LONDON--The U.K. Financial Services Authority, or FSA, said
Monday it has fined UBS AG (UBS) 29.7 million pounds for systems
and controls failings that allowed an employee to cause substantial
losses totaling 2.3 billion dollars as a result of unauthorized
trading.
MAIN FACTS:
-Trader, Kweku Adoboli, has been convicted of two counts of
fraud by abuse of position and sentenced to seven years'
imprisonment.
-Systems and controls failings revealed serious weaknesses in
the firm's procedures, management systems and internal
controls.
-FSA believes UBS failed to take reasonable care to organize and
control its affairs responsibly and effectively, with adequate risk
management systems and failed to conduct its business from the
London Branch with due skill, care and diligence.
-UBS agreed to settle at an early stage and therefore qualified
for a 30% discount under the FSA's executive settlement procedures;
Were it not for this discount, the fine would have been GBP42.4
million.
-UBS agreed to engage an independent firm to conduct a
substantive investigation into the unauthorized trading incident,
expending considerable resources--GBP16 million to date--in doing
so.
-UBS's new senior management has committed significant resources
to undertake an extensive program of remediation.
-UBS has taken disciplinary action against employees who were
involved in the events which gave rise to these breaches, including
clawing back bonuses and withholding 50% of their deferred
compensation from relevant individuals totaling more than GBP34
million.
-FSA conducted its investigation in coordination with the Swiss
Financial Market Supervisory Authority, FINMA, which has also made
its findings public.
-FINMA has also taken action against UBS in relation to the
breach which is the subject of this Notice and UBS has undertaken
to comply with the separate requirements imposed on it by
FINMA.
-Write to Ian Walker at ian.walker@dowjones.com
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