The Fall of UBS
Apr 1, 2005
A Long Time Ago in 1997……
Lates nineties saw a lot of turbulence in the stock and asset markets. Just as great heights were being reached by internet and technology stocks and NASDAQ was crossing one milestone after the other some large institutions were causing tremors in the financial markets. LTCM was perhaps the most celebrated and well documented of such institutions, the fall of which has since become a textbook case.
But we believe that unlike natural disasters no financial disaster or crisis happens in a day or due to one person. It is a natural human tendency to single out a rouge trader or a clique that caused the downfall of a big institution; or we try to point to a very specific market determined set of circumstances that added as a catalyst to that downfall.
But, what about the rouge trader’s boss or their bosses? What about the Board of Directors of the institution? And, above all, what about the institution as a whole? Were all of them – and we take an institution as an organic whole – deaf, dumb and blind?
We believe that when something goes wrong, the company or the institution is to be blamed. Individuals cannot be greater than the institutions where they serve. John Merriweather was not above LTCM nor was Ramy Goldstein bigger than UBS. It is not shame on Ken Lay but rather shame on Enron.
In those heady and frenzied years of 1997 and 1998 something was happening at UBS as well…
The Fall of UBS
  
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