SFC Fines UBS Over Regulatory Breaches
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Hong Kong’s Securities and Futures Commission reprimanded and fined UBS over regulatory breaches covering various areas including transparency client suitability.
The SFC fined UBS AG and UBS Securities Asia Limited HK$9.8 million ($1.26 million) and $1.75 million, respectively, over various regulatory breaches, according to a statement.
The issues covered areas ranging from lacking disclosures to client suitability issues.
The SFC’s probe found that UBS failed to make proper disclosure of its financial interest in some Hong Kong-listed companies covers in its research reports for 14 years, between May 2004 and May 2018.
The failure was caused by multiple data feed logic errors in a legacy data source used by UBS for tracking its shareholding positions, the securities regulator said.
The SFC also found that UBS failed to fulfill various processes across client suitability and sales.
It said the Swiss bank, in various time periods, failed to obtain valid standing authorities from clients who were not qualified as professional investors; record client order instructions; fully assess client derivatives knowledge; and disclose the stop loss event feature in a structured note.
The SFC considers that UBS failed to act with due skill and care and put in place adequate systems and controls to ensure compliance with the applicable regulatory requirements,» the regulator said in the statement.
Questions & Answers
Q.What was the total fine imposed on UBS by the SFC?
What was the total fine imposed on UBS by the SFC?
UBS AG was fined HK$9.8 million ($1.26 million) and UBS Securities Asia Limited was fined $1.75 million, making a total of over $3 million.
Q.What was one of the main issues regarding UBS's research reports?
What was one of the main issues regarding UBS's research reports?
UBS failed to properly disclose its financial interest in some Hong Kong-listed companies featured in its research reports for 14 years, between May 2004 and May 2018.
Q.What were some of the client suitability problems identified?
What were some of the client suitability problems identified?
UBS failed to obtain valid standing authorities from non-professional investors, record client order instructions, fully assess client derivatives knowledge, and disclose a stop loss feature in a structured note.
Q.What was the cause of the disclosure failure in the research reports?
What was the cause of the disclosure failure in the research reports?
The failure was attributed to multiple data feed logic errors in a legacy data source UBS used for tracking its shareholding positions in listed companies.
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