UBS employee banned and fined £35,000

The FSA has fined and banned a former UBS employee for helping cover-up unauthorised trading losses.

Andrew Cumming, a former client adviser at the London branch of UBS, must pay £35,000 and is not allowed to act in any regulated capacity for a minimum of five years on the grounds he is not ‘fit and proper'.

UBS was hit with an £8m fine from the FSA earlier this month for systems and controls failings which failed to prevent the fraudulent activity.

Cumming's signature appears on paperwork which helped document fake loans to conceal losses arising from unauthorised trading.

Affected customers were told their funds were providing loans to other UBS customers with promises of high rates of interest.

To make these ‘loans' appear official, documents on UBS headed paper were sent to customers stating the ‘loans' were guaranteed by the firm.

The FSA's investigation concluded Cumming, who worked in UBS's international wealth management business, signed these documents on seven occasions between October 2005 and October 2007, after a senior colleague ask him to do so, despite knowing the ‘loans' were bogus.

By late 2007, Cumming was fully aware the ‘loans' were part of a scam to conceal losses from unauthorised transactions, but he failed to escalate this knowledge.

Instead, he signed a further ‘loan' allowing the deception to continue.

Margaret Cole, FSA director of enforcement and financial crime, says:"Cumming deliberately misled UBS and its customers. Although he did not stand to make a personal gain, his complicity allowed a colleague to continue making unauthorised trades, while the losses continued to mount up.

"We are committed to deterring behaviour of this kind by banning and fining anyone found to have committed such misconduct."

In setting the financial penalty, the FSA agreed Cumming did not initiate the circumstances leading to his misconduct, nor did he conduct any of the unauthorised transactions.

Cummings also qualified for a 30% cut on his financial penalty for agreeing to settle at an early stage of the FSA's investigation.

Serious financial hardship entitled Cummings to a further discount.

If it wasn't for the settlement discount and Cumming's hardship, the FSA would have imposed a financial penalty of £100,000.