UBS Overlooked Limits When Trade Made Money, Lawyer Says
By Lindsay Fortado – Sep 20, 2012 7:36 AM ET
Kweku Adoboli’s lawyers said UBS (UBSN) AG had a culture that overlooked trading limits and other rules“as long as you were making money.”
Adoboli lawyer Charles Sherrard said the bank became“more aggressive in terms of its desire to make profits” in 2011, during cross examination of one of Adoboli’s former bosses at a fraud trial in London today.
“The culture, practice at the bank you were working for, didn’t matter as long as you were making money,” Sherrard said to Ron Greenidge, who oversaw UBS’s exchange-traded-funds desk until April of last year.
Former UBS trader Kweku Adoboli, center, arrives at Southwark Crown Court in London. Photographer: Chris Ratcliffe/Bloomberg
Adoboli, 32, is on trial on charges of fraud and false accounting over unauthorized trades that lost $2.3 billion. Adoboli admitted he risked $5 billion on Standard & Poor’s 500 futures and a further $3.75 billion in the German futures market, Greenidge said in testimony yesterday.
Greenidge, who worked at UBS for 19 years, said today he was dismissed for gross misconduct because of Adoboli’s trades. He said he felt the bank was making him a scapegoat.
Sherrard read out performance reviews from 2009 written by Greenidge that said Adoboli needed to achieve a better work-life balance. Greenidge agreed Adoboli was a “great ambassador for the ETF product” and had outstanding performance that year.
Greenidge, who said he had daily contact with Adoboli after he became a trader in 2006, was one of the first people to meet with Adoboli on the day he confessed in an e-mail to hiding trades last year. In the Sept. 14, 2011, meeting, Adoboli said his first fictitious trade was made in October 2008, Greenidge testified yesterday.
Adoboli, who eventually caused UBS to lose $2.3 billion,“had a brief window to take the position to zero and he didn’t, and then the market started to go down,” Greenidge testified yesterday.
Adoboli has denied the charges and the former trader’s lawyers have said he is looking forward to providing the jury with his own account of what happened.
“This can’t be true,” Greenidge said was his initial reaction when he saw Adoboli’s e-mail. “I could not believe that someone I worked with back at the time would do something like this.”
William Steward, a former accountant in product control for UBS, said previously he began looking into Adoboli’s trades in August 2011 after receiving a report of a $3.57 billion discrepancy. Steward said he believed Adoboli’s initial explanations that he hadn’t had time to book all of his trades.
Adoboli’s losses piled up when he increased the size of his positions in June last year and then made several “incorrect”trades, Greenidge said.
Adoboli was arrested on Sept. 15, 2011, after confessing to Steward in an e-mail to accruing losses during “the aggressive sell-off in the days of July and early August” as a result of the “escalation of the euro-zone crisis,” prosecutors said last week.
Adoboli is charged with falsifying records on ETF transactions and other documents needed for accounting purposes as early as October 2008, according to his indictment. Prosecutors also charged him with fraud for abusing his senior trader position “by causing or exposing UBS Bank to losses intending thereby to make a gain for himself.”
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