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SocGen Redux - ETF Trader At Center Of UBS Rogue Trade

Tyler Durden's picture




 

Yesterday when discussing the blow up of Goldman Global Alpha blow up we predicted, "If 2007 was any indication, and it was, every terminal event for Global Alpha is a harbinger of many, many bad things coming. What is just as ominous is that if Goldman's quant fund has now blown up, then there are tens if not hundreds of other quant funds, and otherwise, that are completely defunct and liquidating, but simply choose to keep quiet. Look for many more such stunner announcements in the days to come" Sure enough not even 6 hours later, we discover that SocGen part two has struck, this time via a UBS' ETF trader (the same as Jerome Kerviel), who has been identified by the FT as 31 year old Kweku Mawuli Adoboli. The trade in question that resulted in the $2 billion loss and forced the arrest of the trader is unknown but very much irrelevant: he was over his risk profile and nobody had stopped him: this reflects very badly on UBS. Look for the bank's Libor rate to surge yet again, as the interbank market struggles to price in the risk of further such trade blow ups in a time of uber volatility. And, as yesterday, we are certain that even more blow ups, at prop desks and otherwise, will now come out of the woodwork.

Here is Adoboli's FSA broker profile:

While unclear if this is his real twitter profile or not, he appears to enjoy watching CNBC's Fast Money. No real suprise there:

Reuters logically expects many firings over this move, and potentially the loss of the entire banking group:

The bank has in the past two years tried to rebuild the investment bank that nearly felled it during the financial crisis. It needed a state bailout after heavy losses on U.S. subprime mortgage-related securities.

 

Under Gruebel and investment bank boss Carsten Kengeter -- themselves both once traders -- it hired hundreds of traders in a bid to boost its bond business.

 

Several analysts said the incident made it more likely that Kengeter would be in the firing line, while Gruebel could step down sooner rather than later.

 

"Gruebel saved the bank from destruction, so his main job is done. It is only a matter of time before he steps down. If it means he leaves a little sooner, it doesn't change a lot. But the investment bank is a bit of a disaster, and the knives will be out for Kengeter," said Peter Thorne, analyst at Helvea.

 

Another analyst who declined to be named said: "Some important heads are going to have to roll, and some are saying that after a series of missteps with the IB, Kengeter himself will have to go."

 

Former Bundesbank head Axel Weber is due to join the UBS board next May and take over as chairman in 2013.

 

The weak performance of the investment bank and tough capital rules in Switzerland had already attracted intense scrutiny over how UBS will cope, with analysts calling for a retrenchment of the investment bank.

 

 

UBS had started to see client confidence return this year after it had to be rescued by the Swiss state in 2008 following massive losses on toxic assets held by its investment bank.

 

UBS said last month it was to axe 3,500 jobs to shave 2 billion Swiss francs ($2.3 billion) off annual costs as it joins rivals in reversing a post-crisis hiring binge and preparing for a tough few years.

 

For those who wish a more indepth stalking of Adoboli's online presence should head to FT Alphaville.

 

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Thu, 09/15/2011 - 07:30 | 1672434 Drag Racer
Drag Racer's picture

it would be interesting if Max is right and it was a slv etf

Thu, 09/15/2011 - 07:34 | 1672441 oobrien
oobrien's picture

Let's face facts.

We're fucked.  We're looking at a 10 year depression.

But what the fuck can we do?

http://geraldcelente.proboards.com

Thu, 09/15/2011 - 08:56 | 1672710 Long-John-Silver
Long-John-Silver's picture

Only 10 yrs? What makes you so optimistic?

Thu, 09/15/2011 - 12:36 | 1673756 falak pema
falak pema's picture

he cant count beyond that.

Thu, 09/15/2011 - 08:18 | 1672558 Left Right Wrong
Left Right Wrong's picture

Any chance he could be a "fall guy" - to take a hit to his name, a bump to his bank account/concealed bank account, and a slap on the wrist - in order to cover up some expected losses or highly questionable dealings with PM ETFs?

 

Sure is nice to have one person to blame for a $2B loss and an internal investigation to clean up the dirty laundry

Thu, 09/15/2011 - 10:09 | 1673121 Freddie
Freddie's picture

Yeah - I am going to put a Nigerian on the trading desk.  These investment banks should not be bailed out nymore.  F em.

