After serving almost half of his sentence for two counts of fraud, Kweku Adoboli was released from jail in June 2015.
During his trial at Southwark Crown Court, Kweku Adoboli told the jury that UBS staff were encouraged to take risks until they got “a slap on the back of the wrist” by senior managers.
Tracey McDermott of the FCA’s predecessor, the Financial Services Authority, said in 2012 that the bank’s faulty controls had allowed Kweku Adoboli’s losses to mount to what was the largest trading loss in the UK.
“UBS’s systems and controls were seriously defective,” she said.
“As a result, Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly.”
He is facing deportation to his native Ghana after an immigration tribunal this week ruled that he should be removed from the UK.
According to the UK’s law, foreign nationals who have been sentenced to more than a year in jail should be considered for deportation.
Kweku Adoboli, the son of a UN diplomat who was educated at a Yorkshire boarding school, said he would appeal against the “heartbreaking” decision.
Kweku Adoboli, the suspected UBS rogue trader said today that he was “sorry beyond words” for the record $2.3 billion losses suffered by Swiss banking giant.
Kweku Adoboli sat in the dock at City of London magistrates’ court as his barrister Patrick Gibbs QC told the court:
“He is sorry beyond words for what has happened here.
“He went to UBS and told them what he had done and he stands now appalled at the scale of the consequences of his disastrous miscalculations.”
Kweku Adoboli will face a second count of fraud in addition to two charges of false accounting over three years at UBS
Kweku Adoboli, 31, will face a second count of fraud in addition to two charges of false accounting over three years at UBS.
Magistrates remanded Kweku Adoboli in custody until October 20 at the first of two committal hearings.
Prosecutors allege Adoboli lost the cash while working at UBS’s global synthetic equities division, buying and selling exchange traded funds, which track different types of stocks, bonds or commodities such as metals.
Kweku Adoboli’s lawyer, Louise Hodges, of solicitors Kingsley Napley, has made no application so far for bail for her client.
The alleged fraud offence took place between January 1 and September 14 this year.
Kweku Adoboli, son of a former Ghanaian official to the United Nations, joined the Swiss firm in a junior capacity in 2002.
The fraud charge against the rogue trader reads:
“While occupying a position, namely being a senior trader with Global Synthetic Equities, in which you were expected to safeguard, or not to act against, the financial interests of UBS Bank, you dishonestly abused that position intending thereby to make a gain for yourself, causing losses to UBS or to expose UBS to risk of loss.”
The two accusations of false accounting claim that Kweku Adoboli “falsified a record, namely an exchange traded fund transaction”
The two accusations of false accounting – which date back to 2008 – claim that Kweku Adoboli “falsified a record, namely an exchange traded fund transaction”.
After Kweku Adoboli’s first appearance in court, UBS revised upwards the cost of the rogue trading to 2.3 billion US dollars (£1.5 billion) after previously saying the incident had cost it in the range of two billion US dollars (£1.3 billion).
British Financial Services Authority and its Swiss counterpart have launched an investigation into why UBS failed to spot allegedly fraudulent trading.
Swiss banking giant UBS has admitted that the losses allegedly racked up by “rogue trader” Kweku Adoboli has risen from $2 billion to $2.3 billion.
UBS said the huge loss was caused by unauthorized trades on stock index futures made over the past three months.
It said the transactions Kweku Adoboli made were within normal limits and slipped through risk controls due to “fictitious trades” in complex financial instruments called exchange traded funds (ETFs), which were used to cover up losses.
Kweku Adoboli is charged with $2.3 billion fraud at Swiss banking giant UBS
According to UBS, “the true magnitude of the risk exposure was distorted” because the hedges that traders are required to put in place had been fabricated.
The bank also suggested that the trades involved “unauthorized speculative” bets on various S&P 500, Dax and Eurostoxx index futures, rather than on the Swiss franc, as some had thought.
Swiss banking giant also claims that the non-existent hedges entered into its records were “fictitious, forward-settling, cash ETF positions”, trades that had never actually been executed.
UBS also countered suggestions that it did not notice the trades until Kweku Adoboli came forward.
UBS said that Kweku Adoboli, who was charged on Friday with fraud and false accounting, had been responding to the bank’s inquiries.
It appears that the fraud came to light last Wednesday during a review of Kweku Adoboli’s trading book, which it has now unwound.
UBS has now launched an internal investigation regarding the failure of its risk systems.
