Britain's financial regulator said Monday it had fined Swiss bank UBS 29.7 million pounds ($47.6 million) for failings that allowed Kweku Adoboli to commit the country's biggest fraud.
Adoboli, 32, was jailed last week for seven years after gambling away $2.3 billion of the lender's money.
"The FSA has fined UBS AG 29.7 million pounds for systems and controls failings that allowed an employee to cause substantial losses totaling $2.3 billion as a result of unauthorized trading," the watchdog said in a statement.
Last Tuesday, a jury in London found the Ghanaian-born banker guilty of two counts of fraud, though it cleared him of four charges of false accounting.
UBS became aware in September 2011 that unauthorized trades had taken place on the Swiss bank's Exchange Traded Funds Desk on its Global Synthetic Equities (GSE) division in London.
"UBS's systems and controls were seriously defective," said Tracey McDermott, director of enforcement and financial crime at Britain's Financial Services Authority (FSA) watchdog, in a statement.
"UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk.
"As a result Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly.
"We know from past experience that failures to manage risk properly can cause firms to fail and cause systemic harm."
The FSA, which carried out a probe with the Swiss Financial Market Supervisory Authority (Finma), said in Monday's statement it uncovered several "particularly serious" failings.
The regulators said that the computerized system operated by UBS to assist in risk management was not effective, while its trade capture and processing system had "significant deficiencies."
They added that "inadequate front office supervision" was also discovered including poorly executed and ineffective supervision arrangements within the GSE unit.
"Market confidence was put at risk, given the sudden announcement to the market and size of the losses announced," the FSA statement added.
"Negative announcements, such as this, put at risk the confidence which investors have in financial markets.
"The systems and controls failings revealed serious weaknesses in the firm's procedures, management systems and internal controls. The failings enabled Adoboli to commit financial crime."
During the two-month trial, Adoboli admitted losing the enormous sums but denied any wrongdoing, claiming that senior UBS managers were fully aware of his activities.
UBS qualified for a 30 percent discount in the fine after agreeing to settle early.