Case to open against ex-UBS trader in $2 billion fraud trial

Thu Sep 13, 2012 8:03pm EDT
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By Estelle Shirbon

LONDON (Reuters) - A British prosecutor will open the case on Friday against former UBS UBSN.VX trader Kweku Adoboli, who is on trial accused of fraud and false accounting that cost the Swiss bank $2.25 billion.

UBS is not a party to the criminal trial, expected to last eight weeks at Southwark Crown Court in central London, but its Chief Executive Sergio Ermotti warned staff last week that the bank's culture and practices were likely to come under scrutiny.

Adoboli, 32, was arrested on September 15, 2011, the day when UBS announced that it had uncovered what it called "unauthorized trading" at its investment banking arm.

The episode knocked back UBS in its efforts to recover from near collapse during the 2008 financial crisis. It led to a management shake-up, a change of strategy, a tightening of internal controls and a reduced 2011 bonus round for some staff.

Adoboli pleaded not guilty on January 30 to two counts of fraud by abuse of position and two counts of false accounting. He remained in custody until June 8, when he was freed on bail.

A year almost to the day after his arrest, he will be in court all day on Friday to hear prosecutor Sasha Wass outline the case against him to the 12 jurors.

The trial will be watched by a banking sector scarred by years of bad publicity since the financial crisis began and wary of giving regulators more reasons to tighten rules governing the industry.

UBS had given an estimate of $2.3 billion in losses due to the unauthorized deals. The fourth count in Adoboli's indictment says that he "dishonestly abused that position by causing losses to UBS Bank" calculated at $2.25 billion.   Continued...

Former UBS trader Kweku Adoboli arrives at Southwark Crown Court in London September 10, 2012. REUTERS/Olivia Harris