More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
Kweku Adoboli, the so-called rogue trader of UBS AG who lost $2.3 billion in unauthorized trades, went on trial at Southwark Crown Court in London, and the prosecutor said the scale of his gambling was such that his losses could have exceeded the bank’s resources.
Bloomberg reported Friday that Adoboli has denied charges of fraud and of falsification of exchange-traded fund transactions and other documents needed for accounting purposes going as far back as October 2008. Prosecutor Sasha Wass told a jury in criminal court that he “lied to his bosses” to hide his massive trading losses, which amounted to “gambling.”
"At one stage, Mr. Adoboli was in danger of losing the bank nearly $12 billion of unhedged investments," she said, according to Reuters. Bloomberg quoted her saying, “The scale of Mr. Adoboli’s gambling was so large and so unchecked he could have quite easily approached and even exceeded the limits of the bank’s resources.”
Reuters reported her saying that at that point, "He had been sucked into the gambler's mindset and he started throwing good money after bad. He was putting the very existence of the bank at risk."
Adoboli could face as much as 10 years on the fraud charges—there are two—for abusing his senior trader position on the bank’s Delta One desk “by causing or exposing UBS Bank to losses intending thereby to make a gain for himself.” The falsification charges—also two—carry prison terms in the U.K. of up to seven years each.
Wass said that in his quest to boost his bonus, his status at the bank, his job prospects and his ego, Adoboli far exceeded his trading limits and then invented “fictitious deals to conceal this.”
She was quoted saying, “This colossal loss arose purely as a result of Mr. Adoboli’s fraudulent deal-making, which amounted, as we will see, to nothing more than gambling.” She added, “Mr. Adoboli’s activities were far more deliberate than that of a mere rogue trader. He did not simply make a few wild bets. He faked bookings, he created false accounts and conducted himself as a master fraudster, deliberately and systematically deceiving and defrauding the bank which was employing him.”
Adoboli was held in Wandsworth Prison after his arrest on Sept. 15 last year until he was granted bail in June. Since then he has been staying with a friend in London, according to his lawyer, and as part of the bail terms, has surrendered his Ghanaian passport and is subject to a curfew.