment in subsidiaries 777 of which: for which hedge accounting continues to be applied1 521 of which: for which hedge accounting is no longer applied1 255 Effective portion of changes in fair value of hedging instruments reclassified to Other income upon disposal of investment for the year ended1 2 1 This Note addresses the requirement of IFRS 7 effective from 1 January 2018, for which data is provided prospectively. Undiscounted cash flows The table below provides undiscounted cash flow information for derivative instruments designated in hedge accounting relationships. Derivatives designated in hedge accounting relationships (undiscounted cash flows) USD billion On demand Due within 1 month Due between 1 and 3 months Due between 3 and 12 months Due between 1 and 5 years Due after 5 years Total Interest rate swaps1 FX swaps / forwards Cash inflows 0 9 2 0 0 0 11 Cash outflows 0 9 2 0 0 0 11 Net cash flows 0 0 0 0 0 0 0 1 Undiscounted cash inflows and cash outflows of interest rate swaps as of 31 December 2018 were not material as the majority of interest rate swaps designated in hedge accounting relationships are legally settled on a daily basis. Financial statements 462 Consolidated financial statements Note 29 Pension and other post-employment benefit plans The table below provides a breakdown of expenses related to pension and other post-employment benefit plans recognized in the income statement within Personnel expenses. Income statement – expenses related to pension and other post-employment benefit plans USD million 31.12.18 31.12.17 31.12.16 Net periodic expenses for defined benefit plans 188 481 440 of which: related to major pension plans 1 186 460 417 of which: Swiss plan 2 153 414 386 of which: UK plan 11 15 (2) of which: US and German plans 22 31 34 of which: related to post-employment medical insurance plans 3 (11) 3 4 of which: UK plan 1 1 1 of which: US plans (12) 2 3 of which: related to remaining plans and other expenses 4 13 17 19 Expenses for defined contribution plans5 268 243 238 of which: UK plans 80 72 78 of which: US plan 127 110 107 of which: remaining plans 61 61 53 Total pension and other post-employment benefit plan expenses6 457 723 678 1 Refer to Note 29a for more information. 2 Changes to the Swiss pension plan in 2018 resulted in a pre-tax gain of USD 241 million related to past service. Refer to Note 29a for more information on these changes. 3 Refer to Note 29b for more information. 4 Other expenses include differences between actual and estimated performance award accruals. 5 Refer to Note 29c for more information. 6 Refer to Note 6. The table below provides a breakdown of amounts recognized in Other comprehensive income for defined benefit plans. Other comprehensive income – gains / (losses) on defined benefit plans USD million 31.12.18 31.12.17 31.12.16 Major pension plans1 (230) 253 (842) of which: Swiss plan (352) (79) (94) of which: UK plan 130 304 (623) of which: US and German plans (8) 28 (126) Post-employment medical insurance plans2 7 1 (13) of which: UK plan 3 1 (5) of which: US plans 4 0 (7) Remaining plans 3 31 (26) Gains / (losses) recognized in other comprehensive income, before tax (220) 286 (880) Tax (expense) / benefit relating to defined benefit plans recognized in other comprehensive income 276 11 51 Gains / (losses) recognized in other comprehensive income, net of tax3 56 296 (829) 1 Refer to Note 29a for more information. 2 Refer to Note 29b for more information. 3 Refer to the “Statement of comprehensive income.” 463 Note 29 Pension and other post-employment benefit plans (continued) UBS recognizes assets and liabilities with respect to defined benefit plans within Other non-financial assets and Other non- financial liabilities. As of 31 December 2018 and 31 December 2017, the Swiss pension plan was in a surplus situation. However, a surplus is only recognized on the balance sheet to the extent that it does not exceed the estimated future economic benefit. Since the estimated future economic benefit was zero as of 31 December 2018 and 31 December 2017, no net defined benefit pension asset was recognized on the balance sheet. The table below provides a breakdown of liabilities recognized on the balance sheet within Other non-financial liabilities related to defined benefit plans. Balance sheet – net defined benefit pension and post-employment liability USD million 31.12.18 31.12.17 Major pension plans1 671 825 of which: Swiss plan 0 0 of which: UK plan 160 275 of which: US and German plans2 511 550 Post-employment medical insurance plans3 62 88 of which: UK plan 22 27 of which: US plans 40 61 Remaining plans 42 36 Total net defined benefit pension and post-employment liability4 775 949 1 Refer to Note 29a for more information. 2 Of the total liability recognized as of 31 December 2018, USD 137 million related to US plans and USD 374 million related to German plans (31 December 2017: USD 153 million and USD 398 million, respectively). 3 Refer to Note 29b for more information. 4 Refer to Note 22.Financial statements 464 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) a) Defined benefit pension plans UBS has established defined benefit pension plans for its employees in various jurisdictions, with the major plans located in Switzerland, the UK, the US and Germany. The overall investment policy and strategy for UBS’s defined benefit pension plans is guided by the objective of achieving an investment return that, together with contributions, ensures that there will be sufficient assets to pay pension benefits as they fall due while also mitigating various risks. For the plans with assets, i.e. funded plans, the investment strategies are managed under local laws and regulations in each jurisdiction. The asset allocation is determined by the governance body with reference to the current and expected economic and market conditions and in consideration of specific asset class risk in the risk profile. Within this framework, UBS ensures that the fiduciaries consider how the asset investment strategy correlates with the maturity profile of the plan liabilities and the respective potential effect on the funded status of the plans, including potential short-term liquidity requirements. The defined benefit obligations (DBOs) for all of UBS’s defined benefit pension plans are directly affected by changes in yields of high-quality corporate bonds quoted in an active market in the currency of the respective pension plan, as the applicable discount rate used to determine the DBO is based on these yields. For the funded plans, the pension assets are invested in a diversified portfolio of financial assets, including real estate, bonds, investment funds and cash, across geographic regions, to ensure a balance of risk and return. Under IFRS, volatility arises in each pension plan’s net asset / liability position because the fair value of the plan’s financial assets is not fully correlated to movements in the value of the plan’s DBO. Specific asset-liability matching strategies for each pension plan are independently determined by the responsible governance body. The net asset / liability volatility for each plan is dependent on the specific financial assets chosen by each plan’s governance body. For certain pension plans, a liability- driven investment approach is applied to a portion of the plan assets to reduce potential volatility. Swiss pension plan The Swiss pension plan covers employees of UBS AG and employees of companies having close economic or financial ties with UBS AG, and exceeds the minimum benefit requirements under Swiss pension law. Contributions to the pension plan are paid by both the employer and the employees. The Swiss pension plan allows employees to choose the level of contributions paid by them. Employee contributions are calculated as a percentage of the contributory salary and are deducted monthly. The percentages deducted from salary depend on age and choice of contribution category and vary between 1% and 13.5% of contributory base salary and between 0% and 9% of contributory variable compensation. Depending on the age of the employee, UBS pays a contribution that ranges between 6.5% and 27.5% of contributory base salary and between 3.6% and 9% of contributory variable compensation. UBS also pays risk contributions that are used to finance benefits paid out in the event of death and disability, as well as to finance bridging pensions. The plan benefits include retirement, disability and survivor benefits. The pension plan offers to members at the normal retirement age of 64 a choice between a lifetime pension with or without full restitution and a partial or full lump sum payment. Members can draw early retirement benefits starting from the age of 58. Employees have the opportunity to make additional purchases of benefits to fund early retirement benefits (Plan 58+). The pension amount payable is a result of the conversion rate applied on the accumulated balance of the individual plan participant’s pension account at the retirement date. The accumulated balance of each individual plan participant’s pension account is based on credited vested benefits transferred from previous employers, purchases of benefits, and the employee and employer contributions that have been made to the pension account of each individual plan participant, as well as the interest accrued on the accumulated balance. The interest rate accrued is defined annually by the Pension Foundation Board. Although the Swiss pension plan is based on a defined contribution promise under Swiss pension law, it is accounted for as a defined benefit plan under IFRS, primarily because of the obligation to accrue interest on the pension accounts and the payment of lifetime pension benefits. The Swiss pension plan is governed by a Pension Foundation Board. The responsibilities of this board are defined by Swiss pension law and by the plan rules. An actuarial valuation under Swiss pension law is performed regularly. According to Swiss pension law, a temporary limited underfunding is permitted. However, should an underfunded situation occur, the Pension Foundation Board is required to take the necessary measures to ensure that full funding can be expected to be restored within a maximum period of 10 years. If a Swiss pension plan were to become significantly underfunded on a Swiss pension law basis, additional employer and employee contributions could be required. In this situation, the risk is shared between employer and employees, and the employer is not legally obliged to cover more than 50% of the additional contributions required. As of 31 December 2018, the Swiss pension plan had a technical funding ratio under Swiss pension law of 124.2% (31 December 2017: 131.9%). 465 Note 29 Pension and other post-employment benefit plans (continued) The investment strategy of the Swiss plan is implemented on the basis of a multi-level investment and risk management process and complies with Swiss pension law, including the rules and regulations relating to diversification of plan assets. These rules, among others, specify restrictions on the composition of plan assets; e.g., there is a limit of 50% for investments in equities. The investment strategy of the Swiss plan is aligned with the defined risk budget set out by the Pension Foundation Board. The risk budget is determined on the basis of regularly performed asset and liability management analyses. In order to implement the risk budget, the Swiss plan may use direct investments, investment funds and derivatives. To mitigate foreign currency risk, a specific currency hedging strategy is in place. The Pension Foundation Board strives for a medium- and long-term balance between assets and liabilities. As of 31 December 2018, the Swiss pension plan was in a surplus situation on an IFRS measurement basis, as the fair value of plan assets exceeded the DBO by USD 3,274 million (31 December 2017: surplus of USD 3,237 million). However, a surplus is only recognized on the balance sheet to the extent that it does not exceed the estimated future economic benefit, which equals the difference between the present value of the estimated future net service cost and the present value of the estimated future employer contributions. The maximum future economic benefit is highly variable based on changes in the discount rate. As of both 31 December 2018 and 31 December 2017, the estimated future economic benefit was zero and hence no net defined benefit asset was recognized on the balance sheet. As of 31 December 2018, the difference between the pension plan surplus and the estimated future economic benefit, i.e., the asset ceiling effect, was USD 3,274 million (31 December 2017: USD 3,237 million). Changes to the Swiss pension plan As a result of the effects of continuing low and in some cases negative interest rates, diminished investment return expectations and increasing life expectancy, the pension fund of UBS in Switzerland and UBS agreed to measures that have taken effect from the start of 2019 to support the long-term financial stability of the Swiss pension fund. As a result, the conversion rate was lowered, the regular retirement age was increased to 65, employee contributions were increased to vary between 2.5% and 13.5% of the contributory base salary, and savings contributions start from age 20 instead of the previous starting age of 25. Pensions already in payment on 1 January 2019 were not affected by these measures. To mitigate the effects of the reduction of the conversion rate on future pensions, UBS will make a payment to employees’ retirement assets in the Swiss pension fund of up to USD 734 million in three installments in 2020, 2021 and 2022. In accordance with IFRS, these measures led to a reduction in the pension obligation recognized by UBS, resulting in a pre-tax gain of USD 241 million in 2018. In addition, 2018 service costs were lower by USD 59 million due to the decrease in benefits. These effects were recognized as a reduction in Personnel expenses within the income statement across the business divisions and Corporate Center, with a corresponding effect in Other comprehensive income, as the Swiss pension plan was in a surplus situation that could not be recognized due to the IFRS asset ceiling restriction. If the Swiss pension plan remains in an asset ceiling position, the three annual payments, adjusted for expected forfeitures, are expected to reduce total equity by approximately USD 210 million per year over the installment period, with no effect on the income statement. The employer contributions expected to be made to the Swiss pension plan in 2019 are estimated to be USD 454 million. Non-Swiss pension plans UBS locations outside of Switzerland established various defined benefit pension plans in accordance with local regulations and practices. The non-Swiss locations with major defined benefit pension plans are the UK, the US and Germany. Defined benefit pension plans in other locations are not material to the financial results of UBS and hence not separately disclosed. The non-Swiss plans provide benefits in the event of retirement, death or disability. The level of benefits provided depends on the specific rate of benefit accrual and the level of employee compensation. UBS’s general principle is to ensure that the plans are adequately funded on the basis of actuarial valuations. Local pension regulations and tax requirements are the primary drivers for determining when contributions are required. UK pension plan The UK plan is a career-average revalued earnings scheme, and benefits increase automatically based on UK price inflation. The normal retirement age for participants in the UK plan is 60. Since 2000, the UK plan has been closed to new entrants and, since 2013, pension plan participants are no longer accruing benefits for current or future service. Employees instead participate in the UK defined contribution plan. The governance responsibility for the UK plan lies jointly with the Pension Trustee Board, which is required under local pension laws, and UBS. The employer contributions to the pension fund reflect agreed-upon deficit funding contributions, which are determined on the basis of the most recent actuarial valuation using assumptions agreed by the Pension Trustee Board and UBS. In the event of underfunding, UBS and the Pension Trustee Board must agree on a deficit recovery plan within statutory deadlines. In 2018 and 2017, UBS did not make any deficit funding contributions.Financial statements 466 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) The plan assets are invested in a diversified portfolio of financial assets. A liability-driven investment approach is applied, as a portion of the plan assets is invested in inflation-indexed bonds that provide a partial hedge against price inflation. If price inflation increases, the DBO is likely to increase by more than the change in the fair value of plan assets, which would result in an increase in the net defined benefit liability. Plan rules and local pension legislation cap the level of inflationary increase that can be applied to plan benefits. As the plan is obligated to provide guaranteed lifetime pension benefits to plan participants upon retirement, increases in life expectancy will result in an increase in the plan’s liabilities. The sensitivity to changes in life expectancy is particularly high in the UK plan as the pension benefits are indexed to price inflation. As of 31 December 2018, the UK plan was in a deficit situation on an IFRS measurement basis as the DBO exceeded the fair value of plan assets by USD 160 million (31 December 2017: deficit of USD 275 million). Following the most recent triennial statutory actuarial valuation as of 30 June 2017, UBS agreed to minimum cash contributions of USD 26 million in 2019 and USD 13 million in 2020. Total contributions expected to be made to the UK defined benefit pension plan in 2019 are estimated at USD 128 million, subject to regular funding reviews during the year. In addition, UBS and the Pension Trustee Board have entered into an arrangement whereby a collateral pool was established to provide security for the pension fund, effective 31 January 2019, at a value of USD 574 million. The collateral pool includes corporate bonds and government-related debt instruments. The Pension Trustee Board and UBS may agree adjustments to the collateral pool value in the future. The arrangement provides the Pension Trustee Board dedicated access to a pool of assets in the event of UBS’s insolvency or not paying a required deficit funding contribution. Following a UK High Court ruling requiring pension trustees to equalize benefits for men and women in relation to guaranteed minimum pensions (GMP), UBS recorded an increase of USD 4 million in the DBO, resulting in a corresponding loss recognized in the income statement in 2018. US pension plans There are two distinct major defined benefit pension plans in the US, both with a normal retirement age of 65. Since 1998 and 2001, respectively, the plans have been closed to new entrants, who instead can participate in defined contribution plans. One of the major defined benefit pension plans is a contribution-based plan in which each participant accrues a percentage of salary in a pension account. The pension account is credited annually with interest based on a rate that is linked to the average yield on one-year US government bonds. For the other major defined benefit pension plan, retirement benefits accrue based on the career-average earnings of each individual plan participant. Former employees with vested benefits have the option to take a lump sum payment or a lifetime annuity commencing early or at retirement age. As required under local state pension laws, both plans have fiduciaries who, together with UBS, are responsible for the governance of the plans. UBS regularly reviews the contribution strategy for these plans, considering local statutory funding rules and the cost of any premiums that must be paid to the Pension Benefit Guaranty Corporation for having an underfunded plan. In 2018, the contributions made by UBS were USD 42 million (2017: USD 92 million). The plan assets for both plans are invested in a diversified portfolio of financial assets. Each pension plan’s fiduciaries are responsible for the investment decisions with respect to the plan assets. Both US plans apply a liability-driven investment approach to support the volatility management in the net asset / liability position. Derivative instruments may also be employed to manage volatility. The employer contributions expected to be made to the US defined benefit pension plans in 2019 are estimated at USD 9 million. German pension plans There are two different defined benefit pension plans in Germany, and both are contribution-based plans. No plan assets are set aside to fund these plans, and benefits are paid directly by UBS. The normal retirement age for the participants in the German plans is 65. Within the larger of the two plans, each participant accrues a percentage of salary in a pension account. The accumulated account balance of the plan participant is credited on an annual basis with guaranteed interest at a rate of 5%. In the other plan, amounts are accrued annually based on employee elections. For this plan, the accumulated account balance is credited on an annual basis with a guaranteed interest rate of 6% for amounts accrued before 2010, of 4% for amounts accrued from 2010 to 2017 and of 0.9% for amounts accrued after 2017. Both plans are regulated under German pension law, under which the responsibility to pay pension benefits when they are due rests entirely with UBS. For these plans, a portion of the pension payments is directly increased in line with price inflation. The benefits expected to be paid by UBS to the participants of the German plans in 2019 are estimated at USD 11 million. Financial information by plan The tables on the following pages provide an analysis of the movement in the net asset / liability recognized on the balance sheet for defined benefit pension plans, as well as an analysis of amounts recognized in net profit and in Other comprehensive income. 467 Note 29 Pension and other post-employment benefit plans (continued) Defined benefit pension plans USD million Swiss plan UK plan US and German plans Total 2018 2017 2018 2017 2018 2017 2018 2017 Defined benefit obligation at the beginning of the year 23,419 22,465 3,744 3,639 1,816 1,725 28,978 27,830 Current service cost 405 456 0 0 7 9 413 465 Interest expense 151 166 93 102 55 63 299 331 Plan participant contributions 218 208 0 0 0 0 218 208 Remeasurements (242) 301 (266) (88) (69) 82 (577) 295 of which: actuarial (gains) / losses due to changes in demographic assumptions 0 6 (18) (82) (5) (5) (23) (81) of which: actuarial (gains) / losses due to changes in financial assumptions (639) 141 (257) 44 (69) 86 (964) 271 of which: experience (gains) / losses 1 397 154 8 (50) 5 2 410 105 Past service cost related to plan amendments (241) 0 4 0 0 0 (237) 0 Curtailments (20) (50) 0 0 0 0 (20) (50) Benefit payments (954) (1,121) (202) (256) (112) (109) (1,268) (1,487) Other movements 0 (8) 0 0 0 0 0 (8) Foreign currency translation (170) 1,001 (181) 347 (18) 47 (369) 1,395 Defined benefit obligation at the end of the year 22,566 23,419 3,192 3,744 1,679 1,816 27,437 28,978 of which: amounts owed to active members 10,452 10,741 146 180 226 255 10,823 11,176 of which: amounts owed to deferred members 0 0 1,434 1,930 606 645 2,040 2,575 of which: amounts owed to retirees 12,114 12,678 1,612 1,634 847 916 14,574 15,228 Fair value of plan assets at the beginning of the year 26,656 24,184 3,469 3,120 1,265 1,124 31,390 28,428 Return on plan assets excluding amounts included in interest income (523) 1,640 (136) 215 (77) 110 (736) 1,965 Interest income 177 181 86 88 44 44 306 313 Employer contributions 505 485 0 0 51 100 556 585 Plan participant contributions 218 208 0 0 0 0 218 208 Benefit payments (954) (1,121) (202) (256) (112) (109) (1,268) (1,487) Administration expenses, taxes and premiums paid (11) (10) 0 0 (3) (4) (14) (15) Foreign currency translation (228) 1,090 (185) 302 0 0 (412) 1,392 Fair value of plan assets at the end of the year 25,839 26,656 3,032 3,469 1,168 1,265 30,039 31,390 Asset ceiling effect at the beginning of the year 3,237 1,718 0 0 0 0 3,237 1,718 Interest expense on asset ceiling effect 23 13 0 0 0 0 23 13 Asset ceiling effect excluding interest expense and foreign currency translation on asset ceiling effect 71 1,417 0 0 0 0 71 1,417 Foreign currency translation (58) 89 0 0 0 0 (58) 89 Asset ceiling effect at the end of the year 3,274 3,237 0 0 0 0 3,274 3,237 Net defined benefit asset / (liability) 0 0 (160) (275) (511) (550) (671) (825) Movement in the net asset / (liability) recognized on the balance sheet Net asset / (liability) recognized on the balance sheet at the beginning of the year 0 0 (275) (519) (550) (601) (825) (1,120) Net periodic expenses recognized in net profit (153) (414) (11) (15) (22) (31) (186) (460) Gains / (losses) recognized in other comprehensive income (352) (79) 130 304 (8) 28 (230) 253 Employer contributions 505 485 0 0 51 100 556 585 Other movements 0 8 0 0 0 0 0 8 Foreign currency translation 0 0 (4) (45) 18 (47) 14 (91) Net asset / (liability) recognized on the balance sheet at the end of the year 0 0 (160) (275) (511) (550) (671) (825) Funded and unfunded plans Defined benefit obligation from funded plans 22,566 23,419 3,192 3,744 1,219 1,324 26,976 28,487 Defined benefit obligation from unfunded plans 0 0 0 0 460 492 460 492 Plan assets 25,839 26,656 3,032 3,469 1,168 1,265 30,039 31,390 Surplus / (deficit) 3,274 3,237 (160) (275) (511) (550) 2,603 2,412 Asset ceiling effect 3,274 3,237 0 0 0 0 3,274 3,237 Net defined benefit asset / (liability) 0 0 (160) (275) (511) (550) (671) (825) 1 Experience (gains) / losses are a component of actuarial remeasurements of the defined benefit obligation that reflect the effects of differences between the previous actuarial assumptions and what has actually occurred.Financial statements 468 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) Analysis of amounts recognized in net profit USD million Swiss plan UK plan US and German plans Total For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Current service cost 405 456 0 0 7 9 413 465 Interest expense related to defined benefit obligation 151 166 93 102 55 63 299 331 Interest income related to plan assets (177) (181) (86) (88) (44) (44) (306) (313) Interest expense on asset ceiling effect 23 13 0 0 0 0 23 13 Administration expenses, taxes and premiums paid 11 10 0 0 3 4 14 15 Past service cost related to plan amendments (241) 0 4 0 0 0 (237) 0 Curtailments (20) (50) 0 0 0 0 (20) (50) Net periodic expenses recognized in net profit 153 414 11 15 22 31 186 460 Analysis of amounts recognized in other comprehensive income (OCI) USD million Swiss plan UK plan US and German plans Total For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Remeasurement of defined benefit obligation 242 (301) 266 88 69 (82) 577 (295) Return on plan assets excluding amounts included in interest income (523) 1,640 (136) 215 (77) 110 (736) 1,965 Asset ceiling effect excluding interest expense and foreign currency translation on asset ceiling effect (71) (1,417) 0 0 0 0 (71) (1,417) Total gains / (losses) recognized in other comprehensive income, before tax (352) (79) 130 304 (8) 28 (230) 253 The table below provides information on the duration of the DBO and the timing for expected benefit payments. Swiss plan UK plan US and German plans 1 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Duration of the defined benefit obligation (in years) 14.5 15.1 19.5 20.0 9.8 10.6 Maturity analysis of benefits expected to be paid USD million Benefits expected to be paid within 12 months 1,153 1,149 82 83 108 108 Benefits expected to be paid between 1 and 3 years 2,356 2,294 187 182 216 217 Benefits expected to be paid between 3 and 6 years 3,554 3,455 345 337 336 330 Benefits expected to be paid between 6 and 11 years 5,643 5,564 701 717 566 572 Benefits expected to be paid between 11 and 16 years 5,142 5,109 770 806 494 514 Benefits expected to be paid in more than 16 years 16,792 17,190 3,927 4,325 798 887 1 The duration of the defined benefit obligation represents a weighted average across US and German plans. 469 Note 29 Pension and other post-employment benefit plans (continued) Actuarial assumptions The measurement of each pension plan’s DBO considers different actuarial assumptions. Changes in those assumptions lead to volatility in the DBO. The following significant actuarial assumptions are applied: – Discount rate: the discount rate is based on the yield of high- quality corporate bonds quoted in an active market in the currency of the respective pension plan. Consequently, a decrease in the yield of high-quality corporate bonds increases the DBO. Conversely, an increase in the yield of high-quality corporate bonds decreases the DBO. – Rate of salary increase: an increase in the salary of plan participants generally increases the DBO, specifically for the Swiss and German plans. For the UK plan, as the plan is closed for future service, UBS employees no longer accrue future service benefits and thus salary increases have no effect on the DBO. For the US plans, only a small percentage of the total population continues to accrue benefits for future service and therefore the effect of a salary increase on the DBO is minimal. – Rate of pension increase: for the Swiss plan, there is no automatic indexing of pensions. Any increase would be decided by the Pension Foundation Board. For the US plans, there is also no automatic indexing of pensions. For the UK plan, pensions are automatically indexed to price inflation as per plan rules and local pension legislation. The German plans are also automatically indexed and a portion of the pensions are directly increased by price inflation. An increase in price inflation in the UK or Germany increases the respective plan’s DBO. – Rate of interest credit on retirement savings: the Swiss plan and one of the US plans have retirement saving balances that are increased annually by an interest credit rate. For each of these plans, an increase in the interest credit rate increases the plan’s DBO. – Life expectancy: most of UBS’s defined benefit pension plans are obligated to provide guaranteed lifetime pension benefits. The DBO for all plans is calculated using an underlying best estimate of the life expectancy of plan participants. An increase in the life expectancy of plan participants increases the plan’s DBO. The actuarial assumptions used for the pension plans are based on the economic conditions prevailing in the jurisdiction in which they are offered. →Refer to Note 1a item 7 for a description of the accounting policy for defined benefit pension plans Changes in actuarial assumptions UBS regularly reviews the actuarial assumptions used in calculating its DBO to determine their continuing relevance. Swiss pension plan In 2018, a net gain of USD 242 million was recognized in Other comprehensive income (OCI) related to the remeasurement of the DBO. This was primarily due to a market-driven increase in the discount rate, which resulted in an OCI gain of USD 776 million. This effect was partially offset by experience losses of USD 397 million, reflecting differences between the previous actuarial assumptions and what actually occurred, and market-driven changes to the assumed rate of interest credit on retirement savings, which resulted in a loss of USD 124 million. Changes in other assumptions were not significant. In 2017, a net loss of USD 301 million was recognized in OCI related to the remeasurement of the DBO. This was primarily due to a market-driven decrease in the discount rate, which resulted in an OCI loss of USD 165 million, as well as experience losses of USD 154 million. These effects were partially offset by market-driven changes to the assumed rate of interest credit on retirement savings, which resulted in a gain of USD 26 million. Changes in other assumptions were not significant. UK pension plan In 2018, a net gain of USD 266 million was recognized in OCI related to the remeasurement of the DBO for the UK plan. This was primarily due to a market-driven increase in the discount rate, which resulted in an OCI gain of USD 219 million, as well as changes in the pension increase assumption, which resulted in an OCI gain of USD 37 million. In 2017, a net gain of USD 88 million was recognized in OCI related to the remeasurement of the DBO for the UK plan. This was primarily driven by changes in the life expectancy assumption, which resulted in a gain of USD 82 million. In addition, market- driven changes in the inflation rate assumption resulted in a gain of USD 60 million and experience gains were USD 50 million. These gains were partly offset by a market-driven decrease in the discount rate, which resulted in a loss of USD 102 million. US and German pension plans In 2018, a net gain of USD 69 million was recognized in OCI related to the remeasurement of the DBO for the US and German plans, compared with a net loss of USD 82 million in 2017. OCI gains and losses in both years were primarily driven by market-driven movements in discount rates.Financial statements 470 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) The tables below show the significant actuarial assumptions used in calculating the DBO at the end of the year. Significant actuarial assumptions used Swiss plan UK plan US and German plans 1 In %31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Discount rate 0.92 0.67 2.90 2.55 3.69 3.14 Rate of salary increase 1.50 1.30 0.00 0.00 2.81 2.83 Rate of pension increase 0.00 0.00 3.10 3.11 1.50 1.50 Rate of interest credit on retirement savings 0.92 0.67 0.00 0.00 3.70 2.56 1 Represents weighted average assumptions across US and German plans. Mortality tables and life expectancies for major plans Life expectancy at age 65 for a male member currently aged 65 aged 45 Country Mortality table 31.12.18 31.12.17 31.12.18 31.12.17 Switzerland BVG 2015 G with CMI 2016 projections 21.6 21.6 23.1 23.0 UK S2PA with CMI 2017 projections 1 23.4 23.4 24.6 24.6 USA RP2014 WCHA with MP2018 projection scale 2 22.8 22.8 24.3 24.4 Germany Dr. K. Heubeck 2018 G 3 20.5 20.3 23.3 22.9 Life expectancy at age 65 for a female member currently aged 65 aged 45 Country Mortality table 31.12.18 31.12.17 31.12.18 31.12.17 Switzerland BVG 2015 G with CMI 2016 projections 23.5 23.4 25.0 24.9 UK S2PA with CMI 2017 projections 1 25.2 25.2 26.5 26.5 USA RP2014 WCHA with MP2018 projection scale 2 24.4 24.4 26.0 26.0 Germany Dr. K. Heubeck 2018 G 3 24.1 24.3 26.3 26.8 1 In 2017, the mortality table S2PA with CMI 2016 projections was used. 2 In 2017, the mortality table RP2014 WCHA with MP2017 projection scale was used. 3 In 2017, the mortality table Dr. K. Heubeck 2005 G was used. Sensitivity analysis of significant actuarial assumptions The table below presents a sensitivity analysis for each significant actuarial assumption, showing how the DBO would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the balance sheet date. Unforeseen circumstances may arise, which could result in variations that are outside the range of alternatives deemed reasonably possible. Caution should be used in extrapolating the sensitivities below on the DBO as the sensitivities may not be linear. Sensitivity analysis of significant actuarial assumptions1 Increase / (decrease) in defined benefit obligation Swiss plan UK plan US and German plans USD million 31.12.18 31.12.17 31.12.18 31.12.17 31.12.18 31.12.17 Discount rate Increase by 50 basis points (1,327) (1,470) (292) (350) (77) (90) Decrease by 50 basis points 1,503 1,669 333 401 84 98 Rate of salary increase Increase by 50 basis points 68 86 –2 –2 1 1 Decrease by 50 basis points (65) (82)–2 –2 (1) (1) Rate of pension increase Increase by 50 basis points 1,090 1,212 260 380 6 7 Decrease by 50 basis points –3 –3 (262) (336) (6) (7) Rate of interest credit on retirement savings Increase by 50 basis points 231 267 –4 –4 9 9 Decrease by 50 basis points (219) (253)–4 –4 (9) (9) Life expectancy Increase in longevity by one additional year 751 827 122 143 42 48 1 The sensitivity analyses are based on a change in one assumption while holding all other assumptions constant, so that interdependencies between the assumptions are excluded. 