Kweku Adoboli, a UBS trader, has been convicted of two counts of fraud by abuse of position and sentenced to seven years’ imprisonment.
Moreover, FSA has also discovered serious weaknesses in the firm’s procedures, management systems and internal controls due to its systems and control failings.
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It was on 14 September 2011 that UBS had become aware of the unauthorized trading that was carried out between 1 June 2011 and 14 September 2011 on the Exchange Traded Funds Desk in the Global Synthetic Equities trading division conducted from the London Branch of UBS.
According to FSA, UBS had failed to take reasonable care to organize and control its affairs responsibly and effectively, with adequate risk management systems and failed to conduct its business from the London Branch with due skill, care and diligence.
FSA has accused UBS having ineffective computer risk controls and poorly executed and ineffective supervision that allowed Kweku Adoboli repeatedly to breach risk limits and book fictitious trades.
Since the failings took place in the London branch of UBS, the FSA and the Swiss regulator Finma investigated jointly. Adoboli was convicted of fraud last week and sentenced to seven years in jail.
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By GlobalDataTracey McDermott, FSA enforcement director, said: "UBS’s systems and controls were seriously defective. UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk. As a result, Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly."
