UBS trader who lost $2.3 bn jailed for seven years

Thewest, AFP, November 20, 2012

Former UBS banker Kweku Adoboli arrives at Southwark Crown Court in London.
 Adoboli, who gambled away $2.3 billion of the Swiss bank's money, was convicted
of Britain's biggest ever fraud.

LONDON (AFP) - UBS trader Kweku Adoboli, who gambled away $2.3 billion of the Swiss bank's money, was sentenced to seven years in prison on Tuesday for Britain's biggest ever fraud.

"There is a strong streak of the gambler in you," judge Brian Keith told the Ghanaian-born banker. "You were arrogant to think the bank's rules for traders did not apply to you."

The 32-year-old was found guilty of two counts of fraud by a jury at Southwark Crown Court but cleared of four charges of false accounting.

"The amount of money involved was staggering, impacting hugely on the bank but also on their employees, shareholders and investors," said Andrew Penhale, deputy head of fraud at the Crown Prosecution Service.

"This was not a victimless crime."

Adoboli had admitted the losses but denied any wrongdoing.

During the two-month trial he claimed senior managers were fully aware of his activities and encouraged him to take risks to make profits for UBS.

But prosecutors said that in a bid to boost his status and bonuses Adoboli exceeded his trading limits, failed to hedge trades and faked records to cover his tracks.

The court heard had that at one point he was at risk of causing the bank losses of $12 billion.

Adoboli's arrest in September wiped 10 percent off the bank's share price.

Prosecution lawyer Sasha Wass had told jurors during the trial that he was "a gamble or two away from destroying Switzerland's largest bank for his own gain".

Adoboli, the privately-educated son of a former United Nations official, told jurors that he had dedicated his adult life to benefiting the bank and viewed his colleagues at UBS's London offices as "family".

After completing an internship at UBS while at university in England, he went to work for the bank full time following his graduation in 2003.

He joined its exchange traded funds desk in 2006, dealing with funds that rise and fall in value depending on the performance of the markets they track.

By 2007, he and another more senior trader were managing a portfolio worth $50 billion.

It might seem "crazy" that traders with just a few years' experience were in charge of such a huge portfolio, Adoboli told the jury, but "that's how it was".

The court heard that Adoboli began conducting off-the-books trades in 2008, holding them off the ledger until the market rebounded.

But as the financial crisis took hold, he racked up huge losses, and discrepancies in his trading activities eventually aroused the suspicion of a back office accountant.

Adoboli insisted that what he had done did not make him a "rogue trader".

"It is not fraudulent -- it is finding a way to do your job," he told the court.

The case has drawn comparisons to Jerome Kerviel, the French trader who lost the Societe Generale bank 4.9 billion euros ($6.3 billion) in 2008, and British rogue trader Nick Leeson, who caused the collapse of Barings Bank in 1995.

Related Articles:

UBS fined £29.7m by FSA over Kweku Adoboli case

UBS trader Kweku Adoboli 'gambled away' £1.4bn