2 As the plan is closed for future service, a change in assumption is not applicable. 3 As the assumed rate of pension increase was 0% as of 31 December 2018 and as of 31 December 2017, a downward change in assumption is not applicable. 4 As the UK plan does not provide interest credits on retirement savings, a change in assumption is not applicable. 471 Note 29 Pension and other post-employment benefit plans (continued) Fair value of plan assets The tables below provide information on the composition and fair value of plan assets of the Swiss, the UK and the US pension plans. Composition and fair value of plan assets Swiss plan 31.12.18 31.12.17 Fair value Plan asset allocation %Fair value Plan asset allocation % USD million Quoted in an active market Other Total Quoted in an active market Other Total Cash and cash equivalents 137 0 137 1 120 0 120 0 Real estate / property Domestic 0 2,963 2,963 11 0 2,859 2,859 11 Investment funds Equity Domestic 628 0 628 2 667 0 667 3 Foreign 5,721 1,515 7,237 28 7,507 1,331 8,838 33 Bonds1 Domestic, AAA to BBB– 2,570 0 2,570 10 2,279 0 2,279 9 Foreign, AAA to BBB– 6,194 0 6,194 24 6,375 0 6,375 24 Foreign, below BBB– 892 0 892 3 577 0 577 2 Real estate Foreign 0 11 11 0 0 23 23 0 Other 518 4,142 4,659 18 861 4,044 4,905 18 Other investments 531 18 549 2 0 12 12 0 Total fair value of plan assets 17,190 8,649 25,839 100 18,386 8,270 26,656 100 31.12.18 31.12.17 Total fair value of plan assets 25,839 26,656 of which: 2 Bank accounts at UBS 132 120 UBS debt instruments 13 3 UBS shares 25 34 Securities lent to UBS 3 1,567 2,030 Property occupied by UBS 88 85 Derivative financial instruments, counterparty UBS 3 34 23 1 The bond credit ratings are primarily based on Standard & Poor’s credit ratings. Ratings AAA to BBB– and below BBB– represent investment grade and non-investment grade ratings, respectively. In cases where credit ratings from other rating agencies were used, these were converted to the equivalent rating in Standard & Poor’s rating classification. 2 Bank accounts at UBS encompass accounts in the name of the Swiss pension fund. The other positions disclosed in the table encompass both direct investments in UBS instruments and indirect investments, i.e., those made through funds that the pension fund invests in. 3 Securities lent to UBS and derivative financial instruments are presented gross of any collateral. Securities lent to UBS were fully covered by collateral as of 31 December 2018 and 31 December 2017. Net of collateral, derivative financial instruments amounted to USD 10 million as of 31 December 2018 (31 December 2017: USD 12 million).Financial statements 472 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) Composition and fair value of plan assets (continued) UK plan 31.12.18 31.12.17 Fair value Plan asset allocation %Fair value Plan asset allocation % USD million Quoted in an active market Other Total Quoted in an active market Other Total Cash and cash equivalents 143 0 143 5 163 0 163 5 Bonds1 Domestic, AAA to BBB– 1,604 0 1,604 53 1,709 0 1,709 49 Domestic, below BBB– 0 0 0 0 1 0 1 0 Investment funds Equity Domestic 26 0 26 1 31 0 31 1 Foreign 658 0 658 22 1,046 0 1,046 30 Bonds1 Domestic, AAA to BBB– 587 93 680 22 641 83 724 21 Domestic, below BBB– 15 0 15 0 21 0 21 1 Foreign, AAA to BBB– 258 0 258 9 147 0 147 4 Foreign, below BBB– 51 0 51 2 57 0 57 2 Real estate Domestic 102 28 131 4 103 28 131 4 Other 0 0 0 0 (4) 5 1 0 Asset-backed securities 21 2 22 1 0 0 0 0 Other investments2 (565) 9 (556) (18) (575) 11 (563) (16) Total fair value of plan assets 2,900 132 3,032 100 3,341 127 3,469 100 1 The bond credit ratings are primarily based on Standard & Poor’s credit ratings. Ratings AAA to BBB– and below BBB– represent investment grade and non-investment grade ratings, respectively. In cases where credit ratings from other rating agencies were used, these were converted to the equivalent rating in Standard & Poor’s rating classification. 2 Mainly relates to repurchase arrangements on UK treasury bonds. 473 Note 29 Pension and other post-employment benefit plans (continued) Composition and fair value of plan assets (continued) US plans 31.12.18 31.12.17 Fair value Plan asset allocation %Fair value Plan asset allocation % USD million Quoted in an active market Other Total Quoted in an active market Other Total Cash and cash equivalents 27 0 27 2 76 0 76 6 Bonds1 Domestic, AAA to BBB– 462 0 462 40 200 0 200 16 Domestic, below BBB– 2 0 2 0 10 0 10 1 Foreign, AAA to BBB– 92 0 92 8 46 0 46 4 Foreign, below BBB– 3 0 3 0 1 0 1 0 Investment funds Equity Domestic 143 0 143 12 298 0 298 24 Foreign 157 0 157 13 277 0 277 22 Bonds1 Domestic, AAA to BBB– 104 0 104 9 216 0 216 17 Domestic, below BBB– 23 0 23 2 20 0 20 2 Foreign, AAA to BBB– 56 0 56 5 47 0 47 4 Foreign, below BBB– 6 0 6 1 5 0 5 0 Real estate Domestic 0 13 13 1 0 13 13 1 Other 64 0 64 5 21 0 21 2 Insurance contracts 0 17 17 1 0 18 18 1 Asset-backed securities 0 0 0 0 15 0 15 1 Other investments 0 0 0 0 4 0 4 0 Total fair value of plan assets 1,139 29 1,168 100 1,235 31 1,265 100 1 The bond credit ratings are primarily based on Standard & Poor’s credit ratings. Ratings AAA to BBB– and below BBB– represent investment grade and non-investment grade ratings, respectively. In cases where credit ratings from other rating agencies were used, these were converted to the equivalent rating in Standard & Poor’s rating classification. Financial statements 474 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) b) Post-employment medical insurance plans In the US and the UK, UBS offers post-employment medical insurance benefits that contribute to the health care coverage of certain employees and their beneficiaries after retirement. The UK post-employment medical insurance plan is closed to new entrants. In the US, retiree medical premiums are subsidized for eligible participants who retired before 2014. These plans are not prefunded. In the US, the retirees also contribute to the cost of the post-employment medical benefits. In 2018, UBS announced changes to one of the US post- employment medical insurance plans that replaced the UBS retiree medical subsidy with a new subsidy to purchase medical coverage through a private Medicare exchange. This change reduced the post-employment benefit obligation by USD 14 million, resulting in a corresponding gain recognized in the income statement in 2018. The benefits expected to be paid by UBS to the post- employment medical insurance plans in 2019 are estimated at USD 5 million. The table below provides an analysis of the movement in the net asset / liability recognized on the balance sheet for post-employment medical insurance plans, as well as an analysis of amounts recognized in net profit and in Other comprehensive income. Post-employment medical insurance plans USD million UK plan US plans Total 2018 2017 2018 2017 2018 2017 Post-employment benefit obligation at the beginning of the year 27 26 61 64 88 90 Current service cost 0 0 0 0 0 0 Interest expense 1 1 2 2 3 3 Plan participant contributions 0 0 3 3 3 3 Remeasurements (3) (1) (4) 0 (7) (1) of which: actuarial (gains) / losses due to changes in demographic assumptions 0 0 0 0 0 (1) of which: actuarial (gains) / losses due to changes in financial assumptions (1) (1) (4) 2 (5) 2 of which: experience (gains) / losses 1 (2) 0 0 (2) (2) (2) Past service cost related to plan amendments 0 0 (14) 0 (14) 0 Benefit payments2 (1) (1) (7) (8) (9) (9) Foreign currency translation (1) 2 0 0 (1) 2 Post-employment benefit obligation at the end of the year 22 27 40 61 62 88 of which: amounts owed to active members 6 6 0 0 6 6 of which: amounts owed to deferred members 0 0 0 0 0 0 of which: amounts owed to retirees 17 21 40 61 56 81 Fair value of plan assets at the end of the year 0 0 0 0 0 0 Net post-employment benefit asset / (liability) (22) (27) (40) (61) (62) (88) Analysis of amounts recognized in net profit Current service cost 0 0 0 0 0 0 Interest expense related to post-employment benefit obligation 1 1 2 2 3 3 Past service cost related to plan amendments 0 0 (14) 0 (14) 0 Net periodic expenses 1 1 (12) 2 (11) 3 Analysis of amounts recognized in other comprehensive income (OCI) Remeasurement of post-employment benefit obligation 3 1 4 0 7 1 Total gains / (losses) recognized in other comprehensive income, before tax 3 1 4 0 7 1 1 Experience (gains) / losses are a component of actuarial remeasurements of the post-employment benefit obligation that reflect the effects of differences between the previous actuarial assumptions and what has actually occurred. 2 Benefit payments are funded by employer contributions and plan participant contributions. 475 Note 29 Pension and other post-employment benefit plans (continued) Actuarial assumptions The measurement of each medical insurance plan’s post- employment benefit obligation considers different actuarial assumptions. Changes in assumptions lead to volatility in the post-employment benefit obligation. The following significant actuarial assumptions are applied: – Discount rate: discount rates used for post-employment medical insurance plans are the same as those used for defined benefit pension plans. A decrease in the yield of high-quality corporate bonds increases the post-employment benefit obligation. Conversely, an increase in the yield of high-quality corporate bonds decreases the post-employment benefit obligation. – Average health care cost trend rate: an increase in health care costs generally increases the post-employment benefit obligation. – Life expectancy: as some plan participants have lifetime benefits under these plans, an increase in life expectancy increases the post-employment benefit obligation. UBS regularly reviews the actuarial assumptions used in calculating its post-employment benefit obligations to determine their continuing relevance. Significant actuarial assumptions used to determine post-employment benefit obligations at the end of the year were: Significant actuarial assumptions used1 UK plan US plans 2 In %31.12.18 31.12.17 31.12.18 31.12.17 Discount rate 2.90 2.55 4.20 3.54 Average health care cost trend rate – initial 5.10 5.10 7.79 7.99 Average health care cost trend rate – ultimate 5.10 5.10 4.50 4.50 1 The assumptions for life expectancies are provided within Note 29a. 2 Represents weighted average assumptions across US plans. Sensitivity analysis of significant actuarial assumptions The table below presents a sensitivity analysis for each significant actuarial assumption showing how the post- employment benefit obligation would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the balance sheet date. Unforeseen circumstances may arise, which could result in variations that are outside the range of alternatives deemed reasonably possible. Caution should be used in extrapolating the sensitivities below on the post-employment benefit obligation, as the sensitivities may not be linear. Sensitivity analysis of significant actuarial assumptions1 Increase / (decrease) in post-employment benefit obligation UK plan US plans USD million 31.12.18 31.12.17 31.12.18 31.12.17 Discount rate Increase by 50 basis points (1) (2) (2) (3) Decrease by 50 basis points 1 2 2 3 Average health care cost trend rate Increase by 100 basis points 3 4 1 1 Decrease by 100 basis points (3) (3) 0 (1) Life expectancy Increase in longevity by one additional year 2 2 2 4 1 The sensitivity analyses are based on a change in one assumption while holding all other assumptions constant, so that interdependencies between the assumptions are excluded. c) Defined contribution plans UBS sponsors a number of defined contribution plans in locations outside Switzerland. The locations with significant defined contribution plans are the US and the UK. Certain plans allow employees to make contributions and earn matching or other contributions from UBS. Employer contributions to defined contribution plans are recognized as an expense, which, for the years ended 31 December 2018, 2017 and 2016, amounted to USD 268 million, USD 243 million and USD 238 million, respectively.Financial statements 476 Consolidated financial statements Note 29 Pension and other post-employment benefit plans (continued) d) Related-party disclosure UBS is the principal provider of banking services for the pension fund of UBS in Switzerland. In this capacity, UBS is engaged to execute most of the pension fund’s banking activities. These activities can include, but are not limited to, trading, securities lending and borrowing and derivative transactions. The non- Swiss UBS pension funds do not have a similar banking relationship with UBS. Also, UBS leases certain properties that are owned by the Swiss pension fund. As of 31 December 2018, the minimum commitment toward the Swiss pension fund under the related leases was approximately USD 17 million (31 December 2017: USD 5 million). →Refer to the “Composition and fair value of plan assets” table in Note 29a for more information on fair value of investments in UBS instruments held by the Swiss pension fund The following amounts have been received or paid by UBS from and to the pension and other post-employment benefit plans located in Switzerland, the UK and the US in respect of these banking activities and arrangements. Related-party disclosure For the year ended USD million 31.12.18 31.12.17 31.12.16 Received by UBS Fees 35 36 36 Paid by UBS Rent 4 5 5 Dividends, capital repayments and interest 10 10 14 The transaction volumes in UBS shares and UBS debt instruments and the balances of UBS shares held as of 31 December were: Transaction volumes – UBS shares and UBS debt instruments For the year ended 31.12.18 31.12.17 Financial instruments bought by pension funds UBS shares (in thousands of shares) 889 905 UBS debt instruments (par values, USD million) 13 2 Financial instruments sold by pension funds or matured UBS shares (in thousands of shares) 547 2,897 UBS debt instruments (par values, USD million) 3 4 UBS shares held by pension and other post-employment benefit plans 31.12.18 31.12.17 Number of shares (in thousands of shares) 16,712 16,370 Fair value (USD million) 207 301 477 Note 30 Employee benefits: variable compensation a) Plans offered The Group has several share-based and other compensation plans that align the interests of Group Executive Board (GEB) members and other employees with the interests of investors. These compensation plans are also designed to meet regulatory requirements. The most significant compensation plans are described below. →Refer to Note 1a item 6 for a description of the accounting policy related to share-based and other deferred compensation plans Mandatory deferred compensation plans Equity Ownership Plan (EOP) The EOP is a mandatory deferred share-based compensation plan for all employees with total annual compensation greater than USD / CHF 300,000. EOP awards granted to GEB members and certain other employees will only vest if both Group and business division performance conditions are met. For all awards granted for the performance year 2017 (awarded in early 2018) and before, the Group performance condition is based on the average adjusted return on tangible equity (RoTE) excluding deferred tax assets over the performance period. Starting with the EOP awards granted in 2019 for the performance year 2018, the Group performance condition is based on the average reported return on common equity tier 1 capital (RoCET1). Business division performance is measured on the basis of their average adjusted return on attributed equity (RoAE). For Corporate Center employees, it is measured on the basis of the average operating businesses’ adjusted RoAE. Certain awards, such as replacement awards issued outside the normal performance year cycle, may take the form of deferred cash under the EOP plan rules. Notional shares represent a promise to receive UBS shares at vesting and do not carry voting rights during the vesting period. Notional shares granted prior to February 2014 have no rights to dividends, whereas awards granted since February 2014 carry a dividend equivalent that may be paid in notional shares or cash and that vests on the same terms and conditions as the awards. However, starting with awards granted for the performance year 2017, European Banking Authority guidelines do not permit individuals who are deemed to be Material Risk Takers (MRTs) to receive dividend or interest payments on instruments awarded as deferred variable remuneration. Where dividend payments are not permitted, the grant price of the EOP award is adjusted for the expected dividend yield over the vesting period to reflect the fair value of the non-dividend-bearing award. Awards are settled by delivering UBS shares at vesting, except in jurisdictions where this is not permitted for legal or tax reasons. EOP awards generally vest in equal installments after two and three years following grant (for GEB members, generally after three, four and five years). The awards are generally forfeitable upon, among other circumstances, voluntary termination of employment with UBS. Deferred Contingent Capital Plan (DCCP) The DCCP is a mandatory deferred compensation plan for all employees with total annual compensation greater than USD / CHF 300,000. DCCP awards granted up to January 2015 represent a right to receive a cash payment at vesting. For awards granted since February 2015, DCCP takes the form of notional additional tier 1 (AT1) capital instruments, which at the discretion of UBS can be settled in either a cash payment or a perpetual, marketable AT1 capital instrument. DCCP awards vest in full after five years, and up to seven years for UK senior management functions, unless there is a trigger event. Awards are forfeited if a viability event occurs, that is, if FINMA notifies the firm in writing that the DCCP awards must be written down to prevent an insolvency, bankruptcy or failure of UBS, or if UBS receives a commitment of extraordinary support from the public sector that is necessary to prevent such an event. Additionally, they are written down if the Group’s common equity tier 1 capital ratio falls below 10% for GEB members and below 7% for all other employees. As an additional performance condition, GEB members forfeit 20% of their award for each loss- making year during the vesting period. For awards granted up to January 2015, interest on the awards is paid annually, provided that UBS achieved an adjusted profit before tax in the preceding year. For awards granted since February 2015, interest payments are discretionary. Where interest payments are not permitted, such as for MRTs, the DCCP award reflects the fair value of the granted non-interest- bearing award. The awards are generally forfeitable upon, among other circumstances, voluntary termination of employment with UBS.Financial statements 478 Consolidated financial statements Note 30 Employee benefits: variable compensation (continued) Asset Management EOP In order to align deferred compensation of certain Asset Management employees with the performance of the investment funds they manage, awards are granted to such employees in the form of cash-settled notional investment funds. The amount delivered depends on the value of the underlying investment funds at the time of vesting. The awards are generally forfeitable upon, among other circumstances, voluntary termination of employment with UBS. Financial advisor variable compensation In line with market practice for US wealth management businesses, the compensation for US financial advisors in Global Wealth Management is comprised of production payout and deferred compensation awards. Production payout is primarily based on compensable revenue and is paid monthly. Financial advisors may also qualify for deferred compensation awards, which generally vest over a six-year period. The awards are based on strategic performance measures, including production, length of service with the firm and net new business. Production payout rates and deferred compensation awards may be reduced for, among other things, errors, negligence or carelessness, or a failure to comply with the firm’s rules, standards, practices and policies or applicable laws and regulations. Strategic objective awards Strategic objective awards are deferred compensation awards based on strategic performance measures, including production, length of service with the firm and net new business. These awards are granted in the form of both deferred share-based and deferred cash-based awards, with a vesting period of up to six years. Through performance year 2016, strategic objective awards were partly granted under the PartnerPlus deferred cash plan. In addition to such granted awards (UBS company contributions), participants were allowed to voluntarily contribute additional amounts otherwise payable as production payout up to a certain percentage, which vested upon contribution. Company contributions and voluntary contributions were credited with interest in accordance with the terms of the plan. Rather than being credited with interest, a participant could elect to have voluntary contributions, along with vested company contributions, credited with notional earnings based on the performance of various mutual funds. Company contributions and interest on both company and voluntary contributions ratably vest in 20% installments six to 10 years following grant date. Company contributions and interest on notional earnings on both company and voluntary contributions are forfeitable under certain circumstances. GrowthPlus GrowthPlus is a compensation plan for selected financial advisors whose revenue production and length of service exceed defined thresholds from 2010 through 2017. Awards were granted in 2010, 2011, 2015 and 2018. The awards are cash-based and are distributed over seven years, with the exception of 2018 awards, which are distributed over five years. Other compensation plans Equity Plus Plan (Equity Plus) Equity Plus is a voluntary share-based compensation plan that provides eligible employees with the opportunity to purchase UBS shares at market value and receive one notional share for every three shares purchased, up to a maximum annual limit. Share purchases may be made annually from the performance award and / or monthly through deductions from salary. If the shares purchased are held until three years from the start of the associated plan year and, in general, if the employee remains employed by UBS, the notional shares vest. For notional shares granted since April 2014, employees are entitled to receive a dividend equivalent, which may be paid in notional shares and / or cash. Role-based allowances (RBAs) Certain employees of legal entities regulated in the EU may receive an RBA in addition to their base salary. This allowance reflects the market value of a specific role and is fixed, non-forfeitable compensation. Unlike salary, an RBA is paid only as long as the employee is in such a role. RBAs consist of a cash portion and, where applicable, a blocked UBS share award. Such shares will be unblocked in equal installments after two and three years. The compensation expense is recognized in the year of grant. 479 Note 30 Employee benefits: variable compensation (continued) Discontinued deferred compensation plans The following plans have been discontinued. Expenses related to these plans were fully recognized in the income statement in periods prior to 2018. Any remaining outstanding options and stock appreciation rights under these awards will expire during 2019. Senior Executive Equity Ownership Plan (SEEOP) Up to February 2012, GEB members and selected senior executives received a portion of their mandatory deferral in UBS shares or notional shares, which vested in equal installments over a five-year vesting period and were forfeitable if certain conditions had not been met. The employee’s business division or the Group as a whole had to be profitable in the financial year preceding scheduled vesting. Awards granted under SEEOP were settled by delivering UBS shares at vesting. No SEEOP awards have been granted since 2012. Senior Executive Stock Option Plan (SESOP) Up to February 2008, GEB members and selected senior executives were granted UBS options with a strike price set at 110% of the market value of a UBS share on the grant date. These awards vested in full following a three-year vesting period and generally expired 10 years from the grant date. No SESOP awards have been granted since 2008. Long-Term Deferred Retention Senior Incentive Scheme (LTDRSIS) Awards under the LTDRSIS were granted to employees in Australia up to and including 2014 and represented a profit share amount based on the profitability of the Australian business. Awards vested after three years and included an arrangement that allowed for unpaid installments to be reduced if the business recorded a loss for the calendar year preceding vesting. The awards were generally forfeitable upon voluntary termination of employment with UBS. Key Employee Stock Appreciation Rights Plan (KESAP) and Key Employee Stock Option Plan (KESOP) Until 2009, certain key and high-potential employees were granted discretionary share-settled stock appreciation rights (SARs) or options on UBS shares with a strike price not less than the market value of a UBS share on the date of grant. A SAR gives employees the right to receive a number of UBS shares equal to the value of any market price increase of a UBS share between the grant date and the exercise date. One option entitles the holder to acquire one registered UBS share at the option’s strike price. SARs and options are settled by delivering UBS shares, except in jurisdictions where this is not permitted for legal reasons. No options or SARs awards have been granted since 2009. Share delivery obligations Share delivery obligations related to employee share-based compensation awards were 146 million shares as of 31 December 2018 (31 December 2017: 166 million shares). Share delivery obligations are calculated on the basis of unvested notional share awards, options and stock appreciation rights, taking applicable performance conditions into account. As of 31 December 2018, UBS held 118 million treasury shares (31 December 2017: 132 million) that were available to satisfy share delivery obligations. Treasury shares held are delivered to employees at exercise or vesting. However, share delivery obligations related to certain options and stock appreciation rights can also be satisfied by shares issued out of conditional capital. As of 31 December 2018, the number of UBS Group AG shares that could have been issued out of conditional capital for this purpose was 125 million (31 December 2017: 128 million).Financial statements 480 Consolidated financial statements Note 30 Employee benefits: variable compensation (continued) b) Effect on the income statement Effect on the income statement for the financial year and future periods The table below provides information on compensation expenses related to total variable compensation, including financial advisor variable compensation, that were recognized in the financial year ended 31 December 2018, as well as expenses that were deferred and will be recognized in the income statement for 2019 and later. The majority of expenses deferred to 2019 and later that are related to the performance year 2018 relates to awards granted in March 2019. The total compensation expense for unvested share-based awards granted up to 31 December 2018 will be recognized in future periods over a weighted average period of 2.3 years. Variable compensation including financial advisor variable compensation Expenses recognized in 2018 Expenses deferred to 2019 and later USD million Related to the performance year 2018 Related to prior performance years Total Related to the performance year 2018 Related to prior performance years Total Non-deferred cash 2,089 (32) 2,057 0 0 0 Deferred compensation awards 373 565 938 585 653 1,238 of which: Equity Ownership Plan 217 309 526 325 244 570 of which: Deferred Contingent Capital Plan 131 226 357 238 382 620 of which: Asset Management EOP 25 28 53 22 26 48 of which: Other performance awards 0 2 2 0 1 1 Total variable compensation – performance awards 2,461 534 2,995 585 653 1,238 Replacement payments 7 64 72 60 41 102 Forfeiture credits 0 (136) (136) 0 0 0 Severance payments 123 0 123 0 0 0 Retention plan and other payments 33 33 66 24 33 57 Deferred Contingent Capital Plan: interest expense 0 119 119 96 195 291 Total variable compensation – other 162 80 243 180 269 450 Financial advisor variable compensation 3,233 237 3,470 128 639 767 of which: non-deferred cash 3,089 0 3,089 0 0 0 of which: deferred share-based awards 51 44 95 52 131 183 of which: deferred cash-based awards 93 193 286 76 507 584 Compensation commitments with recruited financial advisors1 33 551 584 357 1,883 2,240 Total financial advisor variable compensation 3,266 789 4,054 484 2,522 3,006 Total variable compensation including FA variable compensation 5,889 1,403 7,2922 1,250 3,444 4,694 1 Reflects expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred exposure as of the balance sheet date. 2 Includes USD 634 million in expenses related to share-based compensation (performance awards: USD 526 million; other variable compensation: USD 12 million; financial advisor compensation: USD 95 million). A further USD 49 million in expenses related to share-based compensation was recognized within other Note 6 expense categories (Salaries: USD 15 million, related to role-based allowances; Social security: USD 8 million; Other personnel expenses: USD 26 million, related to the Equity Plus Plan). Total personnel expenses related to share-based equity-settled compensation excluding social security were USD 676 million. 