UBS checks flawed at time of alleged rogue trades, UK court told

Tue Oct 16, 2012 2:39pm EDT
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By Michael Holden

LONDON (Reuters) - There were flaws in control systems at UBS UBSN.VX at the time accused fraudster Kweku Adoboli racked up losses of $2.3 billion through unauthorized trades, the head of global risk at the Swiss bank told a London court on Tuesday.

Colin Bell, global head of operational risk control at UBS, said the overall system of checks was sound but some parts of it had not operated as they should have done, partly due to human error.

When the bank's systems sent out requests to check on deals, Adoboli had at least once been able to sign off on them himself, Bell added.

Adoboli is accused of causing the largest unauthorized trading loss in British history. The 32-year-old former trader is on trial at London's Southwark Crown Court where he denies charges of fraud and false accounting.

His defense team have argued bosses at the bank turned a blind eye to dubious trading activities as long as profits were made and that he was not the only one involved in any alleged illicit activities.

Prosecutors say he was like a gambler, who hid his illegal activities from colleagues and was out for himself.

Bell was one of a team of four who carried out Project Bronze, an in-house investigation launched after Adoboli wrote an email to his bosses on September 14, 2011 confessing to carrying out unauthorized trades.

Bell said their six-day inquiry had been to find out what happened and whether the bank had adequate controls in place.   Continued...

Former UBS trader Kweku Adoboli arrives at Southwark Crown Court in London September 21 , 2012. REUTERS/Neil Hall