Dear colleagues,

In my message to you last week, I said I would keep you updated about the recent unauthorized trading incident.

Criminal law prevents us from disclosing detailed information at the moment and it is also right that we wait for the findings of the independent investigation commissioned by the Board of Directors and the external investigation conducted on behalf of our regulators. However, this does not prevent us from taking immediate and decisive action based on the findings of our own review of what happened.

We know that a trader in UBS's Global Synthetic Equity business in London conducted unauthorized trading activity. This trader has been charged with fraud by abuse of position by the UK authorities. We also know that this happened in a period of extreme market volatility which exacerbated the losses. However, these are just facts, they are no excuse for a loss of such magnitude.

We have to be straight with ourselves. In no circumstances should something like this ever occur. The fact that it did is evidence of a failure to exercise appropriate controls. Our internal investigation indicates that risk and operational systems did detect unauthorized or unexplained activity but this was not sufficiently investigated nor was appropriate action taken to ensure existing controls were enforced.

This is simply not acceptable. We all have signed our Code of Business Conduct & Ethics, we all know what is expected of us and we know what the consequences of failing to abide by this Code are. UBS will not tolerate any misconduct that damages the bank's reputation. This is what we owe the vast majority of you who diligently uphold our principles and values and it is the only way to build a strong culture with our values uncompromisingly at the core.

Today we have accepted the resignations of the co-heads of Global Equities. Firm disciplinary action will be taken against further individuals in Equities and across other responsible functions. We have also taken specific steps to address the failures identified.

The Group Executive Board and the Board of Directors are providing their full support to the ongoing independent investigations. I am committed to keeping you as informed as I can given the circumstances.

I will personally make sure that we address any institutional failures that are revealed by these reviews quickly and decisively. Thank you for the resilience and fortitude you have displayed in recent weeks.

Sincerely,
Sergio Ermotti