UBS AG has been fined $500,000 by the Commodity Futures Trading Commission (CFTC) for prematurely but inadvertently deleting more than 1,000 hours of audio files related to pre-execution swaps trade information the regulator required be saved for one year.

The CFTC announced the fine Thursday, noting the mistake occurred when a technician wrongly believed six months of audio files from July to December 2019 were test files and changed the retention period from five years to one day.

The CFTC noted UBS self-reported the deletion, followed that up with a comprehensive self-report, cooperated with the agency’s investigation, and instituted remedial measures to ensure no similar recordings are deleted prematurely in the future.

UBS reported the issue stemmed from a synchronization flaw that failed to capture the trader’s login information but still recorded the audio. The resulting audio files were therefore not assigned to a particular trader, and as a result, the recordings were given lower priority for retention.

“The deleted files included voice recordings containing 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 the regulations to be retained,” the CFTC said in its order.

The CFTC last year levied a $4.5 million fine against Citibank to resolve charges that three of its subsidiaries failed to “diligently supervise” the audio preservation system the bank operated and maintained. The big difference, compared to the UBS case, is the Citi audio files were under subpoena in an active investigation.

 

Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.

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