Kweku Adoboli Denies Fraud Charges

on Nov 1, 2012

Kweku Adoboli, the trader who lost UBS over $2.3 billion (£1.43 billion) through opening unauthorized positions, denied gambling with the money and said that his losses were the result of senior management pressure exerted on him.

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Adoboli said he felt under pressure to change his strategy in the summer of 2011 following guidance from senior traders at UBS including Carsten Kengeter, the chief executive of the investment bank. Allegedly, Kengeter and Alex Weber, current chairman of UBS, had spoken about the markets and both believed they would rally. Adoboli claims he had a bearish view but changed it and Kengeter encouraged him to maintain the new positive outlook.

“It’s a bit churlish of a junior trader to ignore the words of the global head of the investment bank,” Adoboli told a jury in Southwark Crown Court. “So we bought into the dip. As the market sold off, we bought more. But then the market actually did what I thought it would do, it sold off from peak to trough to 30 percent and I held on all the way down.”

The young trader said he’d wake up every day at 3am to monitor the markets and take the best possible decisions. According to him despite the amount of analysis and investigation he was carrying out, it was still a “calculated gamble”.
Adoboli also claimed he’d spoken with Yassine Bouhara, at that time the co-head of the global equities business, who told him unless he gets a “wrist slap” he isn’t pushing the boundaries. “Yassine came to my desk, it was on April 11, he said ‘I’m watching your book, are you going to double our profit and loss’” Adoboli said. “He said ‘you don’t know you are pushing the boundaries hard enough until you get a slap on the wrist.’”

!m[Young Trader Claims Senior Management Pushed Him to Take Bigger Risks](/uploads/story/699/thumbs/pic1_inline.png)Adoboli also told jurors that his 2011 bonus was lower than what it could’ve been because he redirected some of the profits he accumulated in a secret internal account. The account was dubbed “his umbrella” because it would cover for the losses he registered on “rainy days”. Paul Garlick, Adoboli’s lawyer, took his client through a number of printouts from electronic chat conversations, which show that colleagues of the “rogue trader”, including senior trader John Hughes and junior colleagues Simon Taylor and Christophe Bertrand, were well aware of the umbrella account and the purpose it carried. A private chat between Hughes and Taylor shows the two of them discussing the balance of the account, which reached $19.6 million (£12.2 million) in profit at one point.

Adoboli also claims he met with his colleagues at his ETF desk at a bar near their office on 12 September, 2011, to discuss what to do about the losses. The others decided he should take the blame, he said. “They decided that I should go forward on my own because that was the best way to make sure the desk could continue in its form,” Adoboli explained. “I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough.” His co-workers denied that the meeting ever took place when they were giving testimony. Text messages between Adoboli and his girlfriend reveal he told her that night he was “upset because the boys have sold me down the river”.
In the UK fraud charges carry a maximum sentence of 10 years in jail, and seven years for false accounting. The trial continues.


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