UBS Trader to Remain in Custody for a Month

Kweku Adoboli, the UBS AG (NYSE: UBS) trader charged with conducting unauthorized trading that led to a $2.3 billion loss for the bank, will remain in custody until a court hearing next month. Adoboli has been in police custody since September 15 on charges of fraud and false accounting.

Adoboli, who worked as a trader on Switzerland-based UBS’ Delta One desk, said through his lawyer that was sorry beyond words for what has happened. According to UBS, Adoboli accumulated massive losses over the last three months after taking unauthorized positions in stock market index futures. He masked his illegal trading activities through fictitious hedges.

The disclosure from UBS regarding the scandal has once intensified calls for the Swiss bank to focus on its core Wealth Management business and do away with the risky Investment Banking unit. UBS executives, including CEO Oswald Gruebel, are attending a meeting in Singapore where the rouge trading scandal is expected to be discussed.

Earlier today, Adoboli appeared briefly at a London magistrate’s court, where his lawyers declined to enter a plea to charges of fraud and false accounting.

Gruebel, who last week said that he would not leave his post due to the scandal, is expected to make a pitch to the bank’s board about staying on his position. However, there is growing speculation about Gruebel’s future at the bank, especially in Switzerland where politicians have said that the rouge trading scandal is further proof that the country’s largest bank must be reined in.

Another person facing intense pressure is the head of the bank’s investment banking unit, Carsten Kengeter. Analysts say that Kengeter will have to be held accountable for the rouge trading scandal.

The $2.3 billion loss from unauthorized trading is expected to hurt UBS’ third-quarter financial results. The bank said that it may post a loss in the quarter as a result of the $2.3 billion hit.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.