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UBS Down 9.6% As Unauthorized Trade Results In USD2bn Loss

Submitted by Tyler Durden on 09/15/2011 03:08 -0400

UBS has started European trading off on the wrong track. 'Astonishingly', coming clean to a USD2bn loss on the back of unauthorized trading. No details on whether this was selling Greek credit protection or buying Portuguese bonds (for the yield) but the Bloomberg headlines, UBS equity price crash, and the ES reaction are clear:

*UBS SAYS TRADING LOSS OF $2 BLN                        :UBSN VX

*UBS CITES UNAUTHORIZED TRADE IN INVESTMENT BANK        :UBSN VX

*UBS SAYS MAY MAKE LOSS IN THIRD QUARTER BECAUSE OF TRADE

*UBS SAYS NO CLIENT POSITIONS AFFECTED                  :UBSN VX

*UBS SAYS MATTER IS STILL BEING INVESTIGATED            :UBSN VX

*UBS DROPS 9.2% IN ZURICH TRADING                       :UBSN VX (now 9.6%!!)

...and ES, after ramping back up to VWAP out of nowhere, ripped back below it - almost 3 standard deviations in an instant. FX seems relatively stable (though Swissy is strengthening a little vs the USD and jumped 20 pips in EURCHF's channel) but oil is dropping relatively quickly. Credit spreads are not budging much - though off their earlier tights. Gold and Silver seem unaffected for now.

Senior Financials opened 8.5bps tighter but quickly snapped back around 5bps - trading 285bps now.

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Thu, 09/15/2011 - 03:16 | 1672188 Jendrzejczyk

Just checked and you are correct. My gold and silver are unaffected by this development.

Thu, 09/15/2011 - 03:34 | 1672212 baby_BLYTHE

No Sh*t, we are going into a crisis much worse. This USA will go back, kicking and screaming if necessary, to a gold standard. The total amount of leverage, derivatives outstanding and assets held in the financial markets is enough to buy the western world several times over.

Thu, 09/15/2011 - 05:13 | 1672295 Oh regional Indian

no chance in hell that will hapen. Fiat is the life line of the scum-sucking banksters.

They will switch only when it's good and proper for them (as in their best interest) to switch.

Does the SDR have a GOld piece to it? Didn't think so.

Will the Amero have a golden backside? Doubtful.

It's cashless transacting via "Human Capital Utility Factor" for serfs. Count on it.

Yes SIR, your forehead against that scanner.....beep...thank you. One Ration Unit for Number MCJ2319 on Aisle 666. PLEASE.....

ORI

Gold Will Fold

Thu, 09/15/2011 - 08:19 | 1672561 Top_Kill

Rogue trader lol. More like hired gun who was short Gold and Silver. Notice they didn't tell you what he lost 2 billion on. When Kerviel went down it was instantly announced that it was natural gas. #Maniupulationfail

Thu, 09/15/2011 - 04:57 | 1672286 Pretorian

Just wait your gold silver will be very affected very much! In unexpected direction.

Thu, 09/15/2011 - 03:16 | 1672189 SumSUN

U.S. futures down because of this news. This could be bad. Whatever that trade was, there might be much more to this headline.

Thu, 09/15/2011 - 03:26 | 1672206 Radron33

Good point.

Thu, 09/15/2011 - 05:09 | 1672293 theMAXILOPEZpsycho

word on the street is this was a naked silver short...

Thu, 09/15/2011 - 08:24 | 1672584 ZeroPower

Doubtful.. all traders have to deal with evil risk mgmt division which basically never ever lets you take a naked bet unless its puny in size.

I heard someone on the floor mention it was a horrible rates bet but seemed more like a joke: 'a Bill Gross bet'. No idea what desk this guy sat on either.

Thu, 09/15/2011 - 03:16 | 1672190 Peter K

My guess is buying Greek 1yr for the yield :)

Thu, 09/15/2011 - 03:26 | 1672205 Hephasteus

My guess is signing up for a 10 percent currency hair cut and getting a 50 percent fat tail ass fucking that comes from a totally corrupted system.

Thu, 09/15/2011 - 03:24 | 1672197 jballz

Nah somebody got stuck on the 12 handle swiss drop last week.

