Ex-UBS Trader Accused of \'Playing God\' With Bank\'s Money

LONDON â€" A former trader at UBS was “playing god” with the Swiss bank's money and caused a multibillion-dollar trading loss, prosecutors told a jury in London on Thursday.

During closing arguments in the eight-week court case, Sasha Wass, the lead prosecutor, said Kweku M. Adoboli, a former UBS trader in London, had “arrogantly” side-stepped the firm's rules and carried out risky trading activity from 2008 to 2011.

“There were no accidental losses. They were the result of planned, purposeful unhedged trades,” Ms. Wass told the jury on Thursday. “Mr. Adoboli is a gambler, not a legitimate investment banker.”

Mr. Adoboli, 32, faces charges on six counts of fraud and false accounting in connection with a $2.3 billion loss at the Swiss bank. If convicted, Mr. Adoboli could face more than 10 years in prison. He has pleaded not guilty to the charges. The defense is expected to outline its closing argument on Friday, and the jury will enter de liberations early next week.

The former UBS trader was arrested in September 2011 after several people in the bank's risk compliance unit raised concerns over Mr. Adoboli's trading activity. Just hours before, Mr. Adoboli, a Ghanian-born investment banker, walked out of UBS, writing an e-mail to colleagues that said he had exposed the firm to potential multibillion-dollar losses, according to the prosecution.

The correspondence, which was referred to by prosecutors as a “bombshell,” said Mr. Adoboli had acted alone. Later, he had claimed that some of his colleagues were aware of his actions, prosecutors said.

Over four years, the former UBS trader had created fictitious trades to hide his trading losses and concealed his activities from colleagues, according to the prosecution. UBS believed the reported risk of Mr. Adoboli's activity totaled $1.5 million by mid-September 2011, according to prosecutors. In reality, they said, the financial risk stood at $8.1 billion.

In his defense, the former UBS trader had tried to show that the bank knew about his activities and had encouraged him to continue the reckless behavior. But Ms. Wass told the jury on Thursday that the evidence did not indicate that UBS knew about Mr. Adoboli's risky trades.

“His defense is, in effect, ridiculous,” Ms. Wass said. “It's a fantastical suggestion that the bank knowingly approved what Mr. Adoboli was doing.”

During the case, Mr. Adoboli conceded that he hid his actions through complex trades and misled UBS staff, though he denies his activities were dishonest, the jury was told on Thursday. The prosecution must prove that he acted dishonestly to justify a conviction, according to British law.

Mr. Adoboli joined the firm shortly after graduating from Nottingham University in 2003. He worked his way up to the Delta One desk, a plain-vanilla version of derivatives trading. Traders in this division create investments tha t track specific financial assets like a basket of company stocks.

After starting his speculative trading activity in 2008, the former UBS trader's bonus and salary rose rapidly, the jury was told on Thursday. In 2010, Mr. Adoboli's bonus totaled £95,000, or $152,000, and more than doubled to £250,000, the subsequent year. His salary also rose tenfold from 2006 to 2010, to £350,000, according to the prosecution.

To conceal his trades, Mr. Adoboli created separate accounts to hide profits and losses of his unauthorized activities. In 2009, the so-called umbrella held $30 million, according to the prosecution.

“Like any gambler, Mr. Adoboli thought he had a winning hand,” Ms. Wass told the jury. “He was playing god with the bank's money.”

While Mr. Adoboli contends the firm's management knew about his activities, the prosecution said that the bank had repeatedly warned employees against unauthorized trades.

In 2008, UBS s ent two e-mails to its staff in the wake of the trading scandal at the French bank Société Générale where Jérôme Kerviel, a trader, was found to have generated more than $7 billion in losses. The e-mails warned UBS staff about the illegal activity, according to the prosecution.

“The e-mails showed that UBS viewed the trades as dishonest and fraudulent,” Ms. Wass told the jury on Thursday. “Mr. Adoboli conducted exactly the same type of trading activity as Jérôme Kerviel.”