Here we go again as UBS announces $2bn loss following rogue trades.
Reports that another rogue trader has been unearthed serve
to remind us of just how easy it seems to be for a con man to
get the better of a giant investment bank. UBS, the Swiss bank,
lost around $2bn in unauthorised deals it said this
morning. At the same time, police in London arrested
Kweku Adoboli from UBS' ironically named Delta
One trading desk; Delta One desks focus on hedging for
customers, and are by nature relatively low risk.
The case resonates after a number of similar high-profile
rogues were caught and prosecuted. Most recently in January
2008 rogue trader Jerome Kerviel (like his predecessor Nick
Leeson of Barings Bank fame) woke the world up to the fact that
trading without proper risk controls and supervisory oversight
can lead to unintended consequences. In that case the
consequences were massive losses (approximately $6bn) for
Société Générale, and all because
Kerviel had knowledge of and abused risk management systems at
the bank to hide losses.
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