UBS hit by £29.7m rogue trader fine and warned over capital levels
Tuesday 27 November 2012
UBS was yesterday hit with a £29.7m fine for failing to spot and stop rogue trader Kweku Adoboli, who was jailed for fraud last week, and told it may need to raise its capital levels.
The Financial Services Authority (FSA), who imposed the fine, said there had been "serious weaknesses" in the bank's procedures, management systems and internal controls.
If UBS had not agreed to settle early, the fine would have been even larger at £42.4m, based on 15 per cent of the annual revenues of its global synthetic equities trading division where Adoboli worked.
Meanwhile, Swiss financial regulator Finma announced it was looking at the possibility of UBS needing to up its capital levels to back its operational risks.
"UBS failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk-management systems, and failed to conduct its business from the London branch with due skill, care and diligence," said the FSA.
The City watchdog also said UBS had failed to learn lessons after it was fined £8m for failed controls and systems in its wealth-management business three years ago. UBS has punished staff by clawing back over £34m through reclaiming bonuses and withholding an average of 50 per cent of deferred pay from many executives.
It was also revealed UBS has spent £16m engaging an independent firm to investigate the trading scandal.
Adoboli was jailed for seven years last week on two counts of fraud after running up losses of £1.4bn.
Tracy McDermott, director of enforcement and financial crime at the FSA, said: "UBS's systems and controls were seriously defective. UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk."
The punishment for UBS brings the total fines imposed by the FSA this year to a record-breaking £150m.
UBS said that it had undertaken "extensive remedial action" since Adoboli's losses came to light.
- 1 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 Top 10 travel destinations for 2015: From Haiti and Alaska to Namibia and Iceland
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
UK weather: Travel chaos continues as King's Cross train delays add to snow on roads
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...