New York Securities Lawyer Blog
On November 11, 2019, the Hong Kong Securities and Futures Commission (“SFC”) announced that UBS Financial Services (“UBS”) was fined $51.09 million for overcharging thousands of clients throughout the last decade. The SFC said in its statement that their investigation found that UBS overcharged up to 5,000 clients on “post-trade spread increases,” and that these charges were far in excess of standard firm fee disclosures and rates. UBS also agreed to pay approximately $25.5 million in restitution to affected clients.
According to the SFC, UBS stated that the investigation was triggered by a self-reported discovery of systemic internal control failures. Most firms have compliance software in place that prevents fees or spread markups in excess of certain ratios, with manual overrides required to circumvent these controls. Based on the SFC statement, it was unclear to the public which specific internal controls were breached and whether the breaches were caused by software or human error. UBS issued the following response to the SFC statement:
The relevant conduct predominately 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 charging of excessive fees has diminished in recent years among the larger wealth managers, due in large part to better internal controls and software monitoring. However, as seen here, abuses still do occur in the areas of debt securities and more esoteric securities products, such as options and structured notes.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.