UBS (UBS) Raises Loss Forecast Amid Rogue Trader
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UBS (NYSE: UBS) announced over the weekend after further investigation into its rogue trader, the estimated loss incurred by the company will be roughly $2.3 billion.
While the company confirms none of its clients positions were affected, UBS’s Board has assembled a special committee to conduct an independent investigation of the unauthorized trading activities and the relation to the control environment. The committee will be chaired by David Sidwell, who in turn will report directly to the Board. Other members of the committee include Ann Godbehere and Joseph Yam.
An employee of UBS confirms the loss was a result of "unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months. The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio. However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions, allegedly executed by the trader. These fictitious trades concealed the fact that the index futures trades violated UBS’s risk limits."
Shares of UBS are currently trading down 1.94 percent to $11.65 in the pre-market session Monday. The stock fell by as much as 10 percent on Thursday of last week following the news.
While the company confirms none of its clients positions were affected, UBS’s Board has assembled a special committee to conduct an independent investigation of the unauthorized trading activities and the relation to the control environment. The committee will be chaired by David Sidwell, who in turn will report directly to the Board. Other members of the committee include Ann Godbehere and Joseph Yam.
An employee of UBS confirms the loss was a result of "unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months. The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio. However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions, allegedly executed by the trader. These fictitious trades concealed the fact that the index futures trades violated UBS’s risk limits."
Shares of UBS are currently trading down 1.94 percent to $11.65 in the pre-market session Monday. The stock fell by as much as 10 percent on Thursday of last week following the news.
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