Legal News
The biggest banking fraud in Britain goes to trial (14 September 2012)
Date: 14/09/2012
The biggest banking fraud has gone on trial today where a City trader who was suppose to have had a magic touch gambled away £1.4 billion.
Investment banker Kweku Adoboli, 32, allegedly invented fictitious accounts to conceal the massive losses he was making at Swiss bank UBS from risky deals.
He was fraudulently sidestepping his bank rules and then created books to make it look as I the money being gambled was balanced by incoming cash the Southwark Crown Court heard.
His losses totalled £1.4billion, wiping around 10 per cent or about £2.8billion off UBS’s share price.
He is accused of two counts of fraud and two counts of false accounting while working for Swiss bank UBS between October 2008 and last September.
Prosecuting, Sasha Wass QC said that he was on trial because he lost his bank $2.3 billion (£1.4 billion). He fraudulently gambled it away. He caused wiping of around 10% or about 4.5 billion US dollars (£2.8 billion) off the bank's share price.
By inventing fictitious deals he concealed his trading which exceeded the limit he was allowed to and lying to his bosses.
Mr Adoboli's motive for this behaviour was to increase his bonus, his status within the bank, his job prospects and of course his ego.
Like most gamblers, he believed he had the magic touch. Like most gamblers, when he lost, he caused chaos and disaster to himself and all of those around him.
Adoboli, from Whitechapel, east London, has been accused of losing the money in Britain's biggest alleged banking fraud.
He worked for UBS's global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.
UBS discovered in September last year that Adoboli's deals had caused the bank a loss of £1.4 billion after ‘his fraud had unraveled’.
Ms Wass said the trading loss caused would have been enough to pay a year’s salary for nearly 70000 new nurses or two Wembley stadiums or perhaps even six new hospitals.
She told the jury that Adoboli had ‘fraudulently side-stepped’ the bank's rules that banned high risk and unauthorised investments.
His bank sets a daily trading limit for the ETF desk of 100 billion US dollars while using hedging to reduce risk, buying one type of investment and simultaneously selling a similar one to mitigate any loss.
But prosecutors claim Adoboli failed to hedge several of his investments in order to make a bigger profit and larger bonus for himself.
Ms Wass said a lifelong savings in a pension fund cannot be invested by a investment banker to gamble on the toss of a coin. He is expected to limit the downside and maximise the growth of the investment for your old age.'