That’s a lot of money. Not just for the average citizen, but for a bank, too: UBS disclosed the losses this morning, along with announcing that the loss could push its third quarter bottom line into the red. Shares of UBS fell 10 percent immediately following the announcement.
So who is this enterprising young man, who took it upon himself to play very fast and very loose with a whole lot of cash? Well, British police arrested a 31-year-old UBS trader on the bank’s London exchange-traded-fund desk at 3:30 a.m this morning, on “suspicion of fraud by abuse of position.” Sources identified him as Kweku Adoboli, though his name hasn’t been officially released yet. The last update to his Facebook page, on Sept. 6, read, ” Need a miracle.” Indeed.
The bank says it’s working to ensure that all the problematic positions are closed, but the horse is already way out of the barn. Today’s news comes not just on the exact third anniversary of the Lehman collapse (for those who like their gloom-and-doom symbolism), but also three-ish years after UBS had to write down a whopping $50 billion in bad securities trades. Today’s rogue-trader news perhaps points to a systemic problem that’s more worrisome than the actual incident. Whatever risk-management problems the bank might have had three years ago haven’t exactly disappeared — even if $2 billion has.
UBS rogue trading: man arrested in London [Guardian]
UBS Hit by $2 Billion in Unauthorized Trades [WSJ]