Ex-UBS Trader Hid Loss From Bosses, Prosecutor Says
September 14, 2012
Kweku Adoboli “lied to his bosses” at UBS AG to conceal losses of $2.3 billion from unauthorized trading, prosecutor Sasha Wass told a London criminal court today.
Adoboli, 32, exceeded his trading limits and invented “fictitious deals to conceal this,” Wass told the 12-person jury at the beginning of the trial. His “motive was to increase his bonus, his status within the bank, his job prospects and his ego.”
The former trader is charged with falsifying records on exchange-traded fund transactions and other documents needed for accounting purposes as early as October 2008, according to his indictment. Prosecutors also charged him with fraud for abusing his senior trader position “by causing or exposing UBS Bank to losses intending thereby to make a gain for himself.” Adoboli has denied the charges.
Adoboli arrives at court.
In the U.K., fraud charges carry a maximum sentence of 10 years in jail, and seven years for false accounting. Adoboli is facing two counts of each.
Adoboli worked for the Zurich-based investment bank’s Delta One desk, which handles trades for clients -- or risks the bank’s own money -- typically by speculating on a basket of securities. The loss, which came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures, didn’t affect any client positions, according to UBS.
Colossal Loss
“This colossal loss arose purely as a result of Mr. Adoboli’s fraudulent deal-making, which amounted, as we will see, to nothing more than gambling,” Wass said. “Mr. Adoboli’s activities were far more deliberate than that of a mere rogue trader. He did not simply make a few wild bets. He faked bookings, he created false accounts and conducted himself as a master fraudster, deliberately and systematically deceiving and defrauding the bank which was employing him.”
The trial comes on the heels of a series of scandals for London’s finance industry. Barclays Plc, the country’s second- largest lender by assets, settled with regulators in June for a record 290 million pounds ($469 million) for rigging interest rates. Standard Chartered Plc paid $340 million last month to settle allegations by New York’s banking regulator that it laundered $250 billion for Iran and HSBC Holdings Plc is also being probed over handling cash for sanctioned nations.
Adoboli worked for the Zurich-based investment bank’s Delta One desk, which handles trades for clients -- or risks the bank’s own money -- typically by speculating on a basket of securities. The loss, which came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures, didn’t affect any client positions, according to UBS.
