UBS’s Ermotti Warns Staff on Misconduct Before Adoboli Trial
UBS AG (UBSN) Chief Executive Officer Sergio Ermotti reminded staff that misconduct is “unacceptable” as Switzerland’s biggest bank prepares for the start of the trial over losses from unauthorized trading.
“Misconduct also includes turning a blind eye, that is, failing to intervene when there are irregularities or failing to escalate concerns, however minor these may seem,” Ermotti said in a memo to staff today. “Amidst all the progress that we have made since this incident, we must never forget that our reputation is more important than anything else and that every one of us is a guardian of that reputation.”
The trial of Kweku Adoboli, who is accused of unauthorized trading that resulted in a $2.3 billion loss for UBS, is due to start Sept. 10. The former trader at the firm’s investment bank in London pleaded not guilty in January to charges of fraud and false accounting.
“As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously,” Ermotti said in the memo, the contents of which were confirmed by Zurich-based UBS. The bank is not a party in the trial.
The loss has resulted in the departure of CEO Oswald Gruebel, the co-heads of the bank’s equities division, Francois Gouws and Yassine Bouhara, as well as disciplinary actions against a number of employees. UBS said in May that it had completed remedial action to address control deficiencies identified in the aftermath of the unauthorized trading.
“We have been absolutely determined to learn from this incident and I am aware that you may have been embarrassed by this episode,” Ermotti said. “However, it’s important that you do not allow others to put you down or let this incident detract from your many achievements. The details that will come to light during the trial concern the past and we should look to the future.”
The U.K. and Swiss financial regulators started formal enforcement actions against UBS over the loss in February. The bank has said it’s cooperating with the regulators.
The bank said on its website this month that it strengthened internal controls in the aftermath of the incident. UBS introduced mandatory risk training for staff globally and a redesigned training for supervisors, while adding risk management to employees’ performance objectives, the bank said.
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