More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
As further details emerge regarding its recent $2.3 billion trading loss, UBS interim CEO Sergio Ermotti has decided against spinning off or selling the investment bank and, instead, plans to reduce its size, especially in its fixed-income work, according to a report in Thursday’s Wall Street Journal.
Ermotti was appointed chief following Oswald Gruebel's resignation in September after UBS' investment bank revealed losses due to the actions of an alleged rogue trading. The co-heads of global equities, Francois Gouws and Yassine Bouhara, also have left, and the bank has suspended some front-office staff, a recent Reuters report says.
UBS is set to report its third-quarter results next Tuesday. It is expected that Ermotti could outline his plans at an investor meeting on Nov. 17, according to the Wall Street Journal, which also suggests that Ermotti may cut some capital access for the investment bank and share more resources with UBS wealth-management operations.
The bank did not return a request for information to AdvisorOne.
Meanwhile, prosecutors in London said Thursday that Kweku Adoboli, the trader accused of losing $2.3 billion by making unauthorized trades, falsified records specifically on exchange-traded-fund transactions, according to a Bloomberg report published Thursday.
Adoboli, 31, traded ETFs tied Standard & Poor’s 500, DAX and EuroStoxx index futures, the bank told Bloomberg, and he hid the risk associated with these ETF holdings with fake positions.
The former UBS employee is expected to enter a plea regarding charges of fraud and false accounting in a criminal court in London on Nov. 22.
At UBS, Adoboli, who is a citizen of Ghana, worked for the Delta One desk, which handles client trading but also uses the bank’s own money. UBS has said that no client funds or holding were affected by his activities.
In August, the bank said it planned to cut some 3,500 jobs, almost half of them from its investment bank, with the aim of trimming about 2 billion Swiss francs from annual costs by the end of 2013.