The alleged UBS 'rogue trader' Kwame Adoboli accused of gambling away a record £1.5 ($2.3bn) appeared in court for the second time Thursday for fraud charges. He apologised to the court for wrongful trading during the pre-committal proceedings in London saying, he was 'sorry beyond words'.
Mr Adoboli 31, from east London faces a second count of fraud as well as two charges of false accounting over three yeas at Swiss banking giant UBS.
UBS raised its estimated losses due to alleged unauthorised trading to $2.3bn (£1.5bn) from an initial $2bn. The bank also said the alleged activity by trader Kweku Adoboli was uncovered after UBS began making inquiries.
That prompted Mr Adoboli to admit the losses on Wednesday, UBS said. The trader was charged with fraud and false accounting at a London court on Friday.
UBS boss Oswald Gruebel has insisted he would not resign over the incident.
"I'm responsible for everything that happens at the bank," Mr Gruebel told Swiss Sunday newspaper, der Sonntag. "if you ask me whether I feel guilty, then I would say no."
'Fictitious' hedges
According to the charges, the fraud took place between January and September this year.
The charges add that Mr Adoboli filed false accounts between October 2008 and December 2009, and from January to September 2011.
The 31-year-old worked for UBS's global synthetic equities division, buying and selling exchange traded funds, which track different types of stocks or commodities such as precious metals.
Prosecutors say Mr Adoboli "dishonestly abused that position intending thereby to make a gain for yourself, causing losses to UBS or to expose UBS to risk of loss".
The UBS statement claimed Mr Adoboli had conducted legitimate derivative transactions, giving the bank heavy exposure to various stock market indexes.
But he had then entered "fictitious" hedges against these positions into UBS' risk management system, while in reality he had no hedge in place and was breaching the risk limits that the bank required him to work within.
Stock markets have fallen 10%-20% in the past two months on growing fears of a renewed recession in the US and a disorderly debt default by Greece.
"Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorized activity on September 14, 2011," the UBS statement said.
The bank said it was now operating within normal risk limits, implying that the unauthorised positions had been hedged or unwound.
Political pressure
BBC business editor Robert Peston reports that Mr Adoboli worked in the back office before becoming a trader, which may explain how he managed to keep his trading secret.
The Financial Services Authority (FSA), the City regulator, in conjunction with its Swiss counterpart, FINMA, has launched an investigation into why the Swiss bank did not identify the trades.
UBS said in its latest statement that it too had launched an internal inquiry.
City of London Police said in a statement that its "investigation is ongoing and officers continue to work in close collaboration with the FSA (Financial Services Authority), SFO (Serious Fraud Office) and CPS (Crown Prosecution Service)."
Mr Adoboli has taken on the law firm Kingsley Napley, which also represented Nick Leeson, the rogue trader who brought down Baring's bank.
According to reports he is the son of a retired United Nations employee from Ghana, and that he attended school and university in Britain.
'Much riskier'
All three major ratings agencies - Moody's, Standard & Poor's and Fitch - are reviewing UBS' credit rating for a possible downgrade in light of the apparent failure of the bank's risk control systems.
However, UBS latest statement said the losses only related to trading positions taken on in the last three months.
Mr Adoboli 31, from east London faces a second count of fraud as well as two charges of false accounting over three yeas at Swiss banking giant UBS.
UBS raised its estimated losses due to alleged unauthorised trading to $2.3bn (£1.5bn) from an initial $2bn. The bank also said the alleged activity by trader Kweku Adoboli was uncovered after UBS began making inquiries.
That prompted Mr Adoboli to admit the losses on Wednesday, UBS said. The trader was charged with fraud and false accounting at a London court on Friday.
UBS boss Oswald Gruebel has insisted he would not resign over the incident.
"I'm responsible for everything that happens at the bank," Mr Gruebel told Swiss Sunday newspaper, der Sonntag. "if you ask me whether I feel guilty, then I would say no."
'Fictitious' hedges
According to the charges, the fraud took place between January and September this year.
The charges add that Mr Adoboli filed false accounts between October 2008 and December 2009, and from January to September 2011.
The 31-year-old worked for UBS's global synthetic equities division, buying and selling exchange traded funds, which track different types of stocks or commodities such as precious metals.
Prosecutors say Mr Adoboli "dishonestly abused that position intending thereby to make a gain for yourself, causing losses to UBS or to expose UBS to risk of loss".
The UBS statement claimed Mr Adoboli had conducted legitimate derivative transactions, giving the bank heavy exposure to various stock market indexes.
But he had then entered "fictitious" hedges against these positions into UBS' risk management system, while in reality he had no hedge in place and was breaching the risk limits that the bank required him to work within.
Stock markets have fallen 10%-20% in the past two months on growing fears of a renewed recession in the US and a disorderly debt default by Greece.
"Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorized activity on September 14, 2011," the UBS statement said.
The bank said it was now operating within normal risk limits, implying that the unauthorised positions had been hedged or unwound.
Political pressure
BBC business editor Robert Peston reports that Mr Adoboli worked in the back office before becoming a trader, which may explain how he managed to keep his trading secret.
The Financial Services Authority (FSA), the City regulator, in conjunction with its Swiss counterpart, FINMA, has launched an investigation into why the Swiss bank did not identify the trades.
UBS said in its latest statement that it too had launched an internal inquiry.
City of London Police said in a statement that its "investigation is ongoing and officers continue to work in close collaboration with the FSA (Financial Services Authority), SFO (Serious Fraud Office) and CPS (Crown Prosecution Service)."
Mr Adoboli has taken on the law firm Kingsley Napley, which also represented Nick Leeson, the rogue trader who brought down Baring's bank.
According to reports he is the son of a retired United Nations employee from Ghana, and that he attended school and university in Britain.
'Much riskier'
All three major ratings agencies - Moody's, Standard & Poor's and Fitch - are reviewing UBS' credit rating for a possible downgrade in light of the apparent failure of the bank's risk control systems.
However, UBS latest statement said the losses only related to trading positions taken on in the last three months.
UBS lost £35bn ($71bn) in the 2007-8 banking crisis and had to be bailed out by Swiss taxpayers.
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