Former UBS trader Kweku Adoboli told a London court on Tuesday he "lost control" in the summer of 2011 but insisted he never acted dishonestly in the frantic weeks that resulted in losses of $2.3 billion.
Ending an emotional three-day defense against charges of fraud and false accounting, a tearful Adoboli said he was "devastated" and "sorry beyond words" about the losses.
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But he attacked the culture of investment banks, arguing that compliance rules were "aspirational" and that traders had to bend rules to achieve the goals set by senior management.
The 32-year-old British-educated Ghanaian, who was a senior trader on the Exchange Traded Funds (ETFs) desk at UBS's London offices, was arrested on September 15, 2011. He denies two counts of fraud and four of false accounting.
The prosecution says he traded far in excess of his risk limits and concealed his positions with fictitious accounting. Adoboli says everything he did was for the benefit of UBS, a bank he considered "his family".
"I'm devastated to have put UBS in that position. I'm devastated that my friends lost their jobs. I'm devastated that in order to tell the world who I am I have to tell things about my organization that they wouldn't want me to," Adoboli told the court.
"But in the end the reason I'm most sad is because the losses weren't the result of dishonesty or fraudulent behavior, they were the result of a group of traders asked to do too much with too little resources."
Adoboli said three fellow traders on the ETFs desk knew about his trades and his accounting methods. He says he initially told UBS he had acted alone because he wanted to protect them, but the truth was that the four had acted as a team.
The three other traders, who appeared as witnesses earlier in the trial, denied that they had known the details of Adoboli's activities in the summer of 2011.
Adoboli said his troubles started on July 1 that year when, under intense pressure from colleagues and managers, he abandoned a long-standing bearish stance and flipped his trading position to a long one. Just after he did so, the market started to sell off.
"I lost control. The result of that loss of control was an increasing number of breaks (accounting problems), a more frantic trading activity, a less controlled decision-making process," he said.
Adoboli said weeks went by during which he ate and slept little and lost track of exactly what his large and complex array of trading positions amounted to.
"I'd become de-sensitized to just how big the trades were," he said.
On July 23, as losses mounted, Adoboli recalled that exhaustion and stress reached such levels that they caused him to briefly break up with his long-term girlfriend.
"I went a bit catatonic. I was curled up on my bed. She was asking me what was wrong. I just couldn't explain," he said.
He said the first time he appreciated the extent of his losses was on August 11, when he had gone into work at around 4 a.m. to take stock of his positions. He realized that he was sitting on a potential loss of $2.2 billion.
He said John Hughes, the other senior trader on the ETFs desk, knew about this and had suggested he get on a plane to Ghana and send an email from there explaining everything.
"I said no, that's ridiculous, the best thing to do was to fix the situation," said Adoboli.
He said it was his girlfriend who over time persuaded him to stop trying to recoup the losses and open up to someone about his true position.
"In the end she was the strength. She was the person who said to me 'Look, Kwek, if you can't do this, if you can't fix this, then look within yourself and maybe go and tell someone.'"
"WE FELL OFF THE EDGE"
Adoboli said he had lied to members of the UBS back office but denied acting dishonestly, arguing that his intention was to reverse the losses for the good of the bank.
"I had told loads of people different stories about what the trades were to buy us more time to recoup the losses. Eventually I accepted that I would have to tell someone about the true nature, the full scale of the losses," he said.
In a separate strand of his evidence, Adoboli said he did not believe he had done anything dishonest because he was trying to deliver what UBS management wanted: greater risks in pursuit of greater profits.
He said that in the spring of 2011 the ETFs desk was doing so well that it was held up as an example to other UBS trading desks.
"There were no secrets. There was no hiding. There was no holding back," he said, describing that period.
"We were told to go for it. We went for it. We were told to push the boundaries ... We found the boundary. We found the edge. We fell off the edge and I got arrested," he said.
Adoboli said UBS and investment banks in general set traders unrealistic objectives and everyone knew they could only be met with a certain amount of rule-bending in areas like risk limits.
"The policies were aspirational policies, and on the ground - at the coalface - you had to put in place mechanisms to achieve what you had to achieve," he said.
"In order to achieve what the bank leadership wanted us to achieve, we cannot stick to the policy. We are allowed, it is approved, in reality, that we're going to try to meet in the middle somewhere."
The trial continues on Wednesday, when Adoboli will be cross-examined by the prosecuting counsel.
(Editing by Robin Pomeroy)