Bank trader steals/looses $2 billion before he’s caught

A 31-year old man – Kweku Adoboli – has been arrested by City of London Police on suspicion of fraud in connection with an alleged rogue trading incident that has cost Swiss bank UBS around $2 billion.

The Zurich-based bank uncovered the incident in the past 24 hours. Shares in UBS plunged nearly 10% after it revealed the loss, which could push the bank into the red for the current financial quarter.

The City of London Police confirmed they had arrested a 31-year old man at 3.30am in central London on “suspicion of fraud by abuse of position”. The police did not identify the individual who remains in custody, but sources say he is Adoboli. The force has begun an investigation…

The bank would not comment but Adoboli is understood to work in its equity division and on a trading desk called Delta One that was involved with its exchange traded funds business. ETFs are complex financial instruments that comprise a basket of investments intended to mimic a market’s movements while Delta One traders try to make huge profits on tiny differences between prices. It is understood that the entire trading desk, including Adoboli’s supervisor John Hughes, has been sent home while the investigation continues…

On the third anniversary of the collapse of Lehman Brothers, the Swiss bank said: “UBS has discovered a loss due to unauthorised trading by a trader in its investment bank. The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011.”

It added that “no client positions were affected”…

So, erm, while every banker I know is whining about more and deeper regulation being put in place by governments trying to prevent the sort of corruption and deceit that initiated our Great Recession – UBS, the leading Swiss bank in a nation of bankers, manages to lose $2 billion through one man’s hanky-panky. Not exactly confidence inspiring.

3 thoughts on “Bank trader steals/looses $2 billion before he’s caught

  1. zpike says:

    I read interviews where he was hoping for a miracle to sort his screwups. He knew no one was watching closely enough to stop his game early on. Phew.

  2. Gilraen says:

    He sounded to me exactly like a gambling addict. Hoping to make up losses with the next bet. He needs Gambling anonymous more than jail

    Last night on TV there was a former trader explaining that he left a high paying trading job, when he realised that what he was supposed to be doing should have been in a casino, with money, not with the heard earned cash of other people

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