A Chinese rogue trader who ‘cheated’ investors on her way to losing £10m in gold trading has been sentenced to death today. The 30-year-old Wang Caipang was handed the sentence by a court in Wenzhou in east China after she borrowed the cash between January and October 2010. Caiping, who must first serve two years in prison, borrowed huge sums of money promising to buy equipment, invest in property and open credit guarantee firms, but instead used the cash to speculate in futures and gold trading along with her elder brother, Wang Guanglin, who is still at large…In China, a sentence of jail time then death usually means the punishment will be reduced to life in prison. [DM via Dealbook]
So far, the trading scandal doesn’t appear to have significantly hurt the confidence of UBS’s wealthy clients, who had pulled hundreds of millions of francs from the bank in 2008 and 2009 after Swiss authorities had to bail out UBS following about $50 billion in securities write-downs. A bruising tax evasion battle with the U.S. also drove clients away. UBS only managed to stem the exodus of clients late last year. [WSJ]
UBS trader Kweku Adoboli, accused over the Swiss banking giant’s $2.3 billion losses from unauthorized trades, was “sorry beyond words,” his attorney said Thursday. [NYP]
Don’t let one bad apple ruin it for the rest of us- be vigilant, my beautiful babies. Read more »
As the users of Mark Zuckerberg’s poking machine among us can attest, there are many things you can expect from your Facebook friends. You can expect that they’ll keep you abreast of every insignificant moment of their entire lives. You can expect that they’ll post public affirmations about being “stronger than this” following a break-up or a shitty lunch. You can expect that, when taking a trip, they’ll let you know the flight number, when they’re on the way to the airport, going through security, sitting at the gate**, waiting to take off, defying the request to power down their phone, losing said battle, touching down on the runway, waiting for their bags and still thinking about the person across the aisle who gave them a weird vibe. You can expect that they’ll upload countless photos of their trip with at least one set devoted to posing (alone) on the beach like they’re shooting the god damn Sports Illustrated swimsuit edition, having forced their travel companion to play photog. You can expect that they’ll assume you want to be friends with their household pet. You can expect that they’ll ask you to send positive thoughts into the universe when said pet when it comes down with a common cold.
As a card-carrying member of Facebook, UBS trader Kweku Adoboli was aware of the social contract one enters when becoming friends with people on the ‘book and held up his end of the bargain, dutifully ‘liking’ the status messages of friends forced to sit through 30-minute delays at Heathrow and keeping his fingers crossed that Mr. Fluffernutterbigglesworthjosecanseconiner would recover soon. Which is why it must have stung pretty badly when, after all he’s done for his so-called friends, they couldn’t toss him one bone and help him out of a tight spot. Read more »
The other day we noted that in the course of making fake trades at SocGen, Jerome Kerviel had invented a fake client who he’d named Matt, whose bio Kerviel added little flourishes to such as the fact that Matt apparently loved to play rugby. Today we hear from a non-imaginary colleague of Kerviel’s, none too happy about the fact that he owes her, a bottle of bubbly she’s probably never gonna get. Read more »
Under questioning by Judge Dominique Pauthe, Kerviel said he began making larger bets in 2005 and started falsifying transactions indicating he had covered his bets. Kerviel said he continued to exceed the 125 million-euro trading limit set for the Delta One trading desk where he worked in the years after 2005. “Seventy percent of the time, limits were exceeded,” Kerviel said when a prosecutor said he was the only one who exceeded limits. He said that the controls on his computer were “deactivated,” allowing him to fake transactions. The head of his trading desk knew as early as April 2007 that Kerviel was making fictitious transactions, Kerviel said.
Another rogue trader has caused huge losses at a major financial institution. MF Global Inc., which is largest broker of exchange-traded futures and options contracts, has said it set aside $141.5 million to cover losses caused by a trader who “substantially exceeded” trading limits in his own account. The FT identifies the culprit as Evan Dooley, a broker at the Memphis office, and reports that the trades were carried out at the CME Group in Chicago. Wheat traders in Chicago say he took a large short position on Tuesday night that backfired when the market turned the following day.
MF Global blames a failure of “retail order entry systems.” We have no idea what that means. It sounds a lot like when our tech people tell us that our email has gone down because of “core switch failure” but they’re reversing the polarity so everything will work better from now on.
There’s a serious question about how many of these rogue traders are out there. We hear about them when they take losing positions but apparently no one who “substantially exceeded” his or her trading limits has ever made money for his firm. At least, that’s what you’d have to believe by the absence of disclosures about gains from rogue traders.
“How come ‘rogue trader’ disclosures are always losses?” Kynikos founder Jim Chanos asks.
It’s a good question. Is it even plausible that rogue traders always lose money? Or are risk management practices generally far more lax than is commonly believed? Are there lots of these “unauthorized trades” that we never hear about because they either make money or don’t lose that much? From what we understand about SocGen,it seems at least plausible that they were all too happy to look the other way when Jerome Kerveil’s trades were making money.
Rogue wheat trader loses $140m [Financial Times]
MF Global Statement [Wall Street Journal]