UBS trader Kweku Adoboli, who was charged Friday with engaging in fraud and false accounting since 2008, hired the lawyers who represented rogue trader Nick Leeson in the 1990s.
British police charged that Adoboli, a senior trader in UBS Global Synthetic Equities and the son of a retired U.N. employee from Ghana, falsified accounts related to an exchange traded fund between October 2008 and December 2009 and again between January 2010 and September 2011, Reuters reported.
Adoboli "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 police charged in a London courtroom as Adoboli wiped tears from his eyes.
Accused by UBS of making unauthorized trades that led to a $2 billion loss for the Swiss bank, Adoboli has engaged lawyers at Kingsley Napley LLP, the firm that represented rogue trader Nick Leeson when he was caught making fraudulent derivative trades in 1995, Bloomberg reported.
Leeson lost $1.4 billion on futures and options markets in Japan and Singapore while working for Barings Bank, causing the collapse of London’s oldest merchant bank. He served more than six years in prison.
On the day of Adoboli’s arrest, UBS stock fell as much as 9.6% in Switzerland, despite the bank’s assertions that the news “will not change the fundamental strength of our firm.”
UBS has been placed on review by Standard & Poor’s and Moody’s Investors Service for possible downgrade over its risk control measures.
JPMorgan Chase analysts said in a note, "We expect UBS will come under material pressure from shareholders and FINMA to review its investment bank business ... the trading loss being the final straw, leading to material restructuring."
UBS has already seen its share of bad news in the last month. In late August, UBS said it plans to cut staff by 3,500, or more than 5% of its global workforce, as part of its overall plan to trim about $2.5 billion from its yearly expenses by the end of 2013 “to improve operating efficiency.”
About 10% of the job eliminations, or 350 positions, will take place within the wealth-management operations in the Americas and will affect corporate staff, not advisors, the company said.
Read Going Rogue: Where Six Famous Financial Crooks Are Now at AdvisorOne.com