UBS Archives - Econ70

Criminal Incentives

By Econ70 | 12/19/2012

Last week, HSBC paid a $1.92 billion penalty for laundering money for murderers. Today, UBS is fined $1.5 billion for its part in rigging LIBOR over a multiyear period! While these banks will now “beef up their compliance procedures” and fire some traders, unless top management serves prison time, these toothless penalties are simply a…

Risky Business

By Econ70 | 09/19/2011

The recent $2.3 billion trading loss reported by UBS begs the question, what are these guys doing? The activity is called Delta One (D1) trading and involves trading derivatives. It’s appealing because buying derivatives is more lucrative than buying the underlying asset and it gives clients exposure to investments regulators prohibit. A pension fund might…