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UBS 'Rogue Trader' Kweku Adoboli Guilty Of Fraud Over £1.4bn Loss

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A rogue trader who lost £1.4 billion in bad deals which nearly brought down a major international bank has been found guilty of fraud, and jailed for seven years

At one point during his run of losses, rising star City trader Kweku Adoboli, 32, stood to run up losses of £7.5 billion for employer UBS.

kweku adoboli

Kweku Adoboli, who has been found guilty of fraud

The Ghanaian-born former public schoolboy exceeded his multi million-pound trading limits and failed to hedge trades, allegedly faking records to cover his tracks at the Swiss bank's London office.

He admitted the losses but claimed that he was pressured by staff to take risks, culminating in bad deals which wiped £2.8 billion off the bank's share value when they were discovered.

The jury at Southwark Crown Court, in London, convicted him on Tuesday of one count of fraud linked to the £1.4 billion loss.

He was found guilty of a second fraud charge by majority verdict but cleared of four remaining charges of false accounting after the jury deliberated for 16-and-a-half hours across five days.

Jailing him, trial judge Mr Justice Keith told Adoboli: "There is a strong streak of the gambler in you. You were arrogant to think the bank's rules for traders did not apply to you."

Trial judge Mr Justice Keith gave the jury a majority verdict direction this morning, saying they could deliver a 9-1 verdict on the remaining five charges.

The jury has been reduced to five men and five women after two jurors were discharged.

Adoboli joined UBS as a graduate trainee in 2003 and, at the time of the fraud, worked for its global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.

The prosecution argued that he was a gambler who believed he had the "magic touch".

But, giving evidence, he said everything he had done was aimed at benefiting the bank, where he viewed his colleagues as "family".

Adoboli said he had "lost control in the maelstrom of the financial crisis", and was doing well until he changed from a conservative "bearish" position to an aggressive "bullish" stance under pressure from senior managers.

He told the jury that staff were encouraged to take risks until they got "a slap on the back of the wrist".

UBS saw billions wiped off its share price as it found itself at the centre of the UK's biggest ever banking fraud.

The bank was at one point at risk of losing £7.4 billion because of Adoboli's actions, prosecutors said.

Sasha Wass QC told jurors that he was "a gamble or two away from destroying Switzerland's largest bank for his own gain".

The £1.4 billion loss he caused - revealed when Adoboli sent a bombshell email to colleagues - wiped around 10% or £2.8 billion off UBS' share price.

A day after the massive losses were revealed, the UK's Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority launched an investigation into what had happened.

The FSA said the inquiry would look at the details of the unauthorised trading, the apparent control failures which allowed it to go undetected, and the overall strengths of UBS' systems to prevent fraud.

UBS revealed that 100 investigators had been involved in the probe over an eight-month period.

It emerged during evidence that the inquiry had also uncovered three unrelated incidents of unauthorised trading at UBS, not involving substantial losses, that led to two workers being sacked.

The bank said that senior management had taken action 30 minutes after they were alerted to what Adoboli had done.
He was called back to the office and spoken to for several hours by bank staff before police were called in.

UBS went public on September 15 - the day after Adoboli revealed what he had done - declaring a loss of around two billion US dollars, which was later increased to 2.3 billion.

By the close of business the next day, it said it had closed out all the market risk and that no clients were affected.
The Board of Directors set up a committee to investigate what had happened, and in the aftermath Group Chief Executive Officer Oswald Grubel, and the co-heads of UBS' Equities business, all resigned.

In 2011, the bonus pool for the investment bank was down by 60%.

Shortly before the start of the trial, chief executive Sergio Ermotti sent out an internal message to staff, also published on the bank's website, that stressed that internal controls had been tightened.

He admitted that staff might be "embarrassed" by what had happened.

Mr Ermotti said: "It is important to note that UBS is not a party in the trial, and there is only one defendant in the dock.

"However, given how serious the consequences of the incident were, we must assume that UBS's culture and practices will be examined during the course of the trial. This is, to a certain extent, understandable.

"As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously.

"Misconduct also includes turning a blind eye, that is, failing to intervene when there are irregularities or failing to escalate concerns, however minor these may seem. Such behaviour is unacceptable.

"Amidst all the progress that we have made since this incident, we must never forget that our reputation is more important than anything else and that every one of us is a guardian of that reputation."

Several members of staff from UBS were present in court throughout the duration of the trial.

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