The Commodity Futures Trading Commission has charged UBS AG for failing to hold certain audio recordings for the time required under CFTC regulations.
The US regulator found that due to failures in UBS’s audio retention systems, more than 1,000 hours of audio data were deleted after one day. This included audio recordings which are required to be retained for one year.
The CFTC requires UBS to pay a $500,000 civil monetary penalty.
According to the regulator, before June 2019, UBS implemented multiple software systems to comply with its recordkeeping obligations. These systems operate its trader turret communication devices and recorded and stored voice recordings of calls occurring on these trader turrets.
The recording systems had a know flaw causing them to fail to synchronize certain call data. That included the UBS trader’s identity, which would not transfer to UBS’s voice recording system along with the corresponding voice recording. As a result, there was a large number of recordings without an assigned trader, transferred to UBS AG’s long-term storage systems where they were to be retained for five years.
On 8 July 2019, UBS started deleting voice recordings containing pre-execution swaps trade information, after only one day. A technology analyst believed those recordings were test files that did not need to be kept, setting their retention period from five years to one day.
UBS learned about the premature discarding of those audio files in December 2019. After the discovery, the company performed an internal review to determine the impact and discovered that as a result more than 1,000 hours, or roughly 2.76 percent of total U.S. recorded volume was deleted. Some of the deleted audio files contained pre-execution swaps information such as quotes, solicitations, bids, offers, instructions, trading, and prices that lead to the execution of swaps, all of which are required by Commission regulations to be retained.
Following this discovery, UBS self-reported to CFTC. The regulator noted that the company cooperated with the investigation and proactively engaged in remedial procedures.