481 Note 30 Employee benefits: variable compensation (continued) Variable compensation including financial advisor variable compensation (continued) Expenses recognized in 2017 Expenses deferred to 2018 and later USD million Related to the performance year 2017 Related to prior performance years Total Related to the performance year 2017 Related to prior performance years Total Non-deferred cash 2,088 (25) 2,062 0 0 0 Deferred compensation awards 399 689 1,088 594 697 1,291 of which: Equity Ownership Plan 239 344 583 329 291 620 of which: Deferred Contingent Capital Plan 135 310 444 238 376 614 of which: Asset Management EOP 25 32 57 27 27 54 of which: Other performance awards 0 4 4 0 3 3 Total variable compensation – performance awards 2,487 664 3,151 594 697 1,291 Replacement payments 13 59 72 86 44 130 Forfeiture credits 0 (107) (107) 0 0 0 Severance payments 113 0 113 0 0 0 Retention plan and other payments 25 38 63 30 33 63 Deferred Contingent Capital Plan: interest expense 0 111 111 80 222 301 Total variable compensation – other 151 101 252 196 298 494 Financial advisor variable compensation 3,050 260 3,310 156 795 951 of which: non-deferred cash 2,891 0 2,891 0 0 0 of which: deferred share-based awards 54 48 102 70 121 191 of which: deferred cash-based awards 104 212 316 86 674 760 Compensation commitments with recruited financial advisors1 31 723 754 369 2,058 2,428 Total financial advisor variable compensation 3,080 984 4,064 526 2,853 3,379 Total variable compensation including FA variable compensation 5,718 1,749 7,4672 1,316 3,848 5,164 1 Reflects expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred exposure as of the balance sheet date. 2 Includes USD 711 million in expenses related to share-based compensation (performance awards: USD 583 million; other variable compensation: USD 26 million; financial advisor compensation: USD 102 million). A further USD 101 million in expenses related to share-based compensation was recognized within other Note 6 expense categories (Salaries: USD 25 million, related to role-based allowances; Social security: USD 51 million; Other personnel expenses: USD 25 million, related to the Equity Plus Plan). Total personnel expenses related to share-based equity- settled compensation excluding social security were USD 735 million.Financial statements 482 Consolidated financial statements Note 30 Employee benefits: variable compensation (continued) Variable compensation including financial advisor variable compensation (continued) Expenses recognized in 2016 Expenses deferred to 2017 and later USD million Related to the performance year 2016 Related to prior performance years Total Related to the performance year 2016 Related to prior performance years Total Non-deferred cash 1,842 (43) 1,799 0 0 0 Deferred compensation awards 379 835 1,215 677 841 1,518 of which: Equity Ownership Plan 217 491 708 511 349 861 of which: Deferred Contingent Capital Plan 136 299 435 132 460 593 of which: Asset Management EOP 26 39 66 34 26 60 of which: Other performance awards 0 6 6 0 5 5 Total variable compensation – performance awards 2,221 792 3,013 677 841 1,518 Replacement payments 25 62 87 40 30 70 Forfeiture credits 0 (74) (74) 0 0 0 Severance payments 220 0 220 0 0 0 Retention plan and other payments 26 50 76 23 26 50 Deferred Contingent Capital Plan: interest expense 0 115 115 96 239 335 Total variable compensation – other 272 153 425 159 296 455 Financial advisor variable compensation 2,682 250 2,931 194 877 1,071 of which: non-deferred cash 2,534 0 2,534 0 0 0 of which: deferred share-based awards 34 49 82 57 117 174 of which: deferred cash-based awards 114 201 315 137 760 897 Compensation commitments with recruited financial advisors1 43 765 808 596 2,084 2,679 Total financial advisor variable compensation 2,725 1,015 3,740 790 2,961 3,750 Total variable compensation including FA variable compensation 5,218 1,960 7,1782 1,626 4,097 5,723 1 Reflects expenses related to compensation commitments with financial advisors entered into at the time of recruitment that are subject to vesting requirements. Amounts reflected as deferred expenses represent the maximum deferred exposure as of the balance sheet date. 2 Includes USD 831 million in expenses related to share-based compensation (performance awards: USD 708 million; other variable compensation: USD 41 million; financial advisor compensation: USD 82 million). A further USD 90 million in expenses related to share-based compensation was recognized within other Note 6 expense categories (Salaries: USD 39 million, related to role-based allowances; Social security: USD 27 million; Other personnel expenses: USD 24 million, related to the Equity Plus Plan). Total personnel expenses related to share-based equity-settled compensation excluding social security were USD 872 million. 483 Note 30 Employee benefits: variable compensation (continued) c) Outstanding share-based compensation awards Share and performance share awards Movements in outstanding share-based awards under the EOP during 2018 and 2017 are provided in the table below. Movements in outstanding share and performance share awards granted under the EOP Number of shares 2018 Weighted average grant date fair value (USD) Number of shares 2017 Weighted average grant date fair value (USD) Outstanding, at the beginning of the year 162,835,713 15 165,626,088 16 Shares awarded during the year 58,329,398 17 63,872,651 15 Distributions during the year (67,696,099) 15 (58,756,089) 16 Forfeited during the year (6,623,984) 16 (7,906,936) 15 Outstanding, at the end of the year 146,845,027 16 162,835,713 15 of which: shares vested for accounting purposes 66,850,562 74,883,139 The total carrying amount of the liability related to cash-settled share-based awards as of 31 December 2018 and 31 December 2017 was USD 39 million and USD 56 million, respectively. Option awards No option awards have been granted since 2009. The table below provides information on movements in outstanding option awards during 2018 and 2017. As these awards are Swiss franc-denominated, weighted average exercise prices are presented in Swiss francs. Movements in outstanding option awards Number of options 2018 Weighted average exercise price (CHF) Number of options 2017 Weighted average exercise price (CHF) Outstanding, at the beginning of the year 32,583,168 25 55,913,291 39 Exercised during the year1 (1,813,583) 12 (1,632,319) 12 Forfeited during the year (19,752) 23 (38,995) 27 Expired unexercised (24,182,241) 29 (21,658,809) 61 Outstanding, at the end of the year 6,567,592 14 32,583,168 25 Exercisable, at the end of the year 6,567,592 14 32,583,168 25 1 The weighted average share price upon option exercise was CHF 16.22 in 2018 (2017: CHF 16.73), resulting in an intrinsic value of CHF 7 million of options exercised during 2018 (2017: CHF 8 million). The table below provides additional information about options outstanding as of 31 December 2018. Options outstanding Range of exercise prices Number of options outstanding Weighted average exercise price (CHF) Aggregate intrinsic value (CHF million) Weighted average remaining contractual term (years) CHF 10.21–15.00 3,294,894 10.27 6.5 0.2 15.01–25.00 3,272,698 16.95 0.0 0.6 10.21–25.00 6,567,592 6.5 Financial statements 484 Consolidated financial statements Note 30 Employee benefits: variable compensation (continued) SAR awards No SAR awards have been granted since 2009. The table below provides information on movements in outstanding SAR awards during 2018 and 2017. As these awards are Swiss franc-denominated, weighted average exercise prices are presented in Swiss francs. Movements in outstanding SAR awards Number of SARs 2018 Weighted average exercise price (CHF) Number of SARs 2017 Weighted average exercise price (CHF) Outstanding, at the beginning of the year 8,513,415 12 10,807,315 12 Exercised during the year1 (2,490,146) 11 (2,212,700) 11 Forfeited during the year (11,000) 13 (23,000) 11 Expired unexercised (46,500) 12 (58,200) 13 Outstanding, at the end of the year 5,965,769 12 8,513,415 12 Exercisable, at the end of the year 5,965,769 12 8,513,415 12 1 The weighted average share price upon exercise of SARs was CHF 16.15 in 2018 (2017: CHF 16.70), resulting in an intrinsic value of CHF 12 million of SARs exercised during 2018 (2017: CHF 12 million). The table below provides additional information about SARs outstanding as of 31 December 2018. SARs outstanding Range of exercise prices Number of SARs outstanding Weighted average exercise price (CHF) Aggregate intrinsic value (CHF million) Weighted average remaining contractual term (years) CHF 11.12–12.50 5,633,269 11.34 5.1 0.2 12.51–15.00 2,500 14.85 0.0 0.4 15.01–17.50 42,000 16.80 0.0 0.4 17.51–20.00 288,000 19.25 0.0 0.7 11.12–20.00 5,965,769 5.1 d) Valuation UBS share awards UBS measures compensation expense based on the average market price of the UBS share on the grant date as quoted on the SIX Swiss Exchange, taking into consideration post-vesting sale and hedge restrictions, non-vesting conditions and market conditions, where applicable. The fair value of the share awards subject to post-vesting sale and hedge restrictions is discounted on the basis of the duration of the post-vesting restriction and is referenced to the cost of purchasing an at-the-money European put option for the term of the transfer restriction. The weighted average discount for share and performance share awards granted during 2018 was approximately 18.0% (2017: 20.2%) of the market price of the UBS share. The grant date fair value of notional shares without dividend entitlements also includes a deduction for the present value of future expected dividends to be paid between the grant date and distribution. UBS options and SARs awards The fair values of options and SARs have been determined using a standard closed-formula option valuation model. The expected term of each instrument is calculated on the basis of historical employee exercise behavior patterns, taking into account the share price, strike price, vesting period and the contractual life of the instrument. The term structure of volatility is derived from the implied volatilities of traded options on UBS shares in combination with the observed long-term historical share price volatility. Expected future dividends are derived from traded UBS options or from the historical dividend pattern. 485 Note 31 Interests in subsidiaries and other entities a) Interests in subsidiaries UBS defines its significant subsidiaries as those entities that, either individually or in aggregate, contribute significantly to the Group’s financial position or results of operations, based on a number of criteria, including the subsidiaries’ equity and their contribution to the Group’s total assets and profit or loss before tax, in accordance with the requirements set by IFRS 12, Swiss regulations and the rules of the US Securities and Exchange Commission (SEC). Individually significant subsidiaries The two tables below list the Group’s individually significant subsidiaries as of 31 December 2018. Unless otherwise stated, the subsidiaries listed below have share capital consisting solely of ordinary shares that are held fully by the Group, and the proportion of ownership interest held is equal to the voting rights held by the Group. The country where the respective registered office is located is also the principal place of business. UBS AG operates through a global network of branches and a significant proportion of its business activity is conducted outside Switzerland in the UK, US, Singapore, Hong Kong and other countries. UBS Europe SE has branches and offices in a number of EU member states, including Germany, Italy, Luxembourg, Spain and Austria. Share capital is provided in the currency of the legally registered office. Subsidiaries of UBS Group AG as of 31 December 2018 Company Registered office Share capital in million Equity interest accumulated in % UBS AG Zurich and Basel, Switzerland CHF 385.8 100.0 UBS Business Solutions AG1 Zurich, Switzerland CHF 1.0 100.0 UBS Group Funding (Switzerland) AG Zurich, Switzerland CHF 0.1 100.0 1 UBS Business Solutions AG holds subsidiaries in Poland, China and India. Individually significant subsidiaries of UBS AG as of 31 December 20181 Company Registered office Primary business division Share capital in million Equity interest accumulated in % UBS Americas Holding LLC Wilmington, Delaware, USA Corporate Center USD 2,250.0 2 100.0 UBS Asset Management AG Zurich, Switzerland Asset Management CHF 43.2 100.0 UBS Bank USA Salt Lake City, Utah, USA Global Wealth Management USD 0.0 100.0 UBS Europe SE Frankfurt, Germany Global Wealth Management EUR 446.0 100.0 UBS Financial Services Inc. Wilmington, Delaware, USA Global Wealth Management USD 0.0 100.0 UBS Limited London, United Kingdom Investment Bank GBP 226.6 100.0 UBS Securities LLC Wilmington, Delaware, USA Investment Bank USD 1,283.1 3 100.0 UBS Switzerland AG Zurich, Switzerland Personal & Corporate Banking CHF 10.0 100.0 1 Includes direct and indirect subsidiaries of UBS AG. 2 Comprised of common share capital of USD 1,000 and non-voting preferred share capital of USD 2,250,000,000. 3 Comprised of common share capital of USD 100,000 and non-voting preferred share capital of USD 1,283,000,000.Financial statements 486 Consolidated financial statements Note 31 Interests in subsidiaries and other entities (continued) Other subsidiaries The table below lists other direct and indirect subsidiaries of UBS AG that are not individually significant but that contribute to the Group’s total assets and aggregated profit before tax thresholds and are thereby disclosed in accordance with the requirements set by the SEC. Other subsidiaries of UBS AG as of 31 December 2018 Company Registered office Primary business division Share capital in million Equity interest accumulated in % UBS Americas Inc. Wilmington, Delaware, USA Corporate Center USD 0.0 100.0 UBS Asset Management (Hong Kong) Limited Hong Kong, Hong Kong Asset Management HKD 254.0 100.0 UBS Asset Management (Japan) Ltd Tokyo, Japan Asset Management JPY 2,200.0 100.0 UBS Business Solutions US LLC Wilmington, Delaware, USA Corporate Center USD 0.0 100.0 UBS Credit Corp. Wilmington, Delaware, USA Global Wealth Management USD 0.0 100.0 UBS (France) S.A. Paris, France Global Wealth Management EUR 133.0 100.0 UBS Fund Advisor, L.L.C. Wilmington, Delaware, USA Global Wealth Management USD 0.0 100.0 UBS Fund Management (Luxembourg) S.A. Luxembourg, Luxembourg Asset Management EUR 13.0 100.0 UBS Fund Management (Switzerland) AG Basel, Switzerland Asset Management CHF 1.0 100.0 UBS (Monaco) S.A. Monte Carlo, Monaco Global Wealth Management EUR 49.2 100.0 UBS Realty Investors LLC Boston, Massachusetts, USA Asset Management USD 9.0 100.0 UBS Securities (Thailand) Ltd Bangkok, Thailand Investment Bank THB 500.0 100.0 UBS Securities Australia Ltd Sydney, Australia Investment Bank AUD 0.3 1 100.0 UBS Securities Japan Co., Ltd. Tokyo, Japan Investment Bank JPY 32,100.0 100.0 UBS Securities Pte. Ltd. Singapore, Singapore Investment Bank SGD 420.4 100.0 UBS Asset Management Life Ltd London, United Kingdom Asset Management GBP 15.0 100.0 1 Includes a nominal amount relating to redeemable preference shares. Consolidated structured entities UBS consolidates a structured entity (SE) if it has power over the relevant activities of the entity, exposure to variable returns and the ability to use its power to affect its returns. Consolidated SEs include certain investment funds, securitization vehicles and client investment vehicles. UBS has no individually significant subsidiaries that are SEs. Investment fund SEs are generally consolidated when the Group’s aggregate exposure combined with its decision-making rights indicate the ability to use such power in a principal capacity. Typically the Group will have decision-making rights as fund manager, earning a management fee, and will provide seed capital at the inception of the fund or hold a significant percentage of the fund units. Where other investors do not have the substantive ability to remove UBS as decision maker, the Group is deemed to have control and therefore consolidates the fund. Securitization SEs are generally consolidated when the Group holds a significant percentage of the asset-backed securities issued by the SE and has the power to remove without cause the servicer of the asset portfolio. Client investment SEs are generally consolidated when the Group has a substantive liquidation right over the SE or a decision right over the assets held by the SE and has exposure to variable returns through derivatives traded with the SE or holding notes issued by the SE. In 2018 and 2017, the Group did not enter into any contractual obligation that could require the Group to provide financial support to consolidated SEs. In addition, the Group did not provide support, financial or otherwise, to a consolidated SE when the Group was not contractually obligated to do so, nor has the Group an intention to do so in the future. Further, the Group did not provide support, financial or otherwise, to a previously unconsolidated SE that resulted in the Group controlling the SE during the reporting period. 487 Note 31 Interests in subsidiaries and other entities (continued) b) Interests in associates and joint ventures As of 31 December 2018 and 2017, no associate or joint venture was individually material to the Group. In addition, there were no significant restrictions on the ability of associates or joint ventures to transfer funds to UBS Group AG or its subsidiaries in the form of cash dividends or to repay loans or advances made. There were no quoted market prices for any associates or joint ventures of the Group. UBS Securities China is no longer recognized as an investment in associate as of 31 December 2018 as this entity was consolidated following an increase in stake from 24.99% to 51% and UBS acquiring control in December 2018. →Refer to Note 32 for more information In November 2018, SIX and Worldline entered into a strategic partnership in the cards business under which SIX transferred its existing cards business to Worldline and received a 27% stake in Worldline. UBS recognized a gain of USD 460 million in the income statement, proportional to UBS’s 17.31% equity ownership in SIX. Investments in associates and joint ventures USD million 2018 2017 Carrying amount at the beginning of the year 1,045 947 Additions 3 3 Disposals1 (431) 0 Reclassifications2 (21) 0 Share of comprehensive income 529 100 of which: share of net profit 3 529 76 of which: share of other comprehensive income 4 1 24 Dividends received (42) (53) Impairment (7) Foreign currency translation 16 55 Carrying amount at the end of the year 1,099 1,045 of which: associates 1,066 1,014 of which: UBS Securities China 1 412 of which: SIX Group AG, Zurich 5 952 476 of which: other associates 114 127 of which: joint ventures 33 30 1 In December 2018, UBS increased its shareholding in UBS Securities China from 24.99% to 51%, acquiring control of the entity in accordance with IFRS 10, Consolidated Financial Statements. Upon acquisition of control, UBS derecognized its former investment in associate. Refer to Note 32 for more information. 2 Reflects reclassifications to Properties and other non-current assets held for sale. 3 For 2018, consists of USD 511 million from associates, of which USD 460 million reflected a valuation gain on the equity ownership in SIX related to the sale of SIX Payment Services to Worldline, and USD 18 million from joint ventures. For 2017, consists of USD 61 million from associates and USD 15 million from joint ventures. 4 For 2018, the total of USD 1 million is from associates. For 2017, consists of USD 24 million from associates and negative USD 1 million from joint ventures. 5 In 2018, UBS AG’s equity interest amounts to 17.31%. UBS AG is represented on the Board of Directors. Financial statements 488 Consolidated financial statements Note 31 Interests in subsidiaries and other entities (continued) c) Interests in unconsolidated structured entities During 2018, the Group sponsored the creation of various SEs and interacted with a number of non-sponsored SEs, including securitization vehicles, client vehicles as well as certain investment funds, that UBS did not consolidate as of 31 December 2018 because it did not control these entities. The table below presents the Group’s interests in and maximum exposure to loss from unconsolidated SEs as well as the total assets held by the SEs in which UBS had an interest as of year-end, except for investment funds sponsored by third parties, for which the carrying value of UBS’s interest as of year- end has been disclosed. Interests in unconsolidated structured entities 31.12.18 USD million, except where indicated Securitization vehicles Client vehicles Investment funds Total Maximum exposure to loss1 Financial assets at fair value held for trading 420 174 7,297 7,890 7,890 Derivative financial instruments 8 35 1 44 44 Loans and advances to customers 179 179 179 Financial assets at fair value not held for trading 87 482 1663 302 1,878 Financial assets measured at fair value through other comprehensive income 3,931 3,931 3,931 Other financial assets measured at amortized cost 312 252 337 1,423 Total assets 8264 4,212 7,643 12,682 Derivative financial instruments 35 123 32 158 3 Total liabilities 3 123 32 158 Assets held by the unconsolidated structured entities in which UBS had an interest (USD billion) 636 697 3858 31.12.17 USD million, except where indicated Securitization vehicles Client vehicles Investment funds Total Maximum exposure to loss1 Financial assets at fair value held for trading 373 316 6,302 6,991 6,991 Derivative financial instruments 22 70 23 114 114 Loans and advances to customers 100 100 100 Financial assets at fair value not held for trading 86 68 2 108 262 1,826 Financial assets measured at fair value through other comprehensive income 3,965 46 3 4,011 4,011 Other financial assets measured at amortized cost 299 30 2 328 1,443 Total assets 7794 4,449 6,578 11,806 Derivative financial instruments 21 5 54 208 283 14 Total liabilities 21 54 208 283 Assets held by the unconsolidated structured entities in which UBS had an interest (USD billion)9 586 807 4228 1 For the purpose of this disclosure, maximum exposure to loss amounts do not consider the risk-reducing effects of collateral or other credit enhancements. 2 Represents the carrying value of loan commitments. The maximum exposure to loss for these instruments is equal to the notional amount. 3 Upon adoption of IFRS 9 on 1 January 2018, investment fund units that were formerly classified as available for sale under IAS 39 were reclassified to Financial assets at fair value not held for trading. Refer to Note 1c for more information. 4 As of 31 December 2018, USD 0.6 billion of the USD 0.8 billion (31 December 2017: USD 0.7 billion of the USD 0.8 billion) was held in Corporate Center – Non-core and Legacy Portfolio. 5 Comprised of credit default swap liabilities and other swap liabilities. The maximum exposure to loss for credit default swap liabilities is equal to the sum of the negative carrying value and the notional amount. For other swap liabilities, no maximum exposure to loss is reported. 6 Represents the principal amount outstanding. 7 Represents the market value of total assets. 8 Represents the net asset value of the investment funds sponsored by UBS and the carrying value of UBS’s interests in the investment funds not sponsored by UBS. 9 In 2018 UBS has refined the methodology applied to identify significant interests in the scope of disclosure under IFRS 12, Disclosure of Interests in Other Entities. This change has been applied prospectively as the effect on interests disclosed was not material in prior periods. Had this methodology been applied in 2017, the interests in unconsolidated structured entities at 31 December 2017 would have been USD 0.3 million and USD 0.2 million lower for securitization vehicles and client vehicles, respectively. Assets held by the unconsolidated structured entities in which UBS had an interest at 31 December 2017 would have been USD 26 billion lower for securitization vehicles and USD 22 billion lower for client vehicles. 489 Note 31 Interests in subsidiaries and other entities (continued) The Group retains or purchases interests in unconsolidated SEs in the form of direct investments, financing, guarantees, letters of credit, derivatives and through management contracts. The Group’s maximum exposure to loss is generally equal to the carrying value of the Group’s interest in the SE, with the exception of guarantees, letters of credit and credit derivatives, for which the contract’s notional amount, adjusted for losses already incurred, represents the maximum loss that the Group is exposed to. In addition, the current fair value of derivative swap instruments with a positive replacement value only, such as total return swaps, is presented as the maximum exposure to loss. Risk exposure for these swap instruments could change over time with market movements. The maximum exposure to loss disclosed in the table on the previous page does not reflect the Group’s risk management activities, including effects from financial instruments that may be used to economically hedge the risks inherent in the unconsolidated SE or the risk-reducing effects of collateral or other credit enhancements. In 2018 and 2017, the Group did not provide support, financial or otherwise, to an unconsolidated SE when not contractually obligated to do so, nor has the Group an intention to do so in the future. In 2018 and 2017, income and expenses from interests in unconsolidated SEs primarily resulted from mark-to-market movements recognized in other net income from fair value changes on financial instruments, which have generally been hedged with other financial instruments, as well as fee and commission income received from UBS-sponsored funds. Interests in securitization vehicles As of 31 December 2018 and 31 December 2017, the Group held interests, both retained and acquired, in various securitization vehicles, a majority of which are held within Corporate Center – Non-core and Legacy Portfolio. The Investment Bank also retained interests in securitization vehicles related to financing, underwriting, secondary market and derivative trading activities. In some cases the Group may be required to absorb losses from an unconsolidated SE before other parties because the Group’s interest is subordinated to others in the ownership structure. An overview of the Group’s interests in unconsolidated securitization vehicles and the relative ranking and external credit rating of those interests is presented in the table on the following pages. The numbers outlined in this table may differ from the securitization positions presented in the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors, for the following reasons: (i) exclusion from the table on the following pages of synthetic securitizations transacted with entities that are not SEs and transactions in which the Group did not have an interest because it did not absorb any risk, (ii) a different measurement basis in certain cases (e.g., IFRS carrying value within the table above compared with net exposure amount at default for Pillar 3 disclosures) and (iii) different classification of vehicles viewed as sponsored by the Group versus sponsored by third parties. →Refer to Note 1a item 1 for more information on the Group’s accounting policies regarding consolidation and sponsorship of securitization vehicles and other structured entities →Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information Interests in client vehicles As of 31 December 2018 and 31 December 2017, the Group retained interests in client vehicles sponsored by UBS and third parties that relate to financing and derivative activities, and to hedge structured product offerings. Included within these investments are securities guaranteed by US government agencies. Interests in investment funds The Group holds interests in a number of investment funds, primarily resulting from seed investments or in order to hedge structured product offerings. In addition to the interests disclosed in the table on the previous page, the Group manages the assets of various pooled investment funds and receives fees that are based, in whole or part, on the net asset value of the fund and / or the performance of the fund. The specific fee structure is determined on the basis of various market factors and considers the nature of the fund and the jurisdiction of incorporation, as well as fee schedules negotiated with clients. These fee contracts represent an interest in the fund as they align the Group’s exposure with investors, providing a variable return that is based on the performance of the entity. Depending on the structure of the fund, these fees may be collected directly from the fund assets and / or from the investors. Any amounts due are collected on a regular basis and are generally backed by the assets of the fund. The Group did not have any material exposure to loss from these interests as of 31 December 2018 or as of 31 December 2017.Financial statements 490 Consolidated financial statements Note 31 Interests in subsidiaries and other entities (continued) Interests in unconsolidated securitization vehicles1 31.12.18 USD million, except where indicated Residential mortgage- backed securities Commercial mortgage- backed securities Other asset-backed securities2 Re-securiti- zation3 Total Sponsored by UBS Interests in senior tranches 87 196 8 291 of which: rated investment grade 196 196 of which: rated sub-investment grade 87 8 95 of which: not rated 0 0 Interests in mezzanine tranches 13 13 of which: rated investment grade 12 12 of which: not rated 0 0 Interests in junior tranches 8 1 9 of which: not rated 8 1 9 Total 95 210 8 313 of which: financial assets at fair value held for trading 8 210 8 226 of which: financial assets at fair value not held for trading 87 87 Total assets held by the vehicles in which UBS had an interest (USD billion) 0 24 1 25 Not sponsored by UBS Interests in senior tranches 1 33 25 126 185 of which: rated investment grade 1 33 0 126 160 of which: not rated 0 25 25 Interests in mezzanine tranches 1 7 8 of which: rated investment grade 2 2 of which: rated sub-investment grade 1 1 of which: defaulted 0 0 of which: not rated 0 5 5 Interests in junior tranches 1 1 of which: rated sub-investment grade 1 1 of which: defaulted 0 0 Total 3 41 25 126 194 of which: financial assets at fair value held for trading 3 41 25 126 194 Total assets held by the vehicles in which UBS had an interest (USD billion) 2 12 22 1 37 491 Note 31 Interests in subsidiaries and other entities (continued) Interests in unconsolidated securitization vehicles (continued)1 31.12.17 USD million, except where indicated Residential mortgage- backed securities Commercial mortgage- backed securities Other asset-backed securities2 Re-securiti- zation3 Total Sponsored by UBS Interests in senior tranches 86 24 0 11 121 of which: rated investment grade 0 24 0 24 of which: rated sub-investment grade 86 86 of which: defaulted 11 11 Interests in junior tranches 9 9 of which: rated investment grade 9 9 Total 86 33 0 11 130 of which: financial assets at fair value held for trading 33 0 11 44 of which: financial assets at fair value not held for trading 86 86 Total assets held by the vehicles in which UBS had an interest (USD billion) 1 10 0 1 12 Not sponsored by UBS Interests in senior tranches 77 7 169 66 319 of which: rated investment grade 77 7 169 66 319 Interests in mezzanine tranches 9 1 9 of which: rated investment grade 1 1 of which: defaulted 9 9 Interests in junior tranches 1 1 of which: rated sub-investment grade 1 1 Tranche information not available 0 0 of which: rated investment grade 0 0 of which: not rated 0 0 Total 87 7 169 66 330 of which: financial assets at fair value held for trading 87 7 169 66 330 Total assets held by the vehicles in which UBS had an interest (USD billion)4 19 5 20 0 44 1 This table excludes receivables and derivative transactions with securitization vehicles. 2 Includes credit card, auto and student loan structures. 3 Includes collateralized debt obligations. 