SocGen Redux - ETF Trader At Center Of UBS Rogue Trade

Tyler Durden's picture

Yesterday when discussing the blow up of Goldman Global Alpha blow up we predicted, "If 2007 was any indication, and it was, every terminal event for Global Alpha is a harbinger of many, many bad things coming. What is just as ominous is that if Goldman's quant fund has now blown up, then there are tens if not hundreds of other quant funds, and otherwise, that are completely defunct and liquidating, but simply choose to keep quiet. Look for many more such stunner announcements in the days to come" Sure enough not even 6 hours later, we discover that SocGen part two has struck, this time via a UBS' ETF trader (the same as Jerome Kerviel), who has been identified by the FT as 31 year old Kweku Mawuli Adoboli. The trade in question that resulted in the $2 billion loss and forced the arrest of the trader is unknown but very much irrelevant: he was over his risk profile and nobody had stopped him: this reflects very badly on UBS. Look for the bank's Libor rate to surge yet again, as the interbank market struggles to price in the risk of further such trade blow ups in a time of uber volatility. And, as yesterday, we are certain that even more blow ups, at prop desks and otherwise, will now come out of the woodwork.

Here is Adoboli's FSA broker profile:

While unclear if this is his real twitter profile or not, he appears to enjoy watching CNBC's Fast Money. No real suprise there:

Reuters logically expects many firings over this move, and potentially the loss of the entire banking group:

The bank has in the past two years tried to rebuild the investment bank that nearly felled it during the financial crisis. It needed a state bailout after heavy losses on U.S. subprime mortgage-related securities.


Under Gruebel and investment bank boss Carsten Kengeter -- themselves both once traders -- it hired hundreds of traders in a bid to boost its bond business.


Several analysts said the incident made it more likely that Kengeter would be in the firing line, while Gruebel could step down sooner rather than later.


"Gruebel saved the bank from destruction, so his main job is done. It is only a matter of time before he steps down. If it means he leaves a little sooner, it doesn't change a lot. But the investment bank is a bit of a disaster, and the knives will be out for Kengeter," said Peter Thorne, analyst at Helvea.


Another analyst who declined to be named said: "Some important heads are going to have to roll, and some are saying that after a series of missteps with the IB, Kengeter himself will have to go."


Former Bundesbank head Axel Weber is due to join the UBS board next May and take over as chairman in 2013.


The weak performance of the investment bank and tough capital rules in Switzerland had already attracted intense scrutiny over how UBS will cope, with analysts calling for a retrenchment of the investment bank.



UBS had started to see client confidence return this year after it had to be rescued by the Swiss state in 2008 following massive losses on toxic assets held by its investment bank.


UBS said last month it was to axe 3,500 jobs to shave 2 billion Swiss francs ($2.3 billion) off annual costs as it joins rivals in reversing a post-crisis hiring binge and preparing for a tough few years.


For those who wish a more indepth stalking of Adoboli's online presence should head to FT Alphaville.

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Drag Racer's picture

it would be interesting if Max is right and it was a slv etf

oobrien's picture

Let's face facts.

We're fucked.  We're looking at a 10 year depression.

But what the fuck can we do?

Long-John-Silver's picture

Only 10 yrs? What makes you so optimistic?

Left Right Wrong's picture

Any chance he could be a "fall guy" - to take a hit to his name, a bump to his bank account/concealed bank account, and a slap on the wrist - in order to cover up some expected losses or highly questionable dealings with PM ETFs?


Sure is nice to have one person to blame for a $2B loss and an internal investigation to clean up the dirty laundry

Freddie's picture

Yeah - I am going to put a Nigerian on the trading desk.  These investment banks should not be bailed out nymore.  F em.

disabledvet's picture

Noooooo. Really? Kweeku? that guy went only to the best schools!

Ferrari's picture

"... he appears to enjoy watching CNBC's Fast Money. No real suprise there."

This is so fabulous, and made me roar with laughter. And the sad thing is, about the only people I know who would appreciate this joke are found only here on ZH. Again, this feeling of abject isolation fostered by ZH. It sometimes feels like we're a genre distinct from the other bipeds around us.

