Case to open against ex-UBS trader in US$2b fraud trial
LONDON, Sept 14 — A British prosecutor will open the case today against former UBS trader Kweku Adoboli, who is on trial accused of fraud and false accounting that cost the Swiss bank US$2.25 billion (RM6.75 billion).
UBS is not a party to the criminal trial, expected to last eight weeks at Southwark Crown Court in central London, but its Chief Executive Sergio Ermotti warned staff last week that the bank’s culture and practices were likely to come under scrutiny.
Adoboli, 32, was arrested on September 15, 2011, the day when UBS announced that it had uncovered what it called “unauthorised trading” at its investment banking arm.
The episode knocked back UBS in its efforts to recover from near collapse during the 2008 financial crisis. It led to a management shake-up, a change of strategy, a tightening of internal controls and a reduced 2011 bonus round for some staff.
Adoboli pleaded not guilty on January 30 to two counts of fraud by abuse of position and two counts of false accounting. He remained in custody until June 8, when he was freed on bail.
A year almost to the day after his arrest, he will be in court all day today to hear prosecutor Sasha Wass outline the case against him to the 12 jurors.
The trial will be watched by a banking sector scarred by years of bad publicity since the financial crisis began and wary of giving regulators more reasons to tighten rules governing the industry.
UBS had given an estimate of US$2.3 billion in losses due to the unauthorised deals. The fourth count in Adoboli’s indictment says that he “dishonestly abused that position by causing losses to UBS Bank” calculated at US$2.25 billion.
The British and Swiss financial regulators, the FSA and FINMA, said on February 3 they were launching enforcement investigations into events at UBS. These are still going on.
Such investigations have sometimes resulted in fines and new regulatory requirements on banks.
Adoboli is the son of a retired United Nations diplomat from Ghana. He was educated in Britain, graduating from Nottingham University with a degree in computer science and management.
He joined UBS in 2006, initially in a trade support role. At the time of the alleged offences, he was working as a trader on the Exchange Traded Funds (ETFs) desk in London.
ETFs are financial instruments that allow holders to track indices rather than buying the underlying securities outright. They are a way for investors to gain exposure to markets that are illiquid or hard to access.
Adoboli was in court on Monday, when judge Brian Keith selected the jury and dealt with other procedural matters. Wass’s opening today will be the first time the court delves into the substance of the case. — Reuters