The Swiss bank UBS is hit again as former trader John Hughes, formerly of the exchange-traded fund (ETFs) desk, was banned from working in the UK’s finance industry. He has be indited for aiding another former UBS trader who went rouge, Kweku Adoboli.
Adoboli was charged and sentenced to seven years in 2012 for unauthorized trading that cause losses in excess of $2 billion. Hughes knew of the fraud and did not report it to the proper authorities. Instead, Hughes created an internal fund to reserve profits to cover future losses, according to the Financial Conduct Authority (FCA). UBS was fined £29.7 million for failing to detect the fraud or prevent the trades.
Regulators have accused several of the world’s largest financial institutions of not having the proper risk and oversight controls in place that could have prevented such activity. However, Adoboli admitted to causing the losses but argued that he was pushed to take on an absurd amount of risk, and that rule-breaking at UBS was rampant.
Hughes was involved via the internal “rainy day” fund dubbed the umbrella. He would make trades and then use profits to cover any losses.
UBS has seen at least 11 employees leave the firm due to the trading loss, including former CEO Oswald Gruebel.