Guilty of fraud: Rogue trader who gambled away £1.4 billion

At one point during his run of losses, former rising star City trader Kweku Adoboli, 32, stood to run up losses of 12 billion US dollars (£7.5 billion) for employer UBS.

City of London Police, which investigated his activities after he confessed his losses in an email to colleagues, said he was one of the most sophisticated fraudsters the force had come across.

Adoboli was accused of exceeding his multi million-pound trading limits and failing to hedge trades, faking records to cover his tracks at the Swiss bank’s London office.

He admitted the losses but claimed that he was pressured by staff to take risks, culminating in bad deals which wiped £2.8 billion off the bank’s share value when they were discovered.

The Ghanaian-born and Yorkshire educated former public schoolboy was sentenced after a trial that lasted more than nine weeks at Southwark Crown Court in London.

The jury convicted him unanimously of one count of fraud linked to the £1.4 billion loss.

He was found guilty of a second fraud charge by majority verdict but cleared of four remaining charges of false accounting after the jury deliberated for 16-and-a-half hours across five days.

Jailing him, trial judge Mr Justice Keith told Adoboli: “There is a strong streak of the gambler in you. You were arrogant to think the bank’s rules for traders did not apply to you.”

Adoboli wiped away tears as he sat in the dock during the sentencing.

Mr Justice Keith told him: “Whatever the verdict of the jury you would forever have been known as the man responsible for the largest trading loss in British banking history.”

He added: “Your fall from grace as a result of these convictions is spectacular.

“The fact is you are profoundly unselfconscious of your own failings.”

He sentenced Adoboli to seven years for a charge of fraud by abuse of position relating to the £1.4 billion loss and four years for the other, to be served concurrently.

He will serve half in prison before being released on licence, the judge added.

UBS said in a statement: “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. We have no further comment.”

Andrew Penhale, deputy head of fraud at the Crown Prosecution Service (CPS), told reporters outside the court: “Behind all the technical financial jargon in this case, the question for the jury was whether Kweku Adoboli had acted dishonestly, in causing a loss to the bank of 2.3 billion US dollars.

“He did so, by breaking the rules, covering up and lying. In any business context, his actions amounted to fraud, pure and simple.

“The amount of money involved was staggering, impacting hugely on the bank but also on their employees, shareholders and investors. This was not a victimless crime.

“The CPS Central Fraud Division are pleased to have brought this case so quickly to conclusion, with the trial opening one year to the day after the case was reported to City of London Police.

“This is a tribute to the hard work and dedication of the whole prosecution team.

“People who commit fraud, in any walk of life, should know that the scale and technicality of a case is no barrier to bringing it to justice. At the heart of any complex fraud is a simple notion of dishonesty which is something that we can all understand.”

Adoboli, who attended Ackworth Quaker boarding school in Pontefract between 1992 and 1998, joined UBS as a graduate trainee in 2003 and, at the time of the fraud, worked for its global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.

The prosecution said he was a gambler who believed he had the “magic touch”.

But, giving evidence, he said everything he had done was aimed at benefiting the bank, where he viewed his colleagues as “family”.

Adoboli said he had “lost control in the maelstrom of the financial crisis”, and was doing well until he changed from a conservative “bearish” position to an aggressive “bullish” stance under pressure from senior managers.

He told the jury that staff were encouraged to take risks until they got “a slap on the back of the wrist”.

Charles Sherrard QC, mitigating for Adoboli, said it was important that the jury had cleared him of false accounting, saying they accepted he had not acted to make money for himself but solely for UBS in a matter he said was of “limited criminality”.

He said the trader “gave his life to UBS” and had been “sorry from day one” for what had happened.

“Most significantly he has not been found to be driven by greed, ego, reputation or any sinister motive,” Mr Sherrard said.

“Perhaps it boils down to someone trying too hard to make profits and ultimately overstepping the mark.”

He added: “If there is one thing many of us have learned as a consequence of 20-year-olds being put in charge of a 50 billion dollar (trading) book is that the industry needs to take a long hard look at itself.”

Detective Chief Inspector Perry Stokes, from City of London Police, which investigated Adoboli, said: “This was the UK’s biggest fraud committed by one of the most sophisticated fraudsters the City of London Police has ever come across.

“To all those around him Kweku Adoboli appeared to be man on the make whose career prospects and future earnings were taking off. He worked hard, looked the part and seemingly had an answer for everything.

“But behind this façade lay a trader who was running completely out of control and exposing UBS to huge financial risks on a daily basis. Rules put in place to protect the bank’s position and the integrity of the markets were being bypassed and broken by a young man who wanted it all and was not willing to wait.

“When Adoboli’s pyramid of fictitious trades, exceeded trading limits and non-existent hedging came crashing down the repercussions were felt in financial centres around the world.

“Now, just a year on he is facing the reality that he was not above the law and will be made to pay for his crimes.”