4 In 2018 UBS has refined the methodology applied to identify significant interests in the scope of disclosure under IFRS 12, Disclosure of Interests in Other Entities. This change has been applied prospectively as the effect on interests disclosed was not material in prior periods. Had this methodology been applied in 2017, the interests in unconsolidated securitization vehicles at 31 December 2017 would have been USD 0.3 million lower and the assets held by these unconsolidated securitization vehicles would have been USD 26 billion lower.Financial statements 492 Consolidated financial statements Note 31 Interests in subsidiaries and other entities (continued) Sponsored unconsolidated structured entities in which UBS did not have an interest For several sponsored SEs, no interest was held by the Group at year-end. However, during the respective reporting period the Group transferred assets, provided services and held instruments that did not qualify as an interest in these sponsored SEs, and accordingly earned income or incurred expenses from these entities. The table below presents the income earned and expenses incurred directly from these entities during the year as well as corresponding asset information. The table does not include income earned and expenses incurred from risk management activities, including income and expenses from financial instruments used to economically hedge instruments transacted with the unconsolidated SEs. The majority of the fee income arose from investment funds that are sponsored and administrated by the Group, but managed by third parties. As the Group does not provide any active management services, UBS was not exposed to risk from the performance of these entities and was therefore deemed not to have an interest in them. In certain structures, the fees receivable may be collected directly from the investors and have therefore not been included in the table below. The Group also recorded other net income from fair value changes on financial instruments from mark-to-market movements arising primarily from derivatives, such as interest rate and currency swaps as well as credit derivatives, through which the Group purchases protection, and financial liabilities designated at fair value, which do not qualify as interests because the Group does not absorb variability from the performance of the entity. Total income reported does not reflect economic hedges or other mitigating effects from the Group’s risk management activities. During 2018, UBS and third parties transferred assets of USD 1 billion and USD 1 billion, respectively, into sponsored securitization vehicles created in the year (2017: USD 2 billion and USD 8 billion, respectively). UBS and third parties also transferred assets of USD 2 billion and USD 0 billion, respectively, into sponsored client vehicles created in the year (2017: USD 3 billion and USD 1 billion, respectively). For sponsored investment funds, transfers arose during the period as investors invested and redeemed positions, thereby changing the overall size of the funds, which, when combined with market movements, resulted in a total closing net asset value of USD 18 billion (31 December 2017: USD 15 billion). Sponsored unconsolidated structured entities in which UBS did not have an interest at year-end1 As of or for the year ended 31.12.18 USD million, except where indicated Securitization vehicles Client vehicles Investment funds Total Net interest income 0 (6) 1 (5) Net fee and commission income 16 39 54 Other net income from fair value changes on financial instruments 0 8 20 29 Total income 1 18 60 78 Asset information (USD billion) 22 23 184 As of or for the year ended 31.12.17 USD million, except where indicated Securitization vehicles Client vehicles Investment funds Total Net interest income 2 (9) 0 (7) Net fee and commission income 41 41 Other net income from fair value changes on financial instruments (8) (50) 2 (56) Total income (6) (59) 43 (22) Asset information (USD billion) 102 43 154 1 For the year ended 31 December 2018, no profit attributable to non-controlling interests was excluded from the table (31 December 2017: USD 73 million). 2 Represents the amount of assets transferred to the respective securitization vehicles. 3 Represents the amount of assets transferred to the respective client vehicles. Information in the comparative period has been restated. Asset information as of 31 December 2017 has decreased by USD 3 billion as a result. 4 Represents the total net asset value of the respective investment funds. 493 Note 32 Changes in organization and acquisitions and disposals of subsidiaries and businesses Changes in Group structure and organization UBS Business Solutions AG In 2015, UBS Business Solutions AG was established as a direct subsidiary of UBS Group AG to act as the Group service company and UBS transferred the ownership of the majority of its existing service subsidiaries outside the US to UBS Business Solutions AG. In 2017, shared services functions in Switzerland and the UK were transferred from UBS AG to UBS Business Solutions AG. In 2017, UBS also completed the transfer of the shared services employees in the US to its US service company, UBS Business Solutions US LLC, a wholly owned subsidiary of UBS Americas Holding LLC. UBS Group Funding (Switzerland) AG UBS established UBS Group Funding (Switzerland) AG in 2016 as a wholly owned direct subsidiary of UBS Group AG, to issue loss- absorbing additional tier 1 (AT1) capital instruments and total loss-absorbing capacity (TLAC)-eligible senior unsecured debt, which are guaranteed by UBS Group AG. In 2017, UBS transferred the then outstanding TLAC-eligible senior unsecured debt to UBS Group Funding (Switzerland) AG as the issuer. In May 2018, UBS substituted UBS Group AG where it was the issuer of outstanding AT1 capital instruments with UBS Group Funding (Switzerland) AG. Following the substitution, the relevant AT1 capital instruments are guaranteed by UBS Group AG, and investors’ seniority of claim against UBS Group AG remains unchanged. UBS Europe SE In 2016, UBS merged its Wealth Management subsidiaries in Italy, Luxembourg (including its branches in Austria, Denmark and Sweden), the Netherlands and Spain into UBS Deutschland AG, which was renamed to UBS Europe SE, in order to establish UBS’s new European legal entity, which is headquartered in Frankfurt, Germany. The previously announced combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE took place on 1 March 2019. Transfer of assets and liabilities from UBS Limited to UBS AG, London Branch In the fourth quarter of 2018, clients and other counterparties of UBS Limited who can be serviced by UBS AG, London Branch were generally migrated to UBS AG, London Branch. Transactions affecting the businesses that were transferred which occurred on or after the transfer date were recorded in UBS AG, London Branch. UBS Asset Management AG In 2016, UBS transferred the majority of the operating subsidiaries of Asset Management to UBS Asset Management AG. Increase of stake in and consolidation of UBS Securities China In December 2018, UBS increased its shareholding in UBS Securities China from 24.99% to 51%, acquiring control of the entity in accordance with IFRS 10, Consolidated Financial Statements. Upon acquisition of control, UBS remeasured its former 24.99% holding at fair value, resulting in a pre-tax loss of USD 270 million, recognized in Other income. In addition, a net foreign currency translation gain of USD 46 million was recognized upon derecognition of the former investment in associate, also in Other income. The cost of acquisition of the additional 26.01% stake was USD 125 million. Upon consolidation, UBS recognized USD 102 million of goodwill and USD 278 million of other net assets. In addition, a non-controlling interest of USD 136 million has been recognized. Acquisitions In October 2018, UBS acquired certain assets and liabilities from Nordea’s Luxembourg-based private banking business for a consideration of approximately EUR 120 million. As a result of the transaction, UBS recognized a total of EUR 1.1 billion of loans (mortgages, Lombard loans, overdrafts), EUR 1.3 billion of cash and EUR 2.4 billion of deposits, as well as approximately EUR 75 million of intangible assets and approximately EUR 50 million of goodwill, recognized in Global Wealth Management. In addition, UBS reported an increase of approximately EUR 9.5 billion in client assets, of which approximately EUR 6.1 billion count as invested assets. Sales and disposals of subsidiaries and businesses In 2018, 2017 and 2016, no significant subsidiaries were removed from the scope of consolidation as a result of sales or disposals. In the third quarter of 2018, UBS completed the sale of Widder Hotel, resulting in a pre-tax gain on sale of subsidiaries and businesses of USD 25 million and a pre-tax gain on sale of real estate of USD 31 million. In 2017, UBS completed the sale of Asset Management’s fund administration servicing units in Luxembourg and Switzerland to Northern Trust, resulting in a pre-tax gain on sale of USD 153 million. Also in 2017, UBS completed the sale of a life insurance subsidiary within Global Wealth Management. A loss on sale of USD 24 million was recognized in 2016 relating to this transaction. Financial statements 494 Consolidated financial statements Note 33 Operating leases and finance leases Information on lease contracts classified as operating leases where UBS is the lessee is provided in Note 33a and information on finance leases where UBS acts as a lessor is provided in Note 33b. a) Operating lease commitments As of 31 December 2018, UBS was obligated under a number of non-cancelable operating leases for premises and equipment used primarily for banking purposes. The significant premises leases usually include renewal options and escalation clauses in line with general office rental market conditions, as well as rent adjustments based on price indices. However, the lease agreements do not contain contingent rent payment clauses and purchase options, nor do they impose any restrictions on UBS’s ability to pay dividends, engage in debt financing transactions or enter into further lease agreements. →Refer to Note 1d for more information on the expected effects of adoption of IFRS 16, Leases, effective 1 January 2019 USD million 31.12.18 Expenses for operating leases to be recognized in: 2019 684 2020 647 2021 543 2022 489 2023 449 2024 and thereafter 1,877 Subtotal commitments for minimum payments under operating leases 4,688 Less: Sublease rental income commitments 250 Net commitments for minimum payments under operating leases 4,438 USD million 31.12.18 31.12.17 31.12.16 Gross operating lease expense recognized in the income statement 766 739 757 Sublease rental income 52 68 79 Net operating lease expense recognized in the income statement 714 671 678 b) Finance lease receivables UBS leases a variety of assets to third parties under finance leases, such as commercial vehicles, production lines, medical equipment, construction equipment and aircraft. At the end of the respective lease term, assets may be sold to third parties or further leased. Lessees may participate in any sales proceeds achieved. Lease expenses cover the cost of the assets less their residual value as well as financing costs. As of 31 December 2018, unguaranteed residual values of USD 156 million had been accrued, and the ECL stage 3 allowance for uncollectible minimum lease payments receivable amounted to USD 7 million. No contingent rents were received in 2018. Amounts in the table below are disclosed on a gross basis. The finance lease receivable in Note 17a of USD 1,091 million is presented net of expected credit loss allowances. Lease receivables USD million 31.12.18 Total minimum lease payments Unearned finance income Present value 2019 359 22 337 2020–2023 703 35 669 Thereafter 103 2 102 Total 1,166 58 1,107 495 Note 34 Guarantees, commitments and forward starting transactions The table below shows the maximum irrevocable amount of guarantees, commitments and forward starting transactions. USD million 31.12.18 31.12.17 Gross Sub- partici- pations Net Gross Sub- partici- pations Net Measured at fair value Not measured at fair value Measured at fair value Not measured at fair value Total guarantees 1,639 18,146 (2,803) 16,982 1,662 17,680 (2,942) 16,400 Loan commitments 3,535 31,212 (647) 34,099 7,954 32,125 (1,102) 38,977 Forward starting transactions1 Reverse repurchase agreements 8,117 925 13,011 Securities borrowing agreements 12 24 Repurchase agreements 7,926 400 8,399 1 Cash to be paid in the future by either UBS or the counterparty. Certain reverse repurchase agreements and repurchase agreements were reclassified from amortized cost to fair value through profit or loss upon adoption of IFRS 9 as of 1 January 2018. Refer to Note 1c for more information. Financial statements 496 Consolidated financial statements Note 35 Related parties UBS defines related parties as associates (entities that are significantly influenced by UBS), joint ventures (entities in which UBS shares control with another party), post-employment benefit plans for UBS employees, key management personnel, close family members of key management personnel and entities that are, directly or indirectly, controlled or jointly controlled by key management personnel or their close family members. Key management personnel is defined as members of the Board of Directors (BoD) and Group Executive Board (GEB). a) Remuneration of key management personnel The Chairman of the BoD has a specific management employment contract and receives pension benefits upon retirement. Total remuneration of the Chairman of the Board of Directors and all GEB members is included in the table below. Remuneration of key management personnel USD million, except where indicated 31.12.18 31.12.17 31.12.16 Base salaries and other cash payments1 27 25 25 Incentive awards – cash2 15 15 11 Annual incentive award under DCCP 22 22 22 Employer’s contributions to retirement benefit plans 3 3 3 Benefits in kind, fringe benefits (at market value) 2 2 2 Equity-based compensation3 40 40 42 Total 109 106 105 Total (CHF million)4 107 106 104 1 Includes role-based allowances in line with market practice in response to regulatory requirements. 2 The cash portion may also include blocked shares in line with regulatory requirements. 3 Expenses for shares granted are calculated at grant date of the respective award and allocated over the vesting period of generally 5 years. Refer to Note 30 for more information. In 2018, 2017 and 2016, equity-based compensation was entirely comprised of EOP awards. 4 Swiss franc amounts disclosed represent the respective US dollar amounts translated at the applicable performance award currency exchange rates (2018: CHF / USD 0.98; 2017: CHF / USD 1.00; 2016: CHF / USD 0.99). The independent members of the BoD do not have employment or service contracts with UBS, and thus are not entitled to benefits upon termination of their service on the BoD. Payments to these individuals for their services as external board members amounted to USD 7.6 million (CHF 7.4 million) in 2018, USD 7.1 million (CHF 7.1 million) in 2017 and USD 7.2 million (CHF 7.2 million) in 2016. b) Equity holdings of key management personnel Equity holdings of key management personnel 31.12.18 31.12.17 Number of stock options from equity participation plans held by non-independent members of the BoD and the GEB members1 0 398,867 Number of shares held by members of the BoD, GEB and parties closely linked to them2 5,954,967 3,709,539 1 Refer to Note 30 for more information. 2 Excludes shares granted under variable compensation plans with forfeiture provisions. Of the share totals above, 95,597 shares were held by close family members of key management personnel on 31 December 2018 and 31 December 2017. No shares were held by entities that are directly or indirectly controlled or jointly controlled by key management personnel or their close family members on 31 December 2018 and 31 December 2017. Refer to Note 30 for more information. As of 31 December 2018, no member of the BoD or GEB was the beneficial owner of more than 1% of UBS Group AG’s shares. 497 Note 35 Related parties (continued) c) Loans, advances and mortgages to key management personnel The non-independent members of the BoD and GEB members are granted loans, fixed advances and mortgages in the ordinary course of business on substantially the same terms and conditions that are available to other employees, including interest rates and collateral, and neither involve more than the normal risk of collectibility nor contain any other unfavorable features for the firm. Independent BoD members are granted loans and mortgages in the ordinary course of business at general market conditions. Movements in the loan, advances and mortgage balances are as follows. Loans, advances and mortgages to key management personnel1 USD million, except where indicated 2018 2017 Balance at the beginning of the year 42 42 Additions 15 2 Reductions (22) (1) Balance at the end of the year2 34 42 Balance at the end of the year (CHF million)2, 3 34 41 1 All loans are secured loans. 2 Excludes unused uncommitted credit facilities for one GEB member of USD 3,000,000 (CHF 2,949,690) as of 31 December 2018 and for two GEB members and one BoD member of USD 5,330,670 (CHF 5,196,294) as of 31 December 2017. 3 Swiss franc amounts disclosed represent the respective US dollar amounts translated at the relevant year-end closing exchange rate. d) Other related-party transactions with entities controlled by key management personnel In 2018 and 2017, UBS did not enter into transactions with entities that are directly or indirectly controlled or jointly controlled by UBS’s key management personnel or their close family members and as of 31 December 2018, 31 December 2017 and 31 December 2016, there were no outstanding balances related to such transactions. Furthermore, in 2018 and 2017, entities controlled by key management personnel did not sell any goods or provide any services to UBS, and therefore did not receive any fees from UBS. UBS also did not provide services to such entities in 2018 and 2017, and therefore also received no fees.Financial statements 498 Consolidated financial statements Note 35 Related parties (continued) e) Transactions with associates and joint ventures Loans to and outstanding receivables from associates and joint ventures USD million 2018 2017 Carrying value at the beginning of the year 565 464 Additions 276 83 Reductions (13) (3) Foreign currency translation 0 21 Carrying value at the end of the year 829 565 of which: unsecured loans 818 554 Other transactions with associates and joint ventures As of or for the year ended USD million 31.12.18 31.12.17 Payments to associates and joint ventures for goods and services received 177 180 Fees received for services provided to associates and joint ventures 4 2 Commitments and contingent liabilities to associates and joint ventures 4 4 →Refer to Note 31 for an overview of investments in associates and joint ventures 499 Note 36 Invested assets and net new money Invested assets Invested assets include all client assets managed by or deposited with UBS for investment purposes. Invested assets include managed fund assets, managed institutional assets, discretionary and advisory wealth management portfolios, fiduciary deposits, time deposits, savings accounts and wealth management securities or brokerage accounts. All assets held for purely transactional purposes and custody-only assets, including corporate client assets held for cash management and transactional purposes, are excluded from invested assets as the Group only administers the assets and does not offer advice on how the assets should be invested. Also excluded are non- bankable assets (e.g., art collections) and deposits from third- party banks for funding or trading purposes. Discretionary assets are defined as client assets that UBS decides how to invest. Other invested assets are those where the client ultimately decides how the assets are invested. When a single product is created in one business division and sold in another, it is counted in both the business division that manages the investment and the one that distributes it. This results in double counting within UBS total invested assets, as both business divisions are independently providing a service to their respective clients, and both add value and generate revenue. Net new money Net new money in a reporting period is the amount of invested assets that are entrusted to UBS by new and existing clients, less those withdrawn by existing clients and clients who terminated their relationship with UBS. Net new money is calculated using the direct method, under which inflows and outflows to / from invested assets are determined at the client level based on transactions. Interest and dividend income from invested assets are not counted as net new money inflows. Market and currency movements as well as fees, commissions and interest on loans charged are excluded from net new money, as are the effects resulting from any acquisition or divestment of a UBS subsidiary or business. Reclassifications between invested assets and custody-only assets as a result of a change in the service level delivered are generally treated as net new money flows; however, where such change in service level directly results from a new externally imposed regulation, the one- time net effect of the implementation is reported as an asset reclassification without net new money impact. The Investment Bank does not track invested assets and net new money. However, when a client is transferred from the Investment Bank to another business division, this produces net new money even though client assets were already with UBS. There were no such transfers between the Investment Bank and other business divisions in 2018 and 2017. Invested assets and net new money As of or for the year ended USD billion 31.12.18 31.12.17 Fund assets managed by UBS 342 339 Discretionary assets 999 1,052 Other invested assets 1,760 1,871 Total invested assets1 3,101 3,262 of which: double counts 213 209 Net new money1 59 106 1 Includes double counts. Development of invested assets USD billion 2018 2017 Total invested assets at the beginning of the year1 3,262 2,761 Net new money 59 106 Market movements2 (180) 322 Foreign currency translation (35) 77 Other effects (5) (3) of which: acquisitions / (divestments) 7 4 Total invested assets at the end of the year1 3,101 3,262 1 Includes double counts. 2 Includes interest and dividend income. Financial statements Consolidated financial statements Note 37 Currency translation rates The following table shows the rates of the main currencies used to translate the financial information of UBS’s operations with a functional currency other than the US dollar into US dollars. Closing exchange rate Average rate1 As of For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 31.12.16 1 CHF 1.02 1.03 1.02 1.02 1.01 1 EUR 1.15 1.20 1.18 1.14 1.10 1 GBP 1.28 1.35 1.33 1.30 1.34 100 JPY 0.91 0.89 0.91 0.89 0.92 1 Monthly income statement items of operations with a functional currency other than the US dollar are translated with month-end rates into US dollars. Disclosed average rates for a year represent an average of 12 month-end rates, weighted according to the income and expense volumes of all operations of the Group with the same functional currency for each month. Weighted average rates for individual business divisions may deviate from the weighted average rates for the Group. Note 38 Events after the reporting period Events subsequent to the publication of the unaudited fourth quarter 2018 report The 2018 results and the balance sheet as of 31 December 2018 differ from those presented in the unaudited fourth quarter 2018 report published on 22 January 2019 as a result of events adjusted for after the balance sheet date. Provisions for litigation, regulatory and similar matters increased, which reduced 2018 operating profit before tax and 2018 net profit attributable to shareholders each by USD 382 million. As a result, basic earnings per share decreased by USD 0.10 and diluted earnings per share decreased by USD 0.09. →Refer to Note 21 for more information on provisions for litigation, regulatory and similar matters 501 Note 39 Main differences between IFRS and Swiss GAAP The consolidated financial statements of UBS Group AG are prepared in accordance with International Financial Reporting Standards (IFRS). The Swiss Financial Market Supervisory Authority (FINMA) requires financial groups that present their financial statements under IFRS to provide a narrative explanation of the main differences between IFRS and Swiss GAAP (FINMA Circular 2015 / 1 and the Banking Ordinance). Included in this Note are the significant differences in the recognition and measurement between IFRS and the provisions of the Banking Ordinance and the guidelines of FINMA governing true and fair view financial statement reporting pursuant to article 25 through article 42 of the Banking Ordinance. 1. Consolidation Under IFRS, all entities that are controlled by the holding entity are consolidated. Under Swiss GAAP, controlled entities that are deemed immaterial to the Group or that are held temporarily only are exempt from consolidation, but instead are recorded as participations accounted for under the equity method of accounting or as financial investments measured at the lower of cost or market value. 2. Classification and measurement of financial assets Under IFRS, financial assets are classified as measured at amortized cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Whereas all equity instruments are accounted for at FVTPL by UBS, the classification and measurement of debt instruments depends on the nature of the business model within which the asset is held and the characteristics of the contractual cash flows of the asset. Under Swiss GAAP, debt instruments are generally measured at amortized cost. The classification and measurement of financial assets in the form of securities depend on the nature of the asset: debt instruments that are not held to maturity (available for sale), as well as equity instruments with no permanent holding intent, are classified as Financial investments and measured at the lower of (amortized) cost or market value. Market value adjustments up to the original cost amount and realized gains or losses upon disposal of the investment are recorded in the income statement as Other income from ordinary activities. Equity instruments with a permanent holding intent are classified as participations in Non-consolidated investments in subsidiaries and other participations and measured at cost less impairment. Impairment losses are recorded in the income statement as Impairment of investments in non-consolidated subsidiaries and other participations. Reversals of impairments up to the original cost amount as well as realized gains or losses upon disposal of the investment are recorded as Extraordinary income / Extraordinary expenses in the income statement.Financial statements 502 Consolidated financial statements Note 39 Main differences between IFRS and Swiss GAAP (continued) 3. Fair value option applied to financial liabilities Under IFRS, UBS applies the fair value option to certain financial liabilities not held for trading. Instruments for which the fair value option is applied are accounted for at FVTPL. The amount of change in the fair value that is attributable to changes in UBS’s own credit is presented in Other comprehensive income directly within Retained earnings. The fair value option is applied primarily to issued structured debt instruments; certain non- structured debt instruments; certain payables under repurchase agreements and cash collateral on securities lending agreements; amounts due under unit-linked investment contracts; brokerage payables; and certain loan commitments. Under Swiss GAAP, the fair value option can only be applied to structured debt instruments that consist of a debt host contract and one or more embedded derivatives that do not relate to own equity. Furthermore, unrealized changes in fair value attributable to changes in UBS’s own credit are not recognized, whereas realized own credit is recognized in Net trading income. 4. Allowances and provisions for credit losses Under IFRS, allowances and provisions for credit losses are estimated based on an expected credit loss model. Expected credit losses (ECL) are recognized for financial assets measured at amortized cost, financial assets measured at FVOCI, fee and lease receivables, financial guarantees, loan commitments and certain other credit facilities. Maximum 12-month ECL are recognized from initial recognition of instruments in stage 1. Lifetime ECL are recognized for instruments in stage 2 if a significant increase in credit risk is detected subsequent to the instrument’s initial recognition. Lifetime ECL are also recognized for credit-impaired financial instruments, referred to as instruments in stage 3. Determination of whether an instrument is credit impaired is based on the occurrence of one or more loss events. Under Swiss GAAP, a claim is impaired and an allowance or provision for credit losses is recognized when objective evidence demonstrates that a loss event has occurred after the initial recognition and that the loss event has an effect on future cash flows that can be reliably estimated (incurred loss approach). UBS considers a claim to be impaired if it will be unable to collect all amounts due on it based on the original contractual terms as a result of credit deterioration of the issuer or counterparty. Impairment under the incurred loss approach is in line with ECL for credit-impaired claims in stage 3 under IFRS. A claim can be a loan or receivable or other debt instrument held to maturity carried at amortized cost, a debt instrument available for sale carried at the lower of amortized cost or market value, or a commitment, such as a letter of credit, a guarantee or a similar instrument. An allowance for credit losses is reported as a decrease in the carrying value of a financial asset. For an off-balance sheet item, such as a commitment, a provision for credit loss is reported in Provisions. Changes to allowances and provisions for credit losses are recognized in Credit loss (expense) / recovery. 5. Hedge accounting Under IFRS, when cash flow hedge accounting is applied, the fair value gain or loss on the effective portion of the derivative designated as a cash flow hedge is recognized in equity. When fair value hedge accounting is applied, the fair value gains or losses of the derivative and the hedged item are recognized in the income statement. Under Swiss GAAP, the effective portion of the fair value change of the derivative instrument designated as a cash flow or as fair value hedge is deferred on the balance sheet as Other assets or Other liabilities. The carrying value of the hedged item designated in fair value hedges is not adjusted for fair value changes attributable to the hedged risk. 6. Goodwill and intangible assets Under IFRS, goodwill acquired in a business combination is not amortized but tested annually for impairment. Intangible assets with an indefinite useful life are also not amortized but tested annually for impairment. Under Swiss GAAP, goodwill and intangible assets with indefinite useful lives are amortized over a period not exceeding five years, unless a longer useful life, which may not exceed 10 years, can be justified. In addition, these assets are tested annually for impairment. 503 Note 39 Main differences between IFRS and Swiss GAAP (continued) 7. Pension and other post-employment benefit plans Swiss GAAP permits the use of IFRS or Swiss accounting standards for pension and other post-employment benefit plans, with the election made on a plan-by-plan basis. UBS has elected to apply IFRS (IAS 19) for the non-Swiss defined benefit plans in UBS AG standalone financial statements and Swiss GAAP (FER 16) for the Swiss pension plan in the UBS AG and the UBS Switzerland AG standalone financial statements. The requirements of Swiss GAAP are better aligned with the specific nature of Swiss pension plans, which are hybrid in that they combine elements of defined contribution and defined benefit plans, but are treated as defined benefit plans under IFRS. Key differences between Swiss GAAP and IFRS include the treatment of dynamic elements, such as future salary increases and future interest credits on retirement savings, which are not considered under the static method used in accordance with Swiss GAAP. Also, the discount rate used to determine the defined benefit obligation in accordance with IFRS is based on the yield of high-quality corporate bonds of the market in the respective pension plan country. The discount rate used in accordance with Swiss GAAP (i.e., the technical interest rate) is determined by the Pension Foundation Board based on the expected returns of the Board’s investment strategy. For defined benefit plans, IFRS requires the full defined benefit obligation net of the plan assets to be recorded on the balance sheet, with changes resulting from remeasurements recognized directly in equity. However, for non-Swiss defined benefit plans for which IFRS accounting is elected, changes due to remeasurements are recognized in the income statement of UBS AG standalone under Swiss GAAP. Swiss GAAP requires that employer contributions to the pension fund are recognized as personnel expenses in the income statement. Further, Swiss GAAP requires an assessment as to whether, based on the financial statements of the pension fund prepared in accordance with Swiss accounting standards (FER 26), an economic benefit to, or obligation of, the employer arises from the pension fund which is recognized in the balance sheet when conditions are met. Conditions for recording a pension asset or liability would be met if, for example, an employer contribution reserve is available or the employer is required to contribute to the reduction of a pension deficit (on an FER 26 basis). 