London, United Kingdom (4E) – Swiss bank UBS was fined with £29.7m ($47.6m) by the Financial Services Authority (FSA) for letting former trader Kweku Adoboli lose the company more than $2bn.
In a statement released on Monday, the FSA cited the bank’s weak systems and controls as reason that allowed Adoboli to rack up $2.3bn of losses.
The investigation, which was conducted by the FSA and Swiss regulator Finma, revealed serious weaknesses in UBS.
Failings in UBS’s systems and controls exposed serious weaknesses in the bank’s procedures, internal controls and management systems, according to the FSA.
Tracey McDermott, director of FSA’s enforcement and financial crime, blamed the firm’s defective controls for the significant trading loss which is now the biggest in UK’s history.
Because UBS decided to settle early with regulators, the fine was lowered from £42.4m although it had been speculated to reach as high as £50m.
Since the losses were discovered, UBS took several changes including fixes in its financial reporting.
Last week, Adoboli was convicted of two counts of fraud and received a seven-year prison sentence.
The trader was accused of undertaking unauthorized trades that exceeded risk limits. Adoboli kept his exposure using fictitious hedges and hid his earnings so that he could transfer them into his official accounts.