A discharged UBS broker stole millions from clients including one victim’s life savings she intended to use to pay for college expenses for her three children, says the SEC.

John C. MacColl was charged with defrauding more than 15 retail investors in a $4 million scheme that used high pressure sales tactics to target mostly elderly retirees, according to an SEC complaint filed Aug. 9 in federal court in Michigan.

MacColl, 65, persuaded clients to invest in a “highly-sought-after” private fund that would diversify their portfolios and provide investment returns as high as 20%, exceeding the returns they would receive with investments at UBS, the regulator says.

Between 2008 and 2018, MacColl instructed investors to sell or take a line of credit out against the securities in their accounts and to deposit the money into their personal bank accounts, according to the complaint. He then told clients to make checks payable to “Mac 011” or “Mac 01,” picked up the checks from his customers’ homes, added his first name to the payee line and deposited the checks, according to the complaint.

Parallel criminal charges were filed in a federal court in Michigan this week.

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Clients were told they could expect little information directly from the fund including a prospectus, trade confirmations or account statements, the regulator says. One victim invested her life savings — and money from her deceased husband’s life insurance payout — which she intended to use to pay for college tuition for her three children, prosecutors say.

He provided clients with "fake account statements reflecting fictitious returns," the SEC claims.

MacColl allegedly spent his clients' funds on personal expenses; about $410,000 was used to pay back investors in Ponzi-like fashion to keep the scheme alive, the regulator says.

The scheme crumbled after a client — requesting information about the funds — was faxed a purported account statement with “several obvious errors and misspellings” and contacted FINRA, the SEC says.

By April 2018, MacColl had less than $7,000 remaining in his bank accounts, court documents show.

After missing an interview requested by FINRA and UBS, MacColl allegedly wrote an 11-page letter detailing and admitting to misappropriating client funds, according to the complaint.

An attorney for MacColl was not listed in court documents. MacColl could not be reached for comment.

Thirteen customer disputes are listed on his FINRA BrokerCheck record. Twelve were settled for a total of $1.93 million in damages while one was denied, per BrokerCheck records. There are two pending disputes seeking an additional $1.51 million in alleged damages, per BrokerCheck.

UBS discharged MacColl in March, per BrokerCheck records. FINRA barred him later that same month.

“UBS terminated Mr. MacColl as soon as the Firm became aware of his improper and illegal actions," says a UBS spokesman. "Although those actions occurred outside the firm’s control framework, UBS is reimbursing its affected clients for their losses.”

Prior to his time at UBS, MacColl worked at Morgan Stanley beginning in 1985, per BrokerCheck. The SEC is asking a federal judge to order MacColl to disgorge his allegedly ill-gotten gains, plus prejudgment interest, and to pay a civil penalty.

Sean Allocca

Sean Allocca is an associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.