19.9.2011
By Simon Miller
UBS has admitted that it has lost $2.3bn (£1.46bn) in the unathorised trades conducted by its trader Kweku Adoboli last week.
The upwardly revised figure was released in a statement on Sunday was $0.3bn more than originally thought and came from unauthorised speculation in various S&P 500, DAX and EuroStoxx index futures over the last three months.
The losses originally were suspected to have come from speculation on the Swiss Franc but UBS said that the positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio.
UBS added: "However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions, allegedly executed by the trader. These fictitious trades concealed the fact that the index futures trades violated UBS's risk limits."
Adoboli was charged with fraud by abuse of position by police in London on Friday and UBS's board of directors has set up a special committee to conduct an independent investigation of the unauthorised trading activities and their relation to the control environment. The committee will be chaired by David Sidwell, the senior independent director, and will report to the board of directors. The other members of the committee are Ann Godbehere and Joseph Yam.
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