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>>

  • SKorea ferry toll hits 159 as relatives wait

    SKorea ferry toll hits 159 as relatives wait

    Wednesday, April 23 2014 9:44 PM EDT2014-04-24 01:44:36 GMT
    The grim work of recovering bodies from the submerged South Korea ferry proceeded rapidly Wednesday, with the official death toll reaching 150, though a government official said divers must now rip through cabin...More >>
    Divers made their way deeper Thursday into the submerged wreck of a ferry that sank more than a week ago as the death toll neared 160 and relatives of the more than 140 still missing pressed the government to finish the...More >>
  • Obama offering Japan security, economic assurances

    Obama offering Japan security, economic assurances

    Wednesday, April 23 2014 9:25 PM EDT2014-04-24 01:25:20 GMT
    President Barack Obama is opening a four-country visit to the Asia-Pacific region in Japan, but the West's dispute with Russia over Ukraine is looming.More >>
    Facing fresh questions about his commitment to Asia, President Barack Obama will seek to convince Japan's leaders Thursday that he can deliver on his security and economic pledges, even as the crisis in Ukraine demands...More >>
  • Material on Australian shore not from Malaysia jet

    Material on Australian shore not from Malaysia jet

    Wednesday, April 23 2014 8:34 PM EDT2014-04-24 00:34:29 GMT
    Australia's prime minister said Wednesday that failure to find any clue in the most likely crash site of the lost Malaysia Airlines jet would not spell the end of the search, as officials planned soon to bring...More >>
    Australian officials said Thursday that after examining detailed photographs of unidentified material that washed ashore in the southwestern part of the country they are satisfied it is not a clue in the search for the...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