The Swiss Financial Market Supervisory Authority (Finma) announced the bans on Thursday following a year-long investigation of misconduct in foreign exchange and precious metals trading by 11 employees of Switzerland’s largest bank.
Enforcement proceedings found that six employees, no longer with the bank, “bore significant responsibility for serious organizational shortcomings and improper conduct at UBS,” Finma said in a news release.
The authority has issued industry bans against the former heads of global foreign exchange trading and global foreign exchange spot trading.
They are banned from “holding senior management positions at institutions supervised by Finma for periods of four and five years, respectively”.
Finma said it had also issued industry bans of at least one year against four foreign exchange and precious metals traders who worked for UBS’s spot trading desk at the bank's offices in Opfikon, near Zurich.
Proceedings against four employees were discontinued in August, although they received reprimands, while those against one other employee are continuing, the authority said.
Finma determined that the individuals responsible for managing foreign exchange trading “tolerated and, at times encouraged, behaviour which was improper and against the interest of clients”.
The managers knew that UBS traders were able to use chat groups to share information and were aware of the risks of this kind of behaviour but “they failed to implement adequate systems and controls and to consistently monitor compliance with internal and external rules”.
Finma said that traders shared confidential client information, “sometimes revealing the identity of clients to third parties”.
They additionally “deliberately triggered stop-loss orders and engaged in front running (the practice of executing personal orders while taking advantage of inside information not known to clients)”.
As well, “they also repeatedly attempted to manipulate foreign exchange benchmarks”.
Finma launched enforcement proceedings against the 11 individuals, who no longer work with UBS, in November 2012 after the authority penalized the bank 134 million francs.
The sum amounted to the illegally generated profits and avoided costs gained by the bank from the improper activity.
The authority also imposed a number of “corrective measures” on UBS, including a requirement to automate at least 95 percent of the global foreign exchange trading and to cap bonuses for traders.
AFP reported: Regulators in several countries had accused the (UBS) traders of using internet
discussion forums and instant messaging to manipulate the market.
Earlier this year, the Swiss Competition Commission (Comco) said it was probing whether seven banks had colluded to manipulate prices in the precious metals market.
UBS was among several banks which was heavily fined by US regulators looking into foreign-exchange manipulation and lost judicial immunity from the US Justice Department obtained in 2012 regarding manipulation of the London interbank borrowing rate (Libor).