UBS has revealed that the amount lost through alleged unauthorised trading at the group has risen to £1.45 billion (US $2.3 billion).
 


The Swiss bank provided further details about the discovery of rogue trading in its investment bank, which led to the arrest of Kweku Adoboli last week.
 

UBS alleges that Adoboli conducted a series of unauthorised trades in its global synthetic equity business in London. He has since been charged with fraud by City of London Police.
 


In a statement issued yesterday, UBS said, ‘The loss resulted from unauthorized [sic] speculative trading in various S&P 500, DAX and EuroStoxx index futures over the last three months. The positions taken within the business were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio. 
 


‘However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF (exchange-traded fund) positions, allegedly executed by the trader. These fictitious trades concealed the fact that the index futures trades violated UBS’s risk limits.’
 


The Zurich-based banking group reaffirmed that ‘no client positions were affected’ and said that its equities business is now ‘operating normally within its previously defined risk limits’.
 

A special committee has been set up by the UBS board in order to conduct an independent investigation into the trading scandal and will be led by senior independent director David Sidwell.
 

The Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority have also launched an investigation into the unauthorised trading losses at the banking group.
 


The FSA said the third party investigation would focus on the control failures that saw the trading continue undetected and that it would assess the overall strength of UBS’s controls to prevent fraudulent activity in its investment operations.