I attended the trial for the first two week, and got to speak with the Man in Question. A very decent guy who go into banking the hard way of settlements then working his way up. His desk was earning around £15,000,000 per year when he started and over a the next quarter he earn £16,000,000 then the next quarter £45,000,000 for the desk of six traders with increased loss limits of £100,000,00
.All his desk were aware of of his "Umbrella Account" likewise some people in the Back Office and in several echolens of management. NO compliants were made during this massive up trend in profits.
In the 2nd Qtr of 2011, he decided to be bearish the S&P indice, and loaded up on his position. He believed that the market was not acting right and it was due for a major correction. Over the next few weeks the market edge slightly higher each day, which meant all his desk colleagues and Manager were taking the micky out of his "Bearish" stance, he insisted that the market was due for a correction, but his amigos were all ribbing him and making Cartoons of Adoboli the Bear. Another factor was that his desk manager was more of a scalper than a swing trader and was constantly making loses for the desk, through Adoboli's style of trading and the "umbrella" account it allowed the whole desk to mask their general losses.
Near the end of July he finally gave in to "peer" group pressure and switched his position to Long. Taking the relatively smaller loss on the short side. After that the rest as they say is History. The twin events of Obama care rebellion and the USA downgrade pushed the market to it's lowest lows in one week.
Colleagues agree that he was very active and well studied in the and with the Market to an obessive degree. After discussing his position with with Desk they decided that he should take the rap for the loss, obviously they would not have asked him to take the credit at bonus time had he of stuck to his original decision. He "owned up " as the futures contracts would have had to of been rolled over and that sort of size could not he sweeped under the carpet.
The pressures occured when in 2008 UBS lossed $50 Billion in the sub prime debacle and it was realised that the only department that could possible make it up was through the Sales traders or the Proprietary Traders. The Sales Traders were fleecing thier clients to such a large degree UBS were losing them. This meant the pressure was on the Prop desks to recover the money, hence increased limit sizes and a more embracing attitude to risk.
As Mr Hughes, the ex UBS head of ETF trading desk Adoboli's supervisor mentioned the training consisted of 6 months on the job and a multiple choice test about Derivatives. After that bingo Size for your Eyes.
My own personal views is while he did do some ficticious trades, he did so in an environment that encourged it, I have yet to hear of a Court case of a "Rogue" Trader that make the Bank $ 1 Billion.
