The Financial Industry Regulatory Authority, or FINRA, fined UBS Financial Services Inc. $2 million for continued failures related to short positions in municipal securities and inaccurately representing the tax status of thousands of interest payments to customers.
The U.S. regulator noted that the UBS Group AG unit reported 2,853 positions in municipal securities as tax-exempt, when they were actually taxable, and 950 positions as taxable when they were tax-exempt. FINRA said the errors appeared on customer account statements and tax forms from August 2015, when it last sanctioned the firm, through 2017-end.
The authority added that the failures were a result of the company's inability to establish an efficient supervisory system to identify and address short positions in such securities in a timely manner.
UBS Financial Services agreed to pay the penalty but did not admit to or deny the charges, FINRA said. The company was also directed to pay compensation to customers who may have incurred increased state tax liabilities and to certify within 90 days that it has taken appropriate corrective measures.
