U.S. securities laws have their limits and do not justify making UBS liable to shareholders for touting its ability to control risk even as it harbored a rogue trader who caused $2.3bn of losses, a federal judge ruled on Friday.
Reuters reports that U.S. District Judge Katherine Forrest in Manhattan threw out a lawsuit seeking to hold the Swiss bank responsible for shareholder losses stemming from revelations about unauthorized and fictitious trades made by former UBS trader Kweku Adoboli.
Adoboli, a British trader born in Ghana, was convicted in November 2012 of fraud and sentenced to seven years in prison. He admitted at trial to making his trades to hide his risk exposures, but said he was trying to make money for the bank.
Plaintiffs led by two pension funds in Elmsford, New York, claimed that before Adoboli's trades were revealed on Sept. 15, 2011, UBS officials including then-CEO Gruebel had misled investors by frequently touting the bank's internal controls and 'disciplined' risk culture.
Hit the link below to access the complete Reuters article: