Rogue UBS trader Adoboli also managed to lose his shirt on spread bets

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Kweku Adoboli

It looks like UBS’s infamous rogue trader Kweku Adoboli who managed to lose $2.3 billion for the bank after a series of undeclared and bad bets in exchange traded funds, wasn’t only bad at trading in his work life but managed to do the same with his personal money! So much for being a star fund manager!

Evidence presented at Southwark Crown court showed that he managed to lose £123,000 in spread bet positions with IG index and regularly resorted to pay day loan companies like Wonga to keep himself solvent despite earning £360,000 in 2011. He was officially warned in 2010 for trading with IG Index after failing to disclose the account, but later open another unauthorised account with City Index.

Adoboli used a series of secret trading accounts at UBS but, unlike Nick Leeson infamous five 8’s account which brought down Barings after a series of disastrous bets on Nikkei futures, he termed the account “umbrella”. The umbrella account was said to be in deficit to the tune of $12 billion at one point, enough to turn UBS into another Barings!

In September 2011, Adoboli admitted to the bank “The ETF trades that you see on the ledger are not trades that I have done with a counterparty”. Whoops!

In July, the so called “London whale”, Bruno Iksil, left JP Morgan after racking up losses of $5.8 billion. He became known as the London Whale and Voldemort, after the Harry Potter character because of the sheer size of the credit default swap positions he built up in an obscure vehicle called CDX IG9. The bank initially declared a loss of $2 billion, but this quickly jumped as hedge fund managers jumped in to bet against the Whale’s positions driving them further into deficit,

It’s always staggering how seemingly easy it is for traders to create multi billion pound losses despite the supposed oversight and compliance controls. The investment banks never seem to learn, even after Nick Leeson and countless others!

Contrarian investor uk



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