9:44 a.m. | Updated
LONDON – Kweku M. Adoboli, a former UBS trader, was given a seven-year jail sentence after he was found guilty on Tuesday of fraud for actions that prompted a multibillion-dollar trading loss at the Swiss bank.
After deliberating for five days, the jury returned a guilty verdict on Tuesday on two charges that Mr. Adoboli had dishonestly abused his position from 2008 to 2011. But Mr. Adoboli was also found not guilty on four counts of false accounting.
It is unclear whether he will appeal the prison sentence.
During the case, Mr. Adoboli, 32, argued that his actions were aimed at generating profit for the bank and that colleagues knew about them. But the prosecution had described Mr. Adoboli as “arrogant” and a “gambler” who sidestepped rules when it suited him. Mr. Adoboli was accused of circumventing UBS risk controls and hiding losses by booking fake trades.
“Behind all the technical financial jargon in this case, the question for the jury was whether Kweku Adoboli had acted dishonesty, in causing a loss to the bank of $2.3 billion,” Andrew Penhale, deputy head of fraud at the Crown Prosecution Service, said in a statement. “He did so, by breaking the rules, covering up and lying. In any business context, his actions amounted to fraud, pure and simple.”
The verdict comes more than a year after Mr. Adoboli was arrested in the early hours of Sept. 15, 2011, at the London offices of UBS after confessing in an e-mail that he faked trades for years. The scandal prompted the resignation of Oswald J. Grübel as chief executive of UBS, the departure of the co-chiefs of global equities and a major overhaul of the bank’s risk controls.
The case rattled a banking industry whose nerves were already frayed by the state of the European financial system. It also evoked an earlier trading scandal. In 2008, Jérôme Kerviel, a trader at the French bank Société Générale, was accused and later convicted of generating a $6.8 billion loss. Both former traders worked in the relatively plain-vanilla area of a complex derivatives trading business.
In the course of an intense trial that began two months ago, the jury heard from a teary Mr. Adoboli and several current and former employees of UBS. Lawyers on both sides presented evidence that included e-mail exchanges, cellphone text messages and details of when certain UBS employees arrived and left their offices.
During the trial, which took place in a South London courtroom, Mr. Adoboli’s defense lawyer had said his client was the scapegoat for a multibillion-dollar loss at the bank. The lawyer argued that the allegations failed to take into account the role of management, which not only knew about Mr. Adoboli’s trading activities but also condoned them as long as they were profitable for the bank.
But the prosecution said Mr. Adoboli had exceeded his authorized risk limits on purpose and was “playing God” with the bank’s money. The prosecution said it was “fantastical” to think that UBS approved of Mr. Adoboli’s actions, especially because the bank sent two e-mails to employees after the Kerviel scandal, warning employees about illegal activity.
Mr. Adoboli cried as soon as he started to give evidence last month, saying the trading was intended to benefit the bank, which he called his “family.” He also said he had no reason to believe that what he was doing was wrong.
Born in Ghana, Mr. Adoboli joined UBS as a trainee shortly after graduating from Nottingham University in England in 2003. He rose through the ranks and in 2006 landed on the exchange-traded funds and Delta One trading desk, a plain vanilla version of derivatives trading.
The prosecution contended that as early as 2008, Mr. Adoboli falsified trades and then set up separate accounts to hide profits and losses from his unauthorized trades. The trades initially earned money for UBS and its clients, and his salary rose, the prosecution argued.
But losses started to pile up in the summer of 2011, when Mr. Adoboli wrongly bet on the direction of the financial markets, which were consumed by the European debt crisis. During that period, he exposed UBS to potential losses of as much as $12 billion, according to evidence by the bank’s chief operating officer of securities at the investment bank.
UBS was not a defendant in the case, and under British law had not been not permitted to comment on the case.
“We are glad that the criminal proceedings have reached a conclusion,” UBS said in a brief statement on Tuesday.
DealBook: Jury Finds Former UBS Trader Guilty of Fraud
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DealBook: Jury Finds Former UBS Trader Guilty of Fraud
