UBS trader hid deals in complex web, jury hears

AFP - [email protected] • 19 Sep, 2012 Updated Wed 19 Sep 2012 09:23 CEST

A trader at leading Swiss bank UBS accused of "gambling away" $2.3 billion hid his "rogue trades" behind a smokescreen of confusion, a jury in London heard on Tuesday.

Prosecutor Sasha Wass accused Kweku Adoboli, 32, of deliberately misleading UBS accountants who were investigating why there was a $3.57 billion black hole in the trader's account.

William Steward, the accountant tasked with examining the "breaks" in Adoboli's account, was asked to explain recorded telephone conversations held with the trader in August 2011, a month before the trader was arrested.

At one point, judge Brian Keith feared that the transcripts were too complicated and sent Steward out of the courtroom to prepare a simplified summary of the conversations.

Wass said Adoboli's answers to Steward's queries were "all designed to confuse".

"I understood most (of the explanations) but not 100 percent," Steward told Southwark Crown Court.

"It took quite a long time (to fully understand)."

The lawyer earlier told the court that Adoboli fooled the bank's double entry accounting system, in which each entry is balanced by an equal entry elsewhere in the records, by inventing fictitious deals.

Traders mitigate risk during a transaction by carrying out a similar deal in the opposite direction, hedging any unfavourable market fluctuations.

According to the prosecution, Adoboli faked hedge deals by inventing clients, leaving the bank exposed to huge losses when the market turned against him.

Steward, who no longer works at the bank, said at no point during the telephone exchanges held on August 24th did he suspect that false trades were the cause of the accounting inconsistencies.

He also said that the bank often had breaks which far exceeded $3.57 billion, but that all had previously been resolved.



AFP 2012/09/19 09:23

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