Big Bankers UBS is telling the world and its dog that its computer systems detected unusual and unauthorised trading activity, before rogue trader Kweku Adoboli ran up a $2 billion debt.
Chief executive Sergio Ermotti, who is running the company following Oswald Grubel's resignation last month, told employees that the bank computer detected the rogue activity.
According to the Wall Street Journal, the bank has been carrying out an internal investigation to try and find out how Adoboli was able to carry on with his trading.
Initially it was hoped that the bank could blame a computer glitch. The outfit has some pretty natty software which was supposed to send red flashing lights when a trader acted oddly.
In the memo, seen by the Wall Street Journal, Ermotti wrote: "Our internal investigation indicates that risk and operational systems did detect unauthorised or unexplained activity but this was not sufficiently investigated nor was appropriate action taken to ensure existing controls were enforced."
In short, the red lights came on, it was just that everyone ignored them.
Ermotti said that the bank had to be straight with itself. In no circumstances should something like this ever occur and this is evidence of a failure to exercise appropriate controls.
The heads of UBS' global equities business, Francois Gouws and Yassine Bouhara, have also resigned and it would seem that there are elements of a criminal case being prepared.
The bank said it was working to improve its risk and control framework, adding that it was clarifying rules and processes. Improvements will not do much if the warnings are ignored.