September 20, 2012 / 2:37 PM / 6 years ago

UBS risk limits "didn't matter": ex-trader's lawyer

LONDON (Reuters) - A culture existed at UBS UBSN.VX where traders felt they could ignore risk limits as long as they were making money for the Swiss bank, the lawyer for accused “rogue trader” Kweku Adoboli told a London court on Thursday.

Former UBS trader Kweku Adoboli leaves Southwark Crown Court in London September 14, 2012. Adoboli, who was arrested a year ago when a loss of $2.3 billion came to light, is charged with fraud and false accounting. REUTERS/Neil Hall

Adoboli, 32, was arrested on September 15, 2011, and is now on trial accused of fraud and false accounting that cost UBS $2.3 billion. He has pleaded not guilty.

The hearing on Thursday morning laid bare the human drama behind the jargon of the trading floor, with Adoboli at one point in tears at the back of the courtroom under the emotional impact of the evidence that was presented to the jury.

In particular, Adoboli heard his lawyer read out long excerpts from his performance appraisals, in which he was described as an outstanding and popular member of UBS staff with a great future ahead of him.

He also watched Ronald Greenidge, a former boss with whom he had friendly relations, face a barrage of tricky questions from his own lawyer, Charles Sherrard.

At one point during the tough cross-examination, Greenidge became unwell and had to be helped to a chair by a court usher. The hearing was adjourned for about half an hour before Greenidge resumed giving evidence.

His cross-examination was the first opportunity for Adoboli’s defense team to present his view of events.

The thrust of the argument, expressed through Sherrard’s questions, was that the bank had turned a blind eye to traders exceeding risk limits in the pursuit of ever greater profits.

Sherrard read out an electronic chat that took place between Adoboli and Greenidge on April 14, 2011, in which Adoboli made it clear he was finishing the trading day with a risk exposure of $40 million, beyond his desk’s agreed $25 million overnight limit. Greenidge did not raise any questions about that.

“This is, I suggest, the first example of where the culture and practice of the bank you were both working for was that risk limits didn’t matter as long as you were making money,” Sherrard said.

Greenidge answered: “That’s not true.”

It was almost immediately after that exchange that Greenidge asked for a pause because he felt unwell.


Greenidge was dismissed from UBS after Adoboli’s arrest on the grounds that he had failed in his supervisory role by not detecting what Adoboli was doing. He told the court he felt aggrieved by the “unfair” disciplinary process and that he believed he had been made a scapegoat.

Earlier, the reading out of passages from Adoboli’s 2009 and 2010 performance appraisals gave a flavor of life on the Exchange Traded Funds (ETFs) desk when Adoboli worked there.

Adoboli’s colleagues described him as an excellent ambassador for UBS with a talent for explaining to clients the ins and outs of ETFs, a form of derivative.

“He could explain ETFs to my Nan (grandmother) and she’d get it,” wrote colleague Rob Pienaar in one of the appraisals.

Adoboli was portrayed as a friendly and enthusiastic trader who would drop whatever he was doing at a moment’s notice to help out his colleagues.

“He’s certainly the good cop of the ETFs desk,” wrote fellow trader John Hughes, who will appear as a witness later in the trial.

“He would benefit from additional cynicism,” wrote colleague Makram Fares.

Greenidge’s own comments, at a time when he was Adoboli’s manager, included that the young trader worked too hard.

“He needs to achieve a better work/life balance. We would hate to see him burn out,” Greenidge wrote.

The friendly relations between the defendant and the witness were in evidence in another exchange on a chat system, which was partly read out and partly paraphrased by Sherrard.

“We don’t call you Mace for nothing,” Adoboli told Greenidge in the chat, a reference to Mace Windu, a character from one of the Star Wars movies, to which Greenidge responded that he felt more like the grizzled Jedi knight Yoda at the time.

editing by Guy Faulconbridge, Peter Griffiths and Philippa Fletcher

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