Finra slaps UBS with $2m fine for short position failures
The Financial Industry Regulatory Authority (Finra) has fined UBS $2 million for the firm’s “repeated failures” in addressing municipal short positions and for “inaccurately representing the tax status of thousands of interest payments to customers”.
Finra will also require the bank to pay restitution to customers who may have incurred any increased state tax liabilities, to pay the IRS to relieve customers of any additional federal income tax owed, and to certify within 90 days that the firm has taken appropriate corrective measures.
According to the self-regulatory body, which censured the bank in 2015, UBS “continued to fail to identify and properly address” certain short positions in municipal securities.
The bank “inaccurately represented” that interest payments for 2,853 positions in municipal securities were tax exempt on customer account statements, and that interest payments for a further 950 were not tax exempt when they were.
Finra adds that these failures were the result of the firm’s “continued failure to establish reasonably designed supervisory systems and written supervisory procedures”.
UBS has neither admitted nor denied the charges but consented to the entry of Finra’s findings.