The co-heads of global equities at UBS resigned over the infamous rogue-trading $2.3 billion loss – Francois Gouws and Yassine Bouhara.“Their resignations come as they assume overall responsibility for the effective management of the equities business,” UBS said. Gouws and Bouhara are only the latest resignations in the UBS witch hunt. Chief Executive Oswald J. Grübel also resigned in the wake of the Adoboli scandal.
It All Began with Adoboli , Now Francois Gouws and Yassine Bouhara Fall Victim
It started in September, 2011; over $2.3 billion was lost at UBS and someone had to answer for it. The first person identified was rogue trader Kweku Adoboli. The allegations are that Adoboli made huge bets without making equally large bets to hedge those positions. In other words, he went “all in” and lost. This behavior triggered UBS’s systems to essentially sound the alarm. Adoboli, who worked on the “high stakes” Delta One desk at UBS, was immediately targeted. Those familiar with UBS explain that even if he had “won” his bet, the UBS’s risk control systems would still have gone off. Adoboli was hauled to prison in the middle of the night.
The Blame Game – Francois Gouws and Yassine Bouhara Come After Chief Executive Resignation
The UK’s Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority (iFnma) appointed audit firm KPMG to investigate the losses. UBS is also running an internal investigation and is expected to appoint an additional independent investigator. Given that KPMG was appointed by the FSA and Ernst & Young is the bank’s auditor, UBS will likely choose PricewaterhouseCoopers or Deloitte, says the Telegraph.
The $2.3 billion loss does not seem to have had much effect on UBS. In spite of the $2.3 billion loss, UBS is still reporting a “modest” third quarter profit. It will officially report its third-quarter figures October 25.