UBS trader jailed seven years in UK's top fraud
AFP · 20 Nov 2012, 17:11
Published: 20 Nov 2012 17:11 GMT+01:00
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"There is a strong streak of the gambler in you," judge Brian Keith told the Ghanaian-born banker, 32, who was convicted of two counts of fraud.
"You were arrogant to think the bank's rules for traders did not apply to you."
The trader was found guilty of fraud by a jury at Southwark Crown Court earlier in the day but cleared of four charges of false accounting.
"The tragedy for you is that you had everything going for you," Keith said.
"Your fall from grace as a result of these convictions is spectacular."
The judge said Adoboli would serve half his sentence before being released on licence.
Adoboli wiped away tears as he was sentenced.
He had admitted the losses but denied any wrongdoing.
During the two-month trial he claimed senior managers were fully aware of his activities and encouraged him to take risks to make profits for UBS.
But prosecutors said that in a bid to boost his bonuses and chances of promotion, Adoboli exceeded his trading limits, failed to hedge trades and faked records to cover his tracks between 2008 and 2011.
The tactics initially paid off — prosecutors said he earned $90 million for UBS and its clients by May 2011 and the bank rewarded him with huge bonus increases, rising from £15,000 in 2008 to £250,000 in 2010.
But as the financial crisis took hold, Adoboli's deals went bad.
The court heard had that at one point he was at risk of causing the bank losses of $12 billion.
"The amount of money involved was staggering, impacting hugely on the bank but also on their employees, shareholders and investors," said Andrew Penhale, deputy head of fraud at the Crown Prosecution Service.
"This was not a victimless crime."
'Behind the facade lay a trader out of control'
"We are glad that the criminal proceedings have reached a conclusion and thank the police and the UK authorities for their professional handling of this case," a UBS spokesman said.
"We have no further comment."
Adoboli's arrest in September wiped 10 percent off the bank's share price.
The privately educated son of a former United Nations official, Adoboli wept regularly during the trial, telling jurors he had dedicated his adult life to the bank and viewed his colleagues as "family".
After completing an internship at UBS while at university in England, he went to work for the bank full-time following his graduation in 2003.
He joined its exchange traded funds desk in 2006, dealing with funds that rise and fall in value depending on the performance of the markets they track.
By 2007, he and another more senior trader were managing a portfolio worth $50 billion.
It might seem "crazy" that traders with just a few years' experience were in charge of such a huge portfolio, Adoboli told the jury, but "that's how it was".
"We were these two kids trying to make it work," he added.
The discrepancies in Adoboli's trading activities eventually aroused the suspicion of his colleagues.
On September 14th a back office accountant received an email in which Adoboli confessed that UBS was exposed to colossal losses resulting from his unauthorized trades.
"I am deeply sorry to have left this mess for everyone and to have put my bank and my colleagues at risk," Adoboli wrote.
He was hauled in for questioning and arrested at the bank in the early hours of the next morning.
The case has drawn comparisons to Jerome Kerviel, the French trader who lost the Société Générale bank 4.9 billion euros ($6.3 billion) in 2008, and British rogue trader Nick Leeson, who caused the collapse of Barings Bank in 1995.
"This was the UK's biggest fraud committed by one of the most sophisticated fraudsters the City of London Police has ever come across," said Detective Chief Inspector Perry Stokes, who led the investigation against Adoboli.
"To all those around him Kweku Adoboli appeared to be a man on the make whose career prospects and future earnings were taking off," he added.
"But behind this facade lay a trader who was running completely out of control and exposing UBS to huge financial risks on a daily basis."