[ISN] UBS Admits Internal Fraud Controls Were Not Effective

http://www.csoonline.com/article/692528/ubs-admits-internal-fraud-controls-were-not-effective

By Anh Nguyen
CSO
October 27, 2011

UBS has admitted that certain internal controls were not in place at the 
time that rogue trader Kweku Adoboli allegedly ran up a $2 billion (1.3 
billion) loss on the bank's derivatives desk.

This follows a memo that interim chief executive Sergio Ermotti sent to 
employees earlier this month saying that the bank was aware that its IT 
systems did detect the rogue activity but that "this was not 
sufficiently investigated nor was appropriate action taken to ensure 
existing controls were enforced".

In an update after a regulatory filing to the US Securities and Exchange 
Commission (SEC), UBS said: "Following the discovery of the unauthorised 
trading activities that UBS announced in September, management has 
determined that certain internal controls were not effective on December 
31, 2010, but at the same time has reconfirmed the reliability of the 
financial statements included in UBS's 2010 annual report."

UBS has identified two monitoring controls that were lacking at the end 
of December 2010, when Adoboli allegedly placed the unauthorised trades.

[...]


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