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  #101  
Old 19.09.2011, 10:07
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Re: UBS loses US$2bn in rogue trading

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Yet as these did not lose UBS any money, the bank's special committee will not investigate them.

Says all you need to know, doesn't it? Parasites.

A plague a' all your houses.
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  #102  
Old 19.09.2011, 10:08
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Re: UBS loses US$2bn in rogue trading

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The trader wept in the dock of City of London magistrates court on Friday as he was charged over offences dating back to 2008. Yet as these did not lose UBS any money, the bank's special committee will not investigate them.

how blatent is that - turn a blind eye to fraud when it's in your favour...
The trader made a profit at the expense of the client, the clients of the Alpha desk are pro's they should be able to decide if it's a good trade or not.
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  #103  
Old 19.09.2011, 11:12
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Re: UBS loses US$2bn in rogue trading

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The trader made a profit at the expense of the client, the clients of the Alpha desk are pro's they should be able to decide if it's a good trade or not.
No, we're not talking about sharp practice, or good trading. We're talking about fraud.
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  #104  
Old 19.09.2011, 12:53
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Re: UBS loses US$2bn in rogue trading

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No, we're not talking about sharp practice, or good trading. We're talking about fraud.
The trader was up, not the bank.
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  #105  
Old 19.09.2011, 13:10
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Re: UBS loses US$2bn in rogue trading

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The trader was up, not the bank.
Yes, and the bank said it was not interested in investigating internally because the bank did not incur a loss.

Or in plain English: "Good morning, Mr. Hughes. Your mission John, should you decide to accept it, is to generate maximum profit for UBS, irrespective of legal or regulatory constraints. As always, should you or any of your team be caught or killed, the CEO will disavow any knowledge of your actions. This message will self-destruct in five seconds. Good luck, John."
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  #106  
Old 19.09.2011, 13:46
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Re: UBS loses US$2bn in rogue trading

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In order for it to have been a consistent trading error he must have screwed up hedges for 3 years without the middle office or his MD figuring it out. That to me sounds unlikely or improbable. Especially when most of the hedging that goes on in simple swap/ETF trades is all automated at this point.
His boss isnt (wasn't) an MD.
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  #107  
Old 19.09.2011, 13:50
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Re: UBS loses US$2bn in rogue trading

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His boss isnt (wasn't) an MD.
and that is relevant because....??
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  #108  
Old 19.09.2011, 14:34
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Re: UBS loses US$2bn in rogue trading

the point is a lot of people are making statements like "Middle office, MD, etc" should have noticed, or whatever.

They don't speak from knowledge and they don't know what was done to beat the systems - or if there even was an MD on the desk.
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  #109  
Old 19.09.2011, 15:31
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Re: UBS loses US$2bn in rogue trading

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the point is a lot of people are making statements like "Middle office, MD, etc" should have noticed, or whatever.

They don't speak from knowledge and they don't know what was done to beat the systems - or if there even was an MD on the desk.
It is obvious that they had insufficient, or non-existent risk management systems and processes in place.
Whether the person was a VP or an MD or a Batman is rather irrelevant to my mind...

What is interesting, and rather relevant, is that the chief risk officer Maureen Miskovic was formerly head of risk at Lehman Brothers...

Seriously, who would've thunk eh?
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  #110  
Old 19.09.2011, 17:17
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Re: UBS loses US$2bn in rogue trading

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The trader wept in the dock of City of London magistrates court on Friday as he was charged over offences dating back to 2008. Yet as these did not lose UBS any money, the bank's special committee will not investigate them.

how blatent is that - turn a blind eye to fraud when it's in your favour...
I thought UBS announced "no clients lost money" so if UBS also lost no money then who did?
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  #111  
Old 19.09.2011, 17:19
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Re: UBS loses US$2bn in rogue trading

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I thought UBS announced "no clients lost money" so if UBS also lost no money then who did?
I think that was referring to the offences in 08. the big money got evaporated in the last three months suggesting it was down to the Chf move
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  #112  
Old 19.09.2011, 17:46
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Re: UBS loses US$2bn in rogue trading

Dino is right. If the press reports are correct and the guy was entering fictitious trades, then UBS could not have received a confirm from a bona fide counterparty. Doesn't matter if the trades were forward settling. They should have received a confirm on trade date (or shortly thereafter). The settlement date is irrelevant to when a confirm is issued.

Now, I have to say, some professional counterparties don't issue written confirms to other professional counterparties (I won't bore you with why) so in theory, fictitious trades with them could go undetected. Actually no. There an easy fix for this. It's called exception reporting.

Risk managers should receive a daily exception report detailing any trades not independently confirmed in writing by an alleged counterparty. Someone in the trader's back office should then be detailed to telephone the alleged counterparty's back office to at least verify they had knowledge of the trade and that the basic commercial terms reconciled back to what had been put into the risk systems by the trader.
Note - this is not done by the trader. This is done by the back office as part of separation of duties.
Any trades not acknowledge by this procedure should ring alarm bells with risk managers and senior management and be immediately investigated.

