This morning I woke to the news that UBS, the giant global bank of Switzerland, suffered a $2 billion plus loss, allegedly because of a rogue trader on its London equities desk. If true, apparently UBS management didn’t get the memo on Barings or Société Générale, both of which suffered huge losses because of rogue traders and, in some ways more disturbing, bad oversight of traders.

News like this can lead the public to think all traders are rogues. That’s not the case. Fraudulent trading may cause these extreme losses, but bad trading can lose even more, and usually it’s cock-eyed executives with poor risk management that cause the most losses. (more…)