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UBS given record fine on $2.3B trader loss

Nov. 26, 2012 at 11:47 AM   |   Comments

LONDON, Nov. 26 (UPI) -- British banking regulators Monday fined Swiss bank UBS $47.5 million for slack supervision that permitted a rogue trader to lose $2.3 billion.

The fine is a record for the Financial Services Authority, The New York Times reported Monday.

The fine follows last week's conviction and sentencing of trader Kweku Adoboli, 32, who received a seven-year jail sentence for two counts of fraud. The trader had made unauthorized market bets that ended up losing $2.3 billion.

"UBS' systems and controls were seriously defective," Tracey McDermott, Financial Services Authority's director of enforcement and financial crime, said in a statement.

The bank said it would not contest the regulator's decision and would cooperate with Swiss regulators, who cannot impose a fine, but who have mandated changes, including restricting UBS traders from branching into new trading areas without asking for permission first.

UBS said it had disciplined employees in the wake of the losses and was "'pleased that this chapter has been concluded."

Regulators, however, are still considering imposing higher capital mandates for UBS, which would cushion the bank against unexpected losses.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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