LONDON Former UBS UBSN.VX trader Kweku Adoboli caused the largest trading loss in British banking history through reckless and dishonest methods, a prosecutor said on Thursday.
Sasha Wass said it was "preposterous" of Adoboli to argue that UBS managers had encouraged him down the path that led to losses of $2.3 billion.
Adoboli, 32, was arrested in September 2011 and his trial started a year later. He denies two counts of fraud and four of false accounting from October 2008 to September 2011.
"It was his off-book, unhedged and concealed trades that caused the loss of $2.3 billion," Wass said during her closing speech in the long-running case.
"It was by any standard of the imagination a huge loss, the largest trading loss in UK banking history."
The prosecution say Adoboli traded far in excess of his risk limits, concealed his positions by booking fictitious hedges into the accounts and lied to the UBS back office when asked about his trades.
"His reputation as a trader was built on those lies. He had been awarded promotions, pay rises and bonuses on the back of those lies. The City banker, the star trader, was a lie, a fiction, based on a complete fantasy, an accounting fabrication," said Wass.
Adoboli accepts that he concealed trades with fictitious hedges and lied to the back office but says he was not dishonest in doing so. Under British law, the jury must be certain that he acted dishonestly before they can convict him.
He has argued during the trial that he acted only for the good of UBS, that the bank wanted profits and did not care how they were achieved, that questions were asked only when the trades became loss-making and that colleagues knew of his trading methods and sometimes used similar ones.
"All you have are his unsupported smears to make it sound like UBS was replete with rogue traders like himself," Wass told the jury.
"It is a fantastical suggestion that the bank knew or approved of what Mr Adoboli was doing," she said.
"His defence is, in effect, ridiculous."
Wass pointed the jury to two emails that UBS had sent to its investment banking staff flagging up the case of Jerome Kerviel, a trader accused of causing a loss of $7 billion at the French bank Societe Generale.
The first, dated January 25, 2008, alerted UBS staff to the case, outlined what Kerviel was accused of and listed some "red flags" that staff should be alert to.
The second, dated October 19, 2010, informed staff that Kerviel had been convicted of forgery and breach of trust.
Wass said what Adoboli did was almost identical to what Kerviel had done, and that he could have been in no doubt that such methods could never have been condoned or authorised by a bank, and that they were criminal.
"How on earth, with all this (the Kerviel case) going on in the background, did he think his behaviour was honest and acceptable?" she said.
Wass also ridiculed Adoboli's account of what happened in July and August 2011, the period when the huge losses were racked up. He says he lost control at that time because he was suffering from burnout.
"He may well have been a little stressed," she said, reminding the jury that on August 11 Adoboli's hidden risk exposure had peaked at nearly $12 billion.
"He was stressed because his wild and reckless gambles were making losses and he feared he might get caught," she said.
After nine weeks of painstaking evidence, Adoboli's trial is drawing to a close. After the prosecution's closing speech on Thursday, the defence is expected to make its own closing speech on Friday.
The judge will sum up the case for the 11 jurors early next week and then they will retire to consider their verdict.
(Editing by Andrew Roche)