Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Rogue Trading: A How-To Guide

NYSE trader
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The revelation that a rogue trader at UBS lost billions of dollars has shaken the European banking sector and sparked cries for tighter regulation.

Can't banks do anything to prevent traders from creating huge unauthorized exposures to trading losses?

According to UBS Chief Executive Oswald Gruebel, the rogue trading loss couldn’t have been prevented.

“If someone acts with criminal energy, then you can’t do anything.

That will always be the case in our business,” the former trader said in an interview published in the Swiss weekly Der Sonntag.

The UBS trader's alleged fraudulent trading bears a striking resemblance to that of Jerome Kerviel, the rogue trader from Societe Generale. Both cases bear more than a passing resemblance to Nick Leeson's rogue trading, which brought down the British bank Barings.

In fact, there's a surprisingly consistent pattern to all these rogue traders. » View Slideshow