2nd Circ. Limits Collateral Disclosures In $25M UBS Case

Law360, New York (April 1, 2013, 1:57 PM EDT) -- Brokers are not required to give investors advance written notice before changing collateral policies, the Second Circuit ruled Monday, supporting the dismissal of a $25 million suit against UBS Securities LLC.

A three-judge panel adopted a narrow view of Section 10b-16 of the Securities Exchange Act of 1934, which requires brokers to disclose the conditions under which they can demand additional collateral from investors through a margin call.

Rule 10b-16 does not require brokers to provide advance notice to clients before changing collateral rules, the Second...
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