UBS fined US$51 million by Hong Kong regulator for systematically overcharging bond clients for nearly 10 years
- The Swiss bank agrees to fully compensate about 5,000 clients HK$200 million
- This is second major fine imposed on UBS this year after being penalised fined HK$375 million in March for lapses in its IPO sponsor duty
Hong Kong’s regulator on Monday imposed a HK$400 million (US$51.06 million) fine on UBS – the second this year – for overcharging bond trading clients for nearly a decade, with the Swiss bank agreeing to offer a compensation of HK$200 million to 5,000 customers affected by its conduct.
It is the joint-highest fine imposed by the Securities and Futures Commission, matching the penalty imposed on HSBC Private Bank (Suisse) in 2017 for misconduct related to the sale of risky Lehman Brothers-linked structured products to customers with low-risk appetite.
In March, two UBS units were ordered to pay a combined HK$375 million for failing in their duty as IPO sponsors to conduct proper due diligence on the quality of listing candidates in three initial public offerings. UBS was also banned from acting as an IPO sponsor for one year.
“The SFC expects all intermediaries to uphold high standards of integrity when managing trades for clients. UBS fell far short of these expectations by systematically overcharging a very large number of clients over many years,” said Ashley Alder, chief executive of the SFC.
“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 SFC has stepped up its policing efforts across the board to clean up malpractices by investment banks and companies to assist the Hong Kong Exchanges and Clearing’s bid to make the city Asia’s top fundraising hub.