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November 12, 2019

UBS fined $51m in Hong Kong for overcharging customers

UBS has been hit with a HK$400m ($51.1m) fine by the Hong Kong Securities and Futures Commission (SFC) for overcharging clients and associated systemic control lapses between 2008 and 2017.

The watchdog alleged that the bank’s wealth management arm overcharged customers between 2008 and 2015 during bond and structured note trades by raising post-trade spread.

The bank was also accused of charging its customers more than its standard disclosures or rates from 2008 to 2017.

Moreover, it was found to have falsified account statements issued to financial intermediaries in order to hide the overcharges.

The failures stemmed from ineffective policies and system controls, poor oversight and training of employees, among others, alleged the regulator.

The lapses affected nearly 5,000 clients. UBS will pay HK$200m in total to reimburse these clients.

SFC CEO Ashley Alder said: “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.

“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.”

UBS agreed to take disciplinary actions against more than 20 employees involved in the case.

This is not the bank’s first fall-out with the Hong Kong regulator.

In March this year, UBS along with some other banks were fined by the watchdog to settle charges of failures linked to sponsorship of Hong Kong IPOs. UBS’ share of the fine was HK$375m.

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