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Rogue trader may have cost UBS $2 billion

A rogue trader may have cost Swiss banking giant UBS $2 billion, the bank said on Thursday.

September 15, 2011 12:00:00 AM PDT
A rogue trader may have cost Swiss banking giant UBS $2 billion.

Police in London said they arrested a 31-year-old UBS trader, Kweku Adoboli, in the alleged fraud. UBS declined to confirm his name.

According to the bank, the unauthorized trading could result in UBS reporting a loss for the third quarter of this year.

This could potentially be the largest cost to a bank ever from rogue trading. It comes as UBS is struggling to restore its reputation after heavy subprime losses during the financial crisis that resulted in a government bailout, and an embarrassing U.S. tax evasion case that blew a hole in Switzerland's storied tradition of banking secrecy.

The Swiss banking regulator Finma said it was in contact with UBS about the incident, which was discovered late Wednesday.

UBS said the incident was still under investigation, but no customer money was affected.

The Associated Press contributed to this report.