The U.S. Securities and Exchange Commission informed UBS Group on Wednesday that it would not object to specific securities transactions the bank might conduct under direction from the Swiss regulator to achieve an orderly resolution. The SEC stated it would not pursue enforcement if UBS converted certain debt securities into equity without U.S. registration, thereby eliminating a potential legal barrier to the bank’s crisis plans. This guidance concerns a possible bail-in, a mechanism that recapitalizes a troubled bank by converting designated debt into equity instead of using public funds. The SEC noted that a debt-to-equity exchange mandated by Swiss authorities would qualify as an offer and sale under U.S. law but could meet an exemption from registration. The decision addresses cross-border regulatory issues exposed during the Credit Suisse resolution process.
