Jill Treanor and Graeme Wearden
September 15, 2011
A 31-year old man – Kweku Adoboli – has been arrested by City of London Police on suspicion of fraud in connection with an alleged rogue trading incident that has cost Swiss bank UBS around $2bn (£1.3bn).
The Zurich-based bank uncovered the incident in the last 24 hours and it suffered a near 10% fall in share price in early trading after it revealed the loss could push the bank into the red for the current financial quarter.
The City of London Police confirmed they had arrested a 31-year old man at 3.30am in central London on “suspicion of fraud by abuse of position”. The police did not identify the individual who remains in police custody, but sources say he is Adoboli. The force has begun an investigation.
The Financial Services Authority, the City regulator, is understood to have been informed. People wanting to work in the City often need to be registered with the FSA and Abodoli’s entry shows he has been on the FSA’s register since 2006 at UBS.
The bank would not comment but Adoboli is understood to work in the bank’s equity division and was involved in a trading desk called delta one that was involved in its exchange traded funds (ETF) business. ETFs are complex financial instruments and comprise a basket of investments intended to mimic a market’s movements.
In a brief statement, UBS said it was still trying to get to the bottom of the matter, which was announced on the third anniversary of the collapse of Lehman Brothers.
“UBS has discovered a loss due to unauthorised trading by a trader in its investment bank. The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2bn.