UBS (UBS) Shares Tumble as Rogue Trader Costs Firm Billions in Losses
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UBS (NYSE: UBS) shares are getting slammed Thursday morning following a report the Swiss financial giant may report a third-quarter loss due to some foul play.
In a release Thursday morning, UBS said due to unauthorized trading by one trader, the firm will record a £1.3 billion (about $2 billion) loss in the quarter. The loss could also result in UBS having a GAAP loss in the period, a far cry from the 55 cents per share in earnings currently expected by the Street.
Recent reports say the trader, 31-year-old Kweku Adoboli, is under arrest on allegations he was the trader responsible for the loss. Adoboli was said to be an ETF trader.
According to the Guardian UK, London police arrested Adoboli at 3:30am GMT on "suspicion of fraud by abuse of position."
UBS is unlikely to reveal details of the position until it's been reduced or exited completely, the Guardian said.
In a letter to employees, UBS commented, "While the news is distressing, it will not change the fundamental strength of our firm. We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times..."
The loss is certainly no help to UBS, who said last month it would be cutting about 3,500 jobs, many in the investment bank. Stricter Basel III regulation and overall market volatility have eaten in to earnings for the Zurich-based bank.
UBS shares are down well over 8 percent on the news; but did get slammed 10 percent lower in overnight trading.
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In a release Thursday morning, UBS said due to unauthorized trading by one trader, the firm will record a £1.3 billion (about $2 billion) loss in the quarter. The loss could also result in UBS having a GAAP loss in the period, a far cry from the 55 cents per share in earnings currently expected by the Street.
Recent reports say the trader, 31-year-old Kweku Adoboli, is under arrest on allegations he was the trader responsible for the loss. Adoboli was said to be an ETF trader.
According to the Guardian UK, London police arrested Adoboli at 3:30am GMT on "suspicion of fraud by abuse of position."
UBS is unlikely to reveal details of the position until it's been reduced or exited completely, the Guardian said.
In a letter to employees, UBS commented, "While the news is distressing, it will not change the fundamental strength of our firm. We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times..."
The loss is certainly no help to UBS, who said last month it would be cutting about 3,500 jobs, many in the investment bank. Stricter Basel III regulation and overall market volatility have eaten in to earnings for the Zurich-based bank.
UBS shares are down well over 8 percent on the news; but did get slammed 10 percent lower in overnight trading.
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