8. Netting of replacement values Under IFRS, replacement values and related cash collateral are reported on a gross basis unless the restrictive IFRS netting requirements are met: i) existence of master netting agreements and related collateral arrangements that are unconditional and legally enforceable, both in the normal course of business and in the event of default, bankruptcy or insolvency of UBS and its counterparties; and ii) UBS’s intention to either settle on a net basis or to realize the asset and settle the liability simultaneously. Under Swiss GAAP, replacement values and related cash collateral are generally reported on a net basis, provided the master netting and the related collateral agreements are legally enforceable in the event of default, bankruptcy or insolvency of UBS’s counterparties. 9. Negative interest Under IFRS, negative interest income arising on a financial asset does not meet the definition of interest income and, therefore, negative interest on financial assets and negative interest on financial liabilities are presented within interest expense and interest income, respectively. Under Swiss GAAP, negative interest on financial assets is presented within interest income and negative interest on financial liabilities is presented within interest expense. 10. Extraordinary income and expense Certain non-recurring and non-operating income and expense items, such as realized gains or losses from the disposal of participations, fixed and intangible assets, as well as reversals of impairments of participations and fixed assets, are classified as extraordinary items under Swiss GAAP. This distinction is not available under IFRS. Financial statements Standalone financial statements 506 UBS Group AG standalone financial statements Table of contents 507 UBS Group AG standalone financial statements 507 Income statement 508 Balance sheet 509 Reconciliation of equity 509 Statement of appropriation of total profit / (loss) carried forward and proposed dividend distribution out of capital contribution reserve 511 1 Corporate information 512 2 Accounting policies 515 Income statement notes 515 3 Dividend income from investments in subsidiaries 515 4 Other operating income 515 5 Financial income 515 6 Personnel expenses 516 7 Other operating expenses 516 8 Financial expenses 517 Balance sheet notes 517 9 Liquid assets 517 10 Marketable securities 517 11 Other short-term receivables 517 12 Accrued income and prepaid expenses 518 13 Investments in subsidiaries 518 14 Financial assets 519 15 Accrued expenses and deferred income 519 16 Long-term interest-bearing liabilities 520 17 Compensation-related long-term liabilities 520 18 Share capital 520 19 Treasury shares 521 Additional information 521 20 Guarantees 521 21 Assets pledged to secure own liabilities 521 22 Contingent liabilities 522 23 Significant shareholders 523 24 Share and option ownership of the members of the Board of Directors, the Group Executive Board and other employees 525 25 Related parties 526 Report of the statutory auditor on the financial statements 528 Independent auditor’s report related to the issue of new shares from conditional capital 507 UBS Group AG standalone financial statements Audited | Income statement USD million CHF million For the year ended For the year ended Note 331.12.18 31.12.17 331.12.18 31.12.17 Dividend income from investments in subsidiaries 3 3,212 11 3,152 10 Other operating income 4 157 132 155 129 Financial income 5 77 595 76 580 OOperating income 3,446 738 3,383 719 Personnel expenses 6 23 21 23 20 Other operating expenses 7 216 99 212 97 Amortization of intangible assets 4 4 4 4 Financial expenses 8 30 561 30 547 OOperating expenses 273 686 268 668 Profit / (loss) before income taxes 3,174 52 3,114 51 Tax expense / (benefit) 3 4 3 4 NNet profit / (loss) 3,171 48 3,111 47 Financial statements 508 UBS Group AG standalone financial statements Balance sheet USD million CHF million Note 331.12.18 31.12.17 331.12.18 31.12.17 Assets Liquid assets 9 926 2,609 910 2,543 Marketable securities 10 83 102 82 100 Other short-term receivables 11 788 728 775 710 Accrued income and prepaid expenses 12 7 449 7 437 TTotal current assets 1,804 3,888 1,774 3,790 Investments in subsidiaries 13 41,209 41,486 40,518 40,441 of which: investment in UBS AG 40,889 41,164 40,203 40,126 Financial assets 14 1,444 8,968 1,420 8,742 Prepaid assets 0 9 0 9 Other intangible assets 12 17 12 16 Other non-current assets 8 0 8 0 TTotal non-current assets 42,674 50,481 41,959 49,208 TTotal assets 44,479 54,369 43,733 52,998 of which: amounts due from subsidiaries 2,938 12,376 2,888 12,064 Liabilities Current interest-bearing liabilities 457 1,682 450 1,640 Accrued expenses and deferred income 15 1,465 1,919 1,440 1,871 TTotal short-term liabilities 1,922 3,601 1,890 3,511 Long-term interest-bearing liabilities 16 224 8,086 220 7,882 Compensation-related long-term liabilities 17 3,022 3,397 2,972 3,311 TTotal long-term liabilities 3,246 11,483 3,192 11,193 TTotal liabilities 5,168 15,084 5,082 14,704 of which: amounts due to subsidiaries 694 1,901 682 1,853 Equity Share capital 18 393 395 386 385 General reserves 30,846 33,529 30,271 32,683 of which: statutory capital reserve 30,846 33,529 30,271 32,683 of which: capital contribution reserve 30,846 33,529 30,271 32,683 Voluntary earnings reserve 7,513 7,512 7,452 7,323 Treasury shares 19 (2,612) (2,201) (2,569) (2,145) Reserve for own shares held by subsidiaries 0 1 0 1 Net profit / (loss) 3,171 48 3,111 47 EEquity attributable to shareholders 39,310 39,285 38,651 38,294 TTotal liabilities and equity 44,479 54,369 43,733 52,998 509 Reconciliation of equity A reconciliation of equity for the year ended 31 December 2018 from the former Swiss franc presentation currency to the new US dollar presentation currency is provided in the table below. In million Share capital General reserves Voluntary earnings reserve Treasury shares Reserve for own shares held by subsidiaries Net profit / (loss) Total equity Balance as of 1 January 2018, CHF 385 32,683 7,323 (2,145) 1 47 38,294 Exercise of conditional capital options 0 25 25 Dividend distribution (2,444) (2,444) Change in reserve for own shares 1 (1) 0 Transactions in treasury shares 46 46 Net profit / (loss) appropriation 47 (47) 0 Net profit / (loss) for the period before conversion, CHF 3,129 3,129 CHF equity at conversion date 1 October 20181 386 30,265 7,371 (2,100) 0 3,129 39,050 USD equity opening balance at conversion date 1 October 2018 393 30,840 7,513 (2,140) 0 3,188 39,794 Exercise of conditional capital options 0 6 6 Change in reserve for own shares 0 0 0 Transactions in treasury shares (472) (472) Net profit / (loss) for the period after conversion, USD (18) (18) Balance as of 31 December 2018, USD 393 30,846 7,513 (2,612) 0 3,171 39,310 1 Conversion date rate as of 1 October 2018 represents the closing exchange rate as of 30 September 2018 (CHF / USD 1.02). Statement of appropriation of total profit / (loss) carried forward and proposed dividend distribution out of capital contribution reserve The Board of Directors proposes that the Annual General Meeting of Shareholders (AGM) on 2 May 2019 approve the following appropriation of total profit / (loss) carried forward. Proposed appropriation of total profit / (loss) carried forward USD million CHF million For the year ended For the year ended 31.12.18 31.12.18 Net profit for the period 3,171 3,111 Profit / (loss) carried forward 0 0 Total profit / (loss) carried forward available for appropriation 3,171 3,111 Appropriation of total profit / (loss) carried forward Appropriation to voluntary earnings reserve (3,171) (3,111) Profit / (loss) carried forward 0 0 Financial statements 510 UBS Group AG standalone financial statements Statement of appropriation of total profit / (loss) carried forward and proposed dividend distribution out of capital contribution reserve (continued) Proposed dividend distribution out of capital contribution reserve The Board of Directors proposes that the AGM on 2 May 2019 approve an ordinary dividend distribution of CHF 0.70 in cash per share of CHF 0.10 par value payable out of the capital contribution reserve. Dividends are declared and paid in Swiss francs. The total amount of the dividends will be capped at USD 3,255 million (Cap). To the extent that the USD dividend calculated based on CHF 0.70 per share would exceed the Cap on the day of the AGM, due to the exchange rate determined by the Board of Directors in its reasonable opinion, the CHF per share amount of the dividend will be reduced on a pro-rata basis so that the total USD amount does not exceed the Cap. Provided that the proposed dividend distribution out of the capital contribution reserve is approved, the payment of CHF 0.70 per share will be made on 8 May 2019 to holders of shares on the record date 7 May 2019. The shares will be traded ex-dividend as of 6 May 2019 and, accordingly, the last day on which the shares may be traded with entitlement to receive the dividend will be 3 May 2019. USD million CHF million For the year ended For the year ended 31.12.18 31.12.18 Total statutory capital reserve: capital contribution reserve before proposed distribution1 30,846 30,271 Proposed ordinary distribution of capital contribution reserve within statutory capital reserve: CHF 0.70 per dividend-bearing share2 (3,255) (2,699) Total statutory capital reserve: capital contribution reserve after proposed distribution 27,591 27,572 1 The Swiss Federal Tax Administration’s current position is that, of the CHF 30.3 billion capital contribution reserve available as of 31 December 2018, an amount limited to CHF 15.6 billion is available from which dividends may be paid without a Swiss withholding tax deduction. 2 Dividend-bearing shares are all shares issued except for treasury shares held by UBS Group AG as of the record date. The amount of USD 3,255 million represents the Cap. The amount of CHF 2,699 million presented is based on the total number of shares issued as of 31 December 2018. 511 Note 1 Corporate information UBS Group AG is incorporated and domiciled in Switzerland and its registered office is at Bahnhofstrasse 45, CH-8001 Zurich, Switzerland. UBS Group AG operates under article 620ff. of the Swiss Code of Obligations as an Aktiengesellschaft (a corporation limited by shares). UBS Group AG is the ultimate holding company of the UBS Group, the grantor of the majority of UBS’s deferred compensation plans and the guarantor of perpetual capital notes which qualify as Basel III additional tier 1 (AT1) capital on a consolidated UBS Group basis and senior debt which contributes to the total loss-absorbing capacity (TLAC) of the Group, issued by UBS Group Funding (Switzerland) AG. Issuance of additional tier 1 capital instruments During 2016 and 2015, UBS Group AG issued perpetual capital notes, which qualify as Basel III AT1 capital on a consolidated UBS Group basis. The proceeds from the issuances of those instruments were on-lent to UBS AG. In May 2018, these perpetual capital notes were transferred to UBS Group Funding (Switzerland) AG at book value with a retrospective effect as of 1 January 2018. The transfer was carried out by means of an issuer substitution pursuant to the voluntary substitution provisions provided in the terms and conditions of the relevant instruments. Following the transfer, the outstanding perpetual capital notes are guaranteed by UBS Group AG, and investors’ seniority of claims against UBS Group AG remains unchanged. In December 2018, the Swiss Parliament approved changes to the tax treatment of too big to fail (TBTF) instruments issued by the holding companies of Swiss systemically important banks. The new law aims to eliminate the additional tax burden imposed on systemically important banks as a result of required issuances of TBTF instruments at the holding company level. In March 2019, the Swiss Federal Council determined that the rule would enter into force retroactively as of 1 January 2019. Going forward, new loss-absorbing additional tier 1 capital instruments and total loss-absorbing capacity (TLAC)-eligible senior unsecured debt will be issued directly out of UBS Group AG. It is also expected that UBS Group AG will assume outstanding capital and debt instruments that were previously issued by UBS Group Funding (Switzerland) AG as a means of managing the aforementioned tax burden. →Refer to Note 16 for more information on the main terms and conditions of the perpetual capital notes issued during 2016 and 2015 Furthermore, UBS Group AG grants Deferred Contingent Capital Plan (DCCP) awards to UBS Group employees. These DCCP awards also qualify as Basel III AT1 capital on a consolidated UBS Group basis. As of 31 December 2018, UBS Group AG’s distributable items for the purpose of AT1 capital instruments were USD 38.8 billion (CHF 38.2 billion) (31 December 2017: USD 38.8 billion (CHF 37.8 billion)). For this purpose, distributable items are defined in the terms and conditions of the relevant instruments as the aggregate of (i) net profits carried forward and (ii) freely distributable reserves, in each case, less any amounts that must be contributed to legal reserves under applicable law.Financial statements 512 UBS Group AG standalone financial statements Note 2 Accounting policies The UBS Group AG standalone financial statements are prepared in accordance with the principles of the Swiss Law on Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations). The functional currency of UBS Group AG is the US dollar. The significant accounting and valuation principles applied are described below. Change in functional and presentation currency As of 1 October 2018 (the conversion date) UBS Group AG prospectively changed its functional currency from Swiss francs to US dollars. UBS Group AG also prospectively changed the presentation currency of its standalone financial statements from Swiss francs to US dollars. The interim Swiss franc financial information of UBS Group AG as of 30 September 2018, including the balance sheet, year-to-date income statement and all related notes, was translated into US dollars at the closing rate on 30 September 2018 (the conversion date rate). This conversion had no impact on the income statement or equity. As the primary presentation currency of the standalone financial statements of UBS Group AG is US dollars, amounts in Swiss francs are additionally presented for each component of the financial statements. UBS Group AG applies the modified closing rate method for translating the US dollar amounts into Swiss francs: assets and liabilities are translated at the closing rate, equity positions at historic rates and income and expense items at the weighted average rate for the period. All resulting currency translation effects are recognized separately in Voluntary earnings reserve, amounting to a positive currency translation effect of CHF 81 million as of 31 December 2018. Under Swiss Code of Obligations, prior-period financial statements have not been restated. All comparative prior-period information as of and for the year ended 31 December 2017 is translated at the closing rate as of 31 December 2017. Foreign currency translation Transactions denominated in foreign currency are translated into US dollars at the spot exchange rate on the date of the transaction. At the balance sheet date, all current assets and short-term liabilities as well as Financial assets measured at fair value, which are denominated in a foreign currency, are translated into US dollars using the closing exchange rate. For other non-current assets and long-term liabilities, where the asset mirrors the terms of a corresponding liability or the asset and liability otherwise form an economic hedge relationship, the asset and liability are treated as one unit of account for foreign currency translation purposes, with offsetting unrealized foreign currency translation gains and losses based on the closing exchange rate presented net in the income statement. Investments in subsidiaries measured at historic cost are translated at the spot exchange rate on the date of the transaction. Currency translation effects from dividends paid in Swiss francs are recognized in equity. All other currency translation effects are recognized in the income statement. The main currency translation rates used by UBS Group AG are provided in Note 37 of the consolidated financial statements. Marketable securities Marketable securities include investments in alternative investment vehicles (AIVs) with a short-term holding period. The holding period is deemed short term if the vesting of the awards hedged by the AIV is within 12 months after the balance sheet date. These are equity instruments and are measured at fair value based on quoted market prices or other observable market prices as of the balance sheet date. Gains and losses resulting from fair value changes are recognized in Financial income and Financial expenses, respectively. Financial assets Financial assets include investments in AIVs with a long-term holding period. The holding period is deemed long-term if the vesting of the awards hedged by the AIV is more than 12 months after the balance sheet date. These are equity instruments and are measured at fair value based on their quoted market prices or other observable market prices as of the balance sheet date. Gains and losses resulting from fair value changes are recognized in Financial income and Financial expenses, respectively. Investments in AIVs that have no quoted market price or no other observable market price are recognized as Financial assets and are measured at their acquisition cost adjusted for impairment losses. Financial assets further include loans granted to UBS AG that substantially mirror the terms of AT1 perpetual capital notes issued and fixed-term deposits with UBS AG with maturities more than 12 months after the balance sheet date. The loans and deposits are measured at nominal value. →Refer to Note 14 for more information Derivative instruments UBS Group AG uses derivative instruments to manage exposures to foreign currency risks from investments in foreign subsidiaries. The derivative instruments are entered into with UBS AG, mirroring the conditions of the closing transactions UBS AG enters into with third parties. Derivative instruments are measured at fair value based on quoted market prices or other observable market prices as of the balance sheet date. Unrealized gains and losses are recognized as Accrued income and prepaid expenses and Accrued expenses and deferred income, respectively. Corresponding gains and losses resulting from fair value changes are recognized in Financial income and Financial expenses, respectively. 513 Note 2 Accounting policies (continued) Investments in subsidiaries Investments in subsidiaries are equity interests that are held to carry on the business of UBS Group or for other strategic purposes. They include all subsidiaries directly held by UBS Group AG through which UBS conducts its business on a global basis. The investments are measured individually and carried at cost less impairment. →Refer to Note 13 for more information →Refer to Note 2 in the “Consolidated financial statements” section of this report for a description of businesses of the UBS Group Treasury shares Treasury shares acquired by UBS Group AG are recognized at acquisition cost and are presented as a deduction from shareholders’ equity. Upon disposal or settlement of related share awards, the realized gain or loss is recognized through the income statement as Financial income and Financial expenses, respectively. For settlement of related share awards, the realized gains and losses on treasury shares represent the difference between the market price of the treasury shares at settlement and their acquisition cost. For shares of UBS Group AG acquired by a direct or indirect subsidiary, a Reserve for own shares held by subsidiaries is generally created in UBS Group AG’s equity. However, where UBS AG or UBS Switzerland AG acquire shares of UBS Group AG and hold them in their trading portfolios, no Reserve for own shares held by subsidiaries is created. →Refer to Note 19 for more information Equity participation and other compensation plans Transfer from UBS AG to UBS Group AG The transfer of the deferred compensation plans and related hedging assets in 2014 was conducted on an arm’s length basis, with a step-up of the plan obligation to fair value. This step-up resulted in a net liability that was recorded in the standalone financial statements of UBS AG and transferred to UBS Group AG (net liability related to deferred compensation plan transfer) in 2014. The fair value of this net liability is taken into account in the income statement over the average vesting period (for share awards) or upon exercise / expiry (for option awards) as Other operating income. Upon exercise of option awards that are settled using conditional capital, the fair value of this net liability is recorded in the Statutory capital reserve within General reserves. The difference between the fair value of the hedging assets and the fair value of the obligations on the plans transferred was compensated for with a loan from UBS AG to UBS Group AG. Equity participation plans The grant date fair value of equity-settled share-based compensation awards granted to employees is generally recognized over the vesting period of the awards. Awards granted in the form of UBS Group AG shares and notional shares are settled by delivering UBS Group AG shares at vesting and are recognized as Compensation-related long-term liabilities if vesting is more than 12 months after the balance sheet date or as Accrued expenses and deferred income if vesting is within 12 months from the balance sheet date. The amount recognized is adjusted for forfeiture assumptions, such that the amount ultimately recognized is based on the number of awards that meet the related service conditions at the vesting date. The grant date fair value is based on the UBS Group AG share price, taking into consideration post-vesting sale and hedge restrictions, non-vesting conditions and market conditions, where applicable. Upon settlement of the share awards, any realized gain or loss is recognized in the income statement as Other operating income and Other operating expenses, respectively. Realized gains and losses on share awards represent the difference between the market price of the treasury shares at settlement and the grant date fair value of the share awards. For certain awards, employees receive beneficial and legal ownership of the underlying UBS Group AG shares at the grant date (prepaid awards). Such prepaid awards are recognized as Prepaid assets if vesting is more than 12 months after the balance sheet date or as Accrued income and prepaid expenses if vesting is within 12 months from the balance sheet date. Shares awarded to employees that are settled using conditional capital are accounted for as follows at settlement: the amount paid by the employees for the nominal value of the shares awarded is recorded in Share capital, while any paid amount exceeding the nominal value is considered to be share premium and is recorded in the Statutory capital reserve within General reserves. Other compensation plans Deferred compensation plans that are not share-based, including DCCP awards and awards in the form of AIVs, are accounted for as cash-settled awards. The present value or fair value of the amount payable to employees that is settled in cash is recognized as a liability generally over the vesting period, as Compensation-related long-term liabilities if vesting is more than 12 months after the balance sheet date and as Accrued expenses and deferred income if vesting is within 12 months from the balance sheet date. The liabilities are remeasured at each balance sheet date at the present value of the corresponding DCCP award and the fair value of investments in AIVs, respectively. Gains and losses resulting from remeasurement of the liabilities are recognized in Other operating income and Other operating expenses, respectively.Financial statements 514 UBS Group AG standalone financial statements Note 2 Accounting policies (continued) Recharge of compensation expenses Expenses related to deferred compensation plans are recharged by UBS Group AG to its subsidiaries employing the personnel. Upon recharge, UBS Group AG recognizes a receivable from its subsidiaries corresponding to a liability representing its obligation toward employees. Dispensations in the standalone financial statements As UBS Group AG prepares consolidated financial statements in accordance with IFRS, UBS Group AG is exempt from various disclosures in the standalone financial statements. The dispensations include the management report and the statement of cash flows, as well as certain note disclosures. 515 Income statement notes Note 3 Dividend income from investments in subsidiaries Dividend income from investments in subsidiaries in 2018 consists of USD 3,123 million (CHF 3,065 million) received from UBS AG related to the financial year 2017, which was approved by the Annual General Meeting of Shareholders of UBS AG on 26 April 2018, USD 86 million (CHF 84 million) received from UBS Business Solutions AG related to the financial year ended 31 December 2017, which was approved by the Annual General Meeting of Shareholders of UBS Business Solutions AG on 19 April 2018, and USD 3 million (CHF 3 million) received from UBS Group Funding (Switzerland) AG related to the financial year ended 31 December 2017, which was approved by the Annual General Meeting of Shareholders of UBS Group Funding (Switzerland) AG on 8 March 2018. In 2017, dividend income from investments in subsidiaries consisted of USD 5 million (CHF 5 million) received from UBS Business Solutions AG related to the financial year ended 31 December 2016, which was approved by the Annual General Meeting of Shareholders of UBS Business Solutions AG on 27 April 2017, and USD 5 million (CHF 5 million) received from UBS Group Funding (Jersey) Ltd. in the course of the liquidation of the entity, which was dissolved on 24 November 2017. Note 4 Other operating income USD million CHF million For the year ended For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 Fair value gains on AIV awards 8 0 9 0 Gains related to equity-settled awards1 106 107 105 104 Amortization of net liability related to deferred compensation plan transfer 5 1 5 1 Commission income from guarantees issued 37 25 36 24 Total other operating income 157 132 155 129 1 Gains related to equity-settled awards in 2017 include the release of hidden reserves of USD 90 million (CHF 88 million). Note 5 Financial income USD million CHF million For the year ended For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 Fair value gains on marketable securities and financial assets 0 51 0 49 Fair value gains on derivatives 6 0 6 0 Treasury share gains 47 0 46 0 Interest income on long-term receivables from UBS AG 13 539 13 525 Interest income on liquid assets 11 5 11 5 Foreign currency translation gains 0 0 0 0 Total financial income 77 595 76 580 Note 6 Personnel expenses Personnel expenses include recharges from UBS AG and UBS Business Solutions AG for personnel-related costs for activities performed by the personnel of those companies for the benefit of UBS Group AG. UBS Group AG had no employees throughout 2018 and 2017. All employees of the UBS Group, including the members of the Group Executive Board (GEB) of UBS Group AG, were employed by subsidiaries of UBS Group AG. As of 31 December 2018, the UBS Group employed 66,888 personnel (31 December 2017: 61,253) on a full-time equivalent basis.Financial statements 516 UBS Group AG standalone financial statements Note 7 Other operating expenses USD million CHF million For the year ended For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 Fair value losses on AIV awards 0 49 0 48 Losses related to equity-settled awards 184 19 181 18 Capital tax 14 15 14 14 Other 18 16 17 16 Total other operating expenses 216 99 212 97 Note 8 Financial expenses USD million CHF million For the year ended For the year ended 31.12.18 31.12.17 31.12.18 31.12.17 Fair value losses on marketable securities and financial assets 8 0 8 0 Impairment losses on financial assets 0 2 0 2 Treasury share losses 0 13 0 12 Interest expense on interest-bearing liabilities 13 546 13 532 Interest expense on derivatives 6 0 6 0 Fees paid 1 1 1 1 Foreign currency losses 2 0 2 0 Total financial expenses 30 561 30 547 517 Balance sheet notes Note 9 Liquid assets As of 31 December 2018, liquid assets comprised USD 542 million (CHF 533 million) held on current accounts at UBS Switzerland AG and UBS AG and USD 384 million (CHF 378 million) of time deposits placed with UBS AG. As of 31 December 2017, liquid assets comprised USD 1,706 million (CHF 1,663 million) held on current accounts at UBS Switzerland AG and UBS AG and USD 903 million (CHF 880 million) of time deposits placed with UBS AG. Note 10 Marketable securities Marketable securities include investments in AIVs related to compensation awards vesting within 12 months after the balance sheet date. Note 11 Other short-term receivables USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Loans to UBS Business Solutions AG 216 83 213 80 Receivables from employing entities related to compensation awards 567 637 557 621 Other 5 9 5 9 Total other short-term receivables 788 728 775 710 Note 12 Accrued income and prepaid expenses USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Accrued interest income 6 378 6 368 Other accrued income and prepaid expenses 1 71 1 69 Total accrued income and prepaid expenses 7 449 7 437 Financial statements 518 UBS Group AG standalone financial statements Note 13 Investments in subsidiaries Unless otherwise stated, the subsidiaries listed below have share capital consisting solely of ordinary shares, which are held by UBS Group AG or UBS AG, respectively. The proportion of ownership interest held is equal to the voting rights held by UBS Group AG or UBS AG, respectively. The country where the respective registered office is located is also the principal place of business. UBS AG operates through a global network of branches and a significant proportion of its business activity is conducted outside Switzerland in the UK, US, Singapore, Hong Kong and other countries. UBS Europe SE has branches and offices in a number of EU member states, including Germany, Italy, Luxembourg, Spain and Austria. Share capital is provided in the currency of the legally registered office. In 2017, UBS transferred shared services functions in Switzerland from UBS AG to UBS Business Solutions AG. This transfer resulted in a decrease of the investment value of UBS AG and a corresponding increase in the investment value of UBS Business Solutions AG. UBS Group Funding (Jersey) Ltd. was dissolved in 2017. Subsidiaries of UBS Group AG as of 31 December 2018 Company Registered office Share capital in million Equity interest accumulated in % UBS AG Zurich and Basel, Switzerland CHF 385.8 100.0 UBS Business Solutions AG1 Zurich, Switzerland CHF 1.0 100.0 UBS Group Funding (Switzerland) AG Zurich, Switzerland CHF 0.1 100.0 1 UBS Business Solutions AG holds subsidiaries in Poland, China and India. Individually significant subsidiaries of UBS AG as of 31 December 20181 Company Registered office Primary business division Share capital in million Equity interest accumulated in % UBS Americas Holding LLC Wilmington, Delaware, USA Corporate Center USD 2,250.0 2 100.0 UBS Asset Management AG Zurich, Switzerland Asset Management CHF 43.2 100.0 UBS Bank USA Salt Lake City, Utah, USA Global Wealth Management USD 0.0 100.0 UBS Europe SE Frankfurt, Germany Global Wealth Management EUR 446.0 100.0 UBS Financial Services Inc. Wilmington, Delaware, USA Global Wealth Management USD 0.0 100.0 UBS Limited London, United Kingdom Investment Bank GBP 226.6 3 100.0 UBS Securities LLC Wilmington, Delaware, USA Investment Bank USD 1,283.1 4 100.0 UBS Switzerland AG Zurich, Switzerland Personal & Corporate Banking CHF 10.0 100.0 1 Includes direct and indirect subsidiaries of UBS AG. 2 Comprised of common share capital of USD 1,000 and non-voting preferred share capital of USD 2,250,000,000. 