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UBS: Our Risk Systems Did Detect $2bn Rogue Trader 151

Posted by timothy
from the meant-to-do-that-says-pee-wee dept.
A few weeks ago, UBS employee Kweku Adoboli (universally described as a "rogue trader") ran up a $2 billion loss for his employer; many readers wondered how it is the systems which allow trades to happen at all aren't better tuned to catch such massive cash flows without triggering alerts. Now, reader DMandPenfold submits a report from Computerworld UK in which the bank claims that such triggers were in place — they were simply not acted on. From the article: "UBS has insisted its IT systems did detect unusual and unauthorised trading activity, Interim chief executive Sergio Ermotti, who is running the company following Oswald Grubel's resignation last month, sent a memo to employees saying the bank is aware that its systems did detect the rogue activity. In the memo, Ermotti wrote: 'Our internal investigation indicates that risk and operational systems did detect unauthorised or unexplained activity but this was not sufficiently investigated nor was appropriate action taken to ensure existing controls were enforced.'"
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UBS: Our Risk Systems Did Detect $2bn Rogue Trader

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  • by quarterbuck (1268694) on Thursday October 06, 2011 @03:04PM (#37630144)
    Nick Leeson did not work in IT according to his biography [nickleeson.com] or according to Wiki.
    He used an error account, which he realized was unaudited, but that is something you pick up from being a trader or an auditor- not necessarily IT. These things are common in investment banks/brokerages which have a lot of accounts and client trades and errors need to be isolated in an account that does not belong to a client. ie. if a client asked to buy 100 pork belly contracts and you bought him lean hogs instead, you need a place to dump the pork bellies you bought. It does not mean a "test account" in the IT sense.
  • by TheLink (130905) on Thursday October 06, 2011 @03:06PM (#37630186) Journal
    The other explanation is they were hoping the trader would make money, in which case everyone would share the profits etc.

    He lost money so he's a rogue trader.
  • Re:Called it (Score:4, Informative)

    by Wansu (846) on Thursday October 06, 2011 @03:18PM (#37630364)

      Those protesters on Wall Street have a point, everyone gets hurt when the bank CEOs screw up, but those most responsible.

    Herman Cain says it's the protester's faults if they don't have job. After all, this is 2011 and what the bankers did was in 2008.

  • Re:Called it (Score:4, Informative)

    by Doc Ruby (173196) on Thursday October 06, 2011 @04:53PM (#37631890) Homepage Journal

    Actually, what Cain said yesterday [nydailynews.com] was "Don't blame Wall Street, don't blame the big banks, if you don't have a job and you're not rich, blame yourself."

    While it's arguable that not having a job is a person's own fault (a losing argument with the economy, but arguable), saying it's the fault of everyone not rich that they're not rich isn't just insane. It's the kind of institutional insanity that is driving the country into nothing but the madhouse, with a corporatocracy of Cains at the wheel.

The universe does not have laws -- it has habits, and habits can be broken.

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