The settlement with Market Regulation Services Inc. (RS), which oversees trading on the Toronto Stock Exchange, also covered UBS’ refusal to implement measures to stop such practices after they were detected last year. UBS must provide a copy of an independent consultant’s report verifying that recommendations have been implemented no later than June 30, 2005.
‘Double trading’ occurs when an investor sells a stock to a dealer, who then lines up another buyer, and marks the deal as two trades. Market rules dictate that this action only be marked as one trade.
“This is a deceptive practice which results in artificial volume… that damages the credibility of the market place,” Jane Ratchford, chief counsel for RS, told a panel hearing the agreement in Toronto, according to Reuters.
The regulator learned of the practice at UBS during an annual trade desk review in 2003. It then notified the brokerage of its findings. However, a subsequent review earlier this year found that the practice was still going on at UBS, according to Reuters
RS also said UBS failed to provide proper order and trading records, but said that it had no indication that UBS’ actions had resulted in financial harm to clients.
Under the terms of the settlement, UBS will pay a C$2 million fine, as well as C$100,000 to help offset the costs of the investigation.
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