What Rogue Trader?
It seems almost quaint.
Former UBS trader Kweku Adoboli was arrested last September for allegedly losing $2.3 billion due to unauthorized trading.
The London based “rogue trader” was one of the first high profile Wall Street scandals to hit after the financial crisis.
At the time it was a significant embarrassment to UBS concerning their lack of supervision, risk management and controls.
Financially, the firm took a $2 billion plus hit due to the losses emanating from the trading activities.
“Given how serious the consequences of the incident were, we must assume that UBS’s culture and practices will be examined during the course of the trial,” said UBS chief executive Sergio Ermotti. Mr. Ermotti added that “As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously.”
The frightening thing is that this matter has largely been forgotten due to a rash of other recent scandals. Within the last six months we have witnessed the LIBOR scandal, Facebook IPO debacle, Knight Securities algorithmic trading blow-up, BATS IPO derailment, Peregrine Ponzi scheme, HSBC and Standard Chartered Bank’s anti-money laundering transgressions, and JP Morgan’s London Whale derivatives disaster just to name a few.
It is painfully obvious at this point that Wall Street needs better and tighter regulations along with the budgetary support of the regulatory agencies. Four years have past since the financial crisis and Dodd Frank Act is still not in full effect.
Today, Republican Presidential candidate Mitt Romney rails against Dodd Frank and threatens to derail some all of its requirements. President Obama has been more interested in health care reform and getting re-elected than financial reform.
When a $2 billion trading loss incurred by a relatively low level trader via numerous trades conducted over an extensive period of time and undected by management and regulators is nearly forgotten due to a deluge of other gross misconduct we know it is time for a change.