A rogue trader could be responsible for Switzerland’s biggest bank failing to be profitable in the third quarter, after he managed to siphon off $2 billion in unauthorized trading. A suspect was taken into custody in London early Thursday morning.
Bloomberg reported that UBS AG’s executive board said in a memo to employees that management plans to “get to the bottom of the matter as quickly as possible, and will spare no effort to establish exactly what has happened,” and added, “While the news is distressing, it will not change the fundamental strength of our firm.” Perhaps not, but the firm’s stock fell as much as 9.6% in Switzerland on the news.
Then late Thursday Moody’s Investors Service placed UBS on review for a possible downgrade over its risk control measures.
Meanwhile, The Telegraph reported that the suspect in custody was a UBS employee named Kweku Adoboli who worked in the ETF area. The police statement, which did not identify him, said, “A 31-year old man was arrested at 3.30 AM in central London on suspicion of fraud by abuse of position. He remains in custody.”