Poor old Kweku Adoboli.
Here's the latest from our Highly Placed Professional
Like Jerome Kerviel at Societe Generale before him, Adoboli's defence seems to have relied mainly on the idea that his superiors at UBS knew about his alarming trades. I say alarming, because most of us disciplined market pros who work in the real world know that you don’t take unhedged bets in the market just because you feel like it. And just like Kerviel, Adoboli professed love and pride in his firm and maintained that all he had done was in the bank’s best interests.
If Adoboli was really meant to make money by punting on market direction he’d have worked in a proprietary trading capacity, or as a bank treasurer, or as a line trader running a credit book or other product. But no. His job was, in fact, to oversee the hedging and purchase or sale of futures to match the underlying assets of an ETF fund - that’s a fund of futures contracts. His was a relatively junior trading job that was not meant to include the taking of outright market risk.
Adoboli, however, had form for a bit of personal account trading, didn’t he ? He managed to lose a cool £123,000 of his own money spread betting from home. It’s easily done, losing a fortune on spread betting, and that’s why it’s best not to start. (It’s also why traders shouldn’t be allowed to do it, but I digress). So here you have a 20-something-year-old sitting on a large personal loss, an expensive lifestyle and a job in a vague trading-type capacity at one of the world’s biggest investment banks. Recipe for disaster ? But of course!
Frankly, I have no sympathy for the guy. The very moment he was rumbled, he fled home to send in a resignation email. Not since OJ Simpson’s suicide note has there been such a quick surrender. He knew full well that he’d done wrong, because he said in the email that he’d ‘take full responsibility for my actions - and the shit storm that will ensue'.
But it goes a lot deeper than that. Adoboli probably was the straw that broke the camel’s back. The bank's board in Zurich rightly concluded that shareholder value had to be more important than a trophy investment bank, and now they have started to cut staff amid a radical restructure. So not only has his unauthorised rogue trading cost the bank billions, but Adoboli is responsible for wrecking the careers of many of his colleagues, as well as his own.
Well Adoboli has a long time to reflect on his actions - he was sentenced to 7 years in prison. That's a long time to think of what might have been, and how he threw it all away. And for once, a fraudulent banker has been held to account,and a message has been sent to any other wannabe traders out there - step over the line, and you're history!