3 The combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE, which was formally concluded on 1 March 2019, was treated as an adjusting event after the reporting period in UBS AG standalone financial statements for the year ended 31 December 2018. 4 Comprised of common share capital of USD 100,000 and non-voting preferred share capital of USD 1,283,000,000. Individually significant subsidiaries of UBS AG are those entities that contribute significantly to the Group’s financial position or results of operations, based on a number of criteria, including the subsidiaries’ equity and their contribution to the Group’s total assets and profit or loss before tax, in accordance with Swiss regulations. →Refer to Note 31 in the “Consolidated financial statements” section of this report for more information Note 14 Financial assets USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Long-term receivables from UBS AG1 993 8,460 976 8,247 Long-term receivables from UBS Business Solutions AG 224 211 220 205 Investments in alternative investment vehicles at fair value related to awards vesting after 12 months 224 293 220 286 Investments in alternative investment vehicles at cost less impairment 4 4 4 4 Total financial assets 1,444 8,968 1,420 8,742 1 As of 31 December 2017, long-term receivables from UBS AG included the onward lending of the proceeds from the issuances of additional tier 1 perpetual capital notes. Refer to Note 1 for more information. 519 Note 15 Accrued expenses and deferred income USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Short-term portion of net liability related to deferred compensation plan transfer 3 6 3 6 Short-term portion of compensation liabilities 1,405 1,499 1,382 1,461 of which: Deferred Contingent Capital Plan 550 499 541 486 of which: other deferred compensation plans 856 1,000 841 975 Accrued interest expense 4 365 3 356 Other 53 49 52 47 Total accrued expenses and deferred income 1,465 1,919 1,440 1,871 Note 16 Long-term interest-bearing liabilities Long-term interest-bearing liabilities totaled USD 224 million (CHF 220 million) as of 31 December 2018 comprising fixed- term loans from UBS AG. As of 31 December 2017, long-term interest bearing liabilities totaled USD 8,086 million (CHF 7,882 million) comprising USD 7,875 million (CHF 7,677 million) of notes issued and USD 211 million (CHF 205 million) of fixed- term loans from UBS AG. In May 2018, outstanding perpetual capital notes that qualify as Basel III AT1 capital issued by UBS Group AG were transferred to UBS Group Funding (Switzerland) AG at book value by means of an issuer substitution with a retrospective effect as of 1 January 2018. →Refer to Note 1 for more information Notes issued, overview by amount, maturity and coupon 31.12.17 In million, except where indicated Maturity1 Coupon1 Carrying value in transaction currency Carrying value in USD Carrying value in CHF Euro-denominated low-trigger loss-absorbing additional tier 1 perpetual capital notes 19.02.22 5.750% 1,000 1,200 1,170 US dollar-denominated low-trigger loss-absorbing additional tier 1 perpetual capital notes 19.02.25 7.000% 1,250 1,250 1,218 US dollar-denominated high-trigger loss-absorbing additional tier 1 perpetual capital notes 19.02.20 7.125% 1,250 1,250 1,218 US dollar-denominated high-trigger loss-absorbing additional tier 1 perpetual capital notes 07.08.25 6.875% 1,575 1,575 1,535 US dollar-denominated high-trigger loss-absorbing additional tier 1 perpetual capital notes 22.03.21 6.875% 1,500 1,500 1,462 US dollar-denominated high-trigger loss-absorbing additional tier 1 perpetual capital notes 10.08.21 7.125% 1,100 1,100 1,072 Total notes issued 7,875 7,677 1 The disclosed maturity refers to the first call date of the respective issuance and the disclosed coupon refers to the fixed coupon rate from the issue date up to, but excluding, the first call date.Financial statements 520 UBS Group AG standalone financial statements Note 17 Compensation-related long-term liabilities USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Long-term portion of net liability related to deferred compensation plan transfer 0 3 0 3 Long-term portion of compensation liabilities 3,022 3,394 2,972 3,308 of which: Deferred Contingent Capital Plan 1,415 1,543 1,391 1,504 of which: other deferred compensation plans 1,607 1,850 1,581 1,804 Total compensation-related long-term liabilities 3,022 3,397 2,972 3,311 Note 18 Share capital As of 31 December 2018, the issued share capital consisted of 3,855,634,749 (31 December 2017: 3,853,096,603) registered shares at a par value of CHF 0.10 each. →Refer to “UBS shares” in the “Capital management” section of this report for more information on UBS Group AG shares Note 19 Treasury shares Number of registered shares Average price in USD Average price in CHF Balance as of 31 December 2016 138,441,772 16.12 16.41 of which: treasury shares held by UBS Group AG 138,386,307 16.12 16.41 of which: treasury shares held by UBS AG and other subsidiaries 55,465 15.78 16.06 Acquisitions 54,828,640 16.28 15.87 Disposals (1,689,932) 16.65 16.23 Delivery of shares to settle equity-settled awards (59,278,930) 16.75 16.32 Balance as of 31 December 2017 132,301,550 16.65 16.23 of which: treasury shares held by UBS Group AG 1 132,211,630 16.65 16.23 of which: treasury shares held by UBS AG and other subsidiaries 89,920 17.99 17.54 Acquisitions 103,979,927 15.32 15.10 Disposals (2,438,508) 16.90 16.61 Delivery of shares to settle equity-settled awards (67,375,167) 16.69 16.39 Balance as of 31 December 2018 166,467,802 15.71 15.45 of which: treasury shares held by UBS Group AG 1 166,203,791 15.71 15.46 of which: treasury shares held by UBS AG and other subsidiaries 264,011 12.27 12.05 1 Treasury shares held by UBS Group AG had a carrying value of USD 2,612 million (CHF 2,569 million) as of 31 December 2018 (31 December 2017: USD 2,201 million (CHF 2,145 million)). 521 Additional information Note 20 Guarantees As of 31 December 2018, UBS Group Funding (Switzerland) AG, a subsidiary of UBS Group AG, had issued USD 31,448 million (CHF 30,920 million) equivalent of senior debt which contributes to the total loss-absorbing capacity (TLAC) of the Group (31 December 2017: USD 28,422 million (CHF 27,706 million)). Further, UBS Group Funding (Switzerland) AG had issued USD 10,334 million (CHF 10,161 million) equivalent of perpetual capital notes which qualify as Basel III AT1 capital on a consolidated UBS Group basis. UBS Group AG issued guarantees to the external investors against any default in payments of interest and principal by UBS Group Funding (Switzerland) AG. Note 21 Assets pledged to secure own liabilities As of 31 December 2018, total pledged assets of UBS Group AG amounted to USD 1,862 million (CHF 1,831 million). These assets consisted of certain liquid assets, marketable securities and financial assets and were pledged to UBS AG. As of 31 December 2017, total pledged assets of UBS Group AG amounted to USD 4,449 million (CHF 4,337 million). The associated liabilities secured by these pledged assets were USD 633 million (CHF 623 million) and USD 1,846 million (CHF 1,800 million) as of 31 December 2018 and 31 December 2017, respectively. Note 22 Contingent liabilities UBS Group AG is jointly and severally liable for the combined value added tax (VAT) liability of UBS entities that belong to the VAT group of UBS in Switzerland.Financial statements 522 UBS Group AG standalone financial statements Note 23 Significant shareholders Shareholders registered in the UBS Group AG share register with 3% or more of total share capital % of share capital 31.12.18 31.12.17 Chase Nominees Ltd., London 12.08 11.16 DTC (Cede & Co.), New York1 7.23 6.64 Nortrust Nominees Ltd., London 4.14 4.11 1 DTC (Cede & Co.), New York, “The Depository Trust Company,” is a US securities clearing organization. General rules Under the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading of 19 June 2015 (FMIA), anyone holding shares in a company listed in Switzerland, or holding derivative rights related to shares of such a company, must notify the company and the SIX Swiss Exchange (SIX) if the holding reaches, falls below or exceeds one of the following thresholds: 3, 5, 10, 15, 20, 25, 331⁄3, 50, or 662⁄3% of voting rights, regardless of whether or not such rights may be exercised. Nominee companies that cannot autonomously decide how voting rights are exercised are not obligated to notify the company and SIX if they reach, exceed or fall below the threshold percentages. Pursuant to the Swiss Code of Obligations, UBS discloses in its financial statements the identity of any shareholder with a holding of more than 5% of the total share capital of UBS Group AG. Shareholders not registered in the UBS share register According to the FMIA disclosure notifications filed with UBS Group AG and the SIX as of 31 December 2018, the following entities held more than 3% of the total share capital of UBS Group AG: Dodge & Cox, San Francisco, disclosed a holding of 3.03% of the total share capital of UBS Group AG on 30 November 2018; BlackRock Inc., New York, disclosed a holding of 4.99% on 28 August 2018; and MFS Investment Management, Boston, disclosed a holding of 3.05% on 10 February 2016. The above disclosures have not been subsequently superseded and no new disclosures of significant shareholdings have been made since 31 December 2018. In accordance with the FMIA, the aforementioned holdings are calculated in relation to the total share capital of UBS Group AG reflected in its Articles of Association at the time of the respective disclosure notification. Information on disclosures under the FMIA is available at www.six-exchange-regulation.com/en/home/publications/ significant-shareholders.html. Shareholders registered in the UBS share register The shareholders (acting in their own name or in their capacity as nominees for other investors or beneficial owners) listed in the table above were registered in the UBS share register with 3% or more of the total share capital of UBS Group AG as of 31 December 2018 or as of 31 December 2017. Cross-shareholdings UBS Group AG has no cross-shareholdings where reciprocal ownership would be in excess of 5% of capital or voting rights with any other company. 523 Note 24 Share and option ownership of the members of the Board of Directors, the Group Executive Board and other employees Shares awarded For the year ended 31.12.18 For the year ended 31.12.17 Number of shares Value of shares in USD million Value of shares in CHF million Number of shares Value of shares in USD million Value of shares in CHF million Awarded to members of the BoD 354,265 6 6 416,980 7 7 Awarded to members of the GEB 2,996,831 52 51 2,720,614 44 43 Awarded to other UBS Group employees 55,332,567 926 908 61,152,037 896 874 Total 58,683,663 984 965 64,289,631 947 923 →Refer to the “Corporate governance and compensation” section of this report for more information on the terms and conditions of the shares and options awarded to the members of the Board of Directors and the Group Executive Board Number of shares of BoD members1 Name, function oon 31 December Number of shares held Voting rights in % 2018 764,329 0.042Axel A. Weber, Chairman 2017 642,100 0.037 2018 322,558 0.018Michel Demaré, Vice Chairman 2017 290,694 0.017 2018 189,805 0.010David Sidwell, Senior Independent Director 2017 154,672 0.009 2018 0 0.000Jeremy Anderson, member2 2017 –– 2018 98,832 0.005Reto Francioni, member 2017 76,772 0.004 2018 259,225 0.014Ann F. Godbehere, member 2017 232,263 0.013 2018 0 0.000Fred Hu, member2 2017 –– 2018 ––William G. Parrett, former member2 2017 106,916 0.006 2018 17,157 0.001Julie G. Richardson, member 2017 0 0.000 2018 114,802 0.006Isabelle Romy, member 2017 94,376 0.005 2018 47,074 0.003Robert W. Scully, member 2017 29,917 0.002 2018 145,601 0.008Beatrice Weder di Mauro, member 2017 126,809 0.007 2018 31,159 0.002Dieter Wemmer, member 2017 14,002 0.001 2018 1,990,542 0.109Total 2017 1,768,521 0.102 1 Includes blocked and unblocked shares held by BoD members, including those held by related parties. No options were granted in 2018 and 2017. 2 At the 2018 AGM, Jeremy Anderson and Fred Hu were newly elected and William G. Parrett did not stand for re-election.Financial statements 524 UBS Group AG standalone financial statements Note 24 Share and option ownership of the members of the Board of Directors, the Group Executive Board and other employees (continued) Share and option ownership / entitlements of GEB members1 Name, function on 31 December Number of unvested shares / at risk2 Number of vested shares Total number of shares Potentially conferred voting rights in % Number of options3 Potentially conferred voting rights in %4 2018 1,715,430 1,757,766 3,473,196 0.191 0 0.000Sergio P. Ermotti, Group Chief Executive Officer 2017 1,632,464 460,377 2,092,841 0.121 0 0.000 2018 256,356 0 256,356 0.014 0 0.000Martin Blessing, Co-President Global Wealth Management 2017 65,761 0 65,761 0.004 0 0.000 2018 259,745 0 259,745 0.014 0 0.000Christian Bluhm, Group Chief Risk Officer 2017 131,520 0 131,520 0.008 0 0.000 2018 614,222 317,516 931,738 0.051 0 0.000Markus U. Diethelm, Group General Counsel 2017 589,659 194,000 783,659 0.045 0 0.000 2018 343,120 107,472 450,592 0.025 0 0.000Kirt Gardner, Group Chief Financial Officer 2017 264,718 61,652 326,370 0.019 0 0.000 2018 500,902 254,119 755,021 0.042 0 0.000Robert Karofsky, Co-President Investment Bank 2017 –– –––––– 2018 259,762 263,362 523,124 0.029 0 0.000Sabine Keller-Busse, Group Chief Operating Officer 2017 244,676 176,602 421,278 0.024 0 0.000 2018 910,951 95,597 1,006,548 0.055 0 0.000Ulrich Körner, President Asset Management and President UBS EMEA 2017 881,979 95,597 977,576 0.057 0 0.000 2018 307,090 277,978 585,068 0.032 0 0.000Axel P. Lehmann, President Personal & Corporate Banking and President UBS Switzerland 2017 156,180 277,978 434,158 0.025 0 0.000 2018 1,132,938 484,075 1,617,013 0.089 0 0.000Tom Naratil, Co-President Global Wealth Management and President UBS Americas 2017 1,047,311 422,298 1,469,609 0.085 281,640 0.016 2018 471,049 256,367 727,416 0.040 0 0.000Piero Novelli, Co-President Investment Bank 2017 –– –––––– 2018 ––––––Andrea Orcel, former President Investment Bank 2017 1,328,113 251,439 1,579,552 0.091 0 0.000 2018 161,152 173 161,325 0.009 0 0.000Markus Ronner, Group Chief Compliance and Governance Officer 2017 –– –––––– 2018 503,772 150,000 653,772 0.036 0 0.000Kathryn Shih, President UBS Asia Pacific 2017 581,546 0 581,546 0.034 74,599 0.004 2018 7,436,489 3,964,425 11,400,914 0.627 0 0.000Total 2017 6,923,927 1,939,943 8,863,870 0.513 356,239 0.021 1 Includes all vested and unvested shares and options of GEB members, including those held by related parties. 2 Includes shares granted under variable compensation plans with forfeiture provisions. The actual number of shares vesting in the future will be calculated under the terms of the plans. Refer to “Compensation philosophy and framework” in the “Compensation” section of this report for more information on the plans. 3 Refer to “Note 30 Employee benefits: variable compensation” in the “Consolidated financial statements” section of this report for more information. 4 No conversion rights outstanding. 525 Note 25 Related parties Related parties are defined under the Swiss Code of Obligations as direct and indirect participants with voting rights of 20% or more, management bodies (BoD and GEB), external auditors and direct and indirect investments in subsidiaries. Payables due to members of the GEB and the external auditors are provided in the table below. Amounts due from and due to subsidiaries are provided on the face of the balance sheet. USD million CHF million 31.12.18 31.12.17 31.12.18 31.12.17 Payables due to the members of the GEB 156 170 154 166 of which: Deferred Contingent Capital Plan 78 79 77 77 of which: other deferred compensation plans 78 91 77 89 Payables due to external auditors 0 0 Financial statements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�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inancial statements 528 Significant regulated subsidiary and sub-group information 530 Significant regulated subsidiary and sub-group information Financial and regulatory key figures for our significant regulated subsidiaries and sub-groups UBS AG (standalone)1 UBS Switzerland AG (standalone) UBS Limited (standalone) UBS Americas Holding LLC (consolidated) USD million, except where indicated CHF million, except where indicated GBP million, except where indicated USD million, except where indicated As of or for the year ended 331.12.18 31.12.17 331.12.18 31.12.17 331.12.18 31.12.172 331.12.18 31.12.172 Financial information3,4,5 Income statement Total operating income 112,040 10,563 88,257 8,350 6638 796 112,953 12,026 Total operating expenses 99,539 10,091 66,439 6,419 6621 599 111,162 10,709 Operating profit / (loss) before tax 22,501 472 11,818 1,931 117 197 11,791 1,317 Net profit / (loss)33,333 932 11,401 1,513 118 114 33,969 (1,674) Balance sheet Total assets 4480,238 489,313 2293,034 290,310 331,014 35,569 1142,701 140,797 Total liabilities 4429,130 438,074 2279,200 275,525 228,345 32,760 1115,280 117,950 Total equity 551,107 51,239 113,834 14,785 22,669 2,809 227,421 22,847 Capital6,7 Common equity tier 1 capital 449,411 49,625 110,225 10,160 22,377 2,529 111,746 10,851 Additional tier 1 capital 77,805 3,761 44,243 3,000 2235 235 22,141 1,196 Tier 1 capital 557,217 53,386 114,468 13,160 22,612 2,764 113,887 12,047 Total going concern capital 663,225 61,464 114,468 13,160 Tier 2 capital 2255 685 7714 722 Total gone concern loss-absorbing capacity 110,932 8,400 Total capital 22,867 3,449 114,601 12,769 Total loss-absorbing capacity 225,400 21,560 0 0 Risk-weighted assets and leverage ratio denominator6,7 Risk-weighted assets 2292,888 284,707 995,646 92,894 88,486 10,473 552,581 49,587 Leverage ratio denominator 6601,013 615,238 3306,487 302,987 228,661 36,409 1122,829 135,718 0 0 Capital and leverage ratios (%)6,7 Common equity tier 1 capital ratio 116.9 17.4 110.7 10.9 228.0 24.2 222.3 21.9 Tier 1 capital ratio 330.8 26.4 226.4 24.3 Going concern capital ratio 221.6 21.6 115.1 14.2 Total capital ratio 333.8 32.9 227.8 25.8 Total loss-absorbing capacity ratio 226.6 23.2 Leverage ratio8 110.5 10.0 99.1 7.6 111.3 8.9 Total loss-absorbing capacity leverage ratio 88.3 7.1 Liquidity7,9,10 High-quality liquid assets (billion)776 88 667 69 66 6 Net cash outflows (billion)555 67 553 48 11 1 Liquidity coverage ratio (%)11,12 1139 132 1128 144 4429 454 Other Joint and several liability between UBS AG and UBS Switzerland AG (billion)13 0 226 69 11 As of 1 October 2018, UBS AG prospectively changed the presentation currency of its financial statements from Swiss francs to US dollars. Refer to “Note 2b Changes in accounting policies” in the “UBS AG standalone financial statements (audited)” section of the UBS AG standalone financial statements and regulatory information for the year ended 31 December 2018 under “Holding company and significant regulated subsidiaries and sub-groups” at www.ubs.com/investors for more information. 2 Figures as of or for the year ended 31 December 2017 have been adjusted for consistency with the full-year audited financial statements and / or local regulatory reporting, which were finalized after the publication of the UBS Group AG Annual Report 2017 and the 31 December 2017 Pillar 3 report on 9 March 2018. 3 UBS AG and UBS Switzerland AG financial information is prepared in accordance with Swiss GAAP (FINMA Circular 2015/1 and Banking Ordinance), but does not represent financial statements under Swiss GAAP. 4 UBS Limited financial information is prepared in accordance with International Financial Reporting Standards (IFRS), as endorsed by the EU, but does not represent financial statements under IFRS. 5 UBS Americas Holding LLC financial information is prepared in accordance with accounting principles generally accepted in the US (US GAAP), but does not represent financial statements under US GAAP. 6 For UBS AG and UBS Switzerland AG, based on applicable transitional arrangements for Swiss systemically relevant banks (SRBs). For UBS Limited, based on Directive 2013/36/EU and Regulation 575/2013 (together known as CRD IV) and their related technical standards, as implemented within the UK by the Prudential Regulation Authority (PRA). For UBS Americas Holding LLC, based on applicable US Basel III rules, with total loss-absorbing capacity requirements effective from 1 January 2019 only. 7 Refer to the 31 December 2018 Pillar 3 report under “Pillar 3 disclosures” at www.ubs.com/investors for more information. 8 For UBS AG, on the basis of going concern capital. On the basis of tier 1 capital for UBS Limited and UBS Americas Holding LLC. 9 There was no local disclosure requirement for UBS Americas Holding LLC as of 31 December 2018 and 31 December 2017. 10 For UBS Limited, the values represent an average of the month-end balances for the twelve months ending 31 December 2018 and 31 December 2017 in line with the European Banking Authority guidelines on the liquidity coverage ratio disclosure (EBA/GL/2017/01). Including PRA Pillar 2 requirements, the equivalent average ratios were 179% and 187% for 31 December 2018 and 31 December 2017, respectively. 11 UBS AG is required to maintain a minimum liquidity coverage ratio of 105% as communicated by FINMA. 12 UBS Switzerland AG, as a Swiss SRB, is required to maintain a minimum liquidity coverage ratio of 100%. 13 Refer to the “Capital management” section of this report for more information on the joint and several liability. Under certain circumstances, the Swiss Banking Act and FINMA’s Banking Insolvency Ordinance authorize FINMA to modify, extinguish or convert to common equity liabilities of a bank in connection with a resolution or insolvency of such bank. 531 UBS Group AG is a holding company and conducts substantially all of its operations through UBS AG and its subsidiaries. UBS Group AG and UBS AG have contributed a significant portion of their respective capital and provide substantial liquidity to subsidiaries. Many of these subsidiaries are subject to regulations requiring compliance with minimum capital, liquidity and similar requirements. The table in this section summarizes the regulatory capital components and capital ratios of our significant regulated subsidiaries and sub-groups determined under the regulatory framework of each subsidiary’s or sub- group’s home jurisdiction. →Refer to “Capital and capital ratios of our significant regulated subsidiaries” in the “Capital management” section of this report for more information →Refer to “Note 26 Restricted and transferred financial assets” in the “Consolidated financial statements” section of this report for more information. Supervisory authorities generally have discretion to impose higher requirements or to otherwise limit the activities of subsidiaries. Supervisory authorities also may require entities to measure capital and leverage ratios on a stressed basis and may limit the ability of the entity to engage in new activities or take capital actions based on the results of those tests. In June 2018, the Federal Reserve Board released the results of its Comprehensive Capital Analysis and Review (CCAR) and did not object to UBS Americas Holding LLC’s capital plan. Standalone regulatory information for UBS AG, UBS Switzerland AG and UBS Limited as well as consolidated regulatory information for UBS Americas Holding LLC is provided in the 31 December 2018 Pillar 3 report, which is available under “Pillar 3 disclosures” at www.ubs.com/investors. Standalone financial statements for UBS Group AG as well as standalone financial statements and regulatory information for UBS AG and UBS Switzerland AG are available under “Holding company and significant regulatory subsidiaries and sub-groups” at www.ubs.com/investors. Asset transfer from UBS Limited to UBS AG and merger of UBS Limited into UBS Europe SE On 1 March 2019, the previously announced combined UK business transfer and cross-border merger of UBS Limited into UBS Europe SE took place. Former clients and other counterparties of UBS Limited who can be serviced by UBS AG’s London Branch were migrated to UBS AG’s London Branch prior to the merger. This business transfer included a transfer of net assets against cash consideration of USD 0.7 billion, with no effect on the equity or profit or loss of UBS AG. Total assets of UBS AG increased by USD 4.4 billion, and total liabilities increased by USD 3.7 billion. As a result of the cross-border merger, we expect that UBS Europe SE will become subject to direct supervision by the European Central Bank and will be considered a significant regulated subsidiary from a Group reporting perspective. Starting with the first quarter of 2019, we will include financial and regulatory information of UBS Europe SE in our quarterly reports and Pillar 3 reports. →Refer to the “Regulatory and legal developments“ and “Risk factors“ sections of this report for more information Signifi cant regulated subsidiary andsub-group information 532 Appendix Abbreviations frequently used in our financial reports A ABS asset-backed security AEI automatic exchange of information AGM annual general meeting of shareholders A-IRB advanced internal ratings-based AI artificial intelligence AIV alternative investment vehicle ALCO Asset and Liability Management Committee AMA advanced measurement approach AML anti-money laundering AoA Articles of Association of UBS Group AG ASF available stable funding ASFA advanced supervisory formula approach AT1 additional tier 1 AuM assets under management B BCBS Basel Committee on Banking Supervision BD business division BEAT base erosion and anti- abuse tax BIS Bank for International Settlements BoD Board of Directors BSC Business Solutions Center BVG Swiss occupational pension plan C CAO Capital Adequacy Ordinance CC Corporate Center CCAR Comprehensive Capital Analysis and Review CCB countercyclical buffer CCF credit conversion factor CCP central counterparty CCR counterparty credit risk CCRC Corporate Culture and Responsibility Committee CDO collateralized debt obligation CDR constant default rate CDS credit default swap CEA Commodity Exchange Act CECL current expected credit loss CEM current exposure method CEO Chief Executive Officer CET1 common equity tier 1 CFO Chief Financial Officer CFTC US Commodity Futures Trading Commission CHF Swiss franc CIC Corporate Institutional Clients CIO Chief Investment Office CLN credit-linked note CLO collateralized loan obligation CLS continuous linked settlement CMBS commercial mortgage- backed security COP close-out period C&ORC Compliance & Operational Risk Control CRD IV EU Capital Requirements Directive of 2013 CRM credit risk mitigation (credit risk) or comprehensive risk measure (market risk) CSO Client Strategy Office CST combined stress test CVA credit valuation adjustment D DBO defined benefit obligation DCCP Deferred Contingent Capital Plan DJSI Dow Jones Sustainability Indices DOJ US Department of Justice DOL US Department of Labor D-SIB domestic systemically important bank DTA deferred tax asset DVA debit valuation adjustment E EAD exposure at default EBA European Banking Authority EC European Commission ECAI external credit assessment institution ECB European Central Bank ECL expected credit loss(es) EEPE effective expected positive exposure EIR effective interest rate EL expected loss EMEA Europe, Middle East and Africa EOP Equity Ownership Plan EPE expected positive exposure EPS earnings per share ERISA Employee Retirement Income Security Act of 1974 ESG environmental, social and governance ESMA European Securities and Markets Authority ESR environmental and social risk ETD exchange-traded derivative ETF exchange-traded fund EU European Union EUR euro EURIBOR Euro Interbank Offered Rate F FCA UK Financial Conduct Authority FCT foreign currency translation FDIC US Federal Deposit Insurance Corporation FINMA Swiss Financial Market Supervisory Authority FINRA US Financial Industry Regulatory Authority FMIA Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading 533 Abbreviations frequently used in our financial reports (continued) FMIO FINMA Ordinance on Financial Market Infrastructure FRA forward rate agreement FSA UK Financial Services Authority FSB Financial Stability Board FTA Swiss Federal Tax Administration FTD first to default FTP funds transfer pricing FVA funding valuation adjustment FVOCI fair value through other comprehensive income FVTPL fair value through profit or loss FX foreign exchange G GAAP generally accepted accounting principles GBP British pound GEB Group Executive Board GFA Group Franchise Awards GHG greenhouse gas GIA Group Internal Audit GIIPS Greece, Italy, Ireland, Portugal and Spain GMD Group Managing Director GRI Global Reporting Initiative Group ALM Group Asset and Liability Management G-SIB global systemically important bank H HQLA high-quality liquid assets HR human resources I IAA internal assessment approach IAS International Accounting Standards IASB International Accounting Standards Board IBOR interbank offered rates IFRIC International Financial Reporting Interpretations Committee IFRS International Financial Reporting Standards IHC intermediate holding companies IMA internal models approach IMM internal model method IPS Investment Platforms and Solutions IRB internal ratings-based IRC incremental risk charge ISDA International Swaps and Derivatives Association K KRT Key Risk Taker L LAC loss-absorbing capacity LAS liquidity-adjusted stress LCR liquidity coverage ratio LGD loss given default LIBOR London Interbank Offered Rate LLC limited liability company LRD leverage ratio denominator LTV loan-to-value M MiFID II Markets in Financial Instruments Directive II MiFIR Markets in Financial Instruments associated Regulation MRT Material Risk Taker MTN medium-term note N NAV net asset value NII net interest income NPA non-prosecution agreement NRV negative replacement value NSFR net stable funding ratio NYSE New York Stock Exchange O OCA own credit adjustment OCI other comprehensive income OECD Organisation for Economic Co-operation and Development OIS overnight index swap OTC over-the-counter P PD probability of default PFE potential future exposure PIT point in time P&L profit or loss POCI purchased or originated credit-impaired PRA UK Prudential Regulation Authority PRVpositive replacement value Q QRRE qualifying revolving retail exposures R RBA ratings-based approach RBC risk-based capital RLN reference-linked note RMBS residential mortgage- backed security RniV risks not in VaR RoAE return on attributed equity RoCET1 return on CET1 RoE return on equity RoTE return on tangible equity RV replacement value RW risk weight RWA risk-weighted assets 534 Appendix Abbreviations frequently used in our financial reports (continued) S SA standardized approach SA-CCR standardized approach for counterparty credit risk SAR stock appreciation right SBC Swiss Bank Corporation SCCL single-counterparty credit limit SDGs Sustainable Development Goals SE structured entity SEC US Securities and Exchange Commission SEEOP Senior Executive Equity Ownership Plan SESTA Swiss Federal Act on Stock Exchanges and Securities Trading SESTO FINMA Ordinance on Stock Exchanges and Securities Trading SFA supervisory formula approach SFT securities financing transaction SI sustainable investing SICR significant increase in credit risk SIX SIX Swiss Exchange SMA standardized measurement approach SME small and medium-sized enterprises SMF Senior Management Function SNB Swiss National Bank SPPI solely payments of principal and interest SRB systemically relevant bank SRM specific risk measure SSFA simplified supervisory formula approach SVaR stressed value-at-risk T TBTF too big to fail TCJA US Tax Cuts and Jobs Act TLAC total loss-absorbing capacity TRS total return swap TTC through the cycle U UoM units of measure USD US dollar US IHC US intermediate holding company V VaR value-at-risk This is a general list of the abbreviations frequently used in our financial reporting. Not all of the listed abbreviations may appear in this particular report. 