NEW YORK (Bloomberg) — UBS AG was sued by New York state over allegations that Europe’s largest bank defrauded thousands of brokerage clients out of tens of millions of dollars by steering them into costly accounts they didn’t need.Attorney General Eliot Spitzer claimed on Tuesday that UBS Financial Services Inc., a unit of the Zurich-based company, improperly shifted customers into accounts that charge fees based on assets under management rather than commissions, according to a complaint filed today in New York state court. UBS denied the allegations and said the “InsightOne” accounts make up less than 3.5 percent of its US brokerage accounts.

The suit targets a type of account that brokerage firms increasingly favor because it produces a more stable stream of revenue than commissions, which can plunge when markets decline. Morgan Stanley and Raymond James Financial Inc. paid $2.25 million in fines and returned $4.74 million to clients last year after NASD, the industry’s main regulator, found they failed to determine whether fee-based accounts were appropriate.

“UBS should’ve been paying more attention,” said Adam Honore, a Denver-based analyst for Aite Group LLC, a brokerage-industry research firm. “With the popularity of fee-based accounts, firms absolutely should be monitoring their processes to ensure that ultimately the retail investor is in the best program for their objectives and their trading style.”

Customers in fee-based accounts pay regardless of how much trading they do. In a traditional account, clients pay commissions only when they trade. Spitzer claimed UBS charged a 91-year-old woman more than $35,000 for making just four trades over two years, or $33,000 more than she would have paid in a traditional account.