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FSA launches formal investigation into UBS losses

by LLB Editor
3rd Feb 12 12:29 pm

The Financial Services Authority (FSA) has launched a formal enforcement investigation into the £1.5bn trading loss at the London arm of UBS in September.

The investment bank and a number of its senior staff could be fined as a result of the investigation, or even be barred from working in the City.

UBS chief executive Oswald Grübel was forced to quit after the losses were revealed, while Kweku Adoboli, 31, pleaded not guilty to four charges of fraud and false accounting in court earlier this week.

Adoboli, who worked as a senior trader in the Swiss bank’s global synthetic equities department, will be be remanded in custody until his trial begins in September.

The initial investigation conducted by the FSA has now moved onto a formal enforcement case, it announced, while the Swiss Financial Market Supervisory Authority, its Swiss counterpart, has taken the same step.

How long the investigation will take is unclear, but UBS and members of its staff could face fines or be banned from working in the Square Mile if the FSA feels there is a case for them to answer.

“On 16 September 2011 the Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority (FINMA) announced the launch of an independent investigation into the events surrounding trading losses incurred by UBS in the London operations of its investment bank,” said the FSA.

“The FSA has now commenced a formal enforcement investigation against UBS and is in close contact with FINMA which has also commenced enforcement action against UBS”.

UBS also issued a statement, confirming it had received notification from the FSA and FINMA that the investigations would be moving forward.

The bank said: “We will continue to fully cooperate with our regulators. Immediately after the unauthorised trading incident, the group executive board thoroughly investigated the incident and implemented measures to better protect our firm from unauthorised activities.”

It continued: “Our ability to disclose further details relating to the unauthorised trading incident and the measures we are taking is limited by the fact that regulatory investigations and criminal proceedings are ongoing. This does not prevent us from taking further decisive action to improve our operational risk controls.”


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