535 Information sources Reporting publications Annual publications: Annual Report (SAP no. 80531): Published in English, this single-volume report provides descriptions of: our Group strategy and performance; the strategy and performance of the business divisions and Corporate Center; risk, treasury and capital management; corporate governance, corporate responsibility and our compensation framework, including information on compensation for the Board of Directors and the Group Executive Board members; and financial information, including the financial statements. Auszug aus dem Geschäftsbericht (SAP no. 80531): This publication provides the translation into German of selected sections of the Annual Report. Annual Review (SAP no. 80530): This booklet contains key information on our strategy and performance, with a focus on corporate responsibility at UBS. It is published in English, German, French and Italian. Compensation Report (SAP no. 82307): The report discusses our compensation framework and provides information on compensation for the Board of Directors and the Group Executive Board members. It is available in English and German. Quarterly publications: The quarterly financial report provides an update on our strategy and performance for the respective quarter. It is available in English. How to order publications: The annual and quarterly publications are available in PDF at www.ubs.com/investors in the “UBS Group AG and UBS AG consolidated financial information” section, and printed copies can be requested from UBS free of charge. For annual publications refer to www.ubs.com/investors in the “Investor services” section, which can be accessed via the link on the left-hand side of the screen. Alternatively, they can be ordered by quoting the SAP number and the language preference, where applicable, from UBS AG, F4UK–AUL, P.O. Box, CH-8098 Zurich, Switzerland. Other information Website: The “Investor Relations” website at www.ubs.com/ investors provides the following information on UBS: news releases; financial information, including results-related filings with the US Securities and Exchange Commission; information for shareholders, including UBS share price charts as well as data and dividend information, and for bondholders; the UBS corporate calendar; and presentations by management for investors and financial analysts. Information on the internet is available in English, with some information also available in German. Results presentations: Our quarterly results presentations are webcast live. A playback of most presentations is downloadable at www.ubs.com/presentations. Messaging service: Email alerts to news about UBS can be subscribed to under ”UBS news alert” at www.ubs.com/investors. Messages are sent in English, German, French or Italian, with an option to select theme preferences for such alerts. Form 20-F and other submissions to the US Securities and Exchange Commission: We file periodic reports and submit other information about UBS to the US Securities and Exchange Commission (SEC). Principal among these filings is the annual report on Form 20-F, filed pursuant to the US Securities Exchange Act of 1934. The filing of Form 20-F is structured as a wrap-around document. Most sections of the filing can be satisfied by referring to parts of the annual report. However, there is a small amount of additional information in Form 20-F that is not presented elsewhere and is particularly targeted at readers in the US. Readers are encouraged to refer to this additional disclosure. Any document that we file with the SEC is available on the SEC’s website www.sec.gov. Refer to www.ubs.com/investors for more information. 536 Cautionary Statement Regarding Forward-Looking Statements | This report contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (i) the degree to which UBS is successful in the ongoing execution of its strategic plans, including its cost reduction and efficiency initiatives and its ability to manage its levels of risk-weighted assets (RWA) and leverage ratio denominator (LRD), including to counteract regulatory-driven increases, liquidity coverage ratio and other financial resources, and the degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory and other conditions; (ii) the continuing low or negative interest rate environment in Switzerland and other jurisdictions, developments in the macroeconomic climate and in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, and currency exchange rates, and the effects of economic conditions, market developments, and geopolitical tensions on the financial position or creditworthiness of UBS’s clients and counterparties as well as on client sentiment and levels of activity; (iii) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, as well as availability and cost of funding to meet requirements for debt eligible for total loss-absorbing capacity (TLAC); (iv) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK, the European Union and other financial centers that have imposed, or resulted in, or may do so in the future, more stringent or entity-specific capital, TLAC, leverage ratio, liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration, constraints on transfers of capital and liquidity and sharing of operational costs across the Group or other measures, and the effect these will or would have on UBS’s business activities; (v) the degree to which UBS is successful in implementing further changes to its legal structure to improve its resolvability and meet related regulatory requirements and the potential need to make further changes to the legal structure or booking model of UBS Group in response to legal and regulatory requirements, proposals in Switzerland and other jurisdictions for mandatory structural reform of banks or systemically important institutions or to other external developments, and the extent to which such changes will have the intended effects; (vi) UBS’s ability to maintain and improve its systems and controls for the detection and prevention of money laundering and compliance with sanctions to meet evolving regulatory requirements and expectations, in particular in the US; (vii) the uncertainty arising from the timing and nature of the UK exit from the EU; (viii) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (ix) changes in the standards of conduct applicable to our businesses that may result from new regulation or new enforcement of existing standards, including recently enacted and proposed measures to impose new and enhanced duties when interacting with customers and in the execution and handling of customer transactions; (x) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations, including the potential for disqualification from certain businesses, potentially large fines or monetary penalties, or the loss of licenses or privileges as a result of regulatory or other governmental sanctions, as well as the effect that litigation, regulatory and similar matters have on the operational risk component of our RWA as well as the amount of capital available for return to shareholders; (xi) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (xii) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors; (xiii) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xiv) UBS’s ability to implement new technologies and business methods, including digital services and technologies and ability to successfully compete with both existing and new financial service providers, some of which may not be regulated to the same extent; (xv) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xvi) the occurrence of operational failures, such as fraud, misconduct, unauthorized trading, financial crime, cyberattacks, and systems failures; (xvii) restrictions on the ability of UBS Group AG to make payments or distributions, including due to restrictions on the ability of its subsidiaries to make loans or distributions, directly or indirectly, or, in the case of financial difficulties, due to the exercise by FINMA or the regulators of UBS’s operations in other countries of their broad statutory powers in relation to protective measures, restructuring and liquidation proceedings; (xviii) the degree to which changes in regulation, capital or legal structure, financial results or other factors may affect UBS’s ability to maintain its stated capital return objective; and (xix) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2018. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Rounding | Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Starting in 2018, percentages, percent changes, and adjusted results are calculated on the basis of unrounded figures. Information on absolute changes between reporting periods, which is provided in text and that can be derived from figures displayed in the tables, is calculated on a rounded basis. Tables | Within tables, blank fields generally indicate that the field is not applicable or not meaningful, or that information is not available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis. Percentage changes are presented as a mathematical calculation of the change between periods. UBS Group AG P.O. Box CH-8098 Zurich ubs.com Organization Registration Status Organization CRD Number: 8174 Organization Name: UBS FINANCIAL SERVICES INC. Organization SEC Number: 8-16267 Applicant Name: UBS FINANCIAL SERVICES INC. View IA Record SEC / SRO / Jurisdiction Registration Status Status Effective Date SEC Approved - 01/22/1971 BOX Approved -WAIVE IN FIRM 05/09/2012 CBOE Approved - 06/17/1981 CHX Approved - 12/01/1970 FINRA Approved - 10/13/1936 ISE Approved - 07/06/2000 ARCA Approved -OPTIONS MEMBER; APPROVED EQUITIES ETP MEMBER AS OF 12/18/2003. 02/17/1958 NYSE-MKT Approved -NYSE AMEX EQUITY ("ATL") & NYSE AMEX OPTION ("ATP") FIRM 02/25/1988 BX Terminated -BOX SEPARATION 08/07/2012 PHLX Approved - 01/22/1971 NQX Approved - 07/12/2006 NSX Terminated - 06/06/2014 NYSE Approved - 11/17/1982 AL Approved - 01/20/1966 AK Approved - 07/10/1970 AZ Approved - 01/09/1957 AR Approved - 07/13/1967 CA Approved - 11/30/1970 CO Approved - 02/01/1983 CT Approved - 12/01/1970 DE Approved - 10/06/1981 DC Approved - 12/01/1970 FL Approved - 04/27/1983 GA Approved - 09/22/1981 HI Approved - 12/01/1970 ID Approved - 10/29/1981 IL Approved - 07/01/1942 IN Approved - 10/21/1981 IA Approved - 07/14/1983 KS Approved - 12/01/1970 KY Approved - 07/16/1982 LA Approved - 04/20/1983 ME Approved - 02/13/1984 MD Approved - 10/03/1981 MA Approved - 07/31/1981 MI Approved - 02/03/1983 MN Approved - 07/15/1982 MS Approved - 10/14/1981 MO Approved - 07/18/1983 MT Approved - 05/05/1983 NE Approved - 10/08/1981 NV Approved - 07/18/1983 NH Approved - 02/02/1983 NJ Approved - 07/14/1983 NM Approved - 10/07/1981 NY Approved - 12/02/1982 NC Approved - 07/15/1982 ND Approved - 10/21/1981 OH Approved - 07/16/1982 OK Approved - 07/17/1982 OR Approved - 10/24/1981 PA Approved - 10/01/1970 PR Approved - 09/01/1984 RI Approved - 02/01/1983 SC Approved - 10/28/1981 SD Approved - 07/15/1982 TN Approved - 08/17/1981 TX Approved - 07/25/1983 UT Approved - 04/21/1983 VT Approved - 02/13/1984 VI Approved -CONVERSION TO CRD 03/30/2005 VA Approved - 09/22/1981 WA Approved - 04/20/1983 WV Approved - 09/30/1981 WI Approved - 07/15/1983 WY Approved -APPROVAL DATE AMENDED TO REFLECT ACTUAL APPROVAL DATE WHICH PRECEDED THE 1983 CRD IMPLEMENTATION DEFAULT DATE. 03/10/1967 Are you sure you want to delete this record? CORPORATE MTN OFFERINGS FROM UBS Jodi Pieczynski ~ Steve Rutledge ~ 800-354-3895 Security Moody S&P Size Price Yield Spread Benchmark CUSIP JPM 2.2 10/22/19 ##########2500 99.944 2.35 1 EDSF #NAME? AAPL 1.9 02/07/20 ##########2800 99.806 2.2 -3 EDSF #NAME? AAPL 1.8 05/11/20 ##########5800 99.688 2.15 2 EDSF #NAME? JPM 4.4 07/22/20 ##########8000 102.299 2.24 18 EDSF #NAME? USB 3.05 07/24/20 ##########35000 100.828 2.27 12 EDSF #NAME? C 2.125 10/20/20 ##########2400 99.736 2.32 47 2YR #NAME? BK 2.45 11/27/20 ##########1000 100.324 2.21 35 2YR #NAME? TOYOTA 2.95 04/13/21 ##########5000 101.296 2.21 36 2YR #NAME? USB 3.15 04/26/21 ##########5000 101.644 2.23 34 2YR #NAME? HON 1.85 11/01/21 ##########5000 99.297 2.15 30 2YR #NAME? GD 1.875 08/15/23 ##########2000 98.63 2.22 39 5YR #NAME? COMMERCIAL PAPER OFFERINGS FROM UBS 6/18/2019 Sacramento Regional Institutional Sales Group Jodi PieczynskiSteve Rutledge June Nelson 1-800-354-3895 Short-term Long-term ISSUER Rating Rating 1 DAY 1 WK 2 WKS 3 WKS 1 MO 2 MOS 3 MOS 4 MOS 5 MOS 6 MOS 7 MOS 8 MOS 9 MOS BNP PARIBAS FORT (BNPFNY) ~20MM MIN~A-1/P-1/F1 A+/A1/A+2.32 N/A N/A N/A N/A N/A N/A 2.24 2.23 2.20 N/A 2.16 2.12 BNP PARIBAS NY (BNPPNY) ~20MM MIN~A-1/P-1/F1 A+/Aa3/A+2.32 N/A N/A N/A N/A N/A N/A 2.24 2.23 2.20 N/A 2.16 2.12 CANADIAN IMPERIAL (CANHLD) ~10MM MIN~A-1/P-1/F1+A+/Aa2/AA-N/A N/A N/A N/A N/A 2.21 2.18 N/A 2.14 2.11 N/A N/A 2.02 RABOBANK UA (RABONY) ~25MM MIN~A-1/P-1 A+/Aa3/AA-2.32 2.32 2.31 N/A N/A N/A N/A 2.24 N/A N/A N/A N/A N/A CREDIT AGRICOLE CIB NY (CACPNY) ~25MM MIN~A-1/P-1/F1 A+/A1/A+2.32 2.32 2.32 2.32 N/A 2.20 2.18 2.15 2.10 2.10 2.08 2.08 2.02 CREDIT SUISSE NEW YORK (CSFBNY) ~25MM MIN~A-1/P-1/F1 A+/A1/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A DEXIA CREDIT NY ((DEXCLN) ~5MM MIN~A-1+/P-1/F1+AA/Aa3/AA-N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A EXXON MOBIL (XON)A-1+/P-1 AA+/Aaa N/A N/A N/A N/A 2.29 2.30 2.26 N/A N/A N/A N/A N/A N/A ING (US) FUNDING LLC (INGFDG) ~25MM MIN~A-1/P-1 A+/Aa3 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A JP MORGAN SECURITIES LLC (JPMSCC) A-1/P-1/F1+A+/Aa3/AA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A MUFG BANK LTD/NY (MUFGBK)A-1/P-1/F1 A/A1/A N/A 2.30 2.31 2.32 2.33 2.33 2.33 2.29 2.26 2.22 N/A N/A 2.20 NATIXIS NY (NATXNY) ~5MM MIN~A-1/P-1/F1 A+/A1/A+2.34 2.34 N/A N/A N/A 2.19 2.26 2.24 2.22 2.21 2.19 2.19 2.17 PRUDENTIAL FUNDING (PRU) A-1+/P-1/F1+AA-/A1/A 2.32 2.33 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A TOYOTA MOTOR CREDIT CORP (TOYCC)A-1+/P-1/F1 AA-/Aa3/A+N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A The Daily RepoRT - june 18, 2019 Sacramento Regional Institutional Sales Group ~ Jodi Pieczynski ~ Steve Rutledge ~ June Nelson ~ 800-354-3895 Agency Discount Notes AskSz(M)Issuer Maturity Dsc/Cpn Fed Funds 2.39% 1575425 FHLB DISC CORP 06/19/19 2.25 US Overnight Bank Funding Rate (OBFR01)2.37% 888888 FNMA DISCOUNT 06/20/19 2.21 Prime Rate 5.50% 28800 FHLB DISC CORP 07/02/19 - 07/03/19 2.18 250000 FHLB DISC CORP 07/05/19 2.185 California LAIF (qtrly) a/o 6/06/19 (daily @ 2.45)2.45% 196745 FHLB DISC CORP 07/08/19 - 07/12/19 2.19 Oregon OSTF a/o 12/24/18 2.75% 717510 FHLB DISC CORP 07/15/19 2.2 Washington LGIP a/o 6/07/19 2.40% 28000 FHLB DISC CORP 07/16/19 2.2 717510 FHLB DISC CORP 07/19/19 2.205 UBS Select Government Fd (SEGXX)(1mm minimum)2.25% 750000 FHLB DISC CORP 07/22/19 - 07/26/19 2.205 UBS Select Treasury Fd (SETXX)(1mm minimum)2.20% 950000 FHLB DISC CORP 07/29/19 - 07/31/19 2.205 UBS Select Government Pref Fd (SGPXX)(50mm minimum)2.29% 500000 FHLB DISC CORP 08/01/19 2.205 UBS Select Treasury Pref Fd (STPXX)(50mm minimum)2.24% 500000 FHLB DISC CORP 08/02/19 2.205 74918 FHLB DISC CORP 08/05/19 - 08/12/19 2.18 O/N Agency Discount Notes 2.25% 888888 FNMA DISCOUNT 08/05/19 - 08/09/19 2.13 O/N Treasy/Agy DVP Repo 2.36% 888888 FNMA DISCOUNT 08/12/19 - 08/16/19 2.13 O/N C/P Rated: A-1/P-1 2.34% 74918 FHLB DISC CORP 08/16/19 - 08/30/19 2.18 888888 FNMA DISCOUNT 08/19/19 - 08/23/19 2.13 888888 FNMA DISCOUNT 08/26/19 - 08/30/19 2.13 25000 FHLB DISC CORP 09/03/19 - 09/06/19 2.19 3 Month Bill 3mo 2.20% 888888 FNMA DISCOUNT 09/03/19 - 09/06/19 2.13 6 Month Bill 6mo 2.18% 100000 FHLB DISC CORP 09/09/19 - 09/11/19 2.19 1 Year T-Bill 1yr 2.03% 385000 FHLB DISC CORP 09/13/19 2.2 2 Year T-Note 2yr 1.84% 98000 FHLB DISC CORP 09/20/19 2.19 3 Year T-Note 3yr 1.78% 585512 FHLB DISC CORP 09/23/19 - 09/27/19 2.19 5 Year T-Note 5yr 1.82% 415000 FHLB DISC CORP 09/30/19 - 10/04/19 2.19 7 Year T-Note 7yr 1.93% 150000 FHLB DISC CORP 10/07/19 - 10/15/19 2.11 10 Year T-Note 10yr 2.06% 225000 FHLB DISC CORP 10/31/19 - 11/05/19 2.12 30 Year T-Note 30yr 2.55% 888888 FREDDIE DISCOUNT 11/04/19 - 11/12/19 2.07 100000 FHLB DISC CORP 11/06/19 - 12/11/19 2.05 888888 FREDDIE DISCOUNT 11/25/19 - 11/29/19 2.05 888888 FREDDIE DISCOUNT 12/02/19 - 12/12/19 2.04 888888 FREDDIE DISCOUNT 12/18/19 - 12/31/19 2.01 888888 FREDDIE DISCOUNT 01/02/20 - 01/13/20 1.98 Short Term Rates U.S. Treasury Curve 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3mo 6mo 1yr 2yr 3yr 5yr 7yr 10yr 30yr Agency Bullets Size Issuer Coupon Maturity Offer YTM 9mm FHLMC 1.50%1/17/2020 2.10 mmkt 2.10 mmkt 25mm FHLB 4.125%3/13/2020 2.06 mmkt 2.06 mmkt Sacramento Regional 5mm FHLMC 1.375%5/1/2020 2.03 mmkt 2.03 mmkt Institutional Sales 20mm FFCB 2.00%9/17/2020 +13/2yr 1.97% 21mm FNMA 1.63%10/30/2020 +12/2yr 1.96%Jodi Pieczynski 6mm TVA 3.875%2/15/2021 +4/2yr 1.88%Steve Rutledge 18mm FHLMC 2.375%2/16/2021 +3/2yr 1.87%June Nelson 5mm FHLB 1.75%3/12/2021 +2/2yr 1.86%800-354-3895 phone 50mm FFCB 1.95%3/17/2021 +7/2yr 1.91%855-478-0353 - fax 25mm FNMA 2.50%4/13/2021 +2/2yr 1.86% 25mm FFCB 2.40%4/29/2021 +4/2yr 1.88% 25mm FFCB 2.25%5/17/2021 +4/2yr 1.88% 10mm FFCB 4.00%6/2/2021 +4/2yr 1.88% 22mm FHLB 2.25%6/11/2021 +5/2yr 1.89% 5mm FHLB 1.875%7/7/2021 +3/2yr 1.87% 13mm FHLB 2.375%9/10/2021 +2/2yr 1.86% 5mm FHLMC 2.375%1/13/2022 +3/3yr 1.82% 8mm FFCB 2.20%2/28/2022 +5/3yr 1.84% 11mm FHLB 2.500%3/11/2022 +5/3yr 1.84% 25mm IADB 2.360%4/11/2022 +4/3yr 1.83% 20mm FHLB 2.125%6/10/2022 +5/3yr 1.84% 40mm FFCB 1.875%6/14/2022 +7/3yr 1.86% 21mm FHLB 2.500%12/9/2022 +5/3yr 1.84% 24mm FFCB 2.250%2/8/2023 +5/3yr 1.84% 8mm FHLB 3.250%6/9/2023 +8/5yr 1.91% 7mm FFCB 2.125%9/5/2023 +6/5yr 1.89% 19mm FFCB 2.300%11/8/2023 +5/5yr 1.88% 18mm FFCB 2.160%6/3/2024 +8/5yr 1.91% Agency Callables (issues in BOLD are newest deals) Size (M)Issuer Coupon Maturity Offer YTC YTM Structure Cusip 350mm FFCB 2.30%6/19/2020 100 2.30%2.30%1y/3m cont call; s/d 6/19 3133EKRS7 25mm FHLMC 2.30%12/24/2020 100 2.30%2.30%1.5y/3m q call; s/d 6/24 3134GTVJ9 260mm FFCB 2.10%6/24/2021 100 2.10%2.10%2y/1y cont call; s/d 6/24 3133EKRW8 50mm FHLMC 2.35%6/17/2021 100 2.35%2.35%2y/3m q call; s/d cash/reg 3134GTTL7 25mm FHLMC 2.40%6/24/2021 100 2.40%2.40%2y/3m q call; s/d 6/24 3134GTVH3 80mm FFCB 2.35%9/17/2021 100 2.35%2.35%2.25y/3m cont call; s/d cash/reg 3133EKQY5 175mm FFCB 2.37%12/17/2021 100 2.37%2.37%2.5y/3m cont call; s/d cash/reg 3133EKQZ2 225mm FFCB 2.34%6/13/2022 100 2.34%2.34%3y/6m cont call; s/d cash/reg 3133EKQR0 25mm FHLMC 2.45%6/17/2022 100 2.45%2.45%3y/3m q call; s/d cash/reg 3134GTTM5 25mm FHLMC 2.250%6/19/2023 100 2.250%2.250%4y/1y annual call; s/d 6/19 3134GTUF8 100mm FFCB 2.400%6/19/2023 100 2.400%2.400%4y/1y cont call; s/d 6/19 3133EKRJ7 25mm FHLMC 2.50%6/20/2023 100 2.50%2.50%4y/3m q call; s/d 6/20 3134GTTN3 50mm FFCB 2.500%6/19/2023 100 2.500%2.500%4y/3m cont call; s/d 6/19 3133EKRL2 120mm FFCB 2.49%9/13/2023 100 2.49%2.49%4.25y/3m cont call; s/d cash/reg 3133EKQT6 100mm FFCB 2.220%6/21/2024 100 2.220%2.220%5y/2y cont call; s/d 6/19 3133EKRP3 5.5mm FHLMC 2.350%6/25/2024 100 2.350%2.350%5y/1y annual call; s/d 6/25 3134GTUD3 9.1mm FHLMC 2.375%6/26/2024 100 2.375%2.375%5y/1y q call; s/d 6/26 3134GTTK9 25mm FHLMC 2.33%6/17/2024 100 2.33%2.33%5y/1y q call; s/d cash/reg 3134GTTY9 30mm FFCB 2.360%6/17/2024 100 2.360%2.360%5y/1y cont call; s/d cash/reg 3133EKQW9 5mm FHLMC 2.250%6/20/2024 100 2.250%2.250%5y/6m 1x call; s/d 6/20 3134GTTX1 50mm FHLMC 2.500%6/24/2024 100 2.500%2.500%5y/6m q call; s/d 6/24 3134GTVM2 25mm FHLMC 2.550%6/27/2024 100 2.550%2.550%5y/3m q call;s/d 6/27 3134GTVQ3 Commercial Paper / YCD / Corporate Note offerings are listed on separate e-mail/Bloomberg messages. This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 11. Global Research 14 June 2019 US Economic Perspectives US Weekly: Retail reminds us: strong Q2 growth The Fed would welcome some slowing US growth remains solid. Consumption is strong and industrial production is stabilizing in Q2. We do not think the Fed is set to cut the funds rate any time soon. Why are we so far out of consensus? If escalation in tariffs is avoided, the underlying economy will slow but remain above the Fed's estimate of potential. If escalation does occur, the economy would slow further, but most of the slowing would be late in the year and earlier next year. The second half of 2019 likely would still be above the Fed's estimate of sustainable growth. From the Fed’s perspective, sustainable growth is below 2% for real GDP. They would welcome some slowing. June FOMC preview: Wait and see mode, no cuts on the horizon The June FOMC will be “wait and see”, not “here come the cuts”. We expect the Fed to project higher GDP and lower inflation in the SEP. The dot plot will shift lower, but no wholesale change. We expect the statement to note greater risks but no change to the outlook for growth or policy; a dissent, however, seems likely. Q2 GDP might be running above 3% Consumer spending has rebounded. The May retail sales report was even stronger than we expected, and April sales were revised higher. Q2 real consumption is running at a 3½ to 3¾% q/q annual rate compared to 1¼% in Q1. The question is how much of the pickup comes out of imports or inventories? The week ahead Regional manufacturing surveys will give an early read on the damage from the latest hike of tariffs on goods from China; we expect modest deterioration. Jobless claims will also be important to assessing the damage. Claims have risen in recent weeks but not by enough to be consistent with the weakness reported in payrolls in May. Housing will be a focus: In May, starts and permits probably strengthened, and existing home sales probably held on to recent gains. Economics Americas Seth Carpenter Economist seth.carpenter@ubs.com +1-212-713 4173 Robert Martin Economist rob.martin@ubs.com +1-212-713 2532 Alan Detmeister Economist alan.detmeister@ubs.com +1-212-713 1222 Samuel D. Coffin Economist samuel.coffin@ubs.com +1-203-719 1252 Laura Desplans Economist laura.desplans@ubs.com +1-212-713 2513 US Economic Perspectives 14 June 2019 2 Contents US Economic Outlook ...................................................................... 3 US Economic Forecast ...................................................................... 5 The Week Ahead .............................................................................. 6 Seth Carpenter Economist seth.carpenter@ubs.com +1-212-713 4173 Robert Martin Economist rob.martin@ubs.com +1-212-713 2532 Alan Detmeister Economist alan.detmeister@ubs.com +1-212-713 1222 Samuel D. Coffin Economist samuel.coffin@ubs.com +1-203-719 1252 Laura Desplans Economist laura.desplans@ubs.com +1-212-713 2513 US Economic Perspectives 14 June 2019 3 US Economic Outlook Today's retail sales report came in a bit stronger than we had expected, and confirmed that the US growth remains solid. The 0.5% rise in headline retail sales and 0.5% rise in the control group were accompanied by upward revisions to the April data. Taken together, they imply fairly strong consumption growth in the second quarter, which should support a fairly serious Q2 GDP print. Depending on how much is offset by inventories and imports, Q2 GDP growth could be 3%. Today's industrial production print came in solid, as well. There were a number of aspects of the report—Boeing, energy, for example—that suggested idiosyncratic drags, which nevertheless left us with an indication that IP has stabilized from an earlier slump. Some weakness in the number is also attributable to the soft nonfarm payrolls print for May, which is to say the marginal informational content of the weakness is small. Those drags may persist, but that remains to be seen, and we are left with an indication that the economy is on solid footing. Looking forward, we do not think that the Fed is set to cut the federal funds rate any time soon. Why are we so far out of consensus? First, if escalation in tariffs is avoided as in our baseline, the underlying economy will slow but remain above the Fed's estimate of potential. If our baseline is wrong, and escalation does occur, the economy would slow further, but most of the slowing would be late in the year and earlier next year. The second half of 2019 likely would still be above the Fed's estimate of sustainable growth. Even if we are just plain wrong on current state of the economy, and it has already slipped into recession (in contradiction of today's retail sales and industrial production prints), the Fed will still need a few months of bad data to conclude the economy is slumping rather than slowing to a sustainable pace. Either way, we see a cut in July as highly implausible. September is more plausible but still unlikely. It would take weak data in every month between now and September for the case in favor of a severe slowdown to be convincing. A December cut is much more possible, but again, we would have to be wrong on our forecast. The Fed is misunderstood. Supported by academic research notably penned by John Williams (FRB-New York), near the lower bound, the FOMC thinks "short- term rates should be cut aggressively when deflation or a severe downturn threatens (Reifschneider and Williams 2000, 2002)." There is a big difference Figure 1: Retail sales have rebounded Figure 2: Industrial production is stabilizing Source: Census Bureau, UBS Source: Federal Reserve Board, UBS 230 240 250 260 270 280 290 300 400 420 440 460 480 500 520 14 15 16 17 18 19 Retail and food service sales (left)Control group sales (right) $bn $bn 99 102 105 108 111 14 15 16 17 18 19 Industrial production Manufacturing production Index Retail sales were solid; Q2 will come in strong in all likelihood IP stabilized Why are we so far out of consensus? It is about how the Fed thinks Where is the Fed's disconnect with markets? Probably the fact that the Fed wants some slowing US Economic Perspectives 14 June 2019 4 between a slowing, but still fundamentally solid, economy and a severe downturn. From the Fed's perspective sustainable growth is below 2 percent for real GDP, so some slowing is welcome. A severe downturn is underlying growth notably below that pace. It takes time to differentiate between the two. Moreover, without full escalation of the trade war, we do not see a severe downturn. We could be wrong in our forecast, but the FOMC's inference problem remains the same. How does the FOMC process information? Next week they update economic projections made in March; it will be fairly mechanical. The Fed's best empirical estimates show a lag of three to four quarters from monetary policy to the real economy, with an additional lag of three to four quarters for inflation. Data since March will lead them to mark up 2019 GDP. They will likely mark down their 2019 inflation a touch. They think the soft Q1 inflation is transitory (and we largely agree), though, so the 2020 forecast will likely remain unchanged at 2 percent. The first paragraph of the FOMC statement will have modest changes to reflect incoming data. But they will likely re-introduce a sentence noting risks posed by "global and financial developments," given the resurgence of trade risks. Such language will be chosen to maintain optionality. Highlighting risks neither rules out rate cuts nor commits to them. A dissent is possible, as Jim Bullard (FRB-St. Louis) has said that the rate hike in December could have been a mistake. We put little weight on a dissent itself—recall that in recent history there have been dissents that wanted both tighter and easier policy, and three dissents at a single meeting have not been enough to dissuade the Committee. The dot plot will likely still have no hike as the median projection for 2019. For a majority of the FOMC participants to write down a rate cut as their modal expectation would be extraordinary. Consider an interview with Charlie Evans (FRB-Chicago) who is on the very dovish end of the FOMC spectrum. When asked about the disconnect between market pricing and his outlook, he noted that it is possible that the market sees something he does not, so he will monitor the data in case he eventually needs to adjust his view. That attitude is consistent with a willingness to cut, but not a decision that a rate cut is the single most likely outcome. To be sure, we suspect that at least one dot will show a cut this year, and there may well be another. But one or two dots should not be read as a shift in the view of the Committee as a whole; recall that in March, there were two dots calling for two hikes this year. Figure 3: The comparison to 1995 rate cuts is interesting— the slowdown looked noticeably worse in jobs Figure 4: The 1995 "precautionary cut" took 2 quarters of sharply slower GDP Source: BLS; Federal Reserve, UBS Source: Bureau of Economic Analysis, Federal Reserve, UBS -600 -400 -200 0 200 400 600 93 94 95 96 97 Cut if negative; hike if positive AFR, 3mnth avg As first released employment Thousands 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 93 94 95 Real GDP (left)Fed funds (right) Q/Q % ch., a.r. % The lag between monetary policy and the real economy is 3 to 4 quarters; 2019 projections are marking to market the data The FOMC statement will likely note increased risks and may have a dissent The dot plot won't show a rate cut in 2019 for the median US Economic Perspectives 14 June 2019 5 US Economic Forecast Jun 7, 2019 2019 2020 Q4/Q4 Seasonally adjusted, annual rate % ch 1QA 2QE 3QE 4QE 1QE 2QE 3QE 4QE 2018A 2019E 2020E 2021E Real GDP 3.1 2.9 2.3 2.1 1.8 1.7 1.7 2.0 3.0 2.6 1.8 2.6 Personal consumption exp 1.3 3.1 1.8 1.6 1.8 1.7 1.7 1.9 2.6 2.0 1.8 2.1 Fixed investment 1.0 0.1 3.0 1.8 2.7 2.5 2.5 3.6 4.6 1.5 2.8 6.1 Business fixed investment 2.3 -0.5 3.4 1.9 3.0 2.8 3.2 4.5 7.0 1.8 3.4 6.8 Structures 1.7 -7.0 -1.5 -2.0 3.0 2.8 3.2 4.5 4.9 -2.2 3.4 6.8 Equipment -1.0 -2.0 4.0 0.8 3.0 2.8 3.2 4.5 5.8 0.4 3.4 6.8 Intellectual property products 7.2 6.0 6.0 6.0 3.0 2.8 3.2 4.5 10.2 6.3 3.4 6.8 Residential -3.5 2.5 1.6 1.5 1.5 1.5 0.0 0.5 -3.3 0.5 0.9 3.6 Government purchases 2.5 3.9 3.4 3.4 1.6 1.4 1.6 1.6 1.5 3.3 1.6 1.6 Net exports (contrib, pct pt)1.0 0.2 -0.2 0.1 -0.2 -0.2 -0.2 -0.2 -0.2 0.2 -0.1 -0.3 Exports 4.8 -2.0 0.0 0.0 2.4 2.4 2.4 2.4 2.3 0.7 2.4 2.4 Imports -2.5 -3.0 1.5 -0.4 3.3 3.3 3.3 3.3 3.4 -1.1 3.3 4.0 Inventory contribution (pct pts)0.6 -0.1 0.2 0.1 0.0 0.0 0.0 0.0 0.4 0.2 0.0 0.0 Payrolls (monthly pace, 000s)205 215 195 198 224 265 70 198 212 201 191 209 Private payrolls 197 215 195 195 200 181 181 200 212 201 191 209 Civilian unemployment rate (%)3.9 3.7 3.7 3.6 3.6 3.6 3.6 3.5 3.8 3.6 3.5 3.5 Labor force participation rate (%)63.1 63.1 63.1 63.1 63.2 63.3 63.4 63.4 63.0 63.1 63.4 63.7 Inflation CPI-U 0.9 2.8 0.0 1.4 2.5 2.7 2.0 1.5 2.2 1.3 2.2 2.4 Core CPI-U 2.3 1.8 2.3 2.2 2.6 2.2 2.2 2.3 2.2 2.1 2.3 2.5 PCE Chain Price Index 0.4 2.3 0.9 1.3 2.2 2.3 1.8 1.3 1.9 1.2 1.9 2.1 Core PCE Chain Price Index 1.0 1.9 2.2 1.8 2.3 2.0 1.9 1.9 1.9 1.7 2.0 2.2 Income indicators Average hourly earnings 3.0 3.1 3.1 3.2 3.3 3.4 3.4 3.5 3.3 3.1 3.4 3.6 Employment cost index 3.0 3.1 3.2 3.2 3.2 3.2 3.3 3.3 2.9 3.1 3.3 3.4 Real disposable income 2.2 0.7 2.1 1.7 1.0 1.0 0.9 1.9 3.0 1.7 1.2 1.3 Saving rate (%)6.7 6.1 6.2 6.2 6.0 5.8 5.6 5.6 6.5 6.2 5.6 4.9 Federal budget balance ($ bil, FY)-779 -990 -1006 -966 Federal funds rate (top of range, %)2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 3.00 Source: Commerce Dep't, Federal Reserve, Bureau of Labor Statistics, Treasury Department, & UBS US Economic Perspectives 14 June 2019 6 The Week Ahead Date Release Time (ET) Consensus UBS Est. Previous Mon, Jun 17 Empire State manufacturing survey (Jun) 8:30 AM 12.0 11.0 17.8 Housing Market Index (Jun) 10:00 AM 67 66 66 Total net TIC flows (Apr) 4:00 PM -$8.1B Tue, Jun 18 Housing starts (May) 8:30 AM 1240k 1250k 1235k Building permits (May) 8:30 AM 1300k 1325k 1290k Wed, Jun 19 FOMC statement and projections 2:00 PM Thu, Jun 20 Jobless claims (Jun 15) 8:30 AM 220k 222k Current account (Q1 & annual revision) 8:30 AM -$123.5B -$125.0B -$134.4B Philadelphia Fed manufacturing survey (Jun) 8:30 AM 10.5 11.0 16.6 Index of leading economic indicators (May) 10:00 AM 0.1% 0.2% 0.2% Fri, Jun 21 Markit Manufacturing PMI (Jun, flash) 9:45 AM 50.6 50.5 Existing home sales (May) 10:00 AM 5.30M 5.25M 5.19M State employment (May) 10:00 AM Source: Bloomberg & UBS. Regional manufacturing surveys will give a first read on the damage to the manufacturing sector from the hike to tariffs on goods from China. Jobless claims will also be important to assessing the damage from the increased tariffs. We forecast little change in claims from recent levels. While claims have risen moderately in recent weeks, they have not signalled a deterioration large enough to be consistent with the weakness reported in payrolls in May. Housing will be a focus: In May, starts and permits probably strengthened, and existing home sales probably held on to recent gains. US Economic Perspectives 14 June 2019 7 Monday, June 17 Manufacturing Surveys (Jun 17-20) History Jun forecast Mar Apr May Market UBS N.Y. Fed (Empire State) (Mon, Jun 17, 8:30 am) Current activity index 3.7 10.1 17.8 12.0 11.0 Philadelphia Fed (Thu, Jun 20, 8:30 am) Current activity index 13.7 8.5 16.6 10.5 11.0 Source: Federal Reserve System, Bloomberg and UBS estimates The late-May hike in tariffs on goods from China probably depressed factory sentiment in early June. Figure 5: Regional manufacturing surveys looked stronger than the ISM in May. Source: Federal Reserve System, ISM, UBS Homebuilders Survey (10:00 am) History Jun forecast Mar Apr May Market UBS Housing market index 62 63 66 67 66 Present (59.2%) 68 69 72 Next 6 months (13.6%) 72 71 72 Buyer traffic (27.2%) 44 47 49 Source: National Association of Homebuilders, Bloomberg, and UBS estimates We expect that builder confidence held on to recent gains in June. Home sales have picked up from