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UBS Trader Gets No Miracle as Loss Leads to Arrest
By Liam Vaughan, Elena Logutenkova and Gavin Finch - Sep 16, 2011 8:21 AM GMT+0800
Sept. 15 (Bloomberg) -- John Gutfreund, president of New York-based Gutfreund & Co. and former chief executive officer of Salomon Brothers Inc., Thomas Ajamie, an attorney at Ajamie LLP, and Louise Cooper, an analyst at BGC Partners, offer their views on UBS AG's $2 billion loss from unauthorized trading at its investment bank. This report also contains comments from Francesco Garzarelli, chief interest-rate strategist at Goldman Sachs Group Inc., Simon Maughan, head of sales and distribution at MF Global Ltd., and City of London Police Commander Ian Dyson. (Source: Bloomberg)
As Switzerland’s central bank imposed a limit on the franc’s appreciation against the euro on Sept. 6, UBS AG (UBSN) trader Kweku Adoboli’s Facebook profile had a plea for his friends: “Need a miracle.”
Just over a week later, at 3:30 a.m. yesterday, police in London arrested the 31-year-old Adoboli on suspicion of fraud by abuse of position. UBS told investors less than five hours later that “unauthorized trading by a trader” it didn’t identify caused a $2 billion loss.
Adoboli worked on the bank’s Delta One desk, a unit that handles trades for clients, typically helping them to speculate on or hedge the performance of a basket of securities. It also takes risks with the bank’s own money in arranging trades. It was the same kind of desk as the one worked by Jerome Kerviel, who triggered a 4.9 billion-euro loss ($6.8 billion) for France’s Societe Generale SA in January 2008.
“It couldn’t come at a worse time for UBS,” said Fred Ponzo, a former trader at Societe Generale and capital markets adviser at Greyspark Partners in London. “The thing is, it’s very hard to go through the fail-safes by error. The only way to dig a hole this big is by design. You have to ask the question that if this is a $2 billion hole, is this is a failure of technology and risk management?”
The arrest as global regulators are pressing banks to curb their proprietary trading is likely to revive calls for financial institutions to increase controls on risk and separate their investment banking from their retail businesses. It may also force Chief Executive Officer Oswald Gruebel, 67, to abandon further expansion of UBS’s investment bank.
http://www.bloomberg.com/news/2011-...iracle-as-delta-one-loss-leads-to-arrest.html
By Liam Vaughan, Elena Logutenkova and Gavin Finch - Sep 16, 2011 8:21 AM GMT+0800
Sept. 15 (Bloomberg) -- John Gutfreund, president of New York-based Gutfreund & Co. and former chief executive officer of Salomon Brothers Inc., Thomas Ajamie, an attorney at Ajamie LLP, and Louise Cooper, an analyst at BGC Partners, offer their views on UBS AG's $2 billion loss from unauthorized trading at its investment bank. This report also contains comments from Francesco Garzarelli, chief interest-rate strategist at Goldman Sachs Group Inc., Simon Maughan, head of sales and distribution at MF Global Ltd., and City of London Police Commander Ian Dyson. (Source: Bloomberg)
As Switzerland’s central bank imposed a limit on the franc’s appreciation against the euro on Sept. 6, UBS AG (UBSN) trader Kweku Adoboli’s Facebook profile had a plea for his friends: “Need a miracle.”
Just over a week later, at 3:30 a.m. yesterday, police in London arrested the 31-year-old Adoboli on suspicion of fraud by abuse of position. UBS told investors less than five hours later that “unauthorized trading by a trader” it didn’t identify caused a $2 billion loss.
Adoboli worked on the bank’s Delta One desk, a unit that handles trades for clients, typically helping them to speculate on or hedge the performance of a basket of securities. It also takes risks with the bank’s own money in arranging trades. It was the same kind of desk as the one worked by Jerome Kerviel, who triggered a 4.9 billion-euro loss ($6.8 billion) for France’s Societe Generale SA in January 2008.
“It couldn’t come at a worse time for UBS,” said Fred Ponzo, a former trader at Societe Generale and capital markets adviser at Greyspark Partners in London. “The thing is, it’s very hard to go through the fail-safes by error. The only way to dig a hole this big is by design. You have to ask the question that if this is a $2 billion hole, is this is a failure of technology and risk management?”
The arrest as global regulators are pressing banks to curb their proprietary trading is likely to revive calls for financial institutions to increase controls on risk and separate their investment banking from their retail businesses. It may also force Chief Executive Officer Oswald Gruebel, 67, to abandon further expansion of UBS’s investment bank.
http://www.bloomberg.com/news/2011-...iracle-as-delta-one-loss-leads-to-arrest.html
Serious discussion here! you must be out of your kok 
