Ex-UBS Trader Adoboli Pleads Not Guilty to $2.3B Loss
By Lindsay Fortado and Ben Moshinsky – Jan 30, 2012 11:59 AM ET
Adoboli, dressed in a grey suit and blue tie, pleaded not guilty to all charges at a hearing in London today. A trial that may last as long as eight weeks was scheduled to start in early September.
Adoboli, 31, has been in custody since Sept. 15 when UBS asked London police to arrest him for causing a $2.3 billion loss. The case led to the departures of Chief Executive Officer Oswald Gruebel and the co-heads of the Swiss bank’s global equities business. The trial could be “really awful” for UBS, said Steven Francis, a regulatory lawyer in London.
“There’ll be an assessment of what training he was given” and of “the bank’s compliance procedures,” said Francis, a lawyer at Reynolds Porter Chamberlain, who isn’t involved in the case.
UBS isn’t able to comment on the case because “English criminal law limits what we can say about this incident,” Oliver Gadney, a spokesman for the bank, said in an e-mailed statement.
Adoboli, who was remanded into custody, is being held at Wandsworth prison in southwest London. One of his lawyers, Paul Garlick, told Judge Alistair McCreath he may request bail for Adoboli soon.
Adoboli, who worked for UBS’s investment bank, had been given two time extensions to enter a plea. In December, he received an extra month after hiring new lawyers at Bark & Co. and Furnival Chambers in London. Garlick told the court Dec. 20 that Adoboli hadn’t received “satisfactory legal advice” before he was hired. The former trader was also granted legal aid, or government assistance, to pay his lawyer fees.
British and Swiss finance regulators are investigating the system and control failures at UBS that allowed the unauthorized trades to go undetected. UBS has said it suspended some front office staff pending further discipline.
The loss allegedly came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures, according to the Zurich- based bank. He was charged with fraud and false accounting dating back to 2008.
Adoboli worked for the investment bank’s Delta One desk, which handles trades for clients — or risks the bank’s own money — typically speculating on, or hedging the performance of, a basket of securities.
Under CEO Sergio Ermotti, who took over from Gruebel, the bank set a target for profitability, announced its first cash dividend in five years and said it will shrink its investment bank to concentrate on wealth management.
UBS fell 39 centimes, or 3 percent, to 12.48 francs in Swiss trading.
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