UBS AG faces a heavy fine of 45 million pounds, the second highest amount of fine ever in the history of unauthorized trading. The penalty imposed by UK’s FSA, could increase to a maximum of 50 million pounds for the indulgence of an UBS employee in unauthorized trading, as said by a secret source.
KWEKU ADOBOLI’S UNAUTORIZED TRADING ATTRACTS $72 MILLION FINE FOR UNITED BANK OF SWITZERLAND:
On November 20th, Kweku Adoboli a former trader in UBS AG office in London was sentenced to seven years of jail after being found guilty of unauthorized trading of bank’s money, causing a loss to the tune of $2.3 billion.
The Swiss regulator FINMA is tight lipped on this matter continuing on the joint investigation with the FSA.
KERVIEL, LEESON:
In 1995, the former derivative traders Jerome Kerviel and Nick Leeson were jailed, when found guilty of doing rogue trading and causing losses amounting to 4.9 billion Euros at Societe Generale SA that brought down Barings Plc.
This time Kweku Adoboli had exceeded his trading limits and booked fake hedges to hide the risk from the bank thus causing the losses.
Before his arrest in September 2011, Adoboli confessed that he risked $5 billion on Standard and Poor’s 500 Futures and $3.75 billion in the German futures market thus causing losses.
During the trial, Adoboli’s lawyer Tim Harris focused on the practices of the financial institutions thus bringing to notice the expectations of financial institutions, how the junior staffs are being supervised and how the risk funding and treasury control are managed.
KPMG Investigation:
KPMG LLP received 20 million pounds from UBS AG, for their 8 month in depth investigation in to the trading losses done by 100 investigators.
In 2009, the wealth management unit of UBS AG, London was in trouble with the regulatory board over unauthorized trading and has paid an 8 million pound fine to FSA and had agreed for a reimbursement of $42.4 million of customer’s money.