UBS board of directors had set up a committee chaired by independent director David Sidwell, former chief financial officer at Morgan Stanley, to conduct an independent investigation into the trades and the bank’s control systems.
UBS stunned markets on Thursday when it announced unauthorized trades had lost it about $2 billion.
The figure was raised by a further $300 million on Sunday, and chief executive Oswald Gruebel said the alleged fraud would have consequences for strategy and possibly also for himself.
The huge loss is a heavy blow to the reputation of Switzerland’s biggest bank, which had just started to recover after its near collapse during the financial crisis and a damaging U.S. investigation into its aiding wealthy Americans to dodge taxes.
By 7:45 a.m. UBS shares were down 1.6% at 10.10 francs, outperforming a 2.6% slide on the European banking stocks index.
UBS CEO Oswald Gruebel said he would not be resigning, and said calls for his resignation were “purely political” and that he was “not thinking about stepping down”.
Gruebel added that while he bore ultimate responsibility, he did not feel “guilty” for failing to prevent the costly and embarrassing incident.
Gruebel defiant stance comes amid suggestions that Swiss regulators could tell the bank to hive off or close down its investment banking division, which houses the “Delta One” desk where Kweku Adoboli worked.
The Financial Services Authority and Swiss regulators have drafted in accountancy firm Deloitte to investigate the affair.
Meanwhile, UBS senior independent director David Sidwell, a former finance chief at JP Morgan Chase, is leading the bank’s own probe into the matter.
Kweku Adoboli, the suspected rogue trader accused of a staggering $2 billion fraud told friends he needed “a miracle” days before he was arrested.
Kweku Adoboli, 31, posted a strange message on his Facebook account as he tried to recover enormous losses he had made through illegal trading.
London Police detained the suspected rogue trader, who works for Swiss banking group UBS in raid at 3:30 a.m. on Thursday at his luxury London flat.
Kweku Adoboli is Ghanaian origin, but he was privately educated in UK and is the son of a retired UN worker. He is accused of being responsible for the biggest loss ever accrued by a single trader based in London.
The $2 billion fraud figure easily dwarfs the $1.3 billion lost by rogue trader Nick Leeson, the man behind the collapse of Barings bank in 1995.
Kweku Adoboli enjoyed parties and the company of attractive women
The same amount was intended by UBS to save by cutting 3,500 jobs worldwide.
Speculation was mounting that he may have been caught out after the Swiss Central Bank unexpectedly devalued the franc last week, producing mammoth losses on one of his currency trades.
On Tuesday, September 6, a Kweku Adoboli’s final Facebook message read: “Need a miracle.”
Kweku Adoboli’s boss John Hughes is reported to have quit his job in the aftermath of the scandal. Sources said Hughes would have faced serious questions about supervision of staff. The former boss could not be reached for comment last night.
It is understood that UBS have discovered the $2 billion loss late on Wednesday afternoon.
City of London Police commander Ian Dyson said the force was tipped off by UBS at 1:00 a.m. on Thursday.
Within three hours, police had entered UBS headquarter and had also arrested Kweku Adoboli, who according to sources was a “work-hard, play-hard” trader who enjoyed the company of a series of attractive women at his flat in Whitechapel, East London.
According to some sources, Adoboli earned around $300,000 a year, plus up to $600,000 more in bonuses.
Kweku Adoboli was formally arrested on suspicion of fraud by abuse of position, and was still in custody last night. Police are liaising closely with the Crown Prosecution Service and a decision on charges could be made over the weekend.
Kweku Adoboli was detained on the anniversary day of the collapse of U.S. investment bank Lehman Brothers three years ago.
Rogue traders act independently of colleagues (often recklessly), harming both clients and the firm they work for. In most cases this type of trading is high risk and can create enormous losses.
Police questioned Kweku Adoboli about the fraud, but it was unclear how he was allegedly able to lose such eye-watering sums without being detected by UBS’s risk management team.
The type of trade Kweku Adoboli used is the same as the one used by Jérôme Kerviel, the rogue trader who amassed losses of 4.9billion euros at Société Générale in 2008.
Kweku Adoboli joined UBS in 2006 as a trainee investment adviser. He took on a more senior role as a trade support analyst in 2007 before assuming his present role in one of the banking world’s most important trading areas.
According to his LinkedIn profile, Kweku Adoboli worked as director of Exchange Traded Funds (ETF) and Delta-1 Trading at UBS Investment Bank.
ETFs are an investment fund traded on stock exchanges, much like stocks, which holds assets such as stocks, commodities, or bonds.