Kweku Adoboli has been hauled in as the rogue trader who cost UBS $2 billion. But what happens to rogue traders? Does it ruin their careers? Hardly. They are part of a system that has turned markets into a casino. These banks are making reckless bets that will cost us trillions, not billions. What Adoboli lost was just small change. It's lunch money for investment bankers.
According to the John Gapper at the Financial Times, the rogue trader is a symptom of investment banking. Who's really the rogue trader? The individual or the bank? Gapper writes: "At one level, Mr Adoboli might appear to fit neatly into the stereotype of the rogue trader, a phenomenon that recurs so often that it is an endemic aspect of modern investment banking. He is young, fairly junior and works on a desk that combined proprietary position-taking with "flow trading" in customer orders. The latter has in the past allowed rogue traders such as Nick Leeson of Barings and Jérôme Kerviel of Société Générale, to conceal losses while appearing to be doing what their employers wanted. Mr Adoboli has been arrested but not charged, let alone convicted, so he has the presumption of innocence. But we do know plenty about the proclivity of UBS for getting involved in fiascos in which the bank believed it was taking relatively little risk but ended up losing large amounts of money."
Daniel Fisher at Forbes elaborates on that point. "Rogue traders have tried to defend themselves by saying their colleagues were doing the same things, or their bosses secretly encouraged them to swing for the fences with the bank's money."
Matt Taibbi at Rolling Stone says the term "rogue trader" is a misnomer. "They're not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples' money is exactly the job description of a lot of people on Wall Street. Hell, they don't call these guys "rogue traders" when they make a billion dollars gambling."
The whole system is rotten through and through. Investment banks operate like casinos, so excessive risk taking and making bad bets with investor's money comes with the territory. The so called rogue traders are just part of that system.
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