Kweku Adoboli, the former UBS AG trader on trial for fraud and false accounting, missed a chance to erase billions of dollars in unauthorized trading losses, according to one of his managers at the bank.
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,” Ron Greenidge said at a London court yesterday. Greenidge, who oversaw the exchange-traded-funds desk until April of last year, was one of the first people to meet with Adoboli on the day he confessed in an e-mail to hiding trades.
Adoboli, 32, admitted he risked $5 billion on Standard & Poor’s 500 futures and a further $3.75 billion in the German futures market, said Greenidge, who no longer works at UBS. 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. “He thought the market was going down, in fact it went up.”
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 at the trial last week.
“He had been trading in breach of his limits and booking fictitious trades to hide the exposure,” Greenidge said Adoboli told him at the meeting on the seventh floor of the UBS London office on Sept. 14, 2011.
After Steward began demanding more information that day, Adoboli told his desk he was going to the doctor, left the office and sent the e-mail to Steward from his apartment in London around 2:30 p.m. Greenidge called Adoboli and asked him to return to the office, where he was escorted to meeting room 73 at around 3:45 p.m., Greenidge said.
“The e-mail didn’t mention any trades, any exposures, so it was to find out what the exposure to the bank was,” Greenidge said of the meeting. “Because the exposure was so large,” more managers were called in who wanted to know how he could have amassed such a large position without it being detected and whether other UBS employees were involved.
Adoboli gave them the settlement dates of the fictitious trades so the bank could start identifying them.
Greenidge, who worked at UBS for 19 years, said he had daily contact with Adoboli after he became a trader in 2006 until the time he was arrested. In the Sept. 14 meeting, the former trader said his first fictitious trade was made in October 2008, Greenidge testified.