British regulator bans former UBS trader over Adoboli losses
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[May 02, 2014]
By Kirstin Ridley and Clare Hutchison
LONDON (Reuters) — Britain's financial
regulator has banned a former senior UBS trader for failing to
adequately supervise his junior colleague Kweku Adoboli, the "rogue
trader" jailed in 2012 for running up $2.3 billion in unauthorized
Announcing its first ban from regulated financial jobs for such a
failure, the Financial Conduct Authority (FCA) said on Thursday John
Hughes had been aware of Adoboli's actions but had failed to
challenge, report him or act as a role model with "catastrophic
"Instead he ... allowed the desk's profit and loss to be misstated
over an extended period," FCA enforcement and financial crime
division head Tracey McDermott said.
"This failure contributed to Adoboli's unauthorized trading
continuing unchecked. Approved people should operate to the highest
standards of integrity."
Between January and September 2011, Hughes was the most senior
person on UBS's Exchange Traded Funds desk at the London branch of
UBS — a period during which Adoboli ran up such hefty trading losses
that they that risked undermining the Swiss bank.
Adoboli was sentenced to seven years in jail in November 2012 after
being found guilty of two counts of fraud by abuse of position.
Hughes — who was dismissed for gross misconduct weeks after Adoboli's arrest — wept in court in October 2012 after reading an
email in which his former colleague admitted to the trades.
Part of the unauthorized trading involved creating and using a
secret fund, dubbed the "Umbrella", which had the effect of
manipulating the desk's reported profit and loss.
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The FCA said Hughes knew about the existence of the Umbrella, how it
was being used, did not consider it to be honest and knew UBS would
not have authorized its use.
"Hughes' conduct in relation to the Umbrella was dishonest and
demonstrates that he is not a fit and proper person to perform
functions in relation to any regulated activity carried on by an
authorized or exempt person," the FCA said.
(Editing by Louise Ireland)
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