Hong Kong’s securities watchdog has reprimanded and fined UBS HK$8 million for misclassifying some clients as professional investors for over 12 years.
Between 2009 and July 2022, UBS verified its clients’ professional investor status by an automated process, which was based upon the firm’s misinterpretation of the minimum portfolio requirement for certain types of joint client accounts, the Securities and Futures Commission’s investigation revealed.
As a result, UBS incorrectly classified certain joint accounts as professional investor accounts, and provided its securities pooled lending service to some of them without obtaining valid standing authorities for the use of client securities or securities collateral or disclosing the relevant information in the monthly statements issued to them, the SFC said.
It also offered and sold professional investors-only products to some of these clients.
A look-back review conducted by UBS covering the four-year period between July 2018 and July 2022 identified that a total of 560 joint accounts booked and managed in Hong Kong were misclassified as professional investor accounts, the regulator said.
