The FSA and the Swiss Financial Market Supervisory Authority (FINMA) are launching an independent investigation into the events surrounding the huge trading losses incurred by UBS, allegedly as a result of the actions of 'rogue trader' Kweku Adoboli.
The investigation, to be conducted by a third party firm independent of UBS, will focus:
- on the details of the unauthorised trading activity;
- on the control failures which permitted the activity to remain undetected; and
- will include an assessment of the overall strength of UBS's controls to prevent unauthorised or fraudulent trading activity in its Investment Bank.
Adoboli, a trader alleged to have lost the company some $2bn (£1.3bn) in unauthorised trading, was today charged with fraud.
UBS said it may report a third quarter loss due to the losses incurred.
The BBC reports that UBS believes the losses were accumulated in a large number of small trades over many months, not in one big deal.
It also suggests 31-year-old Adoboli worked in the back office before becoming a trader, possibly explaining how he managed to keep his trading secret.
Credit ratings agencies Moody's and Standard & Poor's said they are reviewing UBS's rating.
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