Kweku Adoboli

I’m down this rabbit hole and you’re joining me!

Another rogue trader deep dive. (Send me an email and let me know if you like these, they are way off-piste, but I find them super interesting, especially when I can map the trades on a chart as I have with Jerome.)

This time we are looking at Mr. Kweku Adoboli, a UBS trader based in London. He was convicted of losing $2 billion in 2011 and ultimately sentenced to seven years in prison. Adoboli worked his way up the UBS ladder from graduate to analyst, to finally director on the ETF desk earning a decent salary.

But something went wrong.

Along the way, Adoboli started making unauthorised trades, and similar to Jerome wasn’t hedging these trades as he was supposed to. He tricked the UBS internal risk management system and was often positioned with a heavy directional bias.

He made serval plays like this, sometimes winning, sometimes losing, but never in real danger. In one instance, he was down $300 million, but gained it all back within a few weeks.

Phew!

What actually happened on the timeline isn’t quite clear, was he encouraged by UBS or was he acting alone recklessly gambling?

Some evidence that suggests it could be the latter was that he also lost £100k of his own money spread betting…

Maybe we will never quite know what went on, but he was convicted and here’s the email he sent to his boss.

From that, I’ve added the possible trades on an SPX chart from 2011