IT Could Have Caught $2 Billion Rogue Trader

superapecommando writes "With the benefit of hindsight, IT experts are claiming that technical countermeasures at Swiss bank UBS could have stopped rogue trader Kweku Adoboli running up a $2 billion loss." If American Express and Visa can mine transaction data and put a stop order on credit cards when you unexpectedly buy gas out of state, it seems like there could be patterns to watch for when the amounts are in the billions, too.

Comments

perhaps, perhaps not

[Trepidity]

A problem is that it's difficult to design a system to automatically determine "risky" or "rogue" or "non-normal" behavior in investment banking, because taking crazy bets is what they do, and interpreting their official policies loosely is a big part of that. Sometimes it turns out massively well, in which case bonuses all around; other times very badly, in which case start looking for ways to label the guy "rogue" and fire him. But it's de facto, if not officially, part of "normal" operation of an investment bank; it just sometimes turns out badly.

Re:perhaps, perhaps not

[Pinky's Brain]

We shouldn't shut it down, but we should disallow them to use government guaranteed deposits for it. Deposit banks should not be allowed to use their depositor money for leveraged investments or derivatives.

The computer is always guilty

[PolygamousRanchKid]

When a financial boo boo occurs, and IT is involved, it's IT's fault.

When a financial boo boo occurs, and IT is not involved, it's IT's fault.

Computers have a tough time defending themselves, so it is easy to pin the blame on them.

Maybe Watson, IBM's Jeopardy champ, could handle this:

"What . . . is a 'Scapegoat'?"

Re:lack of liability

[prefec2]

Because that would be fair. The whole thing is to privatize profits and let the public pay the bills. And by the way there is too much money on the market to really invest all that money and get something in return. But it is not only the financial market. You can found companies and relay responsibility for bad business decision to the banks, stakeholders etc. To make things right, the size of organizations in the financial and business area have to be limited.

Blame the bank administration

[msobkow]

The blame should be placed squarely on the shoulder's of the bank administrators. There is absolutely NO EXCUSE for not noticing a 2 BILLION DOLLAR LOSS.

It's not the computers.

It's not the traders.

It's not the system.

It's the BANKS ADMINISTRATION.

And it's high time that those lazy incompetent greedy bastards were held RESPONSIBLE for their incompetence instead of getting "bonuses."