Head boy turned rogue trader gambled away £1.4bn, court told

Kweku Adoboli, a former head boy at Ackworth School in West Yorkshire, believed he had the “magic touch” when he gambled away £1.4 billion while working as a trader for UBS, his trial was told.

At one point, the 32-year-old was at risk of causing the bank losses of $12 billion (£7.4 billion), jurors at Southwark Crown Court heard yesterday.

Adoboli, who denies two counts of fraud and two of false accounting between October 2008 and last September, allegedly gambled away the money on high risk trades aimed at boosting his annual bonuses and job prospects.

Prosecutor Sasha Wass QC said: “He is on trial because he lost his bank $2.3 billion (£1.4 billion). He fraudulently gambled it away. He also, in doing so, wiped around 10 per cent or about 4.5 billion US dollars (£2.8 billion) off the bank’s share price.

“He did all of this by exceeding his trading limits, by inventing fictitious deals to conceal this and then he lied to his bosses.

“Mr Adoboli’s motive for this behaviour was to increase his bonus, his status within the bank, his job prospects and of course his ego.

“Like most gamblers, he believed he had the magic touch. Like most gamblers, when he lost, he caused chaos and disaster to himself and all those around him.”

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

The bank set his department a daily trading limit of £100 billion (£61.5 billion), and also used hedging to reduce risk.

Prosecutors claim Adoboli failed to hedge several investments to make a bigger profit for the bank and larger bonus for himself.

Ms Wass said: “At one stage Mr Adoboli was in danger of losing the bank nearly $12 billion (£7.4 billion) of unhedged investments.”

Adoboli, of Whitechapel, east London, “fraudulently side-stepped” rules that banned high risk and unauthorised trades, the court heard.

Ms Wass said the amount lost was “enough to pay a year’s salary for nearly 70,000 new nurses or two Wembley stadiums or perhaps even six new hospitals”.

She added: “Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler. He had become what is sometimes referred to as a rogue trader.”

Adoboli made false account entries over two-and-a-half years to make it look as if the money he was gambling had been balanced by money coming in, it is claimed.

He started at UBS in 2003 as a graduate trainee, becoming a trader in December 2005 and being promoted to associate director, then director, by 2010.

He had chance to earn substantial bonuses, Ms Wass said, which rose to £250,000 in 2010.

But he fell into a “gambling mindset” and very quickly the losses he was causing spiralled into billions, the court heard.

Adoboli walked out of the bank last September saying he was going to the doctor’s. An hour later he sent a “bombshell” email outlining the hole in UBS’s accounts.

In the message to colleagues he admitted that trades he had entered in the ledger were not real and some were “off-book”.

Adoboli said he had hoped to make his losses back, but had “clearly failed”. He wrote: “I am deeply sorry to have left this mess for everyone and to have put my bank and my colleagues at risk.”

Adoboli will claim he was not acting dishonestly and that colleagues on his desk knew what he had been doing, jurors heard.

Ms Wass said it would be easy to dismiss the “colossal” loss as “a very large bank losing a very large sum of money”. But she went on: “It’s important to acknowledge the bank is owned by shareholders. Shareholders are not some anonymous group of rich people, but more likely to be ordinary people like you and me. Pension funds, trust funds, investments large and small would have had shares in UBS.”

The trial was adjourned until Monday.