UBS AG agreed to pay disgorgement and pre-judgment interest of US $11.5 million to resolve allegations by the Securities and Exchange Commission that it misled investors of structured notes whose return was based on a proprietary index derived from the performance of a proprietary trading program involving foreign exchange. UBS sold these notes to US retail investors between December 2009 and November 2010, said the SEC. According to the SEC, these notes were marketed to investors as being based on a “transparent” and “systematic” currency trading program. However, alleged the SEC, UBS engaged in conduct associated with the notes that was not disclosed and not systematic. The SEC claimed that UBS added mark-ups to certain hedging transactions that were not justified; added spreads to hedging transactions “that were determined at the discretion of the FX spot desk” and were not systematic; and, on over 24 occasions, engaged in trading for the firm’s proprietary account that were “directionally consistent” with trades later taken with hedging transactions. UBS’s US employees who drafted the relevant disclosure documents were not aware of these practices by the firm’s employees in Switzerland, claimed the SEC. The SEC acknowledged UBS’s “substantial cooperation” with its staff and having voluntarily undertaken remedial measures in accepting the firm’s settlement. In addition to disgorgement, UBS agreed to pay a fine of US $8 million.