UBS has been hit with the third-largest fine levied by the UK financial watchdog for failing to stop employees from using customer accounts to speculate in the foreign exchange and commodities markets.

After a UBS employee blew the whistle, an internal investigation revealed that a desk head and three other employees in the international wealth management business had been placing up to 50 unauthorised trades a day in 2006 and 2007, according to a final notice from the UK Financial Services Authority.

The employees exploited loose controls on trade reporting to allocate their losses to customer accounts and repeatedly moved money around to hide their activities, the notice said. The activities led to client losses of nearly ￡26m ($43m) over a two-year period.