Bureau Recommends: String of fake UBS trades uncovered
Kweku Adoboli worked on the Delta One desk at UBS.
As the world still tries to get to grips with what exactly happened at UBS, the Bureau recommends a Financial Times article which tries to get to explain further how Kweku Adoboli might have lost UBS $2.3bn.
The story suggests Adoboli made a series of massive, speculative bets and allegedly covered them up by off-setting them with a string of fictitious trades.
UBS became suspicious of his activities in July, at which point he allegedly began to enter trades he had not actually made to cover his tracks. These made it seem he had ‘hedged’ his position, when in fact he was making huge bets on one outcome, in breach of trading rules.
What is still unclear is why Adoboli did not hedge his bets to start with. Adoboli worked on Delta One desk, which deals in financial derivatives. The Bureau’s Nick Mathiason explains what Delta One does, and why the sorts of trades it makes can be dangerous.
The Financial Times article also charts the huge growth in Exchange-Traded Funds – which Adoboli traded – over the last decade.
Read the full story. here
