FSA fines and enforcement actions in 2009

On 5 August 2009 the FSA fined UBS AG £8,000,000 for failures in the systems and controls around its London Branch international wealth management business. Between 1 January 2006 and 31 December 2007 certain employees on one desk carried out unauthorised foreign‑exchange and precious‑metals trading across 39 customer accounts and concealed those trades using internal transfers, an internal suspense account and purported loans; affected customers suffered losses and UBS has paid compensation in excess of USD 42 million. The FSA found breaches of Principle 2 (firms must act with due skill, care and diligence) and Principle 3 (firms must organise and control their affairs responsibly and effectively, with adequate risk management) and noted UBS has since made changes to the systems and controls identified.

On 19 August 2009 the Financial Services Authority (FSA) fined Barclays Bank plc and Barclays Capital Securities Limited £2,450,000 (reduced from £3,500,000 for early settlement) for breaches occurring between 1 October 2006 and 31 October 2008. The FSA found Barclays failed to submit accurate transaction reports (SUP 17) in relation to an estimated 57.5 million transactions. The regulator also concluded Barclays breached Principle 2 (to conduct business with due skill, care and diligence — here, by not sufficiently reviewing its transaction‑reporting systems) and Principle 3 (to take reasonable care to organise and control its affairs, including adequate risk management systems, to meet reporting requirements).

The FSA found that Morgan Stanley & Co. International Plc breached Principles 2 and 3 of the FSA’s Principles for Businesses (Principle 2: conduct business with due skill, care and diligence; Principle 3: take reasonable care to organise and control its affairs) during the period November 2007 to May 2008. A Decision Notice dated 1 April 2009 imposed a financial penalty of £1.4 million under section 206 of the Financial Services and Markets Act 2000; the action is recorded on the FCA register on 13 May 2009. The register entry does not record any customer redress, settlement discount or subsequent appeal.