Blank Reg's picture

It's our opposable thumbs that gives us away.

jm's picture

UBS is as much a puke as SocGen for selling out an employee like this.

ConfederateH's picture

UBS is a bigger puke than SocGen because this employee was obviously promoted as part of UBS PC grovelling diversity initiatives (UBS Americas CEO Robert Wolf is a mega-Obama supporter who golfs with Obama and whose sons play basket ball with the chosen one).  It looks like UBS investors are on the hook for $2B.   Unfortunately US taxpayers are already on the hook for $6T due to the Democrat party idiots selection of the diversity president. 

mvsjcl's picture

Who cares! All I see is green everywhere.

I must be going mad. That must be it. The evidence is all too clear. It's as if I find myself in a game of musical chairs. The atmosphere is festive, although I'm not quite sure what the occasion is. The expectation and energy in the air crackles sharp as a saltine snapped in two. The game is about to begin. Spectators, masked and bedecked in jewels and finery of almost celestial origin, ring the participants. The lights dim suddenly, and the music starts. Around and around we go. I don't quite know the tune; odd but somewhat familiar. The on-lookers are laughing uproariously, and I can't figure out why. The music plays. And plays. And plays. Just as I'm beginning to think it might never stop, it does. A mad scramble ensues. But to our horror, we realize that there are no chairs on the floor. We were circling nothing at all. The laughter is deafening. I realize then that the only winner is the music-maker.


And that, by golly, is our folly and foe.

BetTheHouse's picture

Know here you are coming from.  Reading the paper makes me feel like I am taking crazy pills.  Markets rise on Greeking Crisis Easing?  Did I miss something?  Was there some actual event I missed which "eased" the Greek financial crisis?  That's awesome!  Can't beleive it slipped by me!  What was it again?

Cojones's picture

One guy, a lone rogue trader. srsly?

buzzsaw99's picture

he is labeled a rogue trader because he lost money. if he had made $2B that would have been fine.

Dingleberry's picture

EXACTLY.  This wasn't one fucking peon running amok, this was OBVIOUSLY an inside job, top-to-bottom.  Too many controls on traders now after other "rogues".  If this fucker made them money, he would be looking at a vacation instead of jail. Hope he talks , and brings down some more fuckers.

espirit's picture

All it takes is one guy from Fight Club.

Robslob's picture



Why doesn't $2 Billion sound like alot of money anymore...?


Futures like the news...up, up up and awaaayyy...fucked market.

buzzsaw99's picture

cpi today. bennie on deck for next week.


QE3 you are cleared for takeoff...

AmCockerSpaniel's picture

At my age your question is mind numbing.

NumberNone's picture

I find it funny that last month UBS announced the layoff of 3,500 workders to save $2 Billion.  I'm sure the 3,500 people getting cut find the coincidence amusing. 

Freddie's picture

We need more affirmative action trading desks like ALL of Fannie Mae and Freddie Mac.

daxtonbrown's picture

I swear I got an email from some Kweko Adoboli just the other day. "Dearest Friend: I know this may seem unusual but I am at a trading desk and due to the death of my long lost uncle I have come into possession of $2 billion dollars which I find must be deposited elsewhere for safekeeping. If you could just send me your bank account number . . . ."

Well, I'm just paraphrasing. But next time I get an email like that, I'm gonna jump right on it.

KlausK's picture

Thanks for the coffee in my nose.

buzzsaw99's picture

We need to keep bailing out these fine talented assets, er, asshats, or else we might have a depression. LMAO!


:cue e-trade baby loses everything vid.:

Oh regional Indian's picture

This is what happens when you combine the speed of machines with the minds of men.

Can't reverse the "Enter" button hit!

I'm sure some model told him he was doing good things, making mountains of money and all.


Machine Strong Human Weak

firstdivision's picture

Have no fear, futures are up.  All is well with the world...til next month.

Aductor's picture

Adoboli is just an anagram for Diabloo. A devil that misspells his own name - somone at UBS should have noticed one would think.