Thu, 09/15/2011 - 03:25 | 1672202 Jendrzejczyk

Are Thursdays "bath day" for Mr. Buffet?

Thu, 09/15/2011 - 07:15 | 1672419 A.W.E.S.O.M.-O 4000

Oh Mr. Buffet, can you do me a favour and just hold this toaster for a minute. That's it, you're a love. Now just a sec while I plug it in. There you go.

AAAAAGGGHHHHH!!!!!!!!!!!

Thu, 09/15/2011 - 03:30 | 1672209 hunglow

Show me the Bloomberg topless top 12 calendar bell deviations.

Thu, 09/15/2011 - 03:30 | 1672210 Who is John Galt

This news can only be seen as BULLISH for US markets!

Thu, 09/15/2011 - 03:31 | 1672213 lolmao500

Boohoo. Time to die UBS.

Thu, 09/15/2011 - 08:19 | 1672560 SteveNYC

Really, they should have been RIP'd in '08/'09. My money is on a complete US withdrawal by the Swiss investment banks (UBS first) by 2014.

Thu, 09/15/2011 - 03:31 | 1672215 bob_dabolina

Jerome Kerviel take 2, and the vol in futures was from Waddell and Reed

Thu, 09/15/2011 - 03:34 | 1672220 NetDamage

"unathorized" like in "you double down and we will look away and cross our fingers"?

Thu, 09/15/2011 - 09:26 | 1672884 Thomas

Indeed. It's only rogue when there is a loss.

Thu, 09/15/2011 - 03:40 | 1672227 Minoan

Nick Leeson ftw!

Thu, 09/15/2011 - 03:42 | 1672231 chump666

ha! i called it...knew there would be a rogue trade, so 2007/2008.....

Thu, 09/15/2011 - 03:48 | 1672238 Gandalf6900

fat fingered bitchez

Thu, 09/15/2011 - 04:20 | 1672259 Isotope

Ever wonder why you never hear about "unauthorized" trades that make $2B profit? You lose on one and you're terminated and handed over to the prosecutors. You win and you're now head of the division, and well, we're still calculating your bonus, it's going to take us a while with numbers that big.

Thu, 09/15/2011 - 04:21 | 1672260 FJ

Say why YOU want to work for UBS...

Thu, 09/15/2011 - 04:31 | 1672270 scratch_and_sniff

lol got caught on the EUR/CHF short side for 2 mln a pip, ohhhh scared for life! (wtf gets into these people?)

Thu, 09/15/2011 - 05:23 | 1672309 Robslob

Unauthorized GAMBLING Results In USD2bn Loss!

There fixed...trading would require skill and a solid knowledge of fundamentals and the fact that fundamentals actually mattered.

Thu, 09/15/2011 - 05:24 | 1672311 UGrev

In today's news, a former UBS trader was found dead in a hotel room with two gun shot wounds to the head; The police say a victim of an apparent suicide. The victim was said to have been found dead, laying a pool of his own blood surrounded with drug paraphernalia. Several viles of cocaine were also found at the scene along with child pornography and magazines depicting transexuals engaging in sex acts. Back to you Matt.

Thu, 09/15/2011 - 06:08 | 1672348 ejm1961

the 31 yr old trader was arrested in london @ 5 AM today EST or 10 AM london time.............

Thu, 09/15/2011 - 06:13 | 1672352 UGrev

what.. you don't like satire?

Thu, 09/15/2011 - 07:45 | 1672463 ejm1961

Yeah, I do, but pretend a relative reads your post, hahaha!

Thu, 09/15/2011 - 08:18 | 1672557 UGrev

oh ok... Hey family peeps. That didn't really happen.. I made it up.. it was 3 holes in the head and donkey porn.. *ba dum dum*.

Thu, 09/15/2011 - 08:06 | 1672517 mvsjcl

Please use standard Stardate nomenclature. We here on planet Zargonzo don't understand this am/pm stuff.

