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Rogue trader costs UBS two billion -

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Rogue trader costs UBS two billion

Emma Alberici reported this story on Friday, September 16, 2011 08:21:00

TONY EASTLEY: Now if you're thinking you are having a bad day at work, police in London have
arrested a 31-year-old man on charges that he engaged in unauthorised trading at Swiss Investment
Bank UBS.

The man's activities are understood not to have had any impact on customer accounts but he's said
to have lost UBS two billion dollars.

Europe correspondent, Emma Alberici reports.

EMMA ALBERICI: The statement came just moments before the markets opened in London - "UBS has
discovered a two billion dollar loss," it said, "due to unauthorised activity by a trader at its
investment bank".

There had been a hint earlier that something may have been awry at the Swiss bank. Ten days ago one
of its young traders - 31-year-old Kweku Adoboli - updated his Facebook page simply telling friends
quote "need a miracle".

Overnight, London police commander Ian Dyson told a press conference that Ghanaian born Kweku
Adoboli was sitting at his desk at three o'clock in the morning when he was arrested on fraud
charges for abusing his position at UBS.

IAN DYSON: City of London Police has good working relationships with global financial institutions.
They are our community and we work with them and other agencies to combat fraud and economic crime
within the city and the United Kingdom.

NEWS REPORTER: One of the biggest frauds in world financial history, Jerome Kerviel disappeared
after...

EMMA ALBERICI: If Kweku Adoboli is found guilty, this episode at UBS will be the third largest
rogue trading incident at a bank after the $7 billion hit to French bank SociétΘ GΘnΘrale by Jerome
Kerviel who was last year sentenced to three years in jail.

He's appealed that conviction, claiming that his trades were done with the full knowledge of the
bank.

That scandal topped the losses involved with the collapse of Barings, Britain's oldest merchant
bank.

UBS has only just begun to recover from near fatal losses during the financial crisis. The Swiss
government, forced to bail the bank out to the tune of $60 billion, will surely be asking questions
about why the investment banking division hasn't learnt lessons from the risky behaviour that
brought down Lehman Brothers.

EMMA ALBERICI: James Hughes is a senior market analyst at foreign exchange trader Alpari.

JAMES HUGHES: It shows that their risk management tools, those things in place to stop these sort
of things happening, aren't there and it just shows that maybe UBS isn't one of the only banks that
this is happening at.

EMMA ALBERICI: UBS, which has 6000 staff in the UK, saw its shares slide 10 per cent after it
warned that Kweku Adoboli's activity might well have cause the bank to report a loss.

This is Emma Alberici in London for AM.