Unauthorized trading incident

On 15 September 2011, UBS announced that it had discovered unauthorized trading by a trader in its Investment Bank in London, which could cause UBS to report a loss for the third quarter of 2011. In a follow-up announcement on 18 September 2011, UBS gave more details and background on the incident. The trader took unauthorized, speculative positions concealed by the booking of fictitious, offsetting trades, so the violation of UBS's risks limits could not be detected. The loss resulting from the incident is USD 2.3 billion.

2012-11-26 - Regulators publish reports into UBS trading loss, UBS fined GBP 29.7 million

Today FINMA, UBS's Swiss regulator, and the FSA, UBS's UK regulator, announced the findings of their investigations into the unauthorized trading incident of September 2011. They also announced the actions they have taken, and the FSA imposed a fine of GBP 29.7 million on UBS. Copies of the FINMA and FSA press releases and reports can be found on the links below.

UBS's position

Since the outset of this matter we have fully co-operated with the regulators' investigations and we now accept their findings and the penalties incurred.

We are pleased that this chapter has been concluded and that the regulators have acknowledged the steps UBS has taken since this incident.

UBS has taken extensive remedial action:

  • In May this year we confirmed the material weakness in control over financial reporting had been fixed
  • We took appropriate disciplinary action against staff who did not uphold the high standards we expect and we are actively reinforcing a stronger risk control culture across the firmStaff are being retrained on the importance of risk management and the right behaviors, and we have changed the way employees are evaluated and therefore compensated
  • We have made substantial progress over the past year, reinforcing our position as one of the most financially sound global banks
  • We have also announced bold and decisive steps to accelerate the execution of our strategy which will make us less complex, more predictable and fit for the future

2012-11-20 - Unauthorized trading incident trial: The verdict

2012-11-20 - Unauthorized trading incident trial: The verdict

Today the trial in connection with the unauthorized trading incident concluded. The defendant was found guilty on two counts of fraud and not guilty on four counts of false accounting. He has been sentenced to 7 years in prison.

UBS's position

We are glad that the criminal proceedings have reached a conclusion and thank the police and the UK authorities for their professional handling of this case. We have no further comment.

2012-10-26 - Defence case has started

The Prosecution has now concluded their case against Mr Adoboli. Although previously charged with two counts of fraud by abuse of position and two counts of false accounting, two further counts of false accounting have now been added and the two existing counts of false accounting have been amended. The Prosecution have stated in court that their case remains the same. The additions and amendments to the indictment were made to clarify the different types of fictitious transactions Mr Adoboli is alleged to have used. The Defence did not object to the additions and amendments. The defendant has pleaded not guilty to the additional counts. The Defence case has now begun and Mr Adoboli is expected to give evidence on his own behalf over several days.

UBS's position

The UK criminal process is ongoing and will run its course. In the meantime UBS remains completely focussed on our clients and on continuing to deliver on our strategy. UBS is not a party to the case and therefore has no further comment.

2012-09-10 - Trial to commence on Friday 14 September 2012

Today the trial relating to the unauthorized trading incident was due to begin at Southwark Crown Court in London. Upon the application of the Defence, the Prosecution's opening statement will now be heard on Friday 14 September 2012 at 10am (BST).
Further case management issues will continue to be dealt with this week.

UBS's position

The UK criminal process is ongoing and will run its course. In the meantime, UBS remains completely focused on our clients and on continuing to deliver on our strategy. UBS is not a party to the case and therefore has no further comment.

2012-07-20 - Unauthorized trading incident court hearing

A further case management hearing took place at Southwark Crown Court in London, relating to the unauthorized trading incident. At this hearing, the start date of the trial was moved one week to 10 September 2012. Previously the trial had been due to start in London on 3 September 2012. The judge explained that this was necessary in order to ensure adequate preparation time.

UBS’s position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS will not be commenting.

2012-06-08 - Unauthorized trading incident court hearing - bail granted

A case management hearing did take place at Southwark Crown Court in London, relating to the unauthorized trading incident. At this hearing the defendant, Kweku Adoboli, requested and was granted bail.

UBS's position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS will not be commenting.

2012-05-02 - Update on internal control over financial reporting

Source: First Quarter 2012 Report - page 69 - English only

2012-04-18 - Case management hearing took place

A case management hearing related to the unauthorized trading incident took place in London. This was an administrative hearing. The next case management hearing will take place in early June.

UBS's position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS will not be commenting.

2012-02-03 - FINMA and FSA open enforcement proceedings

FINMA and FSA informed us about their decision to open enforcement proceedings against UBS in relation to the unauthorized trading incident in its Investment Bank. This decision is in line with our expectations and reflects a normal step in the context of such matters.

UBS's position

  • As a normal and anticipated step FINMA and FSA have informed us about their decision to commence enforcement proceedings against UBS in relation to the unauthorized trading activities in its Investment Bank. We will continue to fully cooperate with our regulators.
  • Immediately after the unauthorized trading incident, the Group Executive Board (GEB) thoroughly investigated the incident and implemented measures to better protect our firm from unauthorized activities.
  • Our ability to disclose further details relating to the unauthorized trading incident and the measures we are taking is limited by the fact that regulatory investigations and criminal proceedings are ongoing. This does not prevent us from taking further decisive action to improve our operational risk controls.

2012-01-30 - Plea and case management hearing at Southwark Crown Court - Defendant pleads not guilty

A plea and case management hearing (PCMH) relating to the unauthorized trading incident took place in London. The defendant, Kweku Adoboli, a former UBS Equities trader pleaded not guilty to two counts of false accounting and two counts of fraud by dishonest abuse of position.  The case will now proceed to a trial and a date of 3 September 2012 was set by the judge.

UBS's position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS will not be commenting.

2011-12-20 - Plea and case management hearing at Southwark Crown Court

A second plea and case management hearing (PCMH) relating to the unauthorized trading incident took place at Southwark Crown Court. This was a procedural hearing. On the application of the defence, the hearing has been adjourned to 30 January 2012.

UBS's position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS will not be commenting

2011-11-21 - Plea and case management hearing at Southwark Crown Court

A plea and case management hearing (PCMH) relating to the unauthorized trading incident took place at Southwark Crown Court. This was a procedural hearing. On the application of the defence, the hearing has been adjourned to 20th December 2011.

UBS's position

With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS  will not be commenting.

2011-10-25 - UBS submits Form 6-K to the SEC

As a US-listed company, UBS is required under the Sarbanes-Oxley Act to evaluate the effectiveness of its "internal control over financial reporting" and "disclosure controls and procedures" on an annual basis.  Following the discovery of the unauthorized trading activities, management has determined that these controls were not effective on December 31, 2010.  In a document submitted to the US Securities and Exchange Commission (SEC), we have indentified two control deficiencies:

2011-10-20 - Procedural hearing at the City of London Magistrates' Court

A hearing took place at the City of London Magistrates' Court regarding the unauthorized trading incident. This was a procedural hearing to determine if the case would be committed to Crown Court rather than a Magistrates' Court. The case was committed to Crown Court for trial and adjourned until 22 November 2011.

UBS's position

  • The court hearing was a procedural hearing to determine if the case will be committed to the Crown Court for trial rather than a Magistrates' Court.
  • With active criminal proceedings, English criminal law limits what we can say about this incident, therefore UBS is unable to comment.