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.

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

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.

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.

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.

A second plea and case management hearing 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

A plea and case management hearing 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.

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:

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.