FSA Bans, Fines Former UBS Adviser £150,000

Jack Humphrey, Regulatory journalist
December 23, 2011 /

The Financial Services Authority (FSA) has banned and fined a former client adviser at UBS AG £150,000 for failing to act with integrity, in breach of Principle 1 of its Statements of Principles and Code of Conduct for Approved Persons (“APER”) and for not being a fit and proper person.

Jaspreet Singh Ahuja is prohibited from performing any function in relation to any regulated activity in the financial services industry.

Ahuja was a client adviser within UBS’s international wealth management business in London. Between 1 January 2006 and 30 January 2008 he used a pre-existing investment structure to enable an Indian resident customer (via an investment fund incorporated in Mauritius, the fund) to breach Indian law in clear contravention of UBS guidelines. Ultimately, the customer invested over US$250 million in the Fund.

Under Indian law, an Indian investor (whether resident or non-resident in India) is not permitted to invest in Indian securities through a vehicle known as a “Foreign Institutional Investor” (FII) except in particular circumstances (which are not relevant here). Such vehicles are designed so that non-Indian investors may make investments in Indian securities.

Ahuja then wrongfully took steps to conceal the true nature of the customer’s investment, mainly by the deliberate and repeated provision of false and/or misleading information to the UBS Legal and Compliance department and other parts of UBS.

He also assisted in making unauthorised redemption payments out of the Fund knowing, among other things, that the redemptions were not properly authorised by the customer and breached UBS internal compliance rules.

Tracey McDermott, acting director of enforcement and financial crime, said: “Ahuja’s failings were significant. He exploited his position of trust and repeatedly lied to his compliance department while helping a customer circumvent Indian law. This sort of behaviour has no place in the financial services industry. This substantial fine and the ban from working in the financial services industry are significant penalties and should serve as a reminder that such behaviour is woefully short of that expected of approved persons and will not be tolerated.”

In November 2009 the FSA fined UBS £8million for systems and controls failures in relation to this case. UBS has since repaid the affected customers in excess of US$42 million by way of redress.

 

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