UBS Trader to Appear in U.K. Court for $2.3 Billion Fraud Case
Oct. 20 (Bloomberg) -- Kweku Adoboli, the trader accused of costing UBS AG $2.3 billion by making unauthorized trades, will go before a London judge and may enter a plea before his case is transferred to a higher criminal court.
The 31-year-old will today make his third appearance at a London magistrates court, which handles the charging of suspects. Adoboli’s case is scheduled to be transferred today to a Crown Court, which handles more complex criminal trials. He may enter a plea at today’s hearing or indicate how he intends to plead once the case is transferred.
Adoboli has been in custody since his arrest on Sept. 15, when UBS asked London police to detain him after he reported the losses. He was charged two days later with fraud and false accounting dating back to 2008. His lawyers haven’t asked the magistrate judge to release him on bail.
Adoboli, who holds a Ghanaian passport, faces as many as 10 years in prison, according to U.K. sentencing guidelines. Time spent in custody beforehand would be deducted from any sentence. He said through his lawyer at a hearing last month he was “sorry beyond words” for his “disastrous miscalculations.”
The trading losses have led to the departures of UBS Chief Executive Officer Oswald Gruebel and the co-heads of global equities, Francois Gouws and Yassine Bouhara. “A number of front office staff” have been suspended pending further disciplinary action, Carsten Kengeter, head of the investment bank, said in a memo to staff.
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 alleged loss came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures, according to the Zurich- based bank. The trades’ risk was masked by fictitious positions, UBS said.
Adoboli “dishonestly abused” his position as a senior trader on the global synthetic-equity desk “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.
--With assistance from Elena Logutenkova in Zurich and Ambereen Choudhury in London. Editors: Christopher Scinta, Anthony Aarons
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