Adoboli's UBS Colleague Denies Bar Meeting Over Trades
By Erik Larson – Oct 3, 2012 7:01 PM ET
Simon Taylor, a former UBS AG (UBSN) trader, told a U.K. jury he didn’t attend a secret meeting with his co-worker Kweku Adoboli at a bar last year to decide who should take the blame for mounting losses from unauthorized trades.
Taylor, testifying yesterday at Adoboli’s trial in London, denied a claim by Adoboli’s lawyer that he met with Adoboli and two other traders on UBS’s exchange-traded funds desk at an All Bar One restaurant near the bank’s office on Sept. 12, 2011. Adoboli’s lawyer said the meeting was to discuss whether Adoboli would take the blame alone, or if they should do so together.
“By late August, you were fully aware of the state of play,” said the lawyer, Charles Sherrard, referring to losses building in a secret account allegedly used by the team to hold profit from the trades. “The three of you jumped at the chance” to let Adoboli “fall on his sword.”
Adoboli, 32, was charged with fraud and false accounting in relation to unauthorized trades on which Zurich-based UBS lost $2.3 billion. He has pleaded not guilty. Sherrard has sought to show his client wasn’t acting alone and that the bank encouraged traders to take risk and exceed trading limits.
Sherrard showed Taylor a print-out of the entry and exit records of UBS’s London office indicating he and Adoboli left after the financial markets closed on the day of the alleged meeting, and returned together about an hour later. Taylor said he didn’t remember what he did during that time, and may have come back with Adoboli because he “bumped into him” outside.
“You have feigned memory loss about this whole period,”Sherrard said.
John Hughes, another trader on the desk at the time, also testified this week that the meeting at the bar didn’t happen. The fourth team member, Christophe Bertrand, was also alleged to have attended the meeting.
Two days after the alleged meeting, Adoboli sent an e-mail to management admitting booking trades that had no counterparties — a message that Taylor requested should not mention his name, Sherrard said yesterday. Hours before his arrest Adoboli said he had risked $5 billion on Standard & Poor’s 500 futures and a further $3.75 billion in the German futures market, one of his former managers has testified.
Taylor told the jury previously that while he was aware of the secret account, which Adoboli dubbed his “umbrella” at the ETF desk, he wasn’t aware of its risk to the bank until after Adoboli sent the e-mail. He said he believed the umbrella was“protection” using profit from Adoboli’s proprietary trading with bank money to make up for losses trading for clients.
Adoboli called the account the umbrella because it could be tapped on “rainy days” to cover trading losses, prosecutors have said.
After Adoboli’s arrest last year, Taylor was shadowed by bank compliance workers for three weeks while the unauthorized trades were unwound, he said. The compliance officers followed him everywhere, he said, even to the bathroom.
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