UBS staff speculated on client accounts

UBS has been hit with the third-biggest fine levied by the UK financial watchdog after senior employees were discovered using money taken from customer accounts to speculate in foreign currencies and commodities.

http://www.ft.com/cms/s/0/9cdfea6c-ca0e-11de-a5b5-00144feabdc0.html?nclick_check=1

 

Wow that's nuts.

 

Out of control.

 

Here's the rest of the article for those of you who don't want to register/login:

UBS staff speculated on client accounts

By Brooke Masters in London

Published: November 5 2009 14:13 | Last updated: November 5 2009 21:01

UBS has been hit with the third-biggest fine levied by the UK financial watchdog after senior employees were discovered using money taken from customer accounts to speculate in foreign currencies and commodities.

An internal investigation launched by the Swiss Bank after an employee blew the whistle on the practice found a desk head and three other employees in the international wealth management business had been placing up to 50 unauthorised trades a day in 2006 and 2007.
EDITOR’S CHOICE
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FSA statement - Nov-05

According to a notice from the UK’s Financial Services Authority, the employees exploited loose reporting controls to allocate their losses to customer accounts, repeatedly moving money around to hide their activities. Their trades lost clients nearly £26m (€29m) over two years.

UBS was fined £8m and paid restitution of the losses to 39 customers. The employees involved no longer work at the firm.

Steven Francis, law partner at Reynolds Porter Chamberlain, said the case served as a “what not to do manual for a compliance department ... This is a truly massive fine”.

The FSA said the UBS traders took advantage of rules that allowed the international desk to wait up to 24 hours before specifying which account number they were trading for.

The employees were able to consolidate groups of trades into a single trade with an average price, hiding the number of trades and true prices, and also cancel transactions already been booked to one account and rebook book them to another.

The Swiss bank said in a statement that it “deeply regrets this incident”, had co-operated with the FSA and was pleased that the matter had been settled. UBS qualified for a partial early settlement discount on its fine of 20 per cent.

The fine comes at a difficult time for UBS, which is haemorrhaging client funds from its private banking division and had to pay US authorities $780m to settle a criminal tax case and hand over the names of more than 4,500 clients.

Margaret Cole, FSA director of enforcement and financial crime, said the big fine was part of the FSA’s effort to provide “credible deterrence”.

The FSA would not comment on the employees’ status and the final notice did not say whether they personally profited from the trading.

 

LOL

They are such assholes!

There's no limit with these people ... they don't know when, or where, to STOP.

 

There was a typo in the article posting. I inserted the missing words

 

too true..