The UK Financial Services Authority (FSA) fined UBS £29.7m ($48m) for repetitive failings throughout its computer control system that allowed a rogue trader to lose £1.5bn in unauthorised trading.

It is the third-largest fine to be handed out by the regulator in its history.

UBS junior trader, 32 year-old Kweku Adoboli, was sentenced last week to a seven-year jail penalty after he was convicted for fraud by abuse of position.

Between June 2011 and September 2011, Adoboli carried out illegal transactions on the exchange traded funds desk in the global synthetic equities trading division in the UBS’s UK office.

Systems ‘seriously defective’

UBS received a 30% discount on the £42.4 million original fine due to early settlement.

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The Swiss Financial Market Supervisory Authority with the full participation of the bank itself also conducted an investigation on UBS and took action against the bank although it does not have the power to fine.

"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," said Tracey McDermott, FSA’s director of enforcement and financial crime.

UBS insufficient focus on risky transactions

The fine is the latest in a series of regulatory reprimands relating to failed control systems at UBS. In June 2012, two UBS employees were fined for conducting unauthorised trading between 2006 and 2007. Laila Karan and Sachin Karpe paid £1.3m to the FSA while UBS paid $42m in compensation to the clients.

UBS was also fined in December 2011, after former UBS wealth manager helped a client breaching the Indian law, the Swiss company was fined £150,000 and again in November 2009 where the bank had to pay £8m for management failures.

In an official statement, UBS said material weaknesses regarding control of financial operations had been fixed and that disciplinary actions have been taken against staff members who failed to meet UBS’ high-standard. They also confirmed members of the staff were undertaking new training in order to reinforce the risk control culture within the bank.

"Since the outset of this matter we have fully co-operated with the regulators’ investigations and we now accept their findings and the penalties incurred," it said in a statement.