Trying to Understand's picture

... perhaps lack of focus on the task at hand is an industry wide issue???

Everybodys All American's picture

Swiss National Bank does a crazy intervention on their currency and then wonder why a trader gets caught on the wrong side. Good times.

Ratscam's picture

maybe the Delta 1 team did not let Abodoli, the man from ghana, in on the known secret that SNB will devalue on Tuesd.
John Hughes his boss appears to be a white shoe boy

Zgangsta's picture

This news is, of course, bullish for stocks.

eigenvalue's picture

A lot of things seem to be carboncopies of 2007-2008. Hopefully silver will not crash this time as in 2007-2008:(

firstdivision's picture

Why not?  Then your LOLlars will buy more of it.  How is a deal a bad thing?

Zgangsta's picture

From LinkedIn. Not all that popular...

Kweku Adoboli

Director ETF and Delta1 Trading at UBS Investment Bank
London, United Kingdom

Investment Banking
  • European Equity Trading - Delta1 at UBS Investment Bank
  • Trade Support Analyst at UBS IB
  • University of Nottingham

12 connections

Public Profile

sabra1's picture

if he was a HFT, all would have been legal! isn't that so?

firstdivision's picture

If he was an HFT, they would have cancled the trade and the counterparty would have to sustain the losses.

Everybodys All American's picture

Are they going to blame it all on leveraged ETF's? Don't be surprised in order to get rid of all leveraged etfs this would be how you get the sheep on board?

NumberNone's picture

And this is why people hate banks.  Take a loan or credit card from these criminals and you are treated like a piece of shit.  You have 'their' money and you are to be monitored constantly and beat into submission if you even think about making a late payment.  How many people's lives have been ruined over balances in the hundreds of dollars.

On the other hand, once they have your money behind their gated walls, any scumbag with a job and access to a trading terminal can do whatever he or she wants with your money.  Apparently the level of scrutiny and monitoring drops dramatically once it's in their 'professional' hands.  I guess its good to be TBTF and have a perpetual supply of taxpayer money backstopping you.  Where's a public uprising and guillotine when you need one? 

"Hi UBS...I would like a job with your organization.  I have a good feeling about some trades and $2,000,000,000 in others people's money would be a nice start to my success.  Regards, NumberNone"

ambrosiac's picture



Maybe he bet the house on Europe breaking up yesterday, Greece defaulting the day before yesterday etc.  Ah, to be young, impressionable, and an avid blog and financial press reader.


Had it worked he would have been set with coke and whores every day to eternity.  Now he gets a slap on the wrist. 


How strange, nobody else, but nobody, is doing as much.

Coldfire's picture

Focusing the blame on the "rogue" trader is (U)BS. Risk management is the board's responsibility. And they are nine kinds of stupid for allowing this to happen. (Not like the $59 billion in losses over the past 3 years covered them in glory). But it's not all bad news. Just think how well the counterparties made out...

Hedgetard55's picture

That's Sade's nephew.


"Smooth Operator".

Karl Napp's picture

UBS should have outsourced the whole junk trading department to Ghana and all the Kwekus, Kofis would have made you rich.

Ponzi Unit's picture

After that move in CHF it would be a surprise if someone didn't get hurt. Even if forex risk tolerances are managed in a tight band, what happens to the poor bastard who gets caught in the Swiss peg and then waits to unwind it while it just gets worse? 22% move from 1.44 to 112? Bring out your dead...

jayman21's picture

Does anyone know if this was the smoking gun as to why SNB borrowed USD from the FED?  Does anyone know if the ETF was a dollar based ETF?

Fix It Again Timmy's picture

Rogue trader informs his supervisor that things went a tad bad....


fiddy pence haff pound's picture

the Rogue was probably just following orders and got backstabbed.

Everything that the sick banks do now is technically rogue, to the rest of us and to natural law and physics.


how to keep levitating a broke, sack-o-sh*t bank?

how to steal public money?

How to leverage that into political influence?

How to make money killing off jobs, businesses and countries?