Just one day after UBS said that a rogue trader had caused the firm about $2 billion in losses, new details are emerging about the man who allegedly caused the Swiss banking giant to take a massive financial hit.
British media reports have identified the trader as Kweku Adoboli, a 31-year old Ghanaian who was living in London and may have worked in the bank’s European equities unit. Adoboli is slated to appear in a British court on Friday on charges of fraud.
In an interesting twist, the BBC is reporting that UBS’s internal monitoring system did not detect the error. Instead, the BBC says, UBS executives were alerted of the trade by Adoboli himself.
Even if it does not turn out that Adoboli was the whistleblower, the fact that UBS’s own monitoring system may not have caught this renegade transaction presents interesting questions. As the BBC’s Robert Peston said, it could “add to concerns that investment banks simply aren't capable of controlling the huge risks that their traders take."
The BBC’s report says that regulators in London are now investigating why UBS failed to notice the trade.
The financial loss could have serious consequences for the Swiss bank. Moody’s says it is considering downgrading UBS’s credit rating due to concerns about its ability to manage risk in wake of the scandal. Also, Agence France-Presse reported that the $2 billion loss could possibly prompt job cuts or a downsizing of its investment banking unit.