[ by Melanie Gretchen ]

How about that?

In a rare instance, UBS faces a fine by the U.K.'s Financial Services Authority (FSA) for improperly selling a money market fund.  In 2008, the fund unusually fell below book value, leaving hundreds of customers unable to withdraw their money.

FSA Findings and Allegations. The FSA alleged that from 2003 to 2008, almost 2,000 wealthy customers bought the AIG Enhanced Variable Rate Fund, a money-market fund that also invested in asset-backed securities and floating rate notes.  Once the performance fell, customers trying to withdraw their money created a run on the fund, suspending the fund causing even more unhappy customers.

The regulator also accused the bank of having failed to handle customer complaints about the fund sale.  All told, at least 19 customers had been inappropriately sold the fund and at least 11 complaints had been mishandled.

The bank "failed to ensure it understood the product it was selling, failed to recommend it to the right customers and failed to take effective action in the financial crisis when the problems with the fund came to the fore."  -- Tracey McDermott, director of enforcement and financial crime at the authority.

FSA Sanctions. On Tuesday, the Swiss bank was fined £9.45 million ($14.8 million).  In addition, customers will receive some £10 million ($6.4 million) in compensation.

For further details, go to [Dealbook, 2/12/13].