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UBS Fined $47.5 Million in Rogue Trading Scandal
November 26, 2012
[ by Melanie Gretchen ]
UBS must pay £29.7 million ($47.5 million) today for failing to prevent a $2.3 billion loss caused by a former trader. Following last week's conviction of UBS trader Kweku Adoboli for fraud, Britain's Financial Services Authority (FSA) hit the Swiss bank with one of the largest penalties ever issued by the British regulator.
The fine is the culmination of a yearlong collaboration between the FSA and its Swiss counterpart to investigate UBS's trading loss. What the regulators found:
- the bank had serious weaknesses in the internal controls of its investment banking unit, which enabled Mr. Adoboli to process a series of unauthorized trades
- UBS had failed to manage the risks of its London-based traders
- lack of supervision from top managers allowed the unauthorized trading to continue for an extended period of time, according to statements from the authorities
- Mr. Adoboli's activities would have been detected earlier if UBS had more stringent risk management in place in its London operations, the Swiss Financial Market Supervisory Authority said on Monday
"UBS's systems and controls were seriously defective. Failures of this type in firms of the size and standing of UBS not only damage the firms concerned but also wider confidence in the integrity of the markets and the financial system." -- Tracey McDermott, director of enforcement and financial crime at the FSA, in a statement.
For further details, go to [Dealbook, 11/26/12].
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