UBS to Pay US Fine to Settle SEC Allegations

UBS will pay a fine to the SEC to settle allegations it failed to properly implement identity theft measures. JP Morgan was also involved. 

The US brokerage units of UBS, JP Morgan, and TradeStation will pay a total of about $2.5 million in fines to settle allegations by the US Securities and Exchange Commission (SEC). The financial institutions were accused of failing to adequately implement their programs aimed at preventing customer identity theft.

While the companies neither accepted nor denied the allegations, they are said to have violated the U.S. regulator's «Identity Theft Red Flags Rule», or Regulation S-ID. In addition to the cease-and-desist order for future violations, to which all three institutions agreed, JP Morgan must pay a $1.2 million fine, UBS $925,000, and TradeStation $425,000.

SEC Finds Failures

According to the SEC, starting in at least January 2017 through October 2019, the identity theft prevention programs did not include adequate policies and procedures to identify relevant identity theft red flags related to customer accounts or to incorporate them into their programs. The programs also failed to include adequate policies and procedures to respond appropriately to the alerts or to ensure that the programs were regularly updated to reflect changes in identity theft risks to customers.

The UBS order also found it failed to periodically review new or existing types of customer accounts to determine whether and how its identity theft prevention program should apply to them. It also failed to adequately involve the board of directors in the oversight, development, implementation, and administration of the program, and failed to train its employees to effectively implement the program, the SEC said.

These «actions are reminders that broker-dealers and investment advisers must design and operate identity theft prevention programs that are appropriately tailored to their businesses and update them in response to the increased threat and changing nature of identity theft,» said Carolyn M. Welshhans who is the acting chief of the SEC enforcement division's crypto assets and cyber unit.