The Massachusetts Securities Division is investigating UBS PaineWebber’s supervisory and compliance procedures in connection with allegations of a broker stealing more than $4 million from clients, according to the state’s Securities Division.

If the state’s Securities Division finds that PaineWebber was lax in its supervisory and compliance procedures, "We have the power to levy a fine and issue suspensions," according to spokesperson Brian McNiff.

PaineWebber is under fire because of broker Scott McCreadie, who has been accused of stealing more than $4 million from clients, including his father-in-law, his children and his wife, according to William Galvin, the secretary of the commonwealth of Massachusetts. McCreadie is accused of running a complex scheme in which he misappropriated client funds from his family using forged client signatures, forged account statements and fictitious accounts when he was a broker in the Wellesley office of PaineWebber from January 1999 to September 2001. A lawyer for the family alleges that McCreadie set up as many as 70 false accounts to hide his thievery and also defrauded other clients. According to Galvin, PaineWebber is under investigation "to determine why they failed to detect and stop broker theft of his client’s assets."

A timetable has not been established as to when the investigation will be completed, according to McNiff. "What our office is attempting to do is recover funds for investors when they have been involved in something that violates the Massachusetts Securities Act," McNiff says.

McCreadie’s lawyer says his client committed no criminal acts and will be vindicated once all the facts are out.

According to Galvin, Paine Webber reported to the NASD that McCreadie "abandoned" his position with the company last June. The company also reported that McCreadie asserted his Fifth Amendment right against self-incrimination when they questioned him about the scheme, McNiff says.

PaineWebber did not return a call requesting comment on the case, but is said to be running its own investigation into the matter.