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UBS Group Agrees to Pay $51 Million for Overcharging Clients

Zacks Equity Research

UBS Group AG UBS is required to pay about HK$400 million ($51 million) as fine to The Hong Kong Securities and Futures Commission (“SFC”) for having overcharged up to 5,000 clients in the period between 2008 and 2015.

The regulator said that the overcharging occurred in the bank’s wealth management division on bond and structured notes transactions. Also, in an investigation conducted on UBS, it was found that the bank charged extra fees to clients on 'post-trade spread increases'.

Further, the bank has been accused of misrepresenting account statements by giving incorrect information about the spread amounts for trades. The regulator expressed concerns over “serious systemic internal control failures” at the bank.

“UBS fell far short of these expectations by systematically overcharging a very large number of clients over many years,” Ashley Alder, the chief executive of the SFC, said in a statement. “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.”

UBS has agreed to repay about HK$200 million to the affected clients.

Previously, in March, the regulator had banned UBS from leading initial public offerings in Hong Kong for a year on having found that the bank and some of its peers had failed to conduct sufficient due diligence on a number of deals.

As a consequence, UBS was required to pay penalty of HK$375 million.  Morgan Stanley MS was fined HK$224 million for the same charge while Bank of America’s BAC Merrill Lynch and Standard Chartered SCBFF had been asked to pay HK$128 million and HK$59.7 million, respectively.


Increased scrutiny on global banks for their business practices has caused many of these firms to pay billions of dollars as fines and compensation to settle lawsuits and probes. Many investors lost their hard earned money as a result of such business malpractices. Encouragingly, such settlements help restore investors’ confidence in banks and their operations.

UBS has gained 5.2% over the past six months compared with 1.9% growth of the industry it belongs to.

Currently, UBS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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