City trader’s tears as he appears in court to face £1.3bn fraud charge

A CITY trader wept in the dock as he appeared in court accused of a £1.3 billion fraud at Swiss banking giant UBS, but as he was led away to custody he appeared to grin for the cameras.

With an open-necked white shirt and sky blue sweatshirt, Kweku Adoboli stood accused of fraud and two charges of false accounting, one of which dated back to 2008.

The 31-year-old was remanded in custody to appear again at City of London Magistrates Court for a committal hearing next Thursday.

After the hearing City watchdogs the Financial Services Authority and the Swiss Financial Market Supervisory Authority said they had ordered a “comprehensive, independent investigation” into the events surrounding trading losses at the bank’s London operations.

This will see a third party investigate the details of the alleged unauthorised trading activity and why the activities remained undetected.

It will also assess the overall strength of UBS’s controls to prevent fraud.

Adoboli was arrested at his desk in a swoop by police in the early hours of Thursday and appeared in court yesterday.

During the 15-minute hearing, the well-built Ghanaian was handed a tissue from the clerk as he wiped away a tear.

The alleged fraud offence took place between 1 January and 14 September this year, the court heard.

The fraud charge against him read: “While occupying a position, namely being a senior trader with Global Synthetic Equities, in which you were expected to safeguard, or not to act against, the financial interests of UBS Bank, you dishonestly abused that position intending thereby to make a gain for yourself, causing losses to UBS or to expose UBS to risk of loss.”

The two accusations of false accounting – that he “falsified a record, namely an exchange traded fund transaction” – occurred between 2008 and 2009 and between January and September this year.

Adoboli’s lawyer Louise Hodges made no application for bail for her client, from Clark Street, Bethnal Green, east London.

After hearing from Crown Prosecution Service prosecutor David Levy, Chief Magistrate Carolyn Wagstaff told Adoboli: “You are remanded to appear back at this court on September 22 at 10am.”

A packed courtroom looked on as the defendant stared down at his feet while he was ushered back to his custody cell.

The court clarified later that another committal appearance had been fixed for 28 October.

Sue Patten, head of the CPS’s central fraud group, confirmed she had authorised City of London Police to charge him.

The alleged rogue trader, son of a former Ghanaian official for the United Nations, joined the Swiss firm in a junior capacity in 2002.

Adoboli worked as a director of exchange traded funds (ETF) and delta-1 trading at UBS Investment Bank.

ETFs are an investment fund traded on stock exchanges, much like stocks, which hold assets such as stocks, commodities or bonds.

UBS, which has 6,000 staff in the UK, saw its shares slide 10 per cent on Thursday after it revealed the loss of £1.3bn.

The loss could tip the bank into the red for the third quarter. The stock was 3 per cent higher yesterday. The disclosure heightened calls for greater regulation in the banking industry.

A Swiss newspaper yesterday reported that UBS will cut jobs at its investment banking unit, with “massive” savings due to be announced on 17 November.

The bank has already been hit by global growth fears and last month said it would reduce its overall headcount by 3,500 as part of a move to save two billion Swiss francs (£1.5bn) by the end of 2013.