- Hong Kong regulators fined UBS roughly $51 million on Monday for overcharging wealthy clients for a decade.
- The country’s Securities and Futures Commission said the Swiss bank added excess fees to bond and structured-note trades between 2008 and 2015. It also said the bank took two years to report the malpractice after the initial discovery.
- The commission considered UBS’s disciplinary action against the more than 20 involved employees when deciding the size of the fine.
- Watch UBS trade live here.
Hong Kong regulators fined UBS roughly $51 million on Monday for overcharging wealthy clients for a decade.
The country’s Securities and Futures Commission said the Swiss bank’s Wealth Management division added extraneous fees to bond and structured-note trades without clients’ knowledge between 2008 and 2015. The SFC’s investigation also revealed the bank charged fees in excess of its standard rates between 2008 and 2017.
“The SFC expects all intermediaries to uphold high standards of integrity when managing trades for clients,” SFC CEO Ashley Alder wrote. “Although each overcharge represented a fraction of each trade, UBS’s misconduct involved deception and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
The malpractice affected about 5,000 Hong Kong-managed accounts over roughly 28,700 transactions, according to the SFC. The regulatory commission said that, although the bank discovered the shady fees after seven years of malpractice, it took UBS an additional two years to report the actions.
The bank said that the conduct primarily concerned limit orders that account for “a very small percentage” of the bank’s order processing platform. The employees involved in the malpractice lost their jobs at the bank, according to The Wall Street Journal.
“The behavior of the individuals involved is unacceptable and in strong contrast to the behavioral principles of our firm,” UBS spokesperson Erica Chase said.
The SFC also raised concern over UBS’s ability to institute efficient solutions for overcharge practices on spread trades. The bank implemented a new trading platform in 2015 after discovering the malpractice, yet later reported 15 incidents of continued overcharging through the new platform to regulators.
“These issues call into question UBS’s capability to put in place effective remediation to address the spread overcharge practices and proper internal controls to avoid the recurrence of historical deficiencies,” the commission wrote Monday.
While finalizing the fee amount, the commission did consider the bank’s disciplinary actions against over 20 employees involved in the overcharge practices. It also took UBS’s agreement to compensate affected clients into account.
The Monday fine is only the latest in a series of hits to UBS’s Hong Kong business. The Swiss bank was banned from sponsoring initial public offerings for a year in March after the SFC said UBS failed to conduct proper due diligence in three IPOs.
The bank’s stock opened at $12.31 per share Monday, up roughly 0.2% year-to-date.
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