According to the statement issued by the regulator Ahuja, a client advisor within UBS’s international wealth management business in London, between 1 January 2006 and 30 January 2008 used a pre-existing investment structure to enable an Indian resident customer (via an investment fund incorporated in Mauritius, the fund) to breach Indian law in clear contravention of UBS guidelines.
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This resulted in the customer invested over US$250 million in the fund.
According to Tracey McDermott, acting director of enforcement and financial crime, Ahuja’s exploited his position of trust and lied to his compliance department while helping a customer circumvent Indian law.
"This substantial fine and the ban from working in the financial services industry are significant penalties and should serve as a reminder that such behavior is woefully short of that expected of approved persons and will not be tolerated," she added.
According to the FSA statement, according to Indian law, an Indian investor, resident or non-resident in India, is not permitted to invest in Indian securities through "Foreign Institutional Investor" (FII).
Ahuja conceal the true nature of the customer’s investment, mainly by the deliberate and repeated provision of false and/or misleading information to the UBS Legal and Compliance department and other parts of UBS.
Under full knowledge that redemptions were not properly authorized by the customer, Ahuja made payments out of the Fund and breached even UBS internal compliance rules.
In November 2009, the FSA fined UBS GBP8 million for systems and controls failures in relation to this case. UBS has since repaid the affected customers in excess of US$42 million by way of redress.
