Unauthorized trade costs UBS $2 billion, shares tumble

Unauthorized trade costs UBS $2 billion, shares tumble

2011-09-15 15:23:42 GMT+7 (ICT)

ZURICH (BNO NEWS) -- Swiss bank UBS on Thursday confirmed a loss of more than $2 billion due to unauthorized trading, causing the bank's shares to briefly plunge more than eight percent.

UBS said in a brief statement that it discovered a loss due to unauthorized trading by a trader in its Investment Bank, but gave no other details. "The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of USD 2 billion," the statement said.

The bank said no client positions were affected by the unauthorized trading but warned the loss of more than $2 billion could lead UBS to report a loss for the third quarter of 2011. The dramatic news, announced moments before European markets opened, caused UBS stocks to fall more than eight percent before they slightly recovered.

UBS, which is headquartered in Switzerland, provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland. It operates in more than 40 countries and is considered to be the world's second largest manager of private wealth assets.

Thursday's news reminded of other rogue trading incidents, including the case of French trader Jérôme Kerviel who was blamed for a loss of approximately 4.9 billion euros ($6.7 billion) at bank Société Générale in January 2008.

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