According to FINRA, UBS Financial Services Inc. was censured and fined $1,100,000 for sending millions of trade confirmations to customers that failed to accurately disclose whether the price shown was an average price.

Trade confirmations are important documents that provide customers with the terms of their transactions. Accurate disclosure of whether a price is an average price (resulting from multiple executions) or a single execution price is important information for customers to understand how their orders were filled.

The firm's confirmations disclosed that each trade processed through its Trade Allocation and Processing System (TAPS) account was executed in more than one transaction with an average price. However, the firm also used the TAPS account to process block orders, some of which were effected in one execution at a single price. For these single-execution trades, the confirmations incorrectly stated that the trade was executed in more than one transaction at an average price.

These disclosure failures continued for more than 10 years after FINRA notified the firm about the inaccurate disclosures. While the firm eventually worked with a third-party vendor to address the issue, the firm had no supervisory system to review whether average price disclosures were correctly included or omitted. The firm reviewed a weekly sample of confirmations for accuracy of other elements but did not review average price disclosures.

This case highlights the importance of firms promptly addressing identified compliance issues and maintaining ongoing supervisory reviews to ensure accurate customer disclosures.