An alleged rogue trader from Whitechapel acted with the support of colleagues who later “stabbed him in the back,” his defence told a jury on Thursday.
Kweku Adoboli, 32, from Clark Street in Tower Hamlets, is on trial at Southwark Crown Court for “unauthorised trading” that lost swiss banking giant UBS £1.3 billion.
His lawyer, Charles Sherrard, said Adoboli had learned the use of an illicent ‘umbrella’ account to disguise losses from his colleagues. Prosecutors, however, claim he was “out of control” and acting alone.
On Tuesday, the court heard how a former colleague knew about his acitivities but did not report them. John Hughes, a former trader with the firm, said he had told managers about breaches in December 2010, but had felt like a “grass”.
Hughes said he felt his relationship with Adoboli had soured, and that when he discovered that his colleague had broken the limit again in 2011, he decided not to report it.
He told the court: “I felt as if I’d stitched him up…I went to a school where people didn’t grass.
“I should have reported him. Still to this day I wish I had done. We wouldn’t be here today. They’d have fired him.”
Adoboli pled not guilty to charges of fraud and false accounting this January after he was arrested last September. The scandal caused the resignation of then-CEO Oswald Gruebel after the financial services firm announced a $2bn loss.
Another prosecution witness, Philip Allison, told the court under cross-examination that there was a “change of ethos” under Grübel, which encouraged employees to “trade harder” and take more risks.
But Allison, head of global cash equities at UBS London, also claimed Gruebel had pushed for better monitoring of risk. The defence have argued that daily risk limits were not made clear and that managers encouraged a dangerous culture by sending mixed messages.
Hughes described Adoboli as a “very, very good” trader, saying: “Kweku was the good guy. He had a bigger risk appetite than I did,” he told the court.
Prosecutors allege that Adoboli, while working for UBS’ Global Synthetic Equities division, exploited an obscure type of transaction in which traders can receive money before the sale has been properly confirmed – allowing them to use it as leverage in larger sales even if they later fail to deliver and are forced to return it.
Adoboli denies all charges. The trial continues.