The CEO of UBS, head of Switzerland’s largest bank, resigned last week after the company discovered that a rogue trader in the firm had gambled away over $2 billion in investments.
The British police arrested UBS employee Kweku Adoboli on September 15 on charges of fraud and false accounting.
At first, CEO Oswald Gruebel said he had no intention of stepping down, but later retracted that statement.
“As CEO, I bear full responsibility for what occurs at UBS,” Gruebel said. “From my first day on the job, I placed the reputation of the bank above all else. That is why I want to and must act according to my convictions.”
To replace Gruebel, UBS promoted Sergio Ermotti to interim CEO. Many analysts also believe that he is likely to secure the full position. In an interview, Ermotti said he wanted to focus on the future of the company.
“We will not allow this incident to define us,” Ermotti said. “Nor will we permit it to undermine the achievements made under [Gruebel’s] leadership in the past two-and-a-half years.”
The rogue trader scandal served up national headlines for over a week, and some students say UBS will now have a difficult time winning back the trust of its investors.
“The UBS has been in trouble in the past for tax evasion issues, so it’s especially important now that they prove they’re a fiscally responsible company,” said Ari Hock, a junior marketing and supply-chain major. “It’s going to cause hardships for them if they want to remain a viable investment option. This makes UBS looks like a shady company you wouldn’t want to do business with.”
The scandal also highlighted how fragile a global economy can be. According to Bloomberg, the Government of Singapore Investment Co., one of the biggest investors in UBS, reported a $7.4 billion loss. As a result of the rogue trading losses, UBS’s stock dropped to a two-year low, and its effects have rippled throughout the world.
As Daniel Borman, a senior economics major, put it simply. “It’s a more globally connected economy. Be careful who you invest with.”