UBS trader charged, held in $2b fraud scam
Swiss bank under fire for failing to identify huge loss
LONDON - The young trader who rocked Swiss banking titan UBS by allegedly gambling away $2 billion was charged yesterday with fraud and false accounting dating back to 2008, as his bank came under a storm of criticism for failing to catch the loss.
Kweku Adoboli sniffled during a brief court hearing, but did not enter a plea. He will be held until another appearance Thursday, presiding magistrate Carolyn Wagstaff said.
Adoboli, 31, spoke only to confirm his name, birth date and address in a chic east London apartment building. His lawyers made no comment as they left City of London Magistrates’ Court.
In financial circles, questions continued to swirl.
Some analysts and politicians called for senior UBS managers to take responsibility for the loss, which the bank said could put its third-quarter results in the red. Ratings agency Moody’s placed UBS’s credit grade on review for possible downgrade, citing worries over the future of its London-based investment unit.
“Until UBS has explained in detail how such a significant loss due to unauthorized trading could happen, and how the problem will be solved, confidence will remain impaired,’’ said Andreas Venditti, an analyst at Zuercher Kantonalbank.
Switzerland’s Social Democratic Party, which has two representatives in the country’s seven-member government, yesterday accused UBS of “arrogance and greed’’ for failing to curb its business practices after the 2008 banking crisis.
In a statement, the party leadership called for consequences, including the replacement of “egomaniacal, arrogant and irresponsible managers,’’ a ban on proprietary trading for key banks, and a response from UBS to the rumors that the rogue trade was linked to the Swiss National Bank’s decision last week to set a minimum price for euro to Swiss franc exchanges.