Rogue Trader Costs UBS $2 Billion

The Swiss bank UBS says a rogue trader has cost it $2 billion.

Police in London say they've arrested 31-year-old Kweku Adoboli Thursday on fraud allegations. UBS is Switzerland's largest bank. It says it may end up reporting a loss for the entire third quarter as a result of the rogue trade.

Switzerland's banking regulator says it's the biggest such fraud ever seen at a Swiss bank. UBS says the incident remains under investigation, but no client money was involved. The bank suffered heavy subprime losses during the financial crisis and ended up being bailed out. A tax evasion case in the U.S. also damaged UBS' reputation and blew a hole in Switzerland's tradition of banking secrecy.

The case is evoking memories of Jerome Kerviel. He was the trader at the French bank Societe Generale who secretly gambled away $6.7 billion. That fraud prompted banks to tighten oversight rules in an effort to ensure such large sums couldn't be traded unnoticed. UBS shares have been plunging on the Zurich exchange.

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