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13 November 2019
WEALTH MANAGEMENT

UBS fined by Hong Kong for a decade of overcharging clients

UBS will repay approximately HKD 200 million in overcharges and interest to some 5,000 Hong Kong-managed client accounts.

BLOOMBERG/JUSTIN CHIN


Hong Kong regulators fined UBS Group HKD 400 million ($51 million) for overcharging global wealth management clients during almost a decade and flagged concerns about serious and systematic problems with the bank’s internal controls, reportedBloomberg.

Hong Kong Securities and Futures Commission (SFC) stated that it found that UBS systematically overcharged private banking clients by manipulating the price on bond and structured product trades between 2008 to 2015.

The authorities said that UBS also charged some clients too much in fees between 2008 and 2017. To hide the charges, UBS sometimes falsified account statements by misreporting the spread amounts for the trades, added SFC.

Ashley Alder, SFC’s Chief Executive Officer, said, “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 is not entitled.”

It is the second time that Hong Kong has imposed sanctions on UBS for bad market behaviour in recent years. In March 2019, a group of banks including UBS and Morgan Stanley agreed to pay a combined HKD 787 million Hong Kong dollars related to settle cases brought by the authorities concerning the banks’ work on initial public offerings in the city.

In its third-quarter report, the bank had provisioned for the expected fines and need to reimburse clients.

In its statement, the SFC said that UBS’s failure to report the misconduct until two years after it was detected was not an isolated incident.

“After a comprehensive review, UBS self-identified and reported this matter to the relevant Regulators,” the bank said in a statement. “The behaviour of the individuals involved is unacceptable and in strong contrast to the behavioural principles of our firm.”

UBS stated that the transactions accounted for a very small percentage of the bank’s order processing system.


RELATED STORIES: HONG KONG SECURITIES AND FUTURES COMMISSION MORGAN STANLEY UBS GROUP


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