Offshore Capitalist

UBS wealth unit takes £33m hit on rogue trades

UBS has been forced to stump up £33m (€37m) after staff in its London-based wealth management division used client accounts to make unauthorised trades in precious metals and foreign exchange. The UK market regulator slammed UBS for its “inadequate systems and controls” in a wide-ranging critique of the business.

The Financial Services Authority fined UBS £8m, the third largest penalty in its history.

The FSA documented a list of breaches within the bank’s wealth management operations in London that enabled staff to make the unauthorised trades.

Margaret Cole, FSA director of enforcement and financial crime, said: “These employees were able to take advantage of UBS’ inadequate systems and controls, giving them free rein to make unauthorised trades with customer money that they were then able to conceal.”

The transactions took place during a two year period from the beginning of 2006 and involved four employees carrying out unauthorised transactions involving customer money on at least 39 accounts.

The transactions included about 50 foreign exchange trades a day, according to the FSA.

The regulator said UBS had failed to: manage and control risks created by its international wealth management business; implement remedial measures in response to warnings signs; and provide an appropriate level of supervision for customer-facing employees.

UBS paid out an additional $42m (£25m) in compensation to clients affected by the trades.

The bank said in a statement: “A small number of client accounts were impacted and UBS has expended considerable resources to compensate those customers identified as having been affected.”

UBS was not able to confirm whether all the account holders had been fully compensated.

via UBS wealth unit takes £33m hit on rogue trades.

Related posts:

  1. A fund to mirror the Guinness family wealth management
  • Welcome to Offshore Capitalist

    Do dramatic financial headlines every day drive you crazy? Forget them! Drop by Offshore Capitalist every now and then to catch the useful stuff.