Kweku Adoboli booked tens of thousands of real and fake trades during the summer of 2011 that exposed UBS to losses that may have escalated to $12bn within weeks, a bank executive told a London court Tuesday.
Bloomberg reports that Adoboli booked fake futures and ETF trades to make it appear as if he had hedged the risk of his real transactions that far exceeded his limits, Ruwan Weerasekera, Chief Operating Officer of securities at UBS’s investment bank, testified. The potential loss was about $1.5bn in late June 2011, and soared to $12bn by early August, he said.
'Adoboli created the view that the actual trades were hedged trades by booking fictitious trades which offset the real position', said Weerasekera, who testified that as many as half of Adoboli’s transactions were fabricated.
Adoboli is on trial for fraud and false accounting for allegedly causing a $2.3bn trading loss at Zurich-based UBS. Prosecutors say he created an internal account while working on the bank’s exchange-traded funds desk in London where he parked trading profits to cover future losses. Adoboli, 32, has pleaded not guilty and his lawyers have sought to show the jury that others knew about the secret fund.
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