UBS Financial Services was censured and fined $2 million Wednesday by the Financial Industry Regulatory Authority for repeated failures to timely address municipal short positions and inaccurately representing the tax status of thousands of interest payments to customers.
From August 2015, when FINRA previously sanctioned UBS for similar violations, through the end of 2017, UBS continued to fail to timely identify and properly address certain short positions in municipal securities.
As a result, “UBS inaccurately represented on customer account statements and Forms 1099 that interest payments for 2,853 positions in municipal securities were tax-exempt when, in fact, they were taxable,” FINRA said. UBS also “inaccurately represented on approximately 950 additional customer account statements and Forms 1099 that interest payments were taxable, when they were tax-exempt,” according to FINRA.
FINRA also required UBS to pay restitution to customers who may have incurred any increased state tax liabilities, to pay the IRS to relieve customers of any additional federal income tax owed, and to certify within 90 days that the firm has taken appropriate corrective measures.