The Securities and Futures Commission (SFC) has reprimanded and fined UBS AG (UBS) HK$400 million for overcharging its clients over a ten-year period and for related serious systemic internal control failures (Note 1).
UBS has also undertaken to compensate the affected clients by repaying them the full value of the overcharged amount together with interest. The total repayment amount is approximately HK$200 million and covers overcharges made through post-trade spread increases and charges in excess of standard disclosures or rates between 2008 and 2017. The overcharge practices affected about 5,000 Hong Kong-managed client accounts in about 28,700 transactions (Note 2).
The SFC considers that UBS not only failed to observe the fundamental and overarching duty to act in its clients’ best interests but also abused the trust of unsuspecting clients by failing to disclose conflicts of interest and overcharging them in opaque trades.
Mr Ashley Alder, the SFC’s Chief Executive Officer, 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.”
