FCA bans UBS trader over $2.3 billion loss


19 October, AtoZForex.com, Lagos – The earlier reported case of $2.3 billion unauthorized trading loss case by Kweku Mawuli Adoboli, has already resulted in his conviction. Based on two counts of fraud by abuse of position. Proceeding further, now the Financial Conduct Authority has banned Kweku Mawuli Adoboli from performing any position in relation to regulated financial activity.

Mr. Adoboli was sentenced to seven years imprisonment on grounds that he demonstrate a clear and serious lack of honesty and integrity. Following the massive loss he incurred for his bank, post an investigation by the City of London Police and consequent prosecution by the Crown Prosecution Service. The FCA bans UBS trader, Kweku Mawuli Adoboli along with his colleague, John Christopher Hughes. After having considered the relevant circumstances and the severity of the risk posed by Mr. Adoboli. Affecting not only consumers, financial institutions, but also the negative impact on the confidence in the market in general.

Other suspects in the case 

Alongside Mr. Adoboli, the FCA also banned John Christopher Hughes from performing any function in relation to any regulated activity in the financial services industry. Due to failings related to his colleague’s US$2.3 billion unauthorised trading losses. The FCA branded him as: “Hughes is not a fit and proper person.”

Tracey McDermott, the FCA’s director of enforcement and financial crime commented further: “Hughes was the most senior person on the Exchange Traded Funds (ETF) desk. He should have been acting as a role model to others. Instead he failed to report the Umbrella and allowed the Desk’s profit and loss to be misstated over an extended period. This failure contributed to Adoboli’s unauthorised trading continuing unchecked. Approved people should operate to the highest standards of integrity. This means not only doing the right thing themselves but also challenging, and blowing the whistle on, those who are not. Hughes failed to do so with catastrophic consequences.”

UBS also charged guilty & receives fine

The Financial Services Authority (FSA) also fined UBS AG (UBS) £29.7 million. This levy was based on systems and controls failings that allowed an employee to cause substantial losses totalling US$2.3 billion. As a result of unauthorised trading, revealing the serious weaknesses in the firm’s procedures, management systems and internal controls.

Some of the failings discovered by the FCA include:

  • The computerized system operated by UBS to assist in risk management was not effective in controlling the risk of unauthorized trading.
  • The trade capture and processing system had significant deficiencies, which Adoboli exploited in order to conceal his unauthorized trading. The system allowed trades to be booked to an internal counterparty without sufficient details, there were no effective methods in place to detect trades at material off-market prices and there was a lack of integration between systems.

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