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Adoboli’s UBS Co-Worker Admits He Used Umbrella Account

October 01, 2012

Adoboli Went to ‘Elaborate Lengths’ to Make Money, Hughes Says

Prosecutors have charged Kweku Adoboli with fraud and false accounting tied to unauthorized trades on which UBS AG lost $2.3 billion. Photographer: Chris Ratcliffe/Bloomberg

John Hughes, a former UBS AG (UBSN) trader, said he used a secret account set up by his co-worker Kweku Adoboli that was funded with profits from unbooked trades.

Hughes conceded during his fourth day of testimony at Adoboli’s fraud and false accounting trial in London that he used the fund his ETF-desk colleague had dubbed his “umbrella.”

Charles Sherrard, Adoboli’s lawyer, said there was evidence of transactions on the umbrella account made by Hughes while Adoboli was on vacation in Greece on June 2011 and that accounting firm KPMG LLP had evidence of other such trades.

Sherrard asked Hughes why, if he had made the trades, he told UBS management and their lawyers after Adoboli’s arrest last year “that you hadn’t played a part in anything” even though the last trade was made “just six weeks earlier.”

Hughes responded by confirming he’d made the trades and didn’t directly answer the question. It was the first admission by one of Adoboli’s colleagues that others had used the account.

Sherrard has said previously that Hughes had made his own off-book trades, knew of the umbrella account and “at times controlled it.” Hughes testified last week that Adoboli told him in January 2011 he had a secret account he called his umbrella, which Hughes believed held profits from unbooked trades Adoboli later used to cover losses. Prosecutors have said Adoboli called it his umbrella because it would protect him “on a rainy day.”

Adoboli was charged in relation to unauthorized trades on which UBS lost $2.3 billion. The former trader admitted hours before his arrest in September last year that he had risked $5 billion on Standard & Poor’s 500 futures and a further $3.75 billion in the German futures market, a former manager testified. Adoboli has pleaded not guilty.

To contact the reporter on this story: Erik Larson in London at

To contact the editor responsible for this story: Anthony Aarons at

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