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Regulator hits UBS with huge fine for rogue trading

The regulator has fined UBS £8m for system and control failures that allowed four employees to carry out unauthorised transactions involving customer money on at least 39 accounts.

A whistleblower raised concerns internally about the activity, which took place between January 2006 and December 2007 at UBS’s London-based wealth management business.

UBS staff traded foreign exchange and precious metals using client money without authorisation, allocating losses to customer accounts.

An internal UBS inquiry estimated up to 50 such transactions a day were taking place at the peak of the operation. An FSA investigation found the firm had failed to manage and control the key risks and the level of risk created by its international wealth management business model.

It failed to implement effective remedial measures in response to warning signs that suggested systems and controls were inadequate and did not provide an appropriate level of supervision over customer-facing staff.

UBS would have been fined £10m but settled at an early stage of the FSA investigation and qualified for a 20 per cent discount. It is the third-biggest fine the FSA has ever imposed.

UBS has paid over £25m in compensation to customers.

FSA director of enforcement and financial crime Margaret Cole says: “It is imperative that firms have suitable systems and controls to keep their houses in order. Where firms fall short, the consequences will be severe.”

City law firm CMS Cameron McKenna partner Simon Morris says: “The FSA now comes across as the credible deterrent against financial crime it has so long talked about becoming.”


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