UBS fined 8 million pounds for unauthorised trades

By Kirstin Ridley

LONDON (Reuters) - The Financial Services Authority dealt a fresh blow to UBS's credibility, fining the Swiss bank 8.0 million pounds for unauthorised trades by London-based employees.

Handing down its third-largest fine, the FSA said on Thursday the failure of UBS's (UBSN.VX) systems and controls allowed four former staff to carry out the trades on at least 39 accounts over almost two years.

The Zurich-based bank has paid more than $42 million (25 million pounds) to date to compensate clients after its staff traded foreign exchange and precious metals using customers' money without authorisation and allocated losses to their accounts.

At its peak, as many as 50 trades a day were taking place.

"These employees were able to take advantage of UBS's inadequate systems and controls, giving them free rein to make unauthorised trades with customer money that they were then able to conceal," said Margaret Cole, the FSA's director of enforcement and financial crime.

The FSA said UBS, which is struggling to rebuild its reputation after a high-profile and bitter U.S. tax fraud probe, failed to heed warnings that its systems might not appropriate.

UBS said it had taken full remedial action since the trades, which took place between January 2006 and December 2007 at the bank's London-based wealth management business, came to light when a whistleblower raised the alarm internally.

"UBS deeply regrets this incident and having fully co-operated with the FSA's investigation, we are now pleased that this matter has been settled so that we can move forward," the bank said in a statement.