Traders scared to take risk, UBS case fraudster claims

Published: Saturday 24th October 2015 by The News Editor

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Traders in the City are petrified of taking a risk “because they’re caught between a rock and a hard place”, says the man convicted of the UK’s biggest banking fraud.

Former UBS trader Kweku Adoboli, 35, was released from prison this summer after serving half of his seven-year sentence and is reported to be advising traders on compliance.

He was jailed in November 2012 after being found guilty of two counts of fraud that resulted in losses of £1.4 billion.

He has been barred from working in the financial sector again by the Financial Conduct Authority (FCA) but has been giving advice at compliance seminars, according to an article in FT Weekend Magazine.

He tells traders how he went to prison and adds: “I’m just trying to get you to feel something of what I felt, so nobody else has to go through what I went through.”

The court found that Adoboli, a relatively junior Ghanaian trader, had abused his position on UBS’s Exchange Traded Funds Desk to rack up the largest trading loss ever in British banking history.

Prosecutors said he had disguised the underlying positions by the use of late bookings of real trades and the booking of fictitious trades.

They added that Adoboli – who was heavily involved in spread-betting in his spare time – was a gambler who believed he had the ”magic touch”.

Adoboli admitted the enormous losses but claimed he was pressured by staff to take risks, culminating in a catastrophe which wiped £2.8 billion off the bank’s share value at the time.

UBS was fined £29.7 million by the FCA’s predecessor, the Financial Services Authority, a week after Adoboli’s conviction and sentencing. It said the bank’s systems and controls had been ”seriously defective”.

Adoboli told the magazine: “The guys I’ve met are petrified. They’re petrified of taking a risk because they’re caught between a rock and a hard place.

“It’s the same for all the guys who are traders in the industry, where they know their institutions are pushing them to make difficult choices but that if they make a mistake, for political and regulatory reasons, they will be hit with a big stick. And unfortunately, for institutional reasons, they know that they won’t be protected.”

A friend of Adoboli told the magazine: “Unless you have someone who can personalise it, compliance is just a box-ticking exercise.

“If you were talking about a malicious fraudster, that’s one thing. But he has high moral standards and it happened.”

Published: Saturday 24th October 2015 by The News Editor

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