Bloomberg reported that a former senior trader on an exchange-traded funds desk at UBS AG has been banned from working in the finance industry in the UK for his part in the $2.3 billion unauthorized trading loss that was caused by an ex-colleague. The Financial Conduct Authority, who has imposed the penalty in a statement today, said John Hughes had knowingly withheld information about an "umbrella" internal fund that ex-UBS trader Kweku Adoboli had created to help them keep profits in case of future trading losses.
The FCA's head of enforcement, Tracey McDermott, said in the statement, "(Hughes) allowed the desk's profit and loss to be misstated over an extended period. This failure contributed to Adoboli's unauthorized trading continuing unchecked."
Adoboli is currently serving a seven-year sentence following his conviction in a London court in 2012. The former trader, who had since worked for UBS following college, was charged with hiding the risk of booking fake hedges and storing profits in the umbrella fund to help cover the costs of running UBS' ETF desk at its global synthetic equities division. The court has found him guilty of two counts of fraud for causing the billion-dollar loss, but had gotten off from four charges of false accounting.
At this trial, Bloomberg said Adoboli insisted that the managers at his former employment had urged him to take lots of risks and was advised that rule-breaking at UBS was rampant. He also claimed in court that the loss was not done dishonestly, implying that the bank had knowledge about the results of the trade. Hughes, who testified in Adoboli's trial, was hot and cot about his former colleague, telling in court that he both love and loathe the former trader. The news agency said Hughes was fired from the bank for gross misconduct in September 2011 following Adoboli's arrest.
The Zurich-based bank, on the other hand, was not spared and was also slapped with a fine amounting to 29.7 million pounds ($50 million) in 2012 for its failure to detect or prevent the trades.
