Thaindian News

LONDON (BNO NEWS) — A man was arrested in central London on early Thursday morning on suspicion of fraud in connection with the loss of more than $2 billion due to unauthorized trading at Swiss bank UBS, police said.

City of London Police confirmed a 31-year-old man had been arrested at around 3.30 a.m. local time on suspicion of fraud by abuse of position. “He remains in police custody and the City of London Police have launched an investigation,” the spokeswoman said.

Other details about the arrest in London were not immediately released.

Earlier on Thursday, UBS said in a brief statement that it discovered a loss due to unauthorized trading by a trader in its Investment Bank, but gave no other details. “The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of USD 2 billion,” the statement said.

The bank said no client positions were affected by the unauthorized trading but warned the loss of more than $2 billion could lead UBS to report a loss for the third quarter of 2011. The dramatic news, announced moments before European markets opened, caused UBS stocks to fall more than eight percent before they slightly recovered.

UBS, which is headquartered in Switzerland, provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland. It operates in more than 40 countries and is considered to be the world’s second largest manager of private wealth assets.

Thursday’s news reminded of other rogue trading incidents, including the case of French trader Jérôme Kerviel who was blamed for a loss of approximately 4.9 billion euros ($6.7 billion) at bank Société Générale in January 2008.