UBS has been fined £29.7m by the UK watchdog for "significant control breakdowns" that allowed a rogue trader to lose $2.3bn in 2011, according to CNN.
The Financial Services Authority handed out the third largest fine in its history. It criticized the bank for having ineffective computer risk controls and "poorly executed and ineffective supervision" that allowed Kweku Adoboli repeatedly to breach risk limits and book fictitious trades.
Adoboli was convicted of fraud last week and sentenced to seven years in jail.
The failings took place in the London branch of UBS, so the FSA and the Swiss regulator Finma investigated jointly and announced the results on Monday, Nov 26 morning.
Finma, which does not have the power to fine, said it had appointed an independent investigator to make sure that UBS puts corrective measures in place and implements them fully. The Swiss regulator also plans to hire an audit firm to review whether the measures implemented by UBS have proven effective.
The UK fine is one of the first levied under the FSA's new penalty policy, which seeks to link size of fine to the revenues of the division involved. In this case, UBS was fined 15 per cent of the annual revenue of the global synthetics equities trading division where Adoboli worked. UBS qualified for a 30 per cent discount by settling at the earliest stage of the probe.
UBS said: "We have fully co-operated with the regulators' investigations and we now accept their findings and the penalties incurred. We are pleased that this chapter has been concluded and that the regulators have acknowledged the steps UBS has taken since this incident."
The bank also said it had taken "appropriate disciplinary action against staff who did not uphold the high standards we expect" and that employees were being retrained to emphasize risk management. The bank's evaluation and pay systems have also been changed in the wake of the incident.
UBS's penalty is topped only by the £50m paid by Barclays as part of its cross-border settlement with the U.S. and UK for rate manipulation, and the £33m paid by JP Morgan for failing to segregate client assets.
