We’re hearing a lot of grumbling from back-office employees after the unexpected $2.3 billion loss at UBS believed to be caused by a lone rogue trader.
The reason is they’re automatically compared to the accused rogue trader, Kweku Adoboli, who started in the back office at UBS before moving to the Swiss bank’s trading desk.
The comparison is terrible because it’s believed that Adoboli may have used his knowledge of back-office operations to cover up his trades.
And now some back-office employees who have aspirations to move to the front-office are concerned about their future career prospects.
They think that the banks will be wary of promoting them into the front-office.
“I definitely think it’s going to affect me… For people who want to move into front or middle offices, it kind of sucks,” a back-office employee at a large Wall Street bank told us.
The back-office employee, who spoke on the condition of anonymity, told us his office is mostly full of young people just out of school who are using the back-office as a stepping stone to move up on Wall Street.
He said he wants to be a trader one day.
The alleged rogue trading scandal does raise legitimate concerns for banks who want to reduce their risk. Taking on someone from the back-office could possibly increase the risk having bringing on another rogue trader such as Jerome Kerveil who used his knowledge of back-office operations to conceal his trades that cost Societe General a whopping $6 billion. Still, it doesn’t mean that back-office employees are trying to defraud their firms.
Just because you work in a back office, it doesn’t mean you’ll know all the loopholes, the back-office employee we spoke to said.
What you do know, he explains, is how you deal with the accounting part of a trade, how you report it and what happens after the trade.
He said he could see the possibility for people with back-office experience to do rogue trading because “you have a better idea of what’s going on if you’ve worked in a back-office.”
What happened at UBS is unfortunate for those who just want to move up in their firms, he said.
“I definitely think it’s going to be a barrier for people to move. I’m kind of pissed because that’s what I want to do. It’s definitely going to make it more challenging.”