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FSA prepares to fine UBS up to £50m over rogue trading

by Daniel Grote on Nov 23, 2012 at 07:52

FSA prepares to fine UBS up to £50m over rogue trading

The Financial Services Authority is preparing to fine UBS up to £50 million for management failures that led to rogue trader Kweku Adoboli amassing a £1.4 billion loss, according to the Financial Times.

The paper cited sources close to the situation as claiming the FSA and UBS were finalising the details of a settlement, with a joint announcement expected next week.

The FSA and Swiss financial regulator Finma announced a joint probe shortly after UBS revealed the losses. Adoboli (pictured) was this week jailed for seven years after he was found guilty of two counts of fraud.

UBS, Swiss financial regulator Finma and the FSA declined to comment to the FT.

4 comments so far. Why not have your say?

John Phillips

Nov 23, 2012 at 08:25

And to think if he had pulled the rabbit out of the hat, so to speak, with regard to his last bet / trade, we would not have been any the wiser to UBS's failiuars.

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Nov 23, 2012 at 08:44

@ John

I was thinking the same thing. If he'd won all his bets, it would be a different story > in fact it wouldn't be a story at all (but for the obscene size of his bonus)

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Mad Eyes

Nov 23, 2012 at 09:22

works out about a 3.5% fee. Seems reasonable in the new world!

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Nov 23, 2012 at 10:10

Is this enough of a fine to attract the attention of all bank's directors to seriously attack two main failings?

1 The serious failings in control systems to allow this to take place.

2 The unremitting pressure people are put under to perform.

In any reasonable sized company, employees will find ways around rules and ethics to prevent abuse falling down on them from above. Certain managers talk with pride about their ability to 'manage out' employees with remedial action plans, or unrealistic targets, whilst only giving lip service to help and support. The paperwork will be completed properly though! With threats of loss of job, and even careers, employees can and often do, manipulate figures to make them less likely to attract abuse.

For certain individuals, abuse prevention can take a more sinister path, and downright internal fraud can result. Especially if the individual had been courted and his self esteem was once a lot higher.

The unfortunate Mr Adoboli, a gambler at heart (well he would be, given his job) did not steal the £1.4bn, and his only gain was his salary and bonuses. Seven years seems a little harsh for so little personal gain. Mind you I could agree to his line manager serving some time for failing to notice the unusual trading, accompanied by his head of department.

A fine of £50 million can be written off by one days trading for UBS. Jail time for senior executives is a much stronger incentive. Have we learned anything since Nick Leeson?

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