Rogue Trader £1.3 billion fraud

[Junior]

Rogue trader runs up £1.3billion in losses at Swiss bank UBS
By Wil Longbottom, The Mail, 15th September 2011

A suspected rogue trader was arrested in London in a dramatic pre-dawn swoop today on suspicion of losing a major investment bank £1.3bn.

Thirty-one-year-old Kweku Adoboli was held on suspicion of committing fraud while working at Swiss bank UBS, after police raided his home at 3.30am.

After the raid the bank's shares fell by seven per cent, as UBS warned that the unauthorised trading could tip the firm into a third-quarter loss.

The arrest has echoes of the infamous case of Nick Leeson, who was jailed after his 'rogue trading' losses of more than £800m caused Barings Bank to collapse.

After fleeing to Singapore, he was later jailed for more than six years.

UBS, which is based in the heart of the City of London, said in a statement today that no client funds were affected by the incident, but it could lead to it reporting a loss for the third quarter of its financial year.

The bank said: 'UBS has discovered a loss due to unauthorised trading by a trader in its investment bank.

'The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of two billion dollars

'It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.'

The news saw shares in the bank slump by more than seven per cent in early trading.

The company employs around 65,000 staff worldwide.

However, it said recently it would reduce its staff by 3,500 as part of a bid to save £1.5billion by the end of 2013.

The cuts came as it said pre-tax profits dropped 23 per cent on the previous quarter to £1.3billion in the three months to June 30.

As well as the economic downturn, UBS said regulatory changes such as the Basel rules, which require the bank to hold more capital, were behind the need for the cost reductions.

Despite being one of the biggest wealth managers in the world, UBS has a chequered recent history.

At the height of the banking crisis in 2008 it had to be bailed-out by the Swiss government because of its toxic assets. In the same year it was accused by FBI investigators of helping wealthy American clients to evade tax through offshore accounts.

Following a protracted legal case, UBS agreed in February 2009 to pay a fine of $780million to the U.S. Government.

A restructuring then saw UBS launch a multi-million pounds advertising which used the slogan 'we will not rest'.

UBS Investment Bank's officers in Stamford, Connecticut, boasts the largest trading floor in the world – it is the size of two American football pitches, and sees more than $1 trillion in assets traded every day.

One of the biggest recent rogue trading cases involved French bank Societe Generale, which lost around £3.7billion in 2008.

That revelation caused tens of billions of pounds to be wiped off shares on the London Stock Exchange.

Societe Generale employee Jerome Kerviel was last year jailed for three years, although this is subject to appeal. He claimed the bank knew about the risk-taking.

Kerviel also landed a book deal and, in Trapped In A Spiral: Memoirs Of A Trader, said he believed the bank was happy with his work.

At trial, he claimed the bank knew about the risk-taking.

The bank, in turn, said Kerviel, 34, made bets of up to 50 billion euros (£43 billion) - more than SocGen's total market value - on futures contracts on three European equity indices, and that he falsified offsetting transactions to mask the size of his bets.

Kerviel, who was born in Brittany, was sentenced last year to three years in prison although he remains free because he has lodged an appeal. He is reportedly working as an IT technician in the Parisian suburbs.

The scandal topped the losses involved in the infamous 'rogue trader' case in 1995, which saw Briton Nick Leeson cause the collapse of Barings bank after costing the group £800million.

[Much]

"After the raid the bank's shares fell by seven per cent, as UBS warned that the unauthorized trading could tip the firm into a third-quarter loss."

Oh no, UBS could have a third quarter loss of 1.3 Billion Pounds.Like these global banks don't have enough money tucked away under some mattress.Maybe UBS should just lay off another 5,000 people.

[Junior]

UBS trader Kweku Adoboli to appear at crown court
BBC News, October 20, 2011

The case of alleged rogue trader Kweku Adoboli has been committed to crown court by City of London magistrates.

Mr Adoboli is accused of unauthorised trading that lost Swiss bank UBS about £1.5bn ($2.3bn). He faces two charges of fraud and two of false accounting.

He will appear before Southwark Crown Court for a plea and case management hearing on 22 November.

Mr Adoboli, 31, worked for UBS's global synthetic equities division, buying and selling exchange traded funds.

[Junior]

UBS 'rogue trader' accused of gambling away £1.4billion due to appear in court
This Is Money, January 30, 2012

The UBS trader who allegedly gambled away a record £1.4billion is due to enter a plea at Southwark Crown Court today.

31-year-old, Kweku Adoboli, who is being remanded in custody, is accused of two counts of fraud and two counts of false accounting while working for the Swizz banking giant's London office.

Adoboli worked for UBS's global synthetic equities division, buying and selling exchange traded funds, which track different types of stocks, bonds or commodities such as metals.

He is accused of dishonestly using his position to try to make a personal gain, and causing UBS losses or exposing the bank to the risk of loss.

City watchdog the Financial Services Authority and its Swiss counterpart have launched an investigation into why UBS failed to spot allegedly fraudulent trading.

The son of a former Ghanaian official to the United Nations joined the bank in a junior capacity in 2002.

Charges relate to the period between October 2008 and September last year.

Prosecutors allege he gambled away the cash while buying and selling exchange traded funds.

Adoboli, who has appeared in the dock in tailored suits at previous hearings, has given no indication of how he will plead.

Judge Alistair McCreath granted Adoboli's new defence team an extra month to consult with their client after a previous appearance.
Adoboli switched legal teams in November.

He has hired London law firm Bark & Co, which specialises in fraud cases, in place of Kingsley Napley.