That’ll be £42.4m, please – or £30m for early settlement. The fine slapped on UBSby the Financial Services Authorityyesterday for control failures that gave rogue trader Kweku Adoboli scope to lose the bank $2.3bn is the UK regulator’s third biggest. The Swiss bank has weathered the loss, Adoboli has been jailed, heads have rolled. But what is achieved by fining his employer such a derisory amount?
Such fines are relatively new to the UK. The FSA fined Barclaysfor rigging Libor rates; fines on others could follow. And JPMorganwas fined £33m for failing to segregate client assets. If the amounts look symbolic, that is often because of crazily light guidelines. The FSA can levy only up to a fifth of business revenue in the offending period. With UBS, it settled for 15 per cent in recognition of measures taken since, despite the bank’s failure to tighten controls after an £8m fine three years ago. By comparison, French regulators fined Société Générale only €4m for risk control failures after Jérôme Kerviel lost it almost €5bn in 2008.
US fines are meatier. In 1996, the Securities and Exchange Commissionfined Sumitomo Corp$160m after a trader lost $2.6bn trying to corner the copper market. That is more like it. But it then fined Diageoa mere $16m last year to settle Asian bribery allegations, five times what the SEC said Diageo paid to boost sales and win tax benefits.