FINRA Fined UBS Securities LLC $2.5 Million For Trading Violations

UBS Financial Services Inc.

In October 2022, FINRA fined UBS Securities LLC $2.5 million for alleged violations related to the firm’s failure to deliver positions that resulted in tens of thousands of short-selling violations.

According to the order, between 2009 and 2018, UBS Securities LLC “improperly used revocable volume-weighted- average price (VWAP) transactions or limit orders to address buy-in obligations for failure-to-deliver positions, resulting in approximately 5,300 violations of Rule 204(a) and at least 71,000 violations of the penalty box and pre-borrow requirements of Rule 204(b).” FINRA also found that “for nearly seven years, when UBS released shares from segregation in connection with customer long sales, UBS erroneously considered those shares available to close out a fail-to-deliver, causing UBS to undercalculate the shares it was required to borrow or purchase to comply with Rule 204(a). Third, during various time periods from 2009 to 2016, four of UBS’s order management systems did not restrict all short sales in securities with an unsatisfied close-out requirement, resulting in at least another 2,567 violations of Rule 204(b).”

FINRA found that between 2009 and August 2022, “UBS also failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with Rule 204 of Regulation SHO. UBS did not enforce its written supervisory procedures regarding Rule 204. UBS also failed to identify numerous red flags indicating that its close-out actions did not comply with Rule 204(a).”

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, UBS Securities LLC may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.

"*" indicates required fields

Please do not include any confidential or sensitive information in this form. Submitting this form does not create an attorney-client relationship.