Rogue Trader Causes Massive Loss At Swiss Bank

A 31-year-old man was arrested by the London police after leading Swiss bank UBS admitted a rogue trader caused loses worth $2 billion, conducting unauthorized trading through its Investment Bank. The police in London said the suspect is arrested on suspicion of fraud by abuse of position that led to the loss of billions of dollars. The unauthorized trade could force the bank to report third quarter loss, UBS said in a statement. Following the news, the bank’s stock dropped 8.92 percent to 9.955 Swiss franc.

UBS Swiss Bank Loss

UBS declined to comment on the rogue trading, urging its employees to focus on servicing clients while an internal investigation is under way. The news is a big blow for the bank, which experienced heavy losses in US subprime loans and faced hard times during the economic downturn between 2007 and 2008. The Swiss state was forced to save the bank from declaring bankruptcy during the same period, while the United States initiated a tax evasion dispute over UBS’s clients in 2008 and 2009.

According to sources close to the bank, UBS may post loses of 500 million Swiss franc in the third quarter with its reputation damaged severely by the rogue trading affair. Bankers voiced concerns over UBS’s security systems that allowed a trader to conduct rogue trade on behalf of a reputable investment banking institution.
Similar accidents happened in the past and banking institutions like the U.K.’s Barclay’s Bank have been ruined by brokers trading on their behalf.


Speak Your Mind

*