Published October 31, 2012
LONDON – Former UBS trader Kweku Adoboli said on Wednesday that he and Jerome Kerviel, the Societe Generale "rogue trader", got into trouble only because they had lost money for their employers.
Adoboli, 32, was arrested on September 15, 2011, and blamed for losses of $2.3 billion. He is on trial in London accused of two counts of fraud and four of false accounting, which he denies.
The prosecution say Adoboli traded far in excess of his risk limits, concealed his positions through fictitious bookings and lied to the back office when asked questions about his trades.
Adoboli says everything he did was to generate profits for UBS and that he was encouraged by senior managers to "push the boundaries" and ignore stated policies such as risk limits.
"My deep belief was what really happened was that they pushed him (Kerviel) really hard to generate profits for SocGen and as long as he generated profits they were happy, and when it finished in the end in catastrophe they put him in prison," Adoboli said.
"I have experienced exactly the same thing, not because I'm a rogue trader, not because I'm a fraudster, not because I'm a criminal, but because I went in pursuit of the goals set by our leadership."
The Kerviel case arose when prosecuting counsel Sasha Wass read out to the court an email entitled "Global compliance alert: rogue trader costs Societe Generale $7.1 billion" that was sent by UBS to all its investment banking staff in January 2008.
"The trader, who exceeded his limits, was able to conceal the positions ... through 'a scheme of elaborate fictitious transactions' because of his 'in-depth knowledge of the control procedures resulting from his previous employment in the middle office'," the UBS email said, citing SocGen announcements.
"That paragraph could almost be you, couldn't it?" Wass told Adoboli, who like Kerviel had been a trader in so-called "Delta One" products and had worked in the back office before becoming a trader.
He agreed, with the caveat that he did not think his own fictitious transactions had been "elaborate".
Wass put it to Adoboli that the Kerviel case "would have operated as a warning signal to an honest person" and that far from heeding that warning he had carried out a "copy-cat exercise" of Kerviel's activities.
Adoboli has told the court that he first booked a fictitious trade in late 2008, several months after the Kerviel scandal had broken. He has said he did this for legitimate trading purposes that were for the good of UBS.
"What we really thought (of the Kerviel case) was 'this is how investment banks work, we need to ensure not to lose money'," Adoboli said.
Wass put it to him that a better lesson to draw from the Kerviel episode was that traders should follow the rules.
She said that the UBS email had made it plain that it was a "sackable offence" to exceed risk limits and conceal trading positions with fictitious bookings.
"It's a sackable offence to lose money in SocGen and in any other bank," Adoboli responded.
He described the UBS email about Kerviel as a "tick-box exercise" designed to give the impression that the bank was serious about rules and limits when the reality was it didn't care as long as profits were made.
"This email represents how the bank sticks up a piece of paper and says 'this is our policy, this is what you must follow'," he said.
He contrasted this with what he said was the real message coming from senior managers at UBS during his time there, which was that it was fine to bend the official rules to make a profit for the bank.
The trial continues on Thursday.
(Reporting by Estelle Shirbon; Editing by Michael Roddy)