their winter lows. Homebuilder equities are up. We are seeing tentative signs of demand in higher mortgage applications. Figure 6: Homebuilders’ optimism has been rising since the start of the year Source: National Association of Home Builders and UBS 40 45 50 55 60 65 70 75 -20 -10 0 10 20 30 40 50 16 17 18 19 Empire State manuf business activity index (left) Phila. Fed manuf. business activity index (left) Manufacturing ISM (right) Index Index 20 30 40 50 60 70 80 12 13 14 15 16 17 18 19 Housing market index Index US Economic Perspectives 14 June 2019 8 Tuesday, June 18 Housing Activity (8:30 am) History May forecast 000s, saar Feb Mar Apr Market UBS Starts 1149 1168 1235 1240 1250 Single-family 792 804 854 850 Multifamily 357 364 381 400 Permits 1291 1288 1290 1300 1325 Single-family 817 816 786 825 Multifamily 474 472 504 500 Source: Census Bureau, Bloomberg, and UBS estimates We expect single-family starts to maintain recent levels and permits to pick up. Single-family starts have been recovering from winter weakness but permits have not. The weakness in permits contrasts with new home sales, and the ratio of permits to sales is unusually low. With high builder confidence, we expect increased permitting. In the multifamily sector, permits have picked up persistently since Q4; and starts are following, slowly. Figure 7: Single-family starts & permits have diverged Source: Census Bureau and UBS Figure 8: A surge in new home sales, a drop in permits Source: Census Bureau and UBS Figure 9: Permits are very low relative to sales Source: Census Bureau and UBS Figure 10: Multifamily permits have rebounded notably since late last year. Starts have only inched up. Source: Census Bureau and UBS 350 450 550 650 750 850 950 11 12 13 14 15 16 17 18 19 Single-family starts Single-family permits 000s, annual rate 250 350 450 550 650 750 850 950 11 12 13 14 15 16 17 18 19 New home sales Single-family permits 000s, annual rate 1.1 1.2 1.3 1.4 1.5 1.6 1.7 11 12 13 14 15 16 17 18 19 Permits / NHS ratio 100 200 300 400 500 600 700 11 12 13 14 15 16 17 18 19 Multifamily starts Multifamily permits 000s, annual rate US Economic Perspectives 14 June 2019 9 Thursday, June 20 Jobless Claims (8:30 am) Seasonally adj New claims (000s) Continuing claims (000s) Wkly 4-wk avg Wkly % May-18 212 221 1662 1.2 May-25 218 218 1693 1.2 Jun-1 219 215 1695 1.2 Jun-8 222 218 Jun-15 UBSe 220 220 Market * Sample week. Source: Labor Dept., Bloomberg, and UBS The employment report for May was weak but not overly worrisome. Exaggerated weakness in payrolls is reported about once a year. A genuine deterioration in labor markets should also manifest in jobless claims. New claims have been falling since earlier this year, although the decline was arrested in recent weeks. Figure 11: Jobless claims have inched up in recent weeks * MN, WI, IL, IN, OH, MO, KY, TN, AL, GA, FL. Source: Labor Dep’t, UBS Friday, June 21 Existing Home Sales (10:00 am) History May forecast Feb Mar Apr Market UBS Existing home sales (000s) 5480 5210 5190 5300 5250 Single family sales 4910 4670 4620 Condo/co-op sales 570 540 570 %m/m, total 11.2 -4.9 -0.4 1.2 %y/y, total -2.3 -5.4 -4.4 -2.8 Months' supply 3.6 3.8 4.2 Median price (%y/y), total) 3.9 4.0 3.6 Single family (%y/y) 3.9 4.0 3.7 Condo/co-op (%y/y) 3.3 3.5 3.4 Source: National Association of Realtors, Bloomberg, and UBS estimates The pending home sales index (PHSI), based on initial signings of home sales contracts, tends to lead existing home sales, which are based on contract closings, by a month or two. Recent levels of the PHSI imply a slight rise in sales in May. Since December, existing home sales have reversed about half of last year’s 12% decline. Figure 12: Most of last year’s plunge in existing home sales has been reversed Source: National Association of Realtors and UBS 45 50 55 60 65 70 75 180 200 220 240 260 280 300 16 17 18 19 US (LHS)Manufacturing* (RHS) Thousands Thousands 94 98 102 106 110 114 4.7 4.9 5.1 5.3 5.5 5.7 14 15 16 17 18 19 Existing home sales (left)Pending home sales index (right) Millions Index US Economic Perspectives 14 June 2019 10 US Economic Perspectives 14 June 2019 11 Required Disclosures This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 14 June 2019 05:17 PM GMT. UBS has designated certain Research department members as Derivatives Research Analysts where those department members publish research principally on the analysis of the price or market for a derivative, and provide information reasonably sufficient upon which to base a decision to enter into a derivatives transaction. Where Derivatives Research Analysts co-author research reports with Equity Research Analysts or Economists, the Derivatives Research Analyst is responsible for the derivatives investment views, forecasts, and/or recommendations. Analyst Certification:Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention: Investment Research. US Economic Perspectives 14 June 2019 12 Global Disclaimer This document has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. This Document is provided solely to recipients who are expressly authorized by UBS to receive it. If you are not so authorized you must immediately destroy the Document. Global Research is provided to our clients through UBS Neo, and in certain instances, UBS.com and any other system or distribution method specifically identified in one or more communications distributed through UBS Neo or UBS.com (each a system) as an approved means for distributing Global Research. It may also be made available through third party vendors and distributed by UBS and/or third parties via e-mail or alternative electronic means. The level and types of services provided by Global Research to a client may vary depending upon various factors such as a client's individual preferences as to the frequency and manner of receiving communications, a client's risk profile and investment focus and perspective (e.g., market wide, sector specific, long-term, short-term, etc.), the size and scope of the overall client relationship with UBS and legal and regulatory constraints. All Global Research is available on UBS Neo. Please contact your UBS sales representative if you wish to discuss your access to UBS Neo. When you receive Global Research through a System, your access and/or use of such Global Research is subject to this Global Research Disclaimer and to the UBS Neo Platform Use Agreement (the "Neo Terms") together with any other relevant terms of use governing the applicable System. When you receive Global Research via a third party vendor, e-mail or other electronic means, you agree that use shall be subject to this Global Research Disclaimer, the Neo Terms and where applicable the UBS Investment Bank terms of business (https://www.ubs.com/global/en/investment-bank/regulatory.html) and to UBS's Terms of Use/Disclaimer (http://www.ubs.com/global/en/legalinfo2/disclaimer.html). In addition, you consent to UBS processing your personal data and using cookies in accordance with our Privacy Statement (http://www.ubs.com/global/en/legalinfo2/privacy.html) and cookie notice (http://www.ubs.com/global/en/homepage/cookies/cookie-management.html). If you receive Global Research, whether through a System or by any other means, you agree that you shall not copy, revise, amend, create a derivative work, provide to any third party, or in any way commercially exploit any UBS research provided via Global Research or otherwise, and that you shall not extract data from any research or estimates provided to you via Global Research or otherwise, without the prior written consent of UBS. This document is for distribution only as may be permitted by law. It is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject UBS to any registration or licensing requirement within such jurisdiction. This document is a general communication and is educational in nature; it is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Nothing in this document constitutes a representation that any investment strategy or recommendation is suitable or appropriate to an investor’s individual circumstances or otherwise constitutes a personal recommendation. By providing this document, none of UBS or its representatives has any responsibility or authority to provide or have provided investment advice in a fiduciary capacity or otherwise. Investments involve risks, and investors should exercise prudence and their own judgment in making their investment decisions. None of UBS or its representatives is suggesting that the recipient or any other person take a specific course of action or any action at all. By receiving this document, the recipient acknowledges and agrees with the intended purpose described above and further disclaims any expectation or belief that the information constitutes investment advice to the recipient or otherwise purports to meet the investment objectives of the recipient. The financial instruments described in the document may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, structured derivative products and futures (including OTC derivatives) are not suitable for all investors. Trading in these instruments is considered risky and may be appropriate only for sophisticated investors. Prior to buying or selling an option, and for the complete risks relating to options, you must receive a copy of "The Characteristics and Risks of Standardized Options." You may read the document at http://www.theocc.com/publications/risks/riskchap1.jsp or ask your salesperson for a copy. Various theoretical explanations of the risks associated with these instruments have been published. Supporting documentation for any claims, comparisons, recommendations, statistics or other technical data will be supplied upon request. Past performance is not necessarily indicative of future results. Transaction costs may be significant in option strategies calling for multiple purchases and sales of options, such as spreads and straddles. Because of the importance of tax considerations to many options transactions, the investor considering options should consult with his/her tax advisor as to how taxes affect the outcome of contemplated options transactions. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates or other market conditions. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument referred to in the document. For investment advice, trade execution or other enquiries, clients should contact their local sales representative. The value of any investment or income may go down as well as up, and investors may not get back the full (or any) amount invested. Past performance is not necessarily a guide to future performance. Neither UBS nor any of its directors, employees or agents accepts any liability for any loss (including investment loss) or damage arising out of the use of all or any of the Information. Prior to making any investment or financial decisions, any recipient of this document or the information should take steps to understand the risk and return of the investment and seek individualized advice from his or her personal financial, legal, tax and other professional advisors that takes into account all the particular facts and circumstances of his or her investment objectives. Any prices stated in this document are for information purposes only and do not represent valuations for individual securities or other financial instruments. There is no representation that any transaction can or could have been effected at those prices, and any prices do not necessarily reflect UBS's internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions by UBS or any other source may yield substantially different results. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in any materials to which this document relates (the "Information"), except with respect to Information concerning UBS. The Information is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. UBS does not undertake to update or keep current the Information. Any opinions expressed in this document may change without notice and may differ or be contrary to opinions expressed by other business areas or groups, personnel or other representative of UBS. Any statements contained in this report attributed to a third party represent UBS's interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. In no circumstances may this document or any of the Information (including any forecast, value, index or other calculated amount ("Values")) be used for any of the following purposes: (i) valuation or accounting purposes; (ii) to determine the amounts due or payable, the price or the value of any financial instrument or financial contract; or (iii) to measure the performance of any financial instrument including, without limitation, for the purpose of tracking the return or performance of any Value or of defining the asset allocation of portfolio or of computing performance fees. By receiving this document and the Information you will be deemed to represent and warrant to UBS that you will not use this document or any of the Information for any of the above purposes or otherwise rely upon this document or any of the Information. UBS has policies and procedures, which include, without limitation, independence policies and permanent information barriers, that are intended, and upon which UBS relies, to manage potential conflicts of interest and control the flow of information within divisions of UBS and among its subsidiaries, branches and affiliates. For further information on the ways in which UBS manages conflicts and maintains independence of its research products, historical performance information and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. Research will initiate, update and cease coverage solely at the discretion of UBS Research Management, which will also have sole discretion on the timing and frequency of any published research product. The analysis contained in this document is based on numerous assumptions. All material information in relation to published research reports, such as valuation methodology, risk statements, underlying assumptions (including sensitivity analysis of those assumptions), ratings history etc. as required by the Market Abuse Regulation, can be found on UBS Neo. Different assumptions could result in materially different results. The analyst(s) responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting market information. UBS relies on information barriers to control the flow of information contained in one or more areas within UBS into other US Economic Perspectives 14 June 2019 13 areas, units, groups or affiliates of UBS. The compensation of the analyst who prepared this document is determined exclusively by research management and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues; however, compensation may relate to the revenues of UBS and/or its divisions as a whole, of which investment banking, sales and trading are a part, and UBS's subsidiaries, branches and affiliates as a whole. For financial instruments admitted to trading on an EU regulated market: UBS AG, its affiliates or subsidiaries (excluding UBS Securities LLC) acts as a market maker or liquidity provider (in accordance with the interpretation of these terms under English law or, if not carried out by UBS in the UK the law of the relevant jurisdiction in which UBS determines it carries out the activity) in the financial instruments of the issuer save that where the activity of liquidity provider is carried out in accordance with the definition given to it by the laws and regulations of any other EU jurisdictions, such information is separately disclosed in this document. For financial instruments admitted to trading on a non-EU regulated market: UBS may act as a market maker save that where this activity is carried out in the US in accordance with the definition given to it by the relevant laws and regulations, such activity will be specifically disclosed in this document. UBS may have issued a warrant the value of which is based on one or more of the financial instruments referred to in the document. UBS and its affiliates and employees may have long or short positions, trade as principal and buy and sell in instruments or derivatives identified herein; such transactions or positions may be inconsistent with the opinions expressed in this document. Within the past 12 months UBS AG, its affiliates or subsidiaries may have received or provided investment services and activities or ancillary services as per MiFID II which may have given rise to a payment or promise of a payment in relation to these services from or to this company. Where Global Research refers to "UBS Evidence Lab Inside" or has made use of data provided by UBS Evidence Lab you understand that UBS Evidence Lab is a separate department to Global Research and that UBS Evidence Lab does not provide research, investment recommendations or advice. United Kingdom: This material is distributed by UBS AG, London Branch to persons who are eligible counterparties or professional clients. UBS AG, London Branch is authorised by the Prudential Regulation Authority and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Europe: Except as otherwise specified herein, these materials are distributed by UBS Europe SE, a subsidiary of UBS AG, to persons who are eligible counterparties or professional clients (as detailed in the Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin)Rules and according to MIFID) and are only available to such persons. The information does not apply to, and should not be relied upon by, retail clients. UBS Europe SE is authorised by the [European Central Bank (ECB)] and regulated by the BaFin and the ECB. France: Prepared by UBS Europe SE and distributed by UBS Europe SE and UBS Securities France S.A. UBS Securities France S.A. is regulated by the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the Autorité des Marchés Financiers (AMF). Where an analyst of UBS Securities France S.A. has contributed to this document, the document is also deemed to have been prepared by UBS Securities France S.A. Germany, Luxembourg, the Netherlands, Belgium and Ireland: Prepared by UBS AG, London Branch and distributed by UBS AG, London Branch and UBS Europe SE. Spain: Prepared by UBS Europe SE and distributed by UBS Europe SE and UBS Securities España SV, SA. UBS Securities España SV, SA is regulated by the Comisión Nacional del Mercado de Valores (CNMV). Turkey: Distributed by UBS AG, London Branch. No information in this document is provided for the purpose of offering, marketing and sale by any means of any capital market instruments and services in the Republic of Turkey. Therefore, this document may not be considered as an offer made or to be made to residents of the Republic of Turkey. UBS AG, London Branch is not licensed by the Turkish Capital Market Board under the provisions of the Capital Market Law (Law No. 6362). Accordingly, neither this document nor any other offering material related to the instruments/services may be utilized in connection with providing any capital market services to persons within the Republic of Turkey without the prior approval of the Capital Market Board. However, according to article 15 (d) (ii) of the Decree No. 32, there is no restriction on the purchase or sale of the securities abroad by residents of the Republic of Turkey. Poland: Distributed by UBS Europe SE (spolka z ograniczona odpowiedzialnoscia) Oddzial w Polsce regulated by the Polish Financial Supervision Authority. Where an analyst of UBS Europe SE (spolka z ograniczona odpowiedzialnoscia) Oddzial w Polsce has contributed to this document, the document is also deemed to have been prepared by UBS Europe SE (spolka z ograniczona odpowiedzialnoscia) Oddzial w Polsce. Russia: Prepared and distributed by UBS Bank (OOO). Switzerland: Distributed by UBS AG to persons who are institutional investors only. UBS AG is regulated by the Swiss Financial Market Supervisory Authority (FINMA). Italy: Prepared by UBS Europe SE and distributed by UBS Europe SE and UBS Europe SE, Italy Branch. Where an analyst of UBS Europe SE, Italy Branch has contributed to this document, the document is also deemed to have been prepared by UBS Europe SE, Italy Branch.South Africa: Distributed by UBS South Africa (Pty) Limited (Registration No. 1995/011140/07), an authorised user of the JSE and an authorised Financial Services Provider (FSP 7328). Israel: This material is distributed by UBS AG, London Branch. UBS Securities Israel Ltd is a licensed Investment Marketer that is supervised by the Israel Securities Authority (ISA). UBS AG, London Branch and its affiliates incorporated outside Israel are not licensed under the Israeli Advisory Law. UBS AG, London Branch is not covered by insurance as required from a licensee under the Israeli Advisory Law. UBS may engage among others in issuance of Financial Assets or in distribution of Financial Assets of other issuers for fees or other benefits. UBS AG, London Branch and its affiliates may prefer various Financial Assets to which they have or may have Affiliation (as such term is defined under the Israeli Advisory Law). Nothing in this Material should be considered as investment advice under the Israeli Advisory Law. This Material is being issued only to and/or is directed only at persons who are Eligible Clients within the meaning of the Israeli Advisory Law, and this material must not be relied on or acted upon by any other persons. Saudi Arabia: This document has been issued by UBS AG (and/or any of its subsidiaries, branches or affiliates), a public company limited by shares, incorporated in Switzerland with its registered offices at Aeschenvorstadt 1, CH-4051 Basel and Bahnhofstrasse 45, CH-8001 Zurich. This publication has been approved by UBS Saudi Arabia (a subsidiary of UBS AG), a Saudi closed joint stock company incorporated in the Kingdom of Saudi Arabia under commercial register number 1010257812 having its registered office at Tatweer Towers, P.O. Box 75724, Riyadh 11588, Kingdom of Saudi Arabia. UBS Saudi Arabia is authorized and regulated by the Capital Market Authority to conduct securities business under license number 08113-37. UAE / Dubai: The information distributed by UBS AG Dubai Branch is only intended for Professional Clients and/or Market Counterparties, as classified under the DFSA rulebook. No other person should act upon this material/communication. The information is not for further distribution within the United Arab Emirates. UBS AG Dubai Branch is regulated by the DFSA in the DIFC. UBS is not licensed to provide banking services in the UAE by the Central Bank of the UAE, nor is it licensed by the UAE Securities and Commodities Authority. United States: Distributed to US persons by either UBS Securities LLC or by UBS Financial Services Inc., subsidiaries of UBS AG; or by a group, subsidiary or affiliate of UBS AG that is not registered as a US broker-dealer (a ‘non-US affiliate’) to major US institutional investors only. UBS Securities LLC or UBS Financial Services Inc. accepts responsibility for the content of a document prepared by another non-US affiliate when distributed to US persons by UBS Securities LLC or UBS Financial Services Inc. All transactions by a US person in the securities mentioned in this document must be effected through UBS Securities LLC or UBS Financial Services Inc., and not through a non-US affiliate. UBS Securities LLC is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule"), and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule. Canada: Distributed by UBS Securities Canada Inc., a registered investment dealer in Canada and a Member-Canadian Investor Protection Fund, or by another affiliate of UBS AG that is registered to conduct business in Canada or is otherwise exempt from registration. Mexico: This report has been distributed and prepared by UBS Casa de Bolsa, S.A. de C.V., UBS Grupo Financiero, an entity that is part of UBS Grupo Financiero, S.A. de C.V. and is a subsidiary of UBS AG. This document is intended for distribution to institutional or sophisticated investors only. Research reports only reflect the views of the analysts responsible for the reports. Analysts do not receive any compensation from persons or entities different from UBS Casa de Bolsa, S.A. de C.V., UBS Grupo Financiero, or different from entities belonging to the same financial group or business group of such. For Spanish translations of applicable disclosures, please go to www.ubs.com/disclosures. Brazil: Except as otherwise specified herein, this material is prepared by UBS Brasil CCTVM S.A. to persons who are eligible investors residing in Brazil, which are considered to be Investidores Profissionais, as designated by the applicable regulation, mainly the CVM Instruction No. 539 from the 13th of November 2013 (determines the duty to verify the suitability of products, services and transactions with regards to the client´s profile). Hong Kong: Distributed by UBS Securities Asia Limited and/or UBS AG, Hong Kong Branch. Please contact local licensed/registered representatives of UBS Securities Asia Limited and/or UBS AG, Hong Kong Branch in respect of any matters arising from, or in connection with, the analysis or document. Singapore: Distributed by UBS Securities Pte. Ltd. [MCI (P) 009/09/2018 and Co. Reg. No.: 198500648C] or UBS AG, Singapore Branch. Please contact UBS Securities Pte. Ltd., an exempt financial adviser under the Singapore Financial Advisers Act (Cap. 110); or UBS AG, Singapore Branch, an exempt financial adviser under the Singapore Financial Advisers Act (Cap. 110) and a wholesale bank licensed under the Singapore Banking Act (Cap. 19) regulated by the Monetary Authority of Singapore, in respect of any matters arising from, or in connection with, the analysis or document. The recipients of this document represent and warrant that they are accredited and institutional investors as defined in the Securities and Futures Act (Cap. 289). Japan: Distributed by UBS Securities Japan Co., Ltd. to professional investors (except as otherwise permitted). Where this document has been prepared by UBS Securities Japan Co., Ltd., UBS Securities Japan Co., Ltd. is the author, publisher and distributor of the document. Distributed by UBS AG, Tokyo Branch to Professional Investors (except as otherwise permitted) in relation to foreign exchange and other banking businesses when relevant. Australia: Clients of UBS AG: Distributed by UBS AG (ABN 47 088 129 613 and holder of Australian Financial Services License No. 231087). Clients of UBS Securities Australia Ltd: Distributed by UBS Securities Australia Ltd (ABN 62 008 586 481 and holder of Australian Financial Services License No. 231098). This Document contains general information and/or general advice only and does not constitute personal financial product advice. As such, the Information in this document has been prepared without taking into account any investor’s objectives, financial situation or needs, and investors should, before acting on the Information, consider the appropriateness of the Information, having regard to their objectives, financial situation and needs. If the Information contained in this document relates to the acquisition, or potential acquisition of a particular financial product by a ‘Retail’ client as defined by section 761G of the Corporations Act 2001 where a Product Disclosure Statement would be required, the retail client should obtain and consider the Product Disclosure Statement relating to the product before making any decision about whether to acquire the product. The UBS Securities Australia Limited Financial Services Guide is available at: www.ubs.com/ecs-research-fsg. New Zealand: Distributed by UBS New Zealand Ltd. UBS New Zealand Ltd is not a registered bank in New Zealand. You are being provided with this UBS publication or material because you have indicated to UBS that you are a “wholesale client” within the meaning of section 5C of the Financial Advisers Act 2008 of New Zealand (Permitted Client). This publication or material is not intended for clients who are not Permitted Clients (non-permitted Clients). If you are a non-permitted Client you must not rely on this publication or material. If despite this US Economic Perspectives 14 June 2019 14 warning you nevertheless rely on this publication or material, you hereby (i) acknowledge that you may not rely on the content of this publication or material and that any recommendations or opinions in such this publication or material are not made or provided to you, and (ii) to the maximum extent permitted by law (a) indemnify UBS and its associates or related entities (and their respective Directors, officers, agents and Advisors) (each a ‘Relevant Person’) for any loss, damage, liability or claim any of them may incur or suffer as a result of, or in connection with, your unauthorised reliance on this publication or material and (b) waive any rights or remedies you may have against any Relevant Person for (or in respect of) any loss, damage, liability or claim you may incur or suffer as a result of, or in connection with, your unauthorised reliance on this publication or material. Korea: Distributed in Korea by UBS Securities Pte. Ltd., Seoul Branch. This document may have been edited or contributed to from time to time by affiliates of UBS Securities Pte. Ltd., Seoul Branch. This material is intended for professional/institutional clients only and not for distribution to any retail clients. Malaysia: This material is authorized to be distributed in Malaysia by UBS Securities Malaysia Sdn. Bhd (Capital Markets Services License No.: CMSL/A0063/2007). This material is intended for professional/institutional clients only and not for distribution to any retail clients. India: Distributed by UBS Securities India Private Ltd. (Corporate Identity Number U67120MH1996PTC097299) 2/F, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai (India) 400051. Phone: +912261556000. It provides brokerage services bearing SEBI Registration Numbers: NSE (Capital Market Segment): INB230951431, NSE (F&O Segment) INF230951431, NSE (Currency Derivatives Segment) INE230951431, BSE (Capital Market Segment) INB010951437; merchant banking services bearing SEBI Registration Number: INM000010809 and Research Analyst services bearing SEBI Registration Number: INH000001204. UBS AG, its affiliates or subsidiaries may have debt holdings or positions in the subject Indian company/companies. Within the past 12 months, UBS AG, its affiliates or subsidiaries may have received compensation for non-investment banking securities-related services and/or non-securities services from the subject Indian company/companies. The subject company/companies may have been a client/clients of UBS AG, its affiliates or subsidiaries during the 12 months preceding the date of distribution of the research report with respect to investment banking and/or non-investment banking securities-related services and/or non-securities services. With regard to information on associates, please refer to the Annual Report at: http://www.ubs.com/global/en/about_ubs/investor_relations/annualreporting.htmlTaiwan: Distributed by UBS Securities Pte. Ltd., Taipei Branch which is regulated by the Taiwan Securities and Futures Bureau. Indonesia: This report is being distributed by PT UBS Sekuritas Indonesia and is delivered by its licensed employee(s), including marketing/sales person, to its client. PT UBS Sekuritas Indonesia, having its registered office at Wisma GKBI, 22nd floor, JL. Jend. Sudirman, kav.28, Jakarta 10210, Indonesia, is a subsidiary company of UBS AG and licensed under Capital Market Law no. 8 year 1995, a holder of broker-dealer and underwriter licenses issued by the Capital Market and Financial Institution Supervisory Agency (now Otoritas Jasa Keuangan/OJK). PT UBS Sekuritas Indonesia is also a member of Indonesia Stock Exchange and supervised by Otoritas Jasa Keuangan (OJK). Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens except in compliance with applicable Indonesian capital market laws and regulations. This report is not an offer of securities in Indonesia and may not be distributed within the territory of the Republic of Indonesia or to Indonesian citizens in circumstance which constitutes an offering within the meaning of Indonesian capital market laws and regulations. The disclosures contained in research documents produced by UBS AG, London Branch or UBS Europe SE shall be governed by and construed in accordance with English law. UBS specifically prohibits the redistribution of this document in whole or in part without the written permission of UBS and in any event UBS accepts no liability whatsoever for any redistribution of this document or its contents or the actions of third parties in this respect. Images may depict objects or elements that are protected by third party copyright, trademarks and other intellectual property rights. © UBS 2019. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.