UBS fined $51 million by Hong Kong regulator for overcharging clients

The Securities and Futures Commission banned UBS in March from leading initial public offerings in Hong Kong for a year. (AFP)
Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: 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 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 authorized 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.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 37 min 15 sec ago

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak
* Nov Tokyo core CPI -0.7% yr/yr, matches forecast
* Tokyo core CPI marks biggest annual drop since May 2012
* Data suggests nationwide consumer prices to stay weak (Adds analyst quote, background)
By Leika Kihara
TOKYO, Nov 27 : Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.