Ex-trader Adoboli was in debt, had personal spread-bet accounts

Kweku Adoboli Kweku Adoboli

Kweku Adoboli, the former trader on trial for allegedly costing UBS AG $2.3 billion from unauthorized trades, was in debt and had several spread-betting accounts in violation of the bank’s rules, a prosecutor said.

The bank’s compliance department notified Adoboli, 32, that he should have flagged his personal trading through the spread-betting firms IG Index Plc and City Index Ltd. to UBS beforehand, prosecutor Esther Schutzer-Weissmann said at his trial in London today.

Adoboli’s personal bank accounts were mostly overdrawn and he had borrowed money from various short-term lenders, she said. At UBS, his pay rose from 40,500 pounds ($65,800) in 2005 to 360,000 pounds in 2010, including bonus, another prosecutor said at the opening day of his trial last week. He lost 123,000 pounds through his personal trading with IG Index, Schutzer-Weissmann said today. Adoboli’s lawyers agreed not to challenge the information provided by the prosecutor.

The former trader is charged with falsifying records on exchange-traded fund transactions and other documents needed for accounting purposes as early as October 2008. Prosecutors also charged him with fraud for abusing his senior trader position. His trial, at a London criminal court, is scheduled to last eight weeks.

Lawyers at the firm Bark & Co. said in a statement on their website that Adoboli “is keen to proceed with the evidence and ensure that his own account is put forward,” which will give the jury a chance “to consider a radically different and compelling version of both his trading and the way he was managed.”

Adoboli worked for the Zurich-based investment bank’s Delta One desk, which handles trades for clients -- or risks the bank’s own money -- typically by speculating on a basket of securities. The loss UBS attributes to him came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures.

Bloomberg News

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