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By Scott Murdoch
HONG KONG, Nov 11 (Reuters) - Swiss bank UBS was
fined HK$400 million ($51.09 million) by Hong Kong's securities
regulator for overcharging up to 5,000 clients for nearly a
decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said
in a statement that an investigation found UBS had overcharged
clients on 'post-trade spread increases' and charges in excess
of standard disclosures and rates between 2008 and 2017.
The fine is the equal to the largest ever levied on a bank
in Hong Kong. In 2017, HSBC's private banking unit was
also fined $HK400 million over the sale of Lehman Brothers
structured products to customers for five years from 2003.
THE SFC said the investigation exposed 'serious systemic
internal control failures' at the bank. UBS had failed to
disclose conflicts of interests and had overcharged some clients
in 'opaque' trades, it said.
The overcharging affected 5000 Hong Kong managed client
accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the
SFC said.
The regulator said the over-charging occurred in the bank’s
wealth management division on bond and structured notes
transactions.
UBS was found to have increased the spread charged after the
execution of a trade without the clients' knowledge, it said.
In the statement, the SFC said UBS was also found to have
falsified some account statements which were issued to financial
intermediaries who were authorised to trade for the clients to
"conceal the overcharges".
UBS said the issues were 'self-reported' to the SFC and the
results found were against the bank's standard practice.
"The relevant conduct predominantly relates to limit orders
of certain debt securities and structured note transactions,
which account for a very small percentage of the bank's order
processing system," the bank said in a statement.
SFC chief executive Ashley Alder said while each "overcharge
represented a fraction of each trade" the bank's "misconduct
involved decisions and a pervasive abuse of trust resulting in
significant additional revenue for UBS to which it was not
entitled".
In March, the SFC banned UBS from leading initial public
offerings in Hong Kong for a year after it found the bank, and
some of its rivals, had failed to carry out sufficient due
diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined
HK$224 million, Merrill Lynch HK$128 million and Standard
Chartered (StanChart) HK$59.7 million, all for failures when
sponsoring, or leading, public market floats.
($1 = 7.8295 Hong Kong dollars)
(Reporting by Scott Murdoch; Editing by Muralikumar
Anantharaman and Louise Heavens)
