The Securities and Futures Commission ("SFC") has fined UBS AG $8 million for misclassifying professional investors for over 12 years. The firm's misinterpretation of the minimum portfolio requirement led to 560 joint accounts being wrongly classified as professional investor accounts, resulting in improper services and product sales.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On October 20, 2025, the Securities and Futures Commission ("SFC") reprimanded and fined UBS AG ("UBS") $8 million for shortcomings in its internal systems and controls. This resulted in the firm's inability to ensure accurate classification of professional investors ("PIs") for over 12 years.
An investigation by the SFC uncovered that between 2009 and July 2022, UBS’s automated process for verifying clients' PI status was based on an incorrect interpretation of the minimum portfolio requirement for certain joint client accounts. As a result, UBS inaccurately classified some joint accounts as PI accounts when they should have been classified as non-professional investor accounts.
Consequently, UBS provided its securities pooled lending ("SPL") service to non-professional investor clients without obtaining valid standing authorities for the use of client securities or securities collateral. Additionally, UBS offered and sold investment products intended for PIs only to some non-professional investor clients.
A look-back review conducted by UBS covering the period between July 2018 and July 2022 revealed that a total of 560 joint accounts were misclassified as PI accounts. This included 23 accounts that subscribed to the SPL service and 94 accounts that conducted investment transactions in PI-restricted products, resulting in a total of 9,190 SPL transactions and 500 transactions, respectively.
The SFC concluded that UBS failed to act with due skill, care, and establish effective systems to ensure accurate classification of PIs and compliance with regulatory requirements.
In determining the appropriate sanction, the SFC considered several factors, including the long duration of UBS's failures, previous disciplinary actions, the look-back review and remedial actions taken by UBS, and UBS’s cooperation with the SFC.
UBS will implement Enhanced Complaint Handling Procedures ("ECHP") to review any complaints that may be made by clients who were potentially misclassified as PIs during the relevant period.
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