Prof. Edward Pekarek quoted in Business Insurance magazine on rogue UBS trader

Business Insurance magazine turned to visiting Pace Law School Professor Edward Pekarek, assistant director and supervising attorney at the Investor Rights Clinic, for a story on the rogue UBS trader accused of losing the company $2 billion. The story looks at risk management lessons that banking institutions can learn from the episode.

Experts quoted in the article stressed the need to have separate back-office and trading operations. Prof. Pekarek said the UBS trader, as well as two other recent “rogue” traders at other banks, had extensive back-office experience before they became traders.

That is where they “learned where the cracks were in the system,” he said. Then, when promoted to the front office, they “traded beyond their abilities and found themselves deep in a hole and kept digging, and used their back-office training as the shovel” to disguise their activity, Mr. Pekarek said.

Read the whole article here.

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