UBS has revealed how the alleged rogue trader managed to rack up losses of $2.3bn.
Following the arrest of alleged rogue trader Kweku Adoboli, UBS has issued further details on the losses incurred by the rogue trader. The loses are slightly higher than initially reported at $2.3bn or £1.45bn.
Moreover, the bank confirmed that the unauthorized trading took place over the past three months. The rogue trader speculated across the EuroStoxx, DAX and S&P 500 indexes. Moreover, it has revealed how the unauthorized trades managed to bypass internal systems following fictitious trades:
“The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio. 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.”
The Swiss bank claims that as a result of inquiries directed to him by their control functions, the trader admitted to his unauthorized activities.
