According to the Hong Kong Securities and Futures Commission (SFC) website, on October 20, UBS AG (UBS) was censured and fined HK$8 million due to deficiencies in its internal systems and monitoring measures. These shortcomings led to the misclassification of the professional investor status of clients for over 12 years. The investigation by the SFC found that from 2009 to July 2022, UBS employed automated programs to verify the professional investor status of its clients, which was based on a misinterpretation of the minimum portfolio requirements for several categories of joint account holders under the Securities and Futures (Professional Investors) Rules. Consequently, several joint accounts were incorrectly categorized as professional investor accounts, whereas they should have been classified as non-professional investor accounts (non-professional investor clients). As a result, UBS provided securities lending services to certain non-professional investor clients without obtaining valid ongoing authorizations to use customer securities or collateral, nor disclosing relevant information in the account statements sent to them. Additionally, UBS sold investment products intended solely for professional investors to certain non-professional investor clients. A review conducted by UBS covering the period from July 2018 to July 2022 revealed that a total of 560 joint accounts, recorded and/or managed in Hong Kong, had been improperly classified as professional investor accounts. Among these misclassified accounts were 23 accounts registered for utilizing securities lending services, involving 9,190 instances of securities lent to UBS for trades listed or traded on the Hong Kong Stock Exchange; and 94 accounts that conducted investment transactions for products restricted to professional investors, totaling 500 transactions. The SFC determined that UBS acted without the appropriate skill and caution and failed to establish effective systems and monitoring measures to ensure accurate classification of client professional investor status and compliance with applicable regulatory requirements. In deciding on the above measures, the SFC considered all relevant factors, including: the misclassifications persisted for over 12 years; UBS had previously faced disciplinary actions for similar lapses; UBS conducted a review, proactively reporting violations after identifying them, and took remedial actions to enhance its internal monitoring measures and systems; UBS cooperated with the SFC to address its concerns; and UBS will implement strengthened complaint handling procedures to review any complaints from clients who may have been incorrectly classified as professional investors during the relevant period.