SINGAPORE: The Monetary Authority of Singapore (MAS) imposed an S$11.2 million fine on Swiss bank UBS after investigations showed that its advisers had deceived clients or engaged in acts that were likely to deceive them.
These actions involved “the spreads and/or interbank prices for transactions in over-the-counter (OTC) bonds and structured products”, MAS said in a news release on Thursday (Nov 14).
“When UBS executed OTC transactions requested by its clients, it did so with interbank counterparties and its practice was to charge a spread over the interbank price that it obtained from the counterparty,” it said.
MAS' statement follows reports that the UBS Hong Kong branch was fined HK$400 million (US$51.09 million) after investigations found that the bank had overcharged clients over a nearly ten-year period.
In Singapore, UBS reported the misconduct to MAS in 2016 after which the authority conducted investigations.
It was revealed that client advisers in Singapore either did not adhere to the spread or interbank price agreed with or understood by the client, failed to disclose or made only partial disclosures when a limit order’s interbank prices improved, or overcharged clients in excess of the fees sent out in the fee disclosure documents.
“The client advisers’ actions were possible because OTC product prices were not readily accessible to clients for them to verify against the transacted prices advised by UBS,” MAS said.
“In addition, internal system weaknesses enabled the client advisers to increase the spread post-trade in the order management system.
“As the post-trade contract notes sent to clients reflected only the final all-in price without a breakdown of the spread and interbank price, the clients were not informed of the higher spread and/or improved interbank price,” MAS said.
Investigations into those involved in the misconduct are ongoing, it added.
Mr Ong Chong Tee, MAS Deputy Managing Director (Financial Supervision), said: “The conduct of UBS through its representatives is unacceptable and has no place in the financial services industry where trust and integrity are paramount. Our enforcement action and penalty took into account that UBS has undertaken to compensate affected clients and that the bank rendered full cooperation to MAS during the investigation.”
UBS will compensate all clients affected by the misconducts, which occurred between 2008 and 2017, MAS added.
It has also paid the fine and have taken measures to address system and control lapses to “prevent arbitrary spread increases, and enhance price disclosures to clients”.
The bank was also asked to appoint an independent party to check the adequacy and effectiveness of its improved measures. It is required to report these findings to MAS.
In a statement, UBS said this "finally resolves the matter that (it) had self-identified and reported to the regulators in Singapore and Hong Kong".
"The self-reporting included a plan to fully reimburse the affected wealth management clients and is limited to a very small percentage of all transactions processed through the bank's order processing system during this period.
"The behavior of the individuals involved is unacceptable and in strong contrast to the behavioral principles of our firm," it added.