Switzerland’s biggest bank said today it may be unprofitable in the third quarter after the loss from “unauthorized trading” at its investment bank…..

UBS has discovered a loss due to unauthorized trading by a trader in its Investment Bank. The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of USD 2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.

Unauthorized trading? WTF is that….

Who did it?

Could it have possibly been: the Vice-Chairman of the Investment Bank Division? What’s his name? Phil Gramm? Perhaps putting a too big of bite on Halliburton Stock and not exiting before it’s fall today?… lol.

Actually an arrest has been made. London police arrested someone with an Arabic sounding name: Kweku Adoboli …
His boss, John Hughes, is reportedly to have resigned… (I should hope so..)

But the current profile coming out now, too has questions.. Records from the City regulator suggest Mr Adoboli joined UBS as a trainee in March 2006, making him a 5 year employee.
(Roughly 9.2% of UBS’s global employee base work out of the London office.) Apparently he studied communications at University of Nottingham, apparently good qualifications for the investment choices of other people’s money. That and his picture, make this certainly look like a fall guy. On his LinkedIn profile, Adoboli’s title is listed as “Director ETF and Delta1 Trading at UBS Investment Bank.”

How is a 5 year employee with a communications degree given the responsibility over $2,000,000,000 dollars?

The only thing clear is that the wall needs to go back up.
Banks are here to keep money safe; Investment firms are for taking extreme risks to help us grow capital quickly.

It is impossible for one entity to perform both functions at once.

Time for the Glass-Steigle Act (originally passed in 1933, rescinded in 1998 by Phil Gramm’s bill), to be re-instated.

Remember this…

Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model.