LONDON (AP) -- Britain's financial regulator has fined UBS AG for failures which allowed a rogue trader to lose $2.3 billion in the country's biggest-ever fraud case at a bank.
The Financial Services Authority said Monday that it was fining the Swiss-based bank 29.7 million pounds ($47.6 million) after finding serious weaknesses in procedures, management systems and internal controls in the London branch of UBS.
Former UBS trader Kweku Adoboli, 32, was last week sentenced to seven years in prison after being convicted of two counts of fraud.
"UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk," said Tracey McDermott, the FSA's director of enforcement and financial crime.
"As a result Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly."
The agency said UBS failed to investigate substantial increases in profit reported by the Exchange Traded Funds Desk in London where Adoboli worked.
The regulator catalogued a series of failures, notably that UBS' computerized trading system was ineffective in detecting unauthorized trades. It also found that the desk involved in the fraud was not disciplined for breaching daily trading limits and that the processing system allowed trades to be booked without sufficient information. Front-office supervision was also inadequate, it said.
The fine could have been 30 percent higher had UBS not cooperated, the regulator said.
"We are pleased that this chapter has been concluded and that the regulators have acknowledged the steps UBS has taken since this incident," the bank said.
The FSA noted that UBS took disciplinary action against employees involved in the case, including reclaiming bonuses and other deferred compensation amounting to more than 34 million pounds.