London: Swiss bank UBS has been fined eight million pounds in the UK after four of its senior employees
were found misusing funds of customers, including two
companies of Indian industrialist Anil Ambani-led group.
The penalty of close to Rs 50 crore by UK's Financial
Services Authority (FSA) comes at a time when Indian
authorities are also probing alleged violation of norms in use
of funds held in the UBS accounts of Reliance Energy and
Reliance Natural Resources Ltd (RNRL).
The penalty, imposed after its employees were found
speculating in foreign currency and commodities with money
illegally taken from customers' accounts, is part of a larger
probe into the past management of Indian private banking
accounts at UBS, British daily Financial Times reported here.
However, there was no suggestion of any wrongdoing by
Anil Ambani or his group companies, the report added.
While the Indian government is probing into possible
misuse of the bank accounts, the British financial market
watchdog FSA was investigating into the conduct of some former
employees at UBS, the newspaper reported.
According to the report, India's Enforcement Directorate
was investigating whether some "unspecified parties" violated
foreign exchange transactions by misusing UBS accounts in
London held by Anil Ambani group's RNRL and Reliance Energy.
"The directorate is probing allegations that funds from
overdrafts on the accounts were transferred through the
accounts of a group of diamond dealers based in India and
Belgium to a Mauritius fund owned by UBS, from where they were
invested in Indian stocks through offshore derivatives," the
FT report added.
The report also quoted Anil Ambani group as saying that it
had maintained the UBS London accounts "in full compliance
with all applicable laws, rules and regulations."
FSA, in an order dated November 5, imposed the fine on UBS
for "systems and controls failures that enabled four employees
to carry out unauthorised transactions involving customer
money on at least 39 accounts."
The unauthorised activity, which took place between
January 2006 and December 2007 at UBS' London-based wealth
management business, was brought to light by a whistleblower.
Upon further probe, it was found that UBS employees had
taken part in the trading of foreign exchange and precious
metals using customer money without authorisation and
allocated losses to customers' accounts.
An internal UBS investigation estimated that as many as 50
unauthorised transactions a day were taking place. UBS has
since paid compensation in excess of 42 million dollars by way
of redress for its customers' losses. The FSA probe found that
the misuse cost clients nearly 26 million pounds.
According to the Financial Times report, the FSA was still
examining the role played by individuals involved in the case,
which revolved around the India private banking desk led by
Sachin Karpe, who has now left the bank.
Bureau Report
First Published: Thursday, November 12, 2009, 15:30