Ex-Trader Sentenced In Loss at UBS

8:35 p.m. | Updated

LONDON — Kweku M. Adoboli, a former UBS trader, was sentenced to seven years in jail after he was found guilty on Tuesday of fraud that prompted a multibillion-dollar trading loss at the Swiss bank.

After deliberating for five days, the jury returned a guilty verdict on two charges that Mr. Adoboli had dishonestly abused his position from 2008 to 2011. But Mr. Adoboli was found not guilty on four counts of false accounting.

It is unclear whether he will appeal the matter.

During the case, Mr. Adoboli, 32, argued that his actions were aimed at generating profit for the bank and that colleagues were aware. But the prosecution had described Mr. Adoboli as a “gambler” who sidestepped rules when it suited him. Mr. Adoboli was accused of circumventing UBS risk controls and hiding losses by booking fake trades.

In a packed courtroom in London, Judge Brian Keith told Mr. Adoboli that he was “profoundly un-self-conscious of your own failings. You were arrogant enough to think the bank’s rules for traders didn’t apply to you.”

The verdict comes more than a year after Mr. Adoboli was arrested in the early hours of Sept. 15, 2011, at the London offices of UBS after confessing in an e-mail that he faked trades for years. The scandal prompted the resignation of Oswald J. Grübel as chief executive of UBS, the departure of the co-chiefs of global equities and a major overhaul of the bank’s risk controls.

The case rattled a banking industry that was already frayed by the state of the European financial system. It also evoked an earlier trading scandal. In 2008, Jérôme Kerviel, a trader at the French bank Société Générale, was accused and later convicted of generating a $6.8 billion loss. Both former traders worked in the relatively vanilla area of a complex derivatives trading business.

In the course of an intense two-month trial, the jury heard from a teary Mr. Adoboli and several current and former employees of UBS. Lawyers on both sides presented evidence that included e-mail exchanges, cellphone text messages and details of when certain UBS employees arrived and left their offices.

During the trial in a South London courtroom, Mr. Adoboli’s defense lawyer had said his client was the scapegoat for a multibillion-dollar loss at the bank. The lawyer argued that the allegations failed to take into account the role of management. The defense argued that the bank not only knew about Mr. Adoboli’s trading activities but also condoned them as long as they were profitable.

But prosecutors said Mr. Adoboli had exceeded his authorized risk limits on purpose and was “playing God” with the bank’s money. The prosecution said it was “fantastical” to think that UBS approved of Mr. Adoboli’s actions. The bank, as prosecutors laid out, sent two e-mails after the Kerviel scandal, warning employees about illegal activity.

UBS was not a defendant in the case, and under British law had not been not permitted to comment on the case. “We are glad that the criminal proceedings have reached a conclusion,” the bank said in a brief statement on Tuesday.

Mr. Adoboli cried as soon as he started to give evidence last month, saying the trading was intended to benefit the bank. He also said he had no reason to believe that what he was doing was wrong.

Born in Ghana, Mr. Adoboli joined UBS as a trainee shortly after graduating from Nottingham University in England in 2003. He rose through the ranks and in 2006 landed on the exchange-traded funds and Delta One trading desk.

The prosecution contended that as early as 2008, Mr. Adoboli falsified trades and then set up separate accounts to hide profits and losses from his unauthorized trades. The trades initially earned money for UBS and its clients, and his salary rose, the prosecution argued.

But losses started to pile up in the summer of 2011, when Mr. Adoboli wrongly bet on the direction of the financial markets. During that period, UBS exposure to the bet swelled to $12 billion, according to evidence. In the end, the bank reported a $2.3 billion loss.