UBS Financial Services Inc. has been fined $500,000 and ordered to pay over $2.98 million in restitution and disgorgement following an investigation by the Financial Industry Regulatory Authority (FINRA).
The regulatory body found that from January 2017 to December 2018, UBS-FS failed to maintain adequate supervisory systems to monitor short-term trading of syndicate preferred stocks, resulting in unsuitable recommendations and customer losses.
22 UBS
UBS-FS, a full-service brokerage firm with over 11,000 registered representatives, allowed representatives to recommend syndicate preferred stocks—income-generating securities designed for long-term holding.
However, FINRA’s investigation revealed that at least 22 UBS-FS representatives engaged in repeated short-term trading of these stocks, causing customers to incur losses while representatives earned substantial sales concessions and commissions, as alleged by the financial watchdog.
During the investigation, FINRA uncovered significant supervisory lapses:
- Inadequate Monitoring: UBS-FS’s surveillance system flagged only trades held for less than 90 days and failed to review trades held between 90 and 180 days.
- Insufficient Action: The firm did not adequately investigate flagged trades or assess whether short-term trades were suitable for clients.
- Customer Impact: Over 1,986 trades, involving realized customer losses, earned UBS-FS $2.65 million in sales concessions and over $343,000 in sales commissions.
FINRA concluded that UBS-FS violated its rules by failing to supervise representatives and ensure the suitability of recommended transactions. These actions were deemed inconsistent with high standards of commercial honor.
As part of the settlement, UBS-FS has agreed to the following:
- Financial Penalties: A $500,000 fine.
- Restitution: $343,914, plus interest, to affected customers.
- Disgorgement: $2,645,537, plus interest, to FINRA.
The firm has also committed to improved oversight practices, including enhanced written procedures and revised trade review systems implemented in January 2023.
FINRA fined Moomoo $750,000 over misleading ‘finfluencers’
Last month, Moomoo Financial Inc., formerly known as Futu Inc., agreed to pay a $750,000 fine this week following an investigation by the Financial Industry Regulatory Authority (FINRA).
Moomoo Financial, a member of FINRA since 2018, consented to the settlement without admitting or denying the allegations. The firm stated it has taken steps to address the identified issues, including updating its supervisory and privacy protocols.
The settlement, finalized in November 2024, addresses violations related to social media promotions, supervisory lapses, and customer privacy practices. FINRA identified multiple compliance breaches during a review of Moomoo Financial’s operations between January 2020 and 2022. These included:
Misleading Social Media Promotions: Moomoo Financial hired approximately 400 influencers to promote its services. Posts created by these influencers:
- Contained misleading and promissory statements.
- Failed to disclose risks associated with options trading.
- Misrepresented the firm’s regulatory protections, implying guarantees against investment losses.
Lack of Supervisory Oversight: The firm did not ensure that a registered principal reviewed and approved social media content before publication. Records of influencer communications, including dates of use and approval details, were not adequately maintained.
Privacy Notice Violations: Between January 2018 and December 2021, the firm failed to provide privacy policy notices to over 450,000 customers during account opening and annually thereafter.
