Erik submitted this today:
I just read an article about the UBS trading scandal, http://www.economist.com/node/21530113.
After reading the article, my initial thought was that people who work in the back office of a bank and know how the accounting works for trades should not be allowed to make trades. This is what happened at UBS. The trader started off his career at UBS by doing the accounting for trades. He then got promoted to a trading desk and used his knowledge of the accounting treatment for trades to make unauthorized trades and cover them up through accounting. This raises another question, where were the internal controls? The trading desk the trader was on was a Delta One desk, where the trades are supposed to be the least risky. Basically, I think this scandal occurred due to two reasons; allowing people with the accounting knowledge to cover up trades to make unsupervised trades and failure of internal controls to check the trades that are made. What do you think?