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November 6, 2009

UBS fined £8m for unauthorised trades

by Gill Montia

Story link: UBS fined £8m for unauthorised trades

The Financial Services Authority (FSA) has fined UBS £8 million for systems and controls failures that were initially exposed by a whistleblower.

Failures by the Swiss-headquartered investment bank enabled four employees to carry out unauthorised trades involving customer money on at least 39 accounts.

Activities involved trading foreign exchange and precious metals using customer money and allocating losses to customers’ accounts.

An internal UBS investigation estimated that as many as 50 unauthorised transactions a day were taking place at the operation’s peak.

The events took place between January 2006 and December 2007 at UBS’s London-based wealth management business and the bank has since paid compensation of over $42 million to customers.

The regulator’s director of enforcement and financial crime, Margaret Cole, comments: “It is imperative, particularly in these more challenging financial conditions, that firms have suitable systems and controls in place to keep their houses in order.”

She adds: “Where firms fall short in this regard, the consequences will be severe.”

The £8 million fine is the third-largest ever imposed by the FSA.

 

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