UBS Trader Adoboli Faces Added Fraud Charge
By Ben Moshinsky and Lindsay Fortado – Sep 22, 2011 8:36 AM ET
Kweku Adoboli, the UBS AG (UBSN) trader charged with fraud and false accounting that may have resulted in a $2.3 billion loss, said through his lawyer that he was “sorry beyond words” after facing an additional fraud charge at a court hearing today.
The 31-year-old, who holds a Ghanaian passport, didn’t apply for bail when he appeared at a magistrates court in London. Prosecutor David Levy said the alleged loss may exceed $2.3 billion. Adoboli wasn’t required to enter a plea today and another hearing was scheduled for Oct. 20.
The trader is “sorry beyond words for what happened here,” said Patrick Gibbs, Adoboli’s lawyer. He apologized for his “disastrous miscalculations,” Gibbs said.
Adoboli, who appeared today wearing a dark grey suit, white shirt and navy tie, has been in police custody since he was arrested Sept. 15 on suspicion of making the unauthorized trades. Prosecutors charged him Sept. 17 with fraud and false accounting dating back to 2008.
Louise Hodges, another of Adoboli’s lawyers, declined to comment after the hearing. Yves Kaufmann, a spokesman for UBS in Zurich said “the loss arising from the unauthorized trades is $2.3 billion, as we have stated” previously.
Adoboli “dishonestly abused” his “position of trust” as a senior trader on the global synthetic equity desk, “intending thereby to make a gain” for himself and “to expose UBS to a risk of loss,” prosecutors said in court papers. He was “expected to safeguard and not to act against the financial interest of UBS,” they said.
Adoboli worked for UBS’s investment bank on its Delta One desk, which handles trades for clients, typically helping them to speculate on, or hedge the performance of, a basket of securities. The group also trades using the bank’s own money. UBS has said that no client positions were affected.
UBS’s loss came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures over the past three months, according to the bank. The risk of the trades was masked by fictitious positions, UBS said.
Adoboli may not have asked for bail because he believed he wouldn’t get it, said Steven Francis, a regulatory lawyer at Reynolds Porter Chamberlain, who isn’t involved in the case.
The FSA and the Swiss Financial Market Supervisory Authority last week opened a joint investigation into control failures at UBS that allowed the trades to go undetected.
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