UBS Sued by Pension Plan Over $2.3 Billion Trading Loss
UBS AG was sued in a New York by a pension plan over a $2.3 billion trading loss reported last year that the bank blamed on an alleged rogue trader.
The lawsuit is based on the Swiss bank’s disclosure that a former trader, Kweku Adoboli, engaged in unauthorized trades on behalf of UBS resulting in that loss. Shares fell more than 10 percent on Sept. 15 after that disclosure.
“The rogue trader that caused the losses had been conducting unauthorized trades for almost three years,” according to the complaint filed today in federal court in Manhattan. During that time, UBS paid a fine of 8 million pounds ($12.48 million) to the British Financial Services Authority because another rogue trader had made unauthorized client-fund investments, the pension plan said.
UBS knew or recklessly disregarded evidence that its internal controls were insufficient, the pension plans alleged. They’re seeking group status on behalf of those who traded UBS securities on a U.S. exchange from March 15, 2011, to Sept. 15, 2011, plus an award of unspecified money damages.
Christiaan Brakman, a spokesman for the Zurich-based bank, declined to comment on the lawsuit allegations.
Adoboli, 32, was released from a London prison on June 13 after meeting bail. Facing fraud and false accounting charges, he had been in custody since his Sept. 15 arrest and has entered a plea of not guilty.
A trial is scheduled for September of this year.
The case is C.D.T.S. No. 1 and A.T.U. Local 1321 Pension Plan v. UBS AG (UBSN), 12-cv-04924, U.S. District Court, Southern District of New York (Manhattan).
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