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Swiss bank UBS has been fined $47.5 million by Britain's FSA over the Kweku Adoboli trading scandal.
Britain’s financial watchdog on Monday fined Swiss bank UBS $47.5 million “for systems and controls failings” that allowed a rogue trader to lose $2.3 billion.
The Financial Times said the fine was the third largest ever handed out by the Financial Services Authority (FSA) and came after former UBS trader Kweku Adoboli was convicted of fraud last week and sentenced to seven years in jail.
More from GlobalPost: UBS rogue trader Kweku Adoboli jailed for $2bn fraud
Tracey McDermott, FSA director of enforcement and financial crime, said “seriously defective” systems and controls had enabled Adoboli, a trader on UBS’s Exchange Traded Funds desk in London, to trade in excess of authorized limits, committing what Reuters said was the biggest banking fraud in Britain’s history.
"UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk,” McDermott said in a statement.
“ As a result Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly. We know from past experience that failures to manage risk properly can cause firms to fail and cause systemic harm.
"Failures of this type in firms of the size and standing of UBS not only damage the firms concerned but also wider confidence in the integrity of the markets and the financial system. It is imperative that the markets we regulate are seen by investors to be orderly and a safe place to do business.
"This penalty… is intended to make it clear that the FSA expects much higher standards from the firms we regulate."
The New York Times said the Swiss regulator Finma, which does not have the power to fine, has promised to appoint an “independent investigator to oversee improvements in UBS’s risk management systems.”