Thu, 09/15/2011 - 11:14 | 1673430 disabledvet
disabledvet's picture

Noooooo. Really? Kweeku? that guy went only to the best schools!

Thu, 09/15/2011 - 10:38 | 1673250 Ferrari
Ferrari's picture

"... he appears to enjoy watching CNBC's Fast Money. No real suprise there."

This is so fabulous, and made me roar with laughter. And the sad thing is, about the only people I know who would appreciate this joke are found only here on ZH. Again, this feeling of abject isolation fostered by ZH. It sometimes feels like we're a genre distinct from the other bipeds around us.

Thu, 09/15/2011 - 21:42 | 1675848 Blank Reg
Blank Reg's picture

It's our opposable thumbs that gives us away.

Thu, 09/15/2011 - 07:32 | 1672436 jm
jm's picture

UBS is as much a puke as SocGen for selling out an employee like this.

Thu, 09/15/2011 - 08:19 | 1672552 ConfederateH
ConfederateH's picture

UBS is a bigger puke than SocGen because this employee was obviously promoted as part of UBS PC grovelling diversity initiatives (UBS Americas CEO Robert Wolf is a mega-Obama supporter who golfs with Obama and whose sons play basket ball with the chosen one).  It looks like UBS investors are on the hook for $2B.   Unfortunately US taxpayers are already on the hook for $6T due to the Democrat party idiots selection of the diversity president. 

Thu, 09/15/2011 - 07:32 | 1672437 mvsjcl
mvsjcl's picture

Who cares! All I see is green everywhere.

I must be going mad. That must be it. The evidence is all too clear. It's as if I find myself in a game of musical chairs. The atmosphere is festive, although I'm not quite sure what the occasion is. The expectation and energy in the air crackles sharp as a saltine snapped in two. The game is about to begin. Spectators, masked and bedecked in jewels and finery of almost celestial origin, ring the participants. The lights dim suddenly, and the music starts. Around and around we go. I don't quite know the tune; odd but somewhat familiar. The on-lookers are laughing uproariously, and I can't figure out why. The music plays. And plays. And plays. Just as I'm beginning to think it might never stop, it does. A mad scramble ensues. But to our horror, we realize that there are no chairs on the floor. We were circling nothing at all. The laughter is deafening. I realize then that the only winner is the music-maker.

 

And that, by golly, is our folly and foe.

Thu, 09/15/2011 - 07:38 | 1672448 AmCockerSpaniel
AmCockerSpaniel's picture

Eloquent

Thu, 09/15/2011 - 07:38 | 1672449 BetTheHouse
BetTheHouse's picture

Know here you are coming from.  Reading the paper makes me feel like I am taking crazy pills.  Markets rise on Greeking Crisis Easing?  Did I miss something?  Was there some actual event I missed which "eased" the Greek financial crisis?  That's awesome!  Can't beleive it slipped by me!  What was it again?

Thu, 09/15/2011 - 07:32 | 1672439 Cojones
Cojones's picture

One guy, a lone rogue trader. srsly?

Thu, 09/15/2011 - 07:35 | 1672443 buzzsaw99
buzzsaw99's picture

he is labeled a rogue trader because he lost money. if he had made $2B that would have been fine.

Thu, 09/15/2011 - 09:53 | 1673049 Dingleberry
Dingleberry's picture

EXACTLY.  This wasn't one fucking peon running amok, this was OBVIOUSLY an inside job, top-to-bottom.  Too many controls on traders now after other "rogues".  If this fucker made them money, he would be looking at a vacation instead of jail. Hope he talks , and brings down some more fuckers.

Thu, 09/15/2011 - 08:38 | 1672615 espirit
espirit's picture

All it takes is one guy from Fight Club.

Thu, 09/15/2011 - 07:35 | 1672442 Robslob
Robslob's picture

 

 

Why doesn't $2 Billion sound like alot of money anymore...?

 

Futures like the news...up, up up and awaaayyy...fucked market.

Thu, 09/15/2011 - 07:38 | 1672447 buzzsaw99
buzzsaw99's picture

cpi today. bennie on deck for next week.

 

QE3 you are cleared for takeoff...

Thu, 09/15/2011 - 07:41 | 1672453 AmCockerSpaniel
AmCockerSpaniel's picture

At my age your question is mind numbing.

Thu, 09/15/2011 - 08:23 | 1672570 NumberNone
NumberNone's picture

I find it funny that last month UBS announced the layoff of 3,500 workders to save $2 Billion.  I'm sure the 3,500 people getting cut find the coincidence amusing. 

Thu, 09/15/2011 - 10:11 | 1673129 Freddie
Freddie's picture

We need more affirmative action trading desks like ALL of Fannie Mae and Freddie Mac.

Thu, 09/15/2011 - 07:36 | 1672444 daxtonbrown
daxtonbrown's picture

I swear I got an email from some Kweko Adoboli just the other day. "Dearest Friend: I know this may seem unusual but I am at a trading desk and due to the death of my long lost uncle I have come into possession of $2 billion dollars which I find must be deposited elsewhere for safekeeping. If you could just send me your bank account number . . . ."

Well, I'm just paraphrasing. But next time I get an email like that, I'm gonna jump right on it.

Thu, 09/15/2011 - 07:42 | 1672454 KlausK
KlausK's picture

Thanks for the coffee in my nose.

Thu, 09/15/2011 - 07:41 | 1672450 buzzsaw99
buzzsaw99's picture

We need to keep bailing out these fine talented assets, er, asshats, or else we might have a depression. LMAO!

 

:cue e-trade baby loses everything vid.:

Thu, 09/15/2011 - 07:47 | 1672466 DirtMerchant
Thu, 09/15/2011 - 07:40 | 1672451 Oh regional Indian
Oh regional Indian's picture

This is what happens when you combine the speed of machines with the minds of men.

Can't reverse the "Enter" button hit!

I'm sure some model told him he was doing good things, making mountains of money and all.

ORI

Machine Strong Human Weak

Thu, 09/15/2011 - 07:44 | 1672459 firstdivision
firstdivision's picture

Have no fear, futures are up.  All is well with the world...til next month.

Thu, 09/15/2011 - 07:45 | 1672461 Aductor
Aductor's picture

Adoboli is just an anagram for Diabloo. A devil that misspells his own name - somone at UBS should have noticed one would think.

Thu, 09/15/2011 - 08:34 | 1672606 reload
reload's picture

Not too relevant, but, you jogged a memory.

Back in the late 80`s all CV`s sent to SG Warburg (now UBS investment bank) were vetted by their in house handwriting `expert` - a german lady IIRC. It was mandatory that CV`s were hand written at that time, specificaly so that she could make a character assesment on the basis of the writing.

Thu, 09/15/2011 - 07:46 | 1672465 Trying to Understand
Trying to Understand's picture

http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv...

... perhaps lack of focus on the task at hand is an industry wide issue???

Thu, 09/15/2011 - 07:49 | 1672469 Everybodys All ...
Everybodys All American's picture

Swiss National Bank does a crazy intervention on their currency and then wonder why a trader gets caught on the wrong side. Good times.

Thu, 09/15/2011 - 08:23 | 1672578 Ratscam
Ratscam's picture

maybe the Delta 1 team did not let Abodoli, the man from ghana, in on the known secret that SNB will devalue on Tuesd.
John Hughes his boss appears to be a white shoe boy

Thu, 09/15/2011 - 07:50 | 1672471 Zgangsta
Zgangsta's picture

This news is, of course, bullish for stocks.

Thu, 09/15/2011 - 07:57 | 1672492 eigenvalue
eigenvalue's picture

A lot of things seem to be carboncopies of 2007-2008. Hopefully silver will not crash this time as in 2007-2008:(

Thu, 09/15/2011 - 08:10 | 1672529 firstdivision
firstdivision's picture

Why not?  Then your LOLlars will buy more of it.  How is a deal a bad thing?

Thu, 09/15/2011 - 07:59 | 1672499 Zgangsta
Zgangsta's picture

From LinkedIn. Not all that popular...

Kweku Adoboli

Director ETF and Delta1 Trading at UBS Investment Bank
London, United Kingdom

Industry
Investment Banking
Overview
Current
  • European Equity Trading - Delta1 at UBS Investment Bank
Past
  • Trade Support Analyst at UBS IB
Education
  • University of Nottingham
Connections

12 connections

Public Profile

http://uk.linkedin.com/pub/kweku-adoboli/0/7a2/1b7

Thu, 09/15/2011 - 08:07 | 1672520 sabra1
sabra1's picture

if he was a HFT, all would have been legal! isn't that so?

Thu, 09/15/2011 - 08:11 | 1672534 firstdivision
firstdivision's picture

If he was an HFT, they would have cancled the trade and the counterparty would have to sustain the losses.

Thu, 09/15/2011 - 08:08 | 1672525 Everybodys All ...
Everybodys All American's picture

Are they going to blame it all on leveraged ETF's? Don't be surprised in order to get rid of all leveraged etfs this would be how you get the sheep on board?

Thu, 09/15/2011 - 08:25 | 1672532 NumberNone
NumberNone's picture

And this is why people hate banks.  Take a loan or credit card from these criminals and you are treated like a piece of shit.  You have 'their' money and you are to be monitored constantly and beat into submission if you even think about making a late payment.  How many people's lives have been ruined over balances in the hundreds of dollars.

On the other hand, once they have your money behind their gated walls, any scumbag with a job and access to a trading terminal can do whatever he or she wants with your money.  Apparently the level of scrutiny and monitoring drops dramatically once it's in their 'professional' hands.  I guess its good to be TBTF and have a perpetual supply of taxpayer money backstopping you.  Where's a public uprising and guillotine when you need one? 

"Hi UBS...I would like a job with your organization.  I have a good feeling about some trades and $2,000,000,000 in others people's money would be a nice start to my success.  Regards, NumberNone"

Thu, 09/15/2011 - 08:16 | 1672551 ambrosiac
ambrosiac's picture

 

 

Maybe he bet the house on Europe breaking up yesterday, Greece defaulting the day before yesterday etc.  Ah, to be young, impressionable, and an avid blog and financial press reader.

 

Had it worked he would have been set with coke and whores every day to eternity.  Now he gets a slap on the wrist. 

 

How strange, nobody else, but nobody, is doing as much.

Thu, 09/15/2011 - 08:21 | 1672564 Coldfire
Coldfire's picture

Focusing the blame on the "rogue" trader is (U)BS. Risk management is the board's responsibility. And they are nine kinds of stupid for allowing this to happen. (Not like the $59 billion in losses over the past 3 years covered them in glory). But it's not all bad news. Just think how well the counterparties made out...

Thu, 09/15/2011 - 08:22 | 1672572 Hedgetard55
Hedgetard55's picture

That's Sade's nephew.

 

"Smooth Operator".

Thu, 09/15/2011 - 08:24 | 1672579 Karl Napp
Karl Napp's picture

UBS should have outsourced the whole junk trading department to Ghana and all the Kwekus, Kofis would have made you rich.

Thu, 09/15/2011 - 08:26 | 1672589 Ponzi Unit
Ponzi Unit's picture

After that move in CHF it would be a surprise if someone didn't get hurt. Even if forex risk tolerances are managed in a tight band, what happens to the poor bastard who gets caught in the Swiss peg and then waits to unwind it while it just gets worse? 22% move from 1.44 to 112? Bring out your dead...

Thu, 09/15/2011 - 10:22 | 1672658 jayman21
jayman21's picture

Does anyone know if this was the smoking gun as to why SNB borrowed USD from the FED?  Does anyone know if the ETF was a dollar based ETF?

Thu, 09/15/2011 - 09:18 | 1672831 Fix It Again Timmy
Fix It Again Timmy's picture

Rogue trader informs his supervisor that things went a tad bad....

http://www.youtube.com/watch?v=PmGyNfqH2FE

 

Thu, 09/15/2011 - 13:59 | 1674083 fiddy pence haf...
fiddy pence haff pound's picture

the Rogue was probably just following orders and got backstabbed.

Everything that the sick banks do now is technically rogue, to the rest of us and to natural law and physics.

e.g.

how to keep levitating a broke, sack-o-sh*t bank?

how to steal public money?

How to leverage that into political influence?

How to make money killing off jobs, businesses and countries?

Do NOT follow this link or you will be banned from the site!