UBS Didn’t Turn ‘Blind Eye’ to Adoboli, Prosecutor Says
UBS AG (UBSN) didn’t turn “a blind eye” as former trader Kweku Adoboli exceeded risk limits and booked fake hedges to hide the exposure, the prosecution said.
It is “a fantastical suggestion” that the bank and its management knew and approved of Adoboli exceeding risk limits, prosecutor Sasha Wass told the London jury in closing arguments today. Adoboli is on trial accused of causing a $2.3 billion unauthorized trading loss.
“Does it make any sense at all that Switzerland’s largest bank lets one of its traders gamble $12 billion?” Wass said. “This was in a period of great volatility. The message that was coming from the upper management is ‘Keep the delta flat. No risk, please.’”
Part of Adoboli’s defense rests on his claim that his managers pressured him to take on more risk and overlooked that the profits the desk generated didn’t match its reported risk profile. He also testified that his actions weren’t dishonest because others at the bank knew of an internal account where he held profits to cover future costs of the exchange-traded fund desk where he worked.
Adoboli is charged with fraud and false accounting. He was arrested after writing what prosecutors dubbed “the bombshell e-mail” on Sept. 14, 2011, explaining his off-book trading to an accountant and several of his managers at the bank.
“None of the defenses which Mr. Adoboli now relies on were mentioned in his e-mail,” Wass said. “Instead he says in effect, ‘Listen chaps, I fiddled the books and this is how I got away with it, thanks, Kweku.’”
Adoboli accepts the facts of what happened, Wass said. He said in his testimony that all of his actions were intended to increase profits and help the bank.
“If Mr. Adoboli was honest when he exposed the bank to risks, which were well in excess of his limits, why did he hide the risk?” Wass said. “It could only have been done to hide the fact that his real trades were in excess of his limits.”
The defense will present its closing arguments next. Then the judge will sum up the case before jury deliberations begin.
To contact the reporter on this story: Lindsay Fortado in London at email@example.com
To contact the editor responsible for this story: Anthony Aarons at firstname.lastname@example.org