UBS Rogue Trader Found Guilty of Fraud

UBS Fractured

A rogue UBS employee who lost £1.5bn for one of the world's best-known banks by trading huge sums in off-the-book deals, has been convicted of fraud.

A jury at Southwark crown court convicted Kweku Adoboli, 32, of one count of fraud. They are still considering one more count of fraud and four of false accounting.

Adoboli bowed his head when the jury foreman gave the unanimous verdict of all 10 jurors. Judge Brian Keith told the jury to seek similar verdicts on the remaining counts, but told them he would accept majority verdicts of 9-1 if necessary.

The trial heard how Adoboli accepted that his unofficial trades cost UBS more than £1.5bn, but he said he had been working in the best interests of a bank whose bosses placed him under enormous pressure to increase profits. He said colleagues on the exchange traded futures desk where he worked knew about his activities.

Prosecutors told the court that at one point the potential liabilities to UBS of Adoboli's illicit trades totalled more than £7bn, a sum big enough to bring down the bank.

The Ghanaian-born, British-educated trader was arrested on 14 September last year after back-office accountants began to press him on apparent anomalies in his trading records. Walking out of his London office, Adoboli went home to compose an email accepting "full responsibility for my actions and the shit storm that will now ensue" and apologising for putting the bank at risk.

The prosecution portrayed Adoboli, whose combined salary and bonus rose from £30,000 to £360,000 during his eight years with UBS, as a reckless gambler obsessed with his status as a rising star and desperate to boost his bonus. From late 2008 he began making unofficial deals, exceeding his daily limits and failing to make matching hedged trades, a requirement which restricts profits but caps possible losses.

Adoboli initially accrued substantial profits, which were lodged in a secret account he called his "umbrella" and then drip-fed back on to the regular books. But as European markets hit turmoil in the summer of 2011 the trades began to make losses, which he attempted to recoup with ever-bigger punts.

Giving evidence, Adoboli insisted his colleagues knew about the umbrella, and spoke of a prevailing culture in which even relatively junior traders such as himself were given minimal oversight and tacitly urged to make money by whatever means necessary.

The dramatic nine-week hearing saw Adoboli described as a gambling-mad markets obsessive who worked long hours and spent much of his leisure time devoted to financial spread betting. He lost £123,000 in the year before his arrest and, despite his huge income, was forced to take out a series of short-term "payday" loans.

Adoboli, who sat with his legal team rather than in the dock so he could advise them on the technical terms used, wept repeatedly when he gave evidence, saying he had been devoted to UBS and only wanted to help the bank survive market turmoil.

Powered by article was written by Peter Walker, for on Tuesday 20th November 2012 11.48 Europe/London © Guardian News and Media Limited 2010


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