Trader charged with fraud, false accounting

Associated Press

LONDON

The young trader who rocked Swiss banking titan UBS by allegedly gambling away $2 billion was charged Friday with fraud and false accounting dating back to 2008, as his bank came under a storm of criticism for failing to catch the massive loss.

Kweku Adoboli wiped his eyes and sniffled during a brief court hearing but did not enter a plea. He will be held until another appearance Thursday, presiding magistrate Carolyn Wagstaff said.

Wearing a light-blue sweater and a white shirt, the 31-year-old Adoboli stared at the ceiling as the proceeding got under way. Smiling occasionally, he spoke only to confirm his name, birth date and address in a swanky east London apartment building. His lawyers made no comment to waiting reporters as they left the City of London Magistrates’ Court.

In financial circles, questions continued to swirl.

Some commentators and politicians called for senior managers at UBS to take responsibility for the loss, which the bank said could put its third-quarter results in the red. Ratings agency Moody’s placed UBS’s credit grade on review for possible downgrade, citing worries over the future of its London-based investment unit.

“Until UBS has explained in detail how such a significant loss due to unauthorized trading could happen, and how the problem will be solved, confidence will remain impaired,” said Andreas Venditti, an analyst at Zuercher Kantonalbank.

Switzerland’s Social Democratic Party, which has two representatives in the country’s seven- member government, accused UBS on Friday of “arrogance and greed” for failing to curb its business practices in the wake of the 2008 banking crisis.

In a statement, the party leadership called for consequences, including the replacement of “egomaniacal, arrogant and irresponsible managers;” a ban on proprietary trading for key banks; and a response from UBS to the rumors that the rogue trade was connected to the Swiss National Bank’s decision last week to set a minimum price for euro to Swiss franc exchanges.

The young trader, who was arrested Thursday, had been employed by UBS on an equities desk known as Delta One and worked with exchange-traded funds, which track different types of stocks or commodities such as precious metals.