Quantcast

UBS discovered $2B in unauthorized trade - Live5News.com | Charleston, SC | News, Weather, Sports

UBS discovered $2B in unauthorized trade

Posted: Updated:
UBS shares were down about 8.5 percent about five hours after the $2 billion loss was announced. (Source: CNN) UBS shares were down about 8.5 percent about five hours after the $2 billion loss was announced. (Source: CNN)
  • InternationalMore>>

  • Moscow: Ukraine talks must back cease-fire now

    Moscow: Ukraine talks must back cease-fire now

    Monday, September 1 2014 7:21 AM EDT2014-09-01 11:21:32 GMT
    With a new round of talks on easing the crisis in Ukraine about to start, Russian Foreign Minister Sergey Lavrov has called on the participants to push for a cease-fire between Ukrainian government troops and...More >>
    Diplomats at a new round of talks on easing the crisis in Ukraine must push for an immediate, unconditional cease-fire between Ukrainian government troops and pro-Russian separatists, Russia's foreign minister said...More >>
  • China anti-dissent playbook may fail in Hong Kong

    China anti-dissent playbook may fail in Hong Kong

    Monday, September 1 2014 7:11 AM EDT2014-09-01 11:11:19 GMT
    China's Communist leaders have pulled out their usual playbook to suppress resistance to their plans to tightly limit the first direct election of Hong Kong's leader, but are likely to find that the results...More >>
    China's Communist leaders have pulled out their usual playbook to suppress resistance to their plans to tightly limit the first direct election of Hong Kong's leader, but are likely to find that the results are...More >>
  • UN diplomats examine Islamic State alleged crimes

    UN diplomats examine Islamic State alleged crimes

    Monday, September 1 2014 7:00 AM EDT2014-09-01 11:00:39 GMT
    The U.N.'s top human rights body is being asked to investigate the alleged crimes against civilians committed by the Islamic State group in its rampage across northeastern Syria and northern and western Iraq.More >>
    Iraq's government asked the U.N.'s top human rights body Monday to investigate alleged crimes against civilians committed by the Islamic State group in its rampage across northeastern Syria and northern and western...More >>

(CNN) - Swiss banking giant UBS discovered that unauthorized trading has cost it an estimated $2 billion, it announced Thursday.

The "unauthorized trading by a trader in its investment bank" could cause the bank to record a loss in the third quarter of this year, it said.

A loss of $2 billion would be "completely unheard of," market analyst Ralph Silva told CNN.

"We have only had three or four other situations... in the billions, and that is exactly what happened," he said.

Silva outlined three possible ways a loss that big could take place: intentional fraud, "basic stupidity" in trading strategy, or what the banking industry calls "fat fingers," which means typing the wrong number by accident.

Perhaps the trader "put in an extra zero, so instead of buying a million he or she bought 10 million - could be a problem," Silva said.

UBS said no client positions were affected by the loss, which is still being investigated. It declined to tell CNN where the trading occurred.

The loss would potentially be among the largest costs ever to a bank in unauthorized trading.

Rogue trader Jerome Kerviel cost his French bank, Societe Generale, almost $6 billion, and was sentenced to three years in prison last year.

Nick Leeson, the subject of the Ewan McGregor movie Rogue Trader, lost about $1.3 billion for his bank, Barings, in 1995, forcing it to close.

Police in London arrested a man in the early hours of Thursday morning on suspicion of fraud.

They revealed the arrest of the 31-year-old man in London, the British capital's banking district, shortly after the UBS announcement, but declined to confirm whether it was linked to the Swiss bank's loss.

The man remains in police custody, they said, declining to name him. UBS declined to comment on the arrest.

UBS made a pre-tax profit of about $1.9 billion in the second quarter of this year, it announced in July, down from about $2.5 billion the quarter before that.

UBS shares were down about 8.5 percent about five hours after the $2 billion loss was announced.

Copyright 2011 CNN. All rights reserved.

Powered by WorldNow