The responsibilty for making sure adequate risk management procedures are in place rests with top management not the trading desk.
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  #113  
Old 19.09.2011, 17:48
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Re: UBS loses US$2bn in rogue trading

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I think that was referring to the offences in 08. the big money got evaporated in the last three months suggesting it was down to the Chf move
I doubt it was down to the CHF. $2.3 billion is a huge loss. You only get losses like that when you're using leverage, like punting futures.
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  #114  
Old 19.09.2011, 18:14
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Re: UBS loses US$2bn in rogue trading

I'm curious about his exact position and so far what we read in the press doesn't add up.
On sep6, the CHF (against EUR or USD same thing) moved 9%. He lost $2.3bn, so that's a notional at risk of $25.5bn. Since his job was to trade or hedge on equity indices, he must have played with the most liquid, the EuroStoxx50. But €19bn represents 900000 contracts, that's a full day of trading all by himself, and something that doesn't stay unnoticed for long, even by counterparties.
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  #115  
Old 19.09.2011, 18:25
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Re: UBS loses US$2bn in rogue trading

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But €19bn represents 900000 contracts, that's a full day of trading all by himself, and something that doesn't stay unnoticed for long, even by counterparties.
Not one index. Not one day.
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  #116  
Old 19.09.2011, 18:34
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Re: UBS loses US$2bn in rogue trading

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The trader wept in the dock of City of London magistrates court on Friday as he was charged over offences dating back to 2008. Yet as these did not lose UBS any money, the bank's special committee will not investigate them.

how blatent is that - turn a blind eye to fraud when it's in your favour...
Technically, UBS (and the regulator) should be investigating every single lapse, irrespective of when it occurred, and irrespective of whether UBS lost money due to the event.

But of course, acknowledging such lapses from way back in 2008 would mean having to admit that internal auditors and external auditors and the Board were all asleep at the wheel... Concealing intra-day trades is one thing. Carrying fiction across the annual closing of books takes serious magic. or incompetence. or both ...
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  #117  
Old 19.09.2011, 18:42
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Re: UBS loses US$2bn in rogue trading

Can someone please try to overlay this with the usual Youtube spoof vid (Hitler in "The Downfall")?

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Dear colleagues,
I wanted to update you as soon as I could on the events of last week and assure you that we are already making progress on dealing with the consequences.
First, let me thank everyone across UBS for remaining fully engaged in serving clients, supporting colleagues and executing effectively, despite the emotion we have felt in recent days. We all share a sense of anger and frustration. This is understandable, but I am determined not to let this incident undermine our hard won achievements since the crisis. We now need to unite in our determination to move forward forcefully and decisively. I am proud of how constructive and focused everyone in the Investment Bank has been since Wednesday and I am confident that we will turn adversity into strength as we move forward.
You will have seen the press release sent out today which states the facts as they are currently known. Due to the swift and effective actions of the relevant teams we are no longer at financial risk from the wrongdoing, we know the extent of the financial damage and we are fully engaged in the process of resolving all outstanding issues in a careful and considered way. We are working closely with the police and our regulators to assist them in their investigations.
I want to assure you that we are doing everything in our power to address the frameworks, practices and procedures that should have worked better and strengthen their enforcement, where appropriate. It is very difficult to build and maintain a system which protects us effectively against every possible likelihood of attack, but we will not rest until we have controls that are as watertight as possible. Continued vigilance will be key to ensuring we avoid future failures. Do not hesitate to escalate if you have even the slightest concern at any time.
We are undertaking this work diligently and professionally, without conjecture or finger-pointing. We will deal appropriately with those individuals who were responsible for significant operational and management supervision lapses, and then we must move on.
Now is the time for everyone across the Investment Bank to demonstrate to clients, shareholders, regulators and other stakeholders that we are not going to let a single calculated act of deception deflect us from achieving our long-term strategic goals. UBS is financially strong and one of the best-capitalised banks in the world. The Investment Bank has outstanding people and a large number of profitable and successful businesses. Our fundamental strategy remains in place. Clients are inundating us with messages of support, and placing new business with us, showing how much they want us to succeed. Over the weekend our partners in other divisions have confirmed that they cannot achieve their ambitious goals without a healthy and vibrant investment bank alongside, co-operating at every level.
The key to repairing the financial damage to the firm, as well as to our shareholders, is to deliver excellent ongoing performance from each desk and each team, starting today. A very strong fourth quarter is the best way to demonstrate to all that we are bigger than the acts of one misguided individual. We must reach out to clients, be determined in asking for business, this year and into 2012. We must channel the emotion and disappointment felt by everyone across the firm into re-energised interaction with clients, counter-parties and each other.
Do not be distracted by the often ill-informed media commentary around this event. It will fade quickly as the facts become known. Focus on the job at hand, delivering for our clients thoughtfully and proactively. You can all make a difference by acting with resolve, creativity and energy, executing to the highest standards and working hard to restore our momentum.
I am fully committed to working closely with you, as are all senior managers. We will meet with any client you ask us to and we will be relentless in repairing the damage to our reputation. Together, let’s show the world that we are united as a firm, determined to overcome this setback and emerge even stronger.
Thank you for all your hard work, vigilance and continuing commitment to our future success.
Carsten
As far as I'm concerned the whole issue of the "forward settlement of cash ETFs" is ridiculous.
Where was the back office?
What about the confos from the various counterparties?
What role did cost-cutting have with risk management? I have a picture of a bunch if guys trying to keep tabs of thousands of positions in markets that have been "volatile" to say the least.... Perfect recipe for the perfect storm...
I dunno.
There is also the big question of the huge amounts of fail-to-settle deals in index ETFs (FT.com has talked about this ad nauseam over the past years) ... is there some kind of coincidence with the wrongdoings @ UBS?

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  #118  
Old 19.09.2011, 18:45
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Re: UBS loses US$2bn in rogue trading

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I thought UBS announced "no clients lost money" so if UBS also lost no money then who did?
They may even have *made* money at a point - which is what the business is about.
Rogue traders (Matt Taibbi docet) are such only when the house of cards falls down

P.
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Old 20.09.2011, 16:48
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Re: UBS loses US$2bn in rogue trading

UBS' risk managment & compliance team returns to work ...
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  #120  
Old 20.09.2011, 17:33
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Re: UBS loses US$2bn in rogue trading

It is too derogatory for the characters shown in the picture. They look innocent

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UBS' risk managment & compliance team returns to work ...
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