GHANAIAN ROUGE TRADER KWEKU ADOBOLI ARRESTED OVER BRITAIN'S BIGGEST BANKING FRAUD

I need a miracle: rogue trader Kweku Adoboli who lost UBS £1.3bn. 

Kweku Adoboli, a 31-year old City trader at UBS, suspected of carrying out Britain’s biggest banking fraud was arrested at his desk after posting an internet message saying: “I need a miracle.”

Kweku Adoboli, the 31-year-old UBS    trader who has been charged with rogue trading at the Swiss bank

Mr Adoboli is alleged to have lost £1.3 billion before his bosses at the Swiss-based investment bank UBS discovered the rogue trades. The scandal wiped £4 billion off the value of shares in UBS, affecting thousands of pensioners whose funds had invested in the company. 

It also shook City workers who thought banks had eliminated such risks following the case of Jérôme Kerviel, the Paris-based Société Générale worker who lost £4 billion in 2008.  Mr Adoboli was held at 3.30am yesterday at UBS’s Finsbury Avenue office in London after the firm contacted City of London Police at 1am when the alleged fraud was uncovered.

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Last night he was being questioned on suspicion of fraud and abuse of position.  

The Ghanaian-born banker, a graduate of Nottingham University, works as a “market maker”, advising clients on the prices at which they should buy and sell shares or other assets.  Exactly how he is alleged to have racked up such huge losses is unclear. The bank’s £1.3 billion loss compares with £827 million lost by Nick Leeson in 1995, which caused the collapse of Barings Bank.   

Mr Adoboli’s father John, a retired United Nations employee, said from his home in Tema, Ghana, that his son had made “a mistake or wrongful judgment”.  He said: “We are all here reading all the materials and all the things being said about him. The family is heartbroken because this is not our way of life.  “I brought them up to be God-fearing and to appreciate decency. Growing up and through to school days they were very brilliant and respectful.”  

Mr Adoboli was educated at the £19,635-per-year Ackworth boarding school near Pontefract, West Yorks, and is described as a “computer whiz” by friends. Neighbours said he had been working long hours recently, often at night, and rarely seemed to be at his east London home.  

Before he was arrested, he had changed his status on his Facebook page to “I need a miracle”.  The loss uncovered by UBS is almost exactly the same amount the bank was trying to save by cutting 3,500 jobs from its worldwide empire. The bank insisted none of its clients had lost money as a result of the trades, but City analysts said UBS could suffer “significant reputational damage”.  

Louise Cooper, of BGC Partners, said: “Rich people tend not to want to do business with a bank where there are questions over risk control.”  The bank said the unauthorised trades could lead to it losing money in the third quarter of the year. Oswald Gruebel, UBS’s chief executive, described the loss as “distressing” and said he “will spare no effort to establish how it happened”.  

Mr Adoboli, who until recently lived in a £1,000-a-week loft apartment in the City, is described by friends as “a really relaxed, happy guy”.  Recently, however, he had spoken to friends about the pressures of working in the City following the financial downturn, describing it as a “fight”. In a statement, UBS said: “UBS has discovered a loss due to unauthorised trading by a trader in its investment bank.  

“The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.”  Mr Adoboli’s arrest came on the third anniversary of the collapse of Lehman Brothers, seen as the pivotal moment in the worldwide banking crisis.  

UBS was one of the banks which had to bailed out at the height of the banking crisis, accepting help from the Swiss government because of its “toxic” assets in 2008. In the same year it was accused by the FBI of helping clients to evade tax, and agreed to pay a fine of $780 million (£493  million). UBS employs 6,000 people in the UK and 65,000 worldwide. Its staff were told about the alleged fraud in a round-robin email yesterday morning.  

The news brings into question the role of the Financial Services Authority, which failed to spot the unauthorised trades despite regulations which require banks to monitor their employees’ trading positions on an hourly basis.

Culled from:

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8767089/I-need-a-miracle-rogue-trader-Kweku-Adoboli-who-lost-UBS-1.3bn.html