Thu, 09/15/2011 - 05:26 | 1672313 DaBernank

Max Keiser rumor: this UBS loss was due to silver shorting

Thu, 09/15/2011 - 05:30 | 1672314 zhandax

Well so far, the dollar is down maybe 25 pips, bondos are off maybe a half point and gold has rocketed $17 upward. I am sure this will change as soon as the programmers get to lower manhattan and blend with Tabasco, then filter through free Bennie bucks.....

Thu, 09/15/2011 - 05:29 | 1672318 Lord Welligton

Credit spreads are not budging much - though off their earlier tights.

Now I am confused.

Thu, 09/15/2011 - 05:31 | 1672321 tocointhephrase

Heart...bleeding....not very.....

Thu, 09/15/2011 - 05:33 | 1672322 DirtMerchant

Simply laughable excuse...some poor employee will get arrested today so UBS can save face and hang on to their clients

Thu, 09/15/2011 - 07:02 | 1672406 SpeakerFTD

Agreed. Unless the bank itself is criminally incompetent, it is basically impossible to wear that much risk without the knowledge (and consent) of several layers of management above the trader.

Thu, 09/15/2011 - 05:54 | 1672340 ElZorillo

Man arrested in London..

http://www.bbc.co.uk/news/business-14927432

Thu, 09/15/2011 - 06:36 | 1672372 scratch_and_sniff

Madness man, and he's only 31, what a complete headfuck. I wonder what he thought when he seen that his positions were 2bln in the red...probably something like "if i close my eyes its not real".

Thu, 09/15/2011 - 07:19 | 1672424 DirtMerchant

you are assuming he actually did it himself, which I think is probably a great distance from the truth, poor bastard is a scapegoat

Thu, 09/15/2011 - 06:13 | 1672344 Mentaliusanything

Well I wanted my money - they did not have it so they blamed a Jockstrap. Fuck em I'm insured ... but the fine print IS a bit of a worry. I Think I'm insured .. I paid the fee for service.. But they are insurance people... Fuck ... I'm Screwed

Such is the days of our drearies - He who Holds the Gold Fucking makes the rules .. OK

Wait for it I have Clarke and Dawes take on the whole thing. You know them ....two men and a question time about who owes what to what sovereign country..... Well when it is available it will all become Cognitave

Thu, 09/15/2011 - 06:15 | 1672347 kurzdump

According to FT Alphaville the guy worked in the equities division... might result in an interesting unwind

Thu, 09/15/2011 - 06:16 | 1672356 Coldfire

Compliance much?

Thu, 09/15/2011 - 06:17 | 1672358 UGrev

Compliance we much..

Thu, 09/15/2011 - 06:49 | 1672386 AngryGerman

from ETF desk

Thu, 09/15/2011 - 06:57 | 1672398 rokka

Let me guess, they bought Gold at 1920?

Thu, 09/15/2011 - 06:58 | 1672403 j0nx

This is priced in.

Thu, 09/15/2011 - 07:00 | 1672405 FunkyOldGeezer

It's only fiat.

Thu, 09/15/2011 - 07:10 | 1672415 terryfuckwit

well well, it could not possibly be UBS stupidity to lose 2 billion,lets find a patsy fall guy, my whiff is that the bank neglected somewhere to allow for a knock on from the Swiss euro peg sudden action,,It is entire nonsense for them to expect us to believe this rogue trader BS..no one operates like that with millions never mind billions

Thu, 09/15/2011 - 07:18 | 1672421 jm

Seriously. Either UBS is technologically in the steam age (riiight) and can't even identify trades outside of basic risk controls or they are liars that depend on selling stupid lies to cover a horrendous move by a trading desk.

Which will it be UBS? You suck as a bank or you suck as a business?

At least Goldman doesn't sell their employees out like these bitch-banks across the pond.

Thu, 09/15/2011 - 07:12 | 1672417 What does it al...

When it is a loss, it is a "rougue" trader. When it is profit, it is Mr. Paulson, time for him to raise some money...

