Hong Kong regulator fines UBS US$1.5 millon for compliance breaches

HONG KONG: Swiss bank UBS was fined HK$11.55 million (US$1.5 million) by Hong Kong's securities regulator for failing to disclose its holdings in some companies covered in its research reports, the watchdog said on Tuesday (Aug 3).

The Hong Kong Securities and Futures Commission (SFC) said in a statement that the bank's failure to disclose its financial interests in the reports published between 2004 and 2018 was attributed to an error in using legacy technology, which tracked the shareholdings of UBS.

The fines were also related to four other compliance breaches, including the bank's failure to record 35 telephone lines between August 2017 and 2019 involving more than 2,000 transactions executed for more than 400 clients.

UBS reported the issue to the Hong Kong Monetary Authority, which then alerted the SFC, the regulator said.

The bank was also found to not have received proper authorisation from 91 clients who were not classified as professional investors in respect of 913 securities pooled lending transactions.

It did not obtain previous trading evidence from clients participating in some derivatives deal to assess their knowledge and also did not inform 15 clients of the "stop loss event" mechanism on a structured note deal, the SFC said.

"UBS self-identified and reported these matters to the Hong Kong regulators as soon as we found the issues," the bank said in a statement.

"We immediately took steps to strengthen our internal controls and systems in order to prevent the issues from happening again."