Trial of former UBS trader Adoboli begins
A FORMER trader for UBS goes on trial today in a case involving losses of $2.3bn (£1.44bn) that will subject the Swiss bank to an “uncomfortable” examination of its culture and practices.
Investment banker Kweku Adoboli, who was arrested a year ago when the huge losses came to light, has pleaded not guilty to two charges of fraud and two of false accounting related to disastrous trades that UBS says were unauthorised.
The episode marked a serious setback for UBS while it was trying to bounce back from near collapse during the financial crisis in 2008. In the aftermath, the bank made major changes in both its staff and strategy that are still underway.
Chief executive Oswald Gruebel resigned nine days after Adoboli’s arrest, having returned to the bank from retirement to steer it through its recovery. A string of other top staff stood down in the wake of the losses.
“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,” UBS’s new chief executive Sergio Ermotti told the bank’s staff last week.
“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.”
Ermotti says UBS has improved internal monitoring and controls to avoid any repeat of these events.
Adoboli, who worked on a trading desk at UBS’s investment banking arm in London, was arrested on 15 September 2011, the day UBS announced it had “discovered a loss due to unauthorised trading”. He remained in custody until 8 June, when he was released on bail.
If convicted, the 32-year-old Ghanaian faces a possible 10-year jail sentence.
His criminal trial at Southwark Crown Court starts today and is expected to last about eight weeks, although the early stages may largely concern procedural issues. UBS is not a party to the trial.
British-educated Adoboli, the son of a retired United Nations diplomat from Ghana, joined UBS in 2006. At the time of the alleged offences, he was working on the Exchange Traded Funds (ETFs) desk, part of the equities business within the UBS investment bank.