FTSE 100: 5350.05 ▲ 83.64 (1.59%)
The Financial Services Authority (FSA) has begun an enforcement investigation into Swiss bank UBS over the actions of alleged rogue trader Kweku Adoboli, who has been accused of unauthorised trading costing the company £1.5 billion.
The FSA has launched the investigation alongside Swiss regulator the Financial Market Supervisory Authority (FINMA).
In September 2011, the FSA and FINMA announced the launch of an independent investigation into the events surrounding trading losses incurred by UBS in London.
This week Adoboli appeared at Southwark Crown Court and pleaded not guilty to charges of alleged fraud and false accounting.
Comments (4)
Yet another example of ineffective internal checks. Why not co-opt Nick Leeson to provide detailed information as to how it can be done, and what banks internal supervisors need to do to that would prevent it.
Has any individual lost money as a result of this guy's actions? If the only loser is a reduction in share price, then an FSA fine will only reduce it further. (I suppose then FSA could fine themselves for the same action).
When a rogue trader does his trades, and fails, someone else suceeds. So all that has really happened is money from UBS has been distributed amongst loads of other financial institutions. Nothing has really been lost. For all I know, some of the beneficiaries may be RBS, Lloyds, Barclays etc. and some of your investments may still be with them.
The real crime is this guy possably falsified his accounts and traded outside his remit to give him a good bonus, as well as keep a good salary. Once again the bonus culture emphasises short term strategy, and neglects long term performance.
11:40 on 03 February 2012
The basis of this investigation on the part of the FSA will, I imagine, be to grill UBS in some detail as to why their internal security systems, with which they would, of course, on past compliance vists, have already had to furnish the FSA full details and provide demonstrations, appear to have failed to prevent this happening.
This, of course, assumes that the FSA has in the past actually conducted any sort of compliance visit/s to UBS and that, if it did, it did ask for full details of the bank's anti-fraud security measures.
I wonder?
12:57 on 03 February 2012
Julian, the FSA have already answered your question in the RBS report, which clearly stated they were looking the other way at the time.
So presumably UBS can use exactly the same defence. A £2m fine, drinks in the boardroom and business as usual.
Two things that will not be clearly stated is a) how UBS allowed this to happen, since it will compromise confidential business systems (real or imaginary) and b) precisely what did the FSA regulate.
Since the article also states that the FSA announced the launch of an investigation in September, why has it only just begun? In 4 months an awful lot of cover up work can be achieved, especially if the "rogue trading" was not a one man operation. And why use the term "independent investigation". Is part of the FSA owned by UBS? Silly me, you don't have to answer that one!
13:37 on 03 February 2012
In September, you may recall that the UK and Swiss regulators announced they had appointed one of the Big Four to go in and have a poke around. Undoubtedly, the findings of this - the "independent investigation" - has led to the instigation of an "enforcement investigation" by the regulators themselves.
Personally, I'd have said "independent enquiry" for the first bit, to distinguish it from an "investigation" which has certain a legal process set out in FSMA. But then I don't work in the FSA's press department.
15:58 on 03 February 2012
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