Wires

Accused UBS "rogue trader" was chased over problem trades

By Estelle Shirbon

LONDON, Oct 8 (Reuters) - A UBS analyst whoqueried deals booked by accused fraudster Kweku Adoboli thoughthis trading desk was "very messy" but did not suspect anythingillegal, a London court heard on Monday.

Henry Chu, who repeatedly chased Adoboli in the summer of2011 over problems with his bookings, said the first he knew ofany fake trades was when Adoboli's arrest was on the news inSeptember 2011.

Adoboli, 32, is on trial at Southwark Crown Court accused offraud and false accounting that cost UBS $2.3 billion. He haspleaded not guilty.

In 2011, Chu was part of a trade support team at UBS'sLondon office whose job included resolving any "breaks", ordiscrepancies, in the bookings made by Adoboli's Exchange TradedFunds (ETFs) desk.

Testifying by video-link from Hong Kong where he now works,Chu recalled dealing with frequent back office queries overbreaks traced back to trades booked by Adoboli.

"There were a lot of breaks. I thought it was just a verymessy desk," he said, adding later that there could be 20 or 30trades "missing" from the books on a given day and that thiscould have been due to the high volumes being traded and thetime pressure on traders.

He said Adoboli had said the breaks were due to the complexway in which ETFs worked and that one way to resolve them was tochange the settlement dates.

The detail is significant because the prosecution has saidthat one of the main ways in which Adoboli conducted his fraudwas to extend settlement dates to conceal what his true tradingpositions were.

Defence lawyer Paul Garlick read out to Chu two transcriptsof chats from July and August 2011 in which the suggestion tochange a settlement date appeared to come from Chu.

"Might want to change