Former UBS trader faces trial over $2.3 billion losses
By Estelle Shirbon
LONDON (Reuters) - A former UBS UBSN.VX trader goes on trial in London this week in a case involving losses of $2.3 billion that will subject the Swiss bank to an "uncomfortable" examination of its culture and practices.
Investment banker Kweku Adoboli, who was arrested a year ago when the huge losses came to light, has pleaded not guilty to two charges of fraud and two of false accounting related to disastrous trades that UBS says were unauthorized.
The episode marked a serious setback for UBS while it was trying to recover from near collapse during the financial crisis in 2008. In the aftermath, the bank made major changes in both its staff and strategy that are still underway.
"Given how serious the consequences of the incident were, we must assume that UBS's culture and practices will be examined during the course of the trial," UBS chief executive Sergio Ermotti told the bank's staff last week.
"As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously," he wrote in an internal message published on its website.
Adoboli, who worked on a trading desk at UBS's investment banking arm in London, was arrested on September 15, 2011, the day UBS announced it had "discovered a loss due to unauthorized trading". He remained in custody until June 8, when he was released on bail.
If convicted, the 32-year-old Ghanaian faces a possible 10-year jail sentence. His criminal trial at Southwark Crown Court starts on Monday and is expected to last about eight weeks, although the early stages may largely concern procedural issues.
It will be held before a jury, meaning that under English law there are strict restrictions on what can be reported about the case to avoid prejudicing the trial. Continued...