SINGAPORE (Nov 14): The Monetary Authority of Singapore (MAS) has imposed a civil penalty of $11.2 million on UBS for deceptive trades made by the investment bank’s client advisors in Singapore.

In a statement on Thursday, MAS noted that the client advisors had “engaged in acts that deceived or were likely to deceive clients about the spreads and/or interbank prices for transactions in over-the-counter (OTC) bonds and structured products”.

In 2016, UBS had reported to MAS that the bank had uncovered certain malpractices in Hong Kong and Singapore with regard to spread taking in OTC transactions.

Subsequent investigations by MAS revealed that in numerous transactions, the client advisors did not adhere to the spread or interbank price of a trade as agreed with the client.

The client advisors had also failed to disclose or made only partial disclosure to the client when there was a price improvement in the interbank price of a limit order.

In some instances, the client advisors had also overcharged clients in excess of the fees set out in the bank’s fee disclosure documents to clients. 

“The client advisors’ actions were possible because OTC product prices were not readily accessible to clients for them to verify against the transacted prices advised by UBS,” MAS said in a statement on Thursday.

“In addition, internal system weaknesses enabled the client advisors to increase the spread post-trade in the order management system,” the central bank added. “As the post-trade contract notes sent to clients reflected only the final all-in price without a breakdown of the spread and interbank price, the clients were not informed of the higher spread and/or improved interbank price.”

UBS has admitted liability for its client advisors' actions, and has paid MAS the civil penalty.

Designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, a civil penalty action is not a criminal action and does not attract criminal sanctions.

While the civil penalty action by MAS against UBS relates to transactions executed from 2014 onwards in Singapore-managed accounts, UBS has undertaken to compensate all affected clients for misconduct during the period 2008 to 2017.

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