Rogue Trader Kweku Adoboil Loses $2 Billion

Sep 15, 2011
J. Webster
Comments Off on Rogue Trader Kweku Adoboil Loses $2 Billion

More often than not the so called rogue trader is not trading alone but making big bets with his manager’s knowledge. It’s the trader though who ends up taking the fall for both management and the bank in general. There should be controls in place so these kind of huge, risky trades can’t be made without the full knowledge of the bank. What we don’t know is if the bank knew what this ‘rogue’ trader was doing.

What’s more, after the global financial crisis you’d expect banks to have stricter rules in place to manage risk.

BS AG said a rogue trader racked up as much as $2 billion in losses using the firm’s own money, a dramatic admission that raised new questions about the ability of one of the world’s largest banks to manage risk and global regulators’ ability to monitor it.

The losses stemmed from unauthorized derivatives-trading bets, according to a person familiar with the matter. The bank said no client positions were affected.

The Swiss bank made the discovery late Wednesday and notified London police at 1 a.m. Thursday, alleging that one of its traders had committed fraud. At 3:30 a.m., police arrested a 31-year-old man on “suspicion of fraud by abuse of position.”

The Wall Street Journal has the full story.

Related Posts Plugin for WordPress, Blogger...

Comments are closed.