UBS Hit with Another US Fine
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Switzerland’s largest bank gets fined in the US for violating short-selling regulations. The Financial Industry Regulatory Authority (FINRA), which regulates US-based brokerages, is fining UBS Securities $2.5 million for violating short-selling regulations over nine years, it said in a statement issued Monday.
FINRA, which is overseen by the Securities Exchange Commission, found that UBS did not close out at least 5,300 positions in a timely enough fashion between 2009 and 2018, routing or executing more than 73,000 security short sales without first borrowing or arranging to borrow the shares. That meant that the regulator’s close-out requirements were not satisfied.
Although UBS conducted annual reviews of its systems, it failed to identify the improper treatment of shares associated with long-selling activities by clients.
Switzerland’s largest bank also failed to detect red flags present in its books and records that should have indicated systems failures that showed certain buy-in orders as limit orders, according to the regulator.
UBS consented to the entry of FINRA’s findings without admitting or denying the charges.
Questions & Answers
Q.What specific regulations did UBS violate?
What specific regulations did UBS violate?
UBS violated short-selling regulations by failing to close out at least 5,300 positions in a timely manner. It also executed over 73,000 security short sales without first borrowing or arranging to borrow shares, which meant close-out requirements were not satisfied.
Q.How long did these violations occur, and when were they identified?
How long did these violations occur, and when were they identified?
The violations occurred over nine years, between 2009 and 2018. Although UBS conducted annual reviews of its systems during this period, it failed to identify the improper treatment of shares or detect red flags indicating system failures.
Q.What was the consequence for UBS regarding this incident?
What was the consequence for UBS regarding this incident?
UBS Securities was fined $2.5 million by the Financial Industry Regulatory Authority (FINRA) for these violations. The bank consented to FINRA’s findings without admitting or denying the charges.
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