Rogue Trading

“UBS said a trader had lost about $2 billion (£1.3 billion) in unauthorised dealing and warned it might post a loss in the third quarter, a huge blow as the Swiss bank struggles to rebuild its credibility after years of crises.

UBS said the person behind the unauthorised trades had been detained in London, where police said they had arrested a 31-year-old man on suspicion of fraud. Swiss newspaper NZZ cited UBS as saying the trader worked in its London equities division.

The loss threatens the future of UBS's investment bank, which is being reviewed by Chief Executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich U.S. clients dodge taxes.

UBS said it was possible that the trading loss could cause an overall loss in the third quarter of this year. It also said that no client positions were affected.

"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a brief statement.

In an internal email the bank said the unauthorised trade was "distressing" and it would "spare no effort" to find out what happened.

UBS employed almost 18,000 people in its investment bank at the end of June, most of them based outside Switzerland, particularly in London and the United States.

"(This) is a staggering demonstration that all the clever systems that the banks now have, especially after the financial crisis, still cannot stop a determined individual getting round them if they want to," said Chris Roebuck, Visiting Professor at Cass Business School in London.

"It will yet again confirm to the majority of shareholders who are Swiss that investment banking is not 'proper' banking, as private banking is."

UBS said last month it was to axe 3,500 jobs to shave 2 billion Swiss francs ($2.3 billion) off annual costs as it joins rivals in reversing a post-crisis hiring binge and preparing for a tough few years.”

Edited and adapted from Reuters here.

So one does wonder if this 'rogue' trade had been successful and netted the trader and the bank $2b in profit whether this story would have made the news at all? The uncomfortable truth is that within capitalism all trading such is this is rogue as all the profits are ultimately stolen from the unpaid labour of the working classes. City high-flyers taking massive gambles based on rumours and spurious 'market analisys' only further highlight the silliness of such a system for governing the world's needs.

It is also interesting to note in the above story that this massive loss 'might' cause a third quarter loss. That means only in 1/4 of this years trading there is a risk that one bank may suffer a loss, despite the money being traded amounting to the £billions. Yet the capitalist media and the Government are constantly arguing there is no money left and we are all 'in it together'. We certainly are not in it 'together' as this shows. A small minority have never been 'in it' and never will all the while capitalism survives.

SussexSocialist