Suspected UBS rogue trader weeps in the dock

A CITY trader who studied at a Yorkshire boarding school before embarking on a high-flying investment career has been remanded in custody after being accused of a £1.3bn fraud at Swiss banking giant UBS.

Kweku Adoboli, 31, appeared at City of London Magistrates Court yesterday after being charged with fraud and two charges of false accounting, one of which dates back to 2008.

Adoboli, wearing an open-necked white shirt and sky blue sweatshirt, smiled as he left the court in handcuffs, but he had earlier wept in the dock during the 15-minute hearing.

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He was remanded in custody to appear again at City of London Magistrates’ Court for a committal hearing which is due to be held on Thursday.

After the hearing, City watchdogs the Financial Services Authority and the Swiss Financial Market Supervisory Authority said they had ordered a “comprehensive, independent investigation” into the events surrounding trading losses at the bank’s London operations.

This will see a third party investigate the details of the alleged unauthorised trading activity and why it had remained undetected. The inquiry will also assess the overall strength of UBS’s controls to prevent fraud.

Adoboli, who was a pupil at Ackworth School near Pontefract, was arrested at his desk in a swoop by police in the early hours of Thursday. During the court hearing yesterday, the well-built Ghanaian was handed a tissue from the clerk as he wiped a tear away. The alleged fraud offence took place between January 1 and September 14 this year, the court heard.

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The two accusations of false accounting – that he “falsified a record, namely an exchange traded fund transaction” – occurred between 2008 and 2009 and between January and September this year.

Adoboli’s lawyer Louise Hodges, of solicitors Kingsley Napley, made no application for bail for her client, from Clark Street, Bethnal Green in east London.

After hearing from Crown Prosecution Service prosecutor David Levy, Chief Magistrate Carolyn Wagstaff told Adoboli: “You are remanded to appear back at this court on September 22 at 10am.”

A packed courtroom looked on as the defendant stared down at his feet while he was ushered back to his custody cell.

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The court clarified later that another committal appearance had been fixed for October 28.

The head of the CPS’s central fraud group, Sue Patten, confirmed she had authorised City of London Police to charge Adoboli.

The alleged rogue trader, the son of a former Ghanaian official for the United Nations, was a boarder at Ackworth School up until 1998. Headteacher Kathryn Bell described him as an “able pupil” who had made a “very positive contribution” to the school’s community.

Adoboli joined the Swiss banking firm in a junior capacity in 2002, and then worked as a director of exchange traded funds (ETF) and delta-1 trading at UBS Investment Bank. ETFs are an investment fund traded on stock exchanges, much like stocks, which hold assets such as stocks, commodities or bonds.

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UBS, which has 6,000 staff in the UK, saw its shares slide 10 per cent on Thursday after it revealed the loss of £1.3bn. The loss could tip the bank into the red for the third quarter. The stock was three per cent higher yesterday.

The disclosure heightened calls for greater regulation in the banking industry.

A Swiss newspaper yesterday reported that UBS will cut jobs at its investment banking unit, with “massive” savings due to be announced on November 17.

The bank has already been hit by global growth fears and last month said it would reduce its overall headcount by 3,500 as part of a move to save two billion Swiss francs (£1.5bn) by the end of 2013.

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