UBS AG reportedly will likely be hit by enforcement actions in 2 countries - Britain and Switzerland.  Each country's securities regulator appear pre-displosed to supervisory failures and other shortcomings that allowed or enabled a London trader to conduct unauthorized trades last year. Back in September, Switzerland's largest bank by assets, disclosed that an employee on its London-based equity desk allegedly made unauthorized trades that caused $2.3 billion in losses.  Kweku Adoboli was arrested in connection with the case.  Shortly thereafter, CEO Oswald Grübel resigned from the firm.  UBS conducted an internal investigation, which it completed. In October, UBS disclosed some of its findings in a regulatory filing.  UBS noted that the trader was able to make the trades because:

• bank managers violated UBS's internal rules by failing to confirm reported trades with counterparties outside the bank.
• there were gaps in oversight over traders' ability to book and then cancel transactions.
• UBS has since revised its controls to address both deficiencies.

U.K., Swiss Joint Investigation.   The regulators in Britain and Switzerland joined up to conduct a separate joint investigation.  Until now, that probe had been seen largely as a fact-finding mission to determine what went wrong.  All that's changed, and now it's expected that UBS will be fined and sanctioned for its internal control deficiencies. It is expected that this regulatory investigation will be completed by mid-February, although it could take far longer for them to move forward with enforcement action. Interestingly, the FSA can fine a bank UBS for lapses in its risk-control systems;  FINMA, however, cannot.  Instead, the Swiss regulator can force a bank to make personnel changes, and other measures. Forecasting What Sanctions May Befall UBS. Because Mr. Adoboli pleaded "not guilty" he must await trial - scheduled for September 2012.  Once the trial begins, a prolonged trial could prove embarrassing to UBS, because it will continue to put a glaring light on the Swiss bank - one it can do without. For further details:  [WSJournal, 1/30/12].