Adoboli missed chance to erase UBS rogue trades

The trial of UBS rogue trader continued on Tuesday at Southwark Crown Court where the jury heard that Kweku Adoboli missed the chance to erase billions of dollars in unauthorised trades.

Ron Greenidge who was in charge of the exchange-traded-funds desk until April last year said that Mr Adoboli “had a brief window to take the position to zero and he didn’t, and then the market started to go down.”

Mr Adoboli admitted to risking $5 billion on Standard & Poor’s 500 futures and $3.75 billion on the German futures market

Yesterday the court was told that €3.6 billion of incorrectly booked trades were questioned by the bank’s back office more than a month before his arrest.

The court heard that the trades, which should usually be booked on the same day were unregistered for a number of weeks after Mr Adoboli made them.

However, regulators were fooled into believing that there was an innocent explanation for his off-book trades. Compliance staff noticed the incorrectly booked trades and asked him why they had not been booked in properly.

Mr Adoboli told them that he had failed to book them in properly to save time, because he was short-staffed and that he was "really fucking busy."

It was only when Mr Adoboli left his desk and then sent an email that revealed the true nature of his behaviour that the bank realied the extent of the problem. He was called back ny Mr Greenidge that same afternoon to provide more details on the fictitious trades so that the bank could start unwinding them.

In the email, he said: I used the bookings as a way to suppress the PnL [profit and loss] losses that I have accrued through off-book trades that I made. Those trades were previously profit making. The aim had been to try and make the money back before the September expiry date came through but I clearly failed."

It became clear to Mr Adoboli that things were moving out of control towards the end of July. In his email he said that he had accrued massive losses in “the aggressive sell-off in the days of July and early August” due to the “escalation of the euro-zone crisis,”

UBS compliance member, William Steward told the court that until he received the revelatory email from Mr Adoboli on September 14th he had never considered that the trades were off-cook. Asked what that meant he said: "That means to me they are not real deals. They don't have a customer, anyone on the other side. They are fake."

This follows on from yesterday’s revelation that Mr Adoboli had lost £123,000 of his own money spread betting through IG Index. The trades with IG Index led to him receiving two official warnings from his own personal bank because he did not disclose details of the account or the individual trades.

Mr Adoboli was on a salary of £360,000 a year but owed thousands of pounds on current accounts and credit cards. He was overdrawn and using payday loan companies at the time of his arrest in September 2011.

His NatWest account was £3,594 overdrawn when he was arrested despite a total of £233,000 passing through it in the previous 12 months.

In total, Mr Adoboli was more than £4,000 overdrawn across his four current accounts and two credit cards and recent receipts had come from payday loan companies such as Wonga.com and Payday UK.

Mr Adoboli has been charged with two counts of false accounting and two counts of fraudulent trading relating to the $2.3 billion loss incurred by UBS which saw ten per cent wiped from the banks’ share price after the losses came to light.

Mr Adoboli dealt in exchange-traded funds (ETFs) and worked in the banks’ global synthetic equities division.

On Friday the court heard that at one stage Mr Adoboli had put £7.4 billion of the banks money at risk. Prosecuting QC, Sasha Wass said Mr Adoboli had been: "sucked into the gambler's mindset" and "started throwing good money after bad".

Mr Adoboli has pleaded not guilty. The case continues.