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Quotes of the Week W/E 23/09/11 September 24, 2011

Posted by Audit Monkey in The Joy & Pain of Internal Audit, The State of the British Nation.
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This week’s quotes are courtesy of a couple of UBS employees.  For those who have missed the news of late, UBS has racked up losses of over $2billion due to a rogue trader in London. The trader, well ex trader was Kweku Adoboli, who alerted the world to the impending financial black hole by sending posting a message on his Facebook page, commenting “I need a miracle”.

Anyway, The Times (16/09/11) is equally eloquent in its reporting, and I quote “Mr.Adoboli, from Ghana, appeared to have been burnt (sic) by the stock market’s volatility in recent weeks”. The use of ‘burnt’ is all a bit street isn’t it? When did the popular lexicon “being burnt” enter the financial vocabulary to describe losses due to excessive risk taking?

Nevertheless, Mr.Adoboli colleagues were equally forthcoming in their analysis of the fraud (Kweku has been arrested on suspicion of fraud by abuse position). I particularly like this gem from the Evening Standard (16/09/11); “One UBS banker said:”It is very hard to resist the conclusion that this is just a bad bank managed by idiots. Clearly until this bank is run by different people, we can’t really move forward””.

There’s been a lot of questions posed as to how the fraud was perpetrated. Adoboli’s background as a back-office boy is thought to have given him an oversight into how to circumvent the bank’s systems and controls. The truth is probably more prosaic. My guess is Adoboli never booked the trades, hence they never showed on any MI or trend analysis. Of course, the other explanation is Adoboli is just the full guy for some incredibly bad guessing by his superiors on which way the market would go. Incidentally, I don’t mean to be rude but the irony is anyone could be a trader in the Front Office of an investment bank, even a rioter from Tottenham; a couple of key-strokes on the computer and you’ve executed the trade – job done.

The other thing which tickled me is that the Chief Risk Officer at UBS is one Maureen Miskovic. Her CV includes being the former head of risk at Lehman Brothers; hardly a reference is it? (Alright Maureen was at Lehmans between 1998-2002 but don’t let get in the way of a bit of Schadenfreude).

One of the downsides of Adoboli’s handy work is that the bonus pot for UBS staff will be less this year. Time to manufacture one of my own quotes now.

“Inept UBS dealer blows a $2billion hole in UBS’s bottom line; 17,775 bankers don’t get their bonus – f**king priceless!”

  “We won’t be getting our bonus either”, answered UBS security when questioned.


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