Rogue Trader Lost $2B at UBS

Andy Nguyen

Andy Nguyen

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http://dealbook.nytimes.com/2011/09/15/ubs-reports-2-billion-loss-to-rogue-trader/?hp

UBS said on Thursday that a rogue trader in its investment bank had lost $2 billion, a fresh blow to the beleaguered Swiss bank.

Police in London have arrested an European equities trader, Kweku Adoboli, in connection with the case, according to a person with direct knowledge of the situation, who was not authorized to speak publicly.
 
I like how when you lose $2 Billion you're automatically a 'rogue' trader. Maybe he is, or maybe the bank turned on him once he had a big loss.

At least it wasn't $7 Billion.. :p
Société Générale characterizes Kerviel as a rogue trader and claims Kerviel worked these trades alone, and without its authorization. Kerviel, in turn, told investigators that such practices are widespread and that getting a profit makes the hierarchy turn a blind eye.
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Unless they are high on the totem pole, these guys are usually fall guys.
 
Where the heck were risk management and product control?
 
The UBS rogue trading case is the biggest such incident in Europe since Jerome Kerviel’s unauthorized trades in equity-linked futures at the French bank Societe Generale in 2008.


 
pedrokeano said:
since when has abusing your position to put on an, allegedly, illegal position and blowing your limits out of the water NOT been a crime !!!
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Hm ... Never ? What's "illegal" position and how come that bank's internal restrictions (about a position's limit) can put someone in jail?

FYI, Nick Lesson wasn't pleaded guilty because his actions destroyed Barings or he blowed the limit but because he forged some documents in order to hide his losses from internal audit.
 
Just wondering when I will see the first news story concerning a "rogue trader" being arrested whose actions resulted in a $2B gain for his or her employer.
 
logixwriter said:
risk management didnt do its job at UBS
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Reminds me of when I tried to blame the local neighbourhood watch for not doing their job when I strung up my next door neighbour's cat ... never fails to amaze me when someone tries to explain away white collar crime on such a disgusting scale
 
logixwriter said:
Since when doing a trade has become a crime?
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bob said:
Just wondering when I will see the first news story concerning a "rogue trader" being arrested whose actions resulted in a $2B gain for his or her employer.
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It would be interesting to know the "threshold" loss number when it becomes "rouge". A few millions won't make the news or even get you fired so it must be a number somewhere in the middle right?
 
The train of thought is this...
The illegality is based on fraud that conceals the position and loss.
Nobody would bother concealing a position that resulted in a win. If a position resulted in a win and the trader wanted to increase the size of the trade, he could yell at risk to resize his limit.
Risk management isn't going to take most of the blame because hey... if they can't see the position, what does it matter?
 
It amazes me...I am a prop trader at one of the largest prop house ( by no. of people employed) and I have never been able to put on a position greater than my sanctioned limits even if I wanted to .... How can these Ibanks employ such poor risk measures...
 
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