The Financial Industry Regulatory Authority (FINRA) accused UBS Securities, the investment bank division of the massive Swiss banking group UBS, of failing to adequately supervise compliance staff, which resulted in millions of violations of options trading reporting requirements. UBS Securities agreed to pay $3.75 million to resolve the allegations.
According to a settlement decree issued by FINRA on Thursday, UBS Securities has a duty to fairly examine any potential rule violations and resolve them.
The ruling states that between January 2010 and September 2021, 7.1 million violations of FINRA options reporting regulations were caused by UBS's inability to appropriately examine red flags. Large Options Position Report (LOPR) signals that were allegedly ignored or not investigated were among the alleged lapses.
UBS was required to establish a structure, including written policies, for managing every employee in charge of making sure that securities laws and regulations are followed, as well as for upholding and enforcing those policies. According to FINRA, it failed to do so between November 2013 and November 2022.
According to the Financial Industry Regulatory Authority (FINRA), the bank's written procedures "failed to provide for any supervisory review to determine whether the short-covered quantity of information reported to the LOPR was accurate."
The decision states that UBS did recognize three reporting errors, but it did not act quickly to fix them. In one instance, it took five years from the time the problem was discovered in 2013 to the time it was eventually fixed in 2018.
Another alleged instance involved UBS, which allegedly discovered a short-covered quantity issue in 2015, hired a consultant to address it in 2018, but did not fully resolve the matter until 2020.
In the third instance, despite FINRA raised the matter with the bank in January 2021, UBS did not resolve a problem with an account name and address until September 2021, according to the ruling.
UBS consented to a fine and a censure.
A request for comment from UBS was not responded to.
By fLEXI tEAM