Swiss bank UBS (NYSE:UBS) announced today, 14 months after the original incident became public, that a trader responsible for more than $2 billion in losses has been convicted on two counts of fraud and sentenced to seven years in prison. Kweku Adoboli ended up losing $2.3 billion of his employer's money; he was found not guilty on four counts of false accounting.
UBS said the trader "took unauthorized, speculative positions concealed by the booking of fictitious, offsetting trades, so the violation of UBS's risks limits could not be detected."
The company initially reported the trading losses on Sept. 15, 2011, in a press release, saying it was due to a single trader in its Investment Bank, and that the losses would be in the range of $2 billion. The company also reported at the time that those losses might cause the company to lose money in the quarter, although UBS ended up profitable in the period. Adoboli was a trader in London at the time of the illegal actions.
Just nine days after the bank announced the unauthorized trading, Group CEO Oswald J. Grubel resigned from the bank, citing a duty to assume responsibility for the unauthorized trading incident.