Former UBS trader Kweku Adoboli appeared in court on Monday at the start of his fraud trial in a case involving losses of $2.3-billion (U.S.) at the Swiss bank.
Mr. Adoboli, who was arrested a year ago when the huge losses came to light, denies two charges of fraud amounting to more than $1.5-billion and two of false accounting related to disastrous trades that UBS says were unauthorised.
The episode marked a serious setback for UBS while it was trying to recover from near collapse during the financial crisis in 2008. In the aftermath, the bank made major changes in both its staff and strategy that are still under way.
Wearing a grey suit and red tie, Mr. Adoboli sat behind glass screens in the dock while the judge and lawyers discussed plans for his trial. A jury was to be selected later on Monday and the prosecution will outline its case on Friday.
If convicted, the British-educated Ghanaian, the son of a retired United Nations diplomat, faces a possible 10-year jail sentence. The trial is expected to last eight weeks.
Opening proceedings at London’s Southwark Crown Court, Judge Brian Keith said the first witness in the trial could expect to be called at the start of next week.
Mr. Adoboli, 32, who worked on a trading desk at UBS’s investment banking arm in London, was arrested on September 15, 2011, the day UBS announced it had “discovered a loss due to unauthorized trading”.
At the time of the alleged offences, he was working on the Exchange Traded Funds (ETFs) desk, part of the equities business within the UBS investment bank.
ETFs are so-called Delta One products, derivatives that closely track underlying securities and give holders exposure to markets that are hard to access or are illiquid.
Last year’s events had far-reaching consequences for UBS. Oswald Gruebel, who had been brought out of retirement in 2009 to steer UBS through the financial crisis, resigned as chief executive nine days after Adoboli’s arrest.
He was replaced by Sergio Ermotti who says UBS has improved internal monitoring and controls to avoid any repeat of the trading losses.