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Ear to the Ground

Trader Lost Billions for Swiss Bank

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Posted on Sep 15, 2011
Flickr / twicepix (CC-BY-SA)

Swiss banking giant UBS said Thursday that a rogue trader had cost it approximately $2 billion in unauthorized trades.

London police arrested UBS trader Kweku Adoboli, 31, in connection with the alleged fraud, though the bank did not confirm his identity.

UBS said it may have to report a loss for the entire quarter because of the rogue trading. Its shares plunged about 9 percent on the news. —BF

The Associated Press in Forbes:

The Swiss banking regulator Finma said it was in contact with UBS about the incident, which was discovered late Wednesday.

“From the scale of this case you can be sure that it’s the biggest we’ve ever seen for a Swiss bank,” Finma spokesman Tobias Lux told The Associated Press.

UBS provided little specific information, saying the incident was still under investigation and no client money was involved. The unauthorized transactions could cost UBS almost as much as the 2 billion Swiss francs ($2.28 billion) the bank hopes to save by cutting 3,500 jobs over the next two years.

It comes as UBS is struggling to restore its reputation after heavy subprime losses during the financial crisis that resulted in a government bailout, and an embarrassing U.S. tax evasion case that blew a hole in Switzerland’s storied tradition of banking secrecy.

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By SoTexGuy, September 16, 2011 at 10:03 am Link to this comment

Payson’s comment is fabulous.

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By Shorebreak, September 16, 2011 at 7:58 am Link to this comment
(Unregistered commenter)

UBS got all their money back this morning after Helicopter Ben Bernanke showered all the European banks with bushels of free dollars, printed out of thin air, in another one of his bailouts, now amounting to about 20 trillion dollars.

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By Payson, September 15, 2011 at 2:39 pm Link to this comment
(Unregistered commenter)

In the United States of America(the greatest country on earth, land of the free,
etc.) we know how to deal with financial fraudsters like this 2 billion dollar
bandit:

“Welcome to the S.E.C. Mr. Fraudster.  Have a seat.  I understand you have
found yourself in a bit of an unfortunate situation with some missing billions. 
Let me just pull out our evidence file on your doings…oh, well, this is strange. 
Opps…It seems that we accidentally shredded all of the evidence.  Your file only
contains some Starbucks receipts and a free drink coupon from Arby’s.

Oh, well.  You won’t do it again, right?  If you ever get the itch to break the law,
just let us know.  Or, better yet, go ahead and do it again, but let us know how
we should punish you after the fact.

Until then, we hope you enjoy that $20 million retirement package your firm
gave you.  We are terribly sorry that you are being taxed at that oppressive 15
percent tax rate.  Believe me, we are doing all we can to get rid of your tax
burden all together so you can start creating all of those American jobs the
Republicans have been telling us about.

Thanks again for coming in.  Oh, and make sure you seriously consider that job
offer from the White House to be a special financial sector advisor.  If that isn’t
appealing, I can give you the numbers of some lobbying firms who can put you
to work writing our future financial reform laws(wink).  Keep up the good
work!”

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