Rogue Trading No Training: The Connections

Ariane Chapelle

Adoboli, Kerviel, Leeson, Jett, Iguchi, Rusnak... the list goes on. Rogue traders appear to be endemic to the global financial system. Although only the largest and most spectacular losses make world headlines, smaller unauthorised trading goes on all the time at many of the world’s banks – some say it is actively encouraged by management, so long as it is making money. This is what is being argued by Sachin Karpe, a desk head at UBS AG’s wealth-management unit fired for unauthorized trading in 39 client accounts, and Laila Karan, a former client adviser who Karpe oversaw on the Asia-2 desk.

The two men are in court defending themselves against charges by the UK Financial Services Authority that they caused losses of $42.4 million on 21 client accounts through unauthorised trading. The FSA alleges that Karpe covered up a $130,626 loss he made in a client account with money from another client account. The regulator further claims, he also authorised the deletion of mailed account statements and made foreign exchange trades with clients’ money to minimize customer losses. Karpe’s defense claims that he had his clients’ implied consent, that the practice was widespread within UBS