Rogue trader wipes out UBS bonus pool

Losses chalked up to an alleged rogue trader are expected to ding Swiss banking giant UBS’s third quarter profits, and may cost executives and others at the firm their bonuses.

It’s also said the recent bad news has ramped up pressure for the company to install a successor to current chief executive Oswald Gruebel.

Kweku Adoboli stands accused of losing the Swiss banking giant more than $2 billion in unauthorized trading was charged last week with fraud and false accounting.

He remains in police custody, the London police department said in a statement. It said an investigation involving financial regulator the Financial Services Authority, the Serious Fraud Office and the Crown Prosecution Service was continuing.

Law firm Kingsley Napley, which represented Nick Leeson—the trader who brought down British bank Barings in 1995 after he made around $1.4 billion of losses in unauthorized trades—said that it had been hired to represent Adoboli.

In Switzerland, UBS faces pressure to explain how its managers failed to catch the $2 billion loss, and how monitoring systems had been unable to flag the alleged unauthorized trades.

Adoboli, born in Ghana, has been employed by UBS on an equities desk known as Delta One and worked with exchange-traded funds—which track different types of stocks or commodities, such as precious metals.

Some commentators and politicians called for senior managers at UBS to take responsibility for the loss.

“Until UBS has explained in detail how such a significant loss due to unauthorized trading could happen, and how the problem will be solved, confidence will remain impaired,” said Andreas Venditti, an analyst at Zuercher Kantonalbank.

The international banking industry has been trying to implement stricter controls on traders in the wake of a 2008 scandal at France’s Societe Generale, when trader Jerome Kerviel gambled away €4.9 billion ($6.7 billion), and the infamous Leeson case.

Staff

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