The bank have been given an £8m fine, which is the third largest fine levied by the City regulator. As a result of the trading activity, the bank has been forced to pay compensation of more than $42m (£25.2m) although the FSA established that it had not itself profited from the trading.

FSA director of enforcement and financial crime Margaret Cole, said the fine was set at a high level as a deterrent to others: “The penalty, one of the largest fines we have levied, reflects our tougher enforcement stance and our policy of imposing steep penalties to achieve credible deterrence.”

The FSA concluded that UBS had failed to manage and control key risks. “UBS deeply regrets this incident and, having fully co-operated with the FSA’s investigation, we are now pleased that this matter has been settled so we can move forward” the bank said. This has come at a bad time for the bank, which has just announced its first positive quarter in more than two years.

To read more on this story go to guardian.co.uk.

This quarter is helping to edge the investment bank back into the black. They reported an adjusted pretax profit of CHF (Swiss Franc) 66 million, excluding a CHF1.436m charge on its own debt as a result of credit spread tightening in the third quarter.

John Cryan, the chief financial officer of UBS, said “the FICC result was down to improved revenues in credit trading following several key hires, stable revenues in macro and the rates business picked up a little slack from the foreign exchange trading business, which experienced narrower spreads, lower volatilities and seasonally lower trading volumes.”

UBS said it expects the investment bank’s performance to continue to improve into 2010. To read more on this story go to online.wsj.com.