UBS Securities LLC is being sanctioned by the U.S. Financial Industry Regulatory Authority Inc. (FINRA) for long-running violations of short-selling rules.
FINRA fined UBS Securities US$2.5 million for violations of regulation SHO, which guards against potentially abusive “naked” short selling and chronic failures to deliver.
The self-regulatory organization found that, from 2009 to 2018, UBS failed close out at least 5,300 “failure to deliver positions” and routed or executed more than 73,000 short sales “with an unsatisfied close-out requirement without first borrowing or arranging to borrow the shares.”
Additionally, the SRO said that, from 2009 to August this year, UBS’s supervisory systems were inadequate to ensure compliance with the rule’s requirements.
“The short sale obligations imposed by Reg SHO afford critical protection to the markets and investors,” said Jessica Hopper, executive vice-president and head of enforcement at FINRA, in a release.
UBS settled the case, consenting to the entry of FINRA’s findings without admitting or denying the allegations.