UBS fined $4.5 million for record keeping failures

Hong Kong financial watchdog fines UBS after it failed to produce transaction and client consent records.

UBS Securities in Hong Kong has been handed a $4.5 million fine for failing to record transactions and client consents of trading activities effectively.

The Securities and Futures Commission (SFC) found that between June 2015 and June 2016 UBS was unable to provide complete information on its client facilitation trades.

During an inspection, the regulator requested a list of client facilitation trades for the month of April 2016, but UBS said the system where the records were kept might  “not be a golden source of facilitation interactions”.

The SFC said UBS could only locate client consent records for around half of the trades it conducted throughout 2016, and the full list was not produced until February 2017.

For about 83% of the trades with client consent obtained, the reviewer was unable to determine all trade-specific information, including the date of trade, equity symbol, quantity to be traded, and/or execution price.

“UBS Securities is under a regulatory duty to have the resources and procedures which are needed for the proper performance of its business activities and implement them effectively,” the statement of disciplinary action said.

“UBS Securities is expected to have adequate records in relation to its client facilitation trading, which can readily show whether a trade is being facilitated and that the client consented to the trade.”

The regulator added it took into account the fact that UBS was fully cooperating to resolve the regulatory concerns relating to the disciplinary action.

The board of directors at UBS has since implemented more effective controls to ensure records are kept and maintained, alongside an ongoing supervisory review.