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

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."

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Life and Style
Men with beards rejoice: Your beard probably doesn't harbour faeces-like bacteria
health
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before