Swiss banking giant UBS fined £29.7m over rogue trader Kweku Adoboli
Adoboli was sentenced to seven years in prison last week after he was convicted of two counts of fraud by abuse of position
Monday 26 November 2012
Swiss banking giant UBS has been fined £29.7 million by the City watchdog for failings which allowed convicted rogue trader Kweku Adoboli to lose £1.4 billion.
The Financial Services Authority (FSA) said procedures, management systems and internal controls at the bank's London branch were "seriously defective".
Adoboli was sentenced to seven years in prison last week after he was convicted of two counts of fraud by abuse of position.
Tracey McDermott, FSA director of enforcement and financial crime, said: "UBS's systems and controls were seriously defective."
She went on: "As a result, Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly.
"We know from past experience that failures to manage risk properly can cause firms to fail and cause systemic harm."
UBS became aware on September 14 last year that unauthorised trading had taken place on the Exchange Traded Funds Desk in the Global Synthetic Equities (GSE) trading division in London.
Adoboli disguised the underlying positions by the use of late bookings of real trades and the booking of fictitious trades.
The FSA, in an investigation with the Swiss Financial Market Supervisory Authority (Finma), uncovered several "particularly serious" failings which put wider market confidence at risk and allowed Adoboli to commit financial crime.
The computerised system operated by UBS to assist in risk management was not effective, the regulators said, while its trade capture and processing system had "significant deficiencies".
Inadequate front office supervision was discovered including poorly executed and ineffective supervision arrangements within the GSE division.
Adoboli was at one point on the verge of causing losses of 12 billion US dollars (£7.5 billion), and the hole he eventually left was the largest trading loss ever in British banking history.
Prosecutors claimed Adoboli - who was heavily involved in spread-betting in his spare time - was a gambler who believed he had the "magic touch".
The 32-year-old admitted the enormous losses but claimed he was pressured by staff to take risks, culminating in a catastrophe which wiped £2.8 billion off the bank's share value.
James Carlton, a partner specialising in areas of business crime and regulation at Fox Williams, said: "This case illustrates that Kweku Adoboli, while 'rogue', could not have achieved what he did without there being significant failings within the overall trading operations and UBS clearly accepts a degree of corporate culpability for this.
"This case continues to underline the need for all financial institutions to have in place, and to continually monitor, highly comprehensive control systems which effectively balance the conflicting needs between regulatory compliance and corporate profit."
- 1 Astrological signs are almost all wrong, as movement of moon and sun throws out zodiac
- 2 Dad eats daughter's weed brownies, thinks he's had a stroke
- 3 The West has it totally wrong on Lee Kuan Yew
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...