UBS Probes $2.3 Billion In Trader Loses
September 19, 2011 by UPI - United Press International, Inc.
ZURICH, Switzerland, Sept. 18 (UPI) — Swiss bank UBS said Sunday it was raising the estimate of losses from unauthorized trading by an alleged rogue employee to $2.3 billion.
The losses were allegedly the work of a London trader who was charged with fraud and false accounting this weekend. An earlier estimate was $2 billion.
UBS said in a written statement the estimate was revised to account for losses concealed by a falsified position that kept the transactions within the company’s risk-exposure guidelines.
“The true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions, allegedly executed by the trader,” the UBS statement said. “These fictitious trades concealed the fact that the index futures trades violated UBS’s risk limits.”
The New York Times said UBS declined to comment on exactly how far back the dubious trades made by Kweku Adoboli went. The bank has said the $2.3 billion evaporated in a period of three months.
UBS also said Sunday that it was launching an investigation led by David Sidwell, an independent director of the bank who is chairman of its risk committee. Sidwell was CFO at Morgan Stanley from 2004-2007.