Rogue Trader Reportedly Costs UBS $2 Billion


A UBS exchange-traded-fund director has lost $2 billion of the firm’s money, raising questions about the bank’s proprietary trading and risk management systems just three years after it lost over $39 billion and had to be rescued by the Swiss National Bank.

UBS has taken the position that Mr. Adoboli is a “rogue” trader whose trades were “fraudulent” in that they were “unauthorized.” Mr. Adoboli has been arrested by British police.

A number of problems at UBS raise questions as to how a trader could generate such a large loss. The problems include UBS’s proprietary trading in its fixed-income, currencies and commodities, or FICC business, which sparked the $39.28 billion loss in 2008; UBS’s having to be rescued by the Swiss National Bank; and UBS’s purportedly revised risk management systems.

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