*Kweku Adoboli, a native of the West African nation of Ghana, was arrested last Thursday on suspicion of rouge trading which caused a $2 billion loss for the giant Swiss bank UBS. Bank officials said the loss could wipe out their entire quarterly profits.
Reports of 31-year-old Adoboli’s dealings generated fears through the entire European banking community which was already suffering as a result of the European debt crisis which is threatening to bankrupt several governments.
Adoboli was a fast-rising star in the complex world of derivatives trading. As part of this business, traders create investments to track customized assets, like a basket of five retail stocks. In some cases, they use computer programs to profit from tiny differences between the prices of derivatives and their underlying assets. Specially, Abodoli and his team specialized in an especially hot corner of the market known as exchange-traded funds – a booming $1.4 trillion industry.
A “rogue trader” is essentially an authorized employee making unauthorized trades on behalf of a financial institution.
(source: Taylor Media Services)