Thu, 09/15/2011 - 07:18 | 1672420 Drag Racer

financial false flag!!!!

come on ubs, grow a pair. admit your books were cooked and you needed a fall guy to cover it up before you got caught when the euro blows up and investigations get started.

when it blows up... ha, it is blowing up as we speak and nobody involved wants to admit it till they cover themselves better. look at the stories/rumors about several euro members already printing currencies, Iceland puts out a story claiming they will not return to theirs and drachmas already trading. how many coutries are putting up finacial 'fences' to cover? germany says no 'period' on euro bonds which is the only way possible to save it. now big daddy soros has to put his idiotspeak powers to try and buy some time. sorry but it is just toast and ubs will be crushed in the process. this is just trying to buy time they no longer have.

Thu, 09/15/2011 - 07:41 | 1672428 Dr. Engali

Those darn pesky rogue traders. They just seem to pop up at the worst times. We had a rogue trader causin problems in 2008 and one now. It's a good thing they caught him before he did more damage.

Sarcasm off

It's like groundhog day.

Thu, 09/15/2011 - 07:32 | 1672438 youngman

Yes I heard he worked in the ETF division...now what ETF has been acting wierd....or will be..they did not say the trade has been unwound....they might have to buy themselves out of it....I´ll put my hat on gold and silver...his name is out..but I can´t spell it..

Thu, 09/15/2011 - 07:37 | 1672445 Youri Carma

UBS reports $2 billion loss by rogue trader http://www.economicvoice.com/ubs-reports-2-billion-loss-by-rogue-trader/50023671

The silver bugs also have an unsubstantiated theory that this loss was due to an attempt by the bank to exit a naked silver short position. http://maxkeiser.com/2011/09/15/breaking-ubs-rogue-trader-was-trying-to-exit-a-naked-silver-short/

Rogue trader costs UBS $2bn http://www.fx-mm.com/8493/news/rogue-trader-costs-ubs-2bn/

UBS’s apparent reluctance to identify the precise source of the loss fuelled early speculation that the bank itself may have been culpable.

One unsubstantiated rumour circling in Zurich was that the $2 billion shortfall arose from a risky short on silver.

Thu, 09/15/2011 - 07:44 | 1672460 ejm1961

Kweku Adoboli is the name of the London Rogue Trader

https://www.facebook.com/people/Kweku-Adoboli/777375270?sk=wall

Thu, 09/15/2011 - 07:50 | 1672470 ejm1961

Apparently trying to exit a short naked position in Silver as mentioned above

Thu, 09/15/2011 - 08:06 | 1672514 Everybodys All ...

Naked short position on silver does not add up to that kind of a loss in my opinion. Long the Swiss Franc on the other hand could do it considering what the Swiss National Bank intervention did to the Franc.

Thu, 09/15/2011 - 08:11 | 1672535 highwaytoserfdom

Funny when the money is lost someone gets blamed on a trade... How about the 20 plus point up move in the ES in fifteen minuits on Monday? What you have here is sector rotation out of usury leverage.. When you understand/play the game you know what is going on. The banksters are hoping that the people care about Eliot Spitzer's $5,000 peccadillo and ignor the $130,000,000 NYSE Grasso inicendent that got Eliot elected. We know Person owns a good portion of Financial Times, Murdock owns Dow Jones, Fox ect.. UBS issue yea blame it on a trader! What did they forget the "usury" line? Blame it on sub/alt/liar... THE BANKS LEVERED THIS JUNK 40 TO 1. Why? Gee government spending property tax a FICO system that rewards non-risk takers.

"The Rothschilds, and that class of money-lenders of whom they are the representatives and agents -- men who never think of lending a shilling to their next-door neighbors, for purposes of honest industry, unless upon the most ample security, and at the highest rate of interest -- stand ready, at all times, to lend money in unlimited amounts to those robbers and murderers, who call themselves governments, to be expended in shooting down those who do not submit quietly to being robbed and enslaved." by: Lysander Spooner
(1808-1887) Political theorist, activist, abolitionist Source: "No Treason #6" (1870)

Thu, 09/15/2011 - 08:38 | 1672617 mayhem_korner

Irony:

UBS rogue held/incarcerated for $2B loss limited to those holding an interest, Fed racks up TARP, $787 Stimulus, and $600B QE2 losses, affecting virtually everyone, and they get to campaign for re-election.

UBS Down 9.6% As Unauthorized Trade Results In USD2bn Loss

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