LONDON, Oct 18 (Reuters) - UBS managers have
detected three unauthorised trading incidents within the bank
unrelated to accused "rogue trader" Kweku Adoboli, a London
court heard on Thursday.
The information was part of an addendum to a KPMG report
into Adoboli's trading that was communicated to the accused
fraudster's legal defence team last week.
The court was not told when the three previously unheard-of
incidents occurred, and no details were given.
Adoboli, 32, is on trial at Southwark Crown Court accused of
fraud and false accounting that cost the Swiss bank $2.3
billion. He has pleaded not guilty.
Charles Sherrard, one of Adoboli's lawyers, made reference
to the three incidents during his cross-examination of Colin
Bell, UBS's global head of operational risk control.
Citing the KPMG addendum, Sherrard said UBS managers had
instructed the auditors not to delve into the three incidents as
part of their in-depth investigation into the Adoboli affair.
Bell said he was aware of the incidents in question but did
not wish to disclose details due to confidentiality obligations.
However, he said he would "draw a distinction" between the
three incidents and the case of Adoboli.
Speaking in general terms, he said one example of an
incident that would be termed "unauthorised trading" could be
where someone mandated to trade a particular product had traded
a different one.
"It doesn't fall into the same bucket" as the Adoboli case,
in which the core accusation is that the trader exceeded his
trading limits and concealed his huge, unhedged positions with
fictitious bookings, Bell said.
The exchange between Bell and Sherrard was part of a broader
strategy by Adoboli's defence team to present UBS as a bank with
sloppy compliance systems that sent mixed messages to its
traders about how seriously they should take risk limits.
Citing the KPMG addendum, Sherrard said the three other
unauthorised trading incidents had taken place "prior to and
during" the investigative period.
It was not clear whether this referred to the period during
which KPMG have been examining events at UBS, which began after
Adoboli's arrest on Sept. 15, 2011, or to the wider period under
investigation, which goes back to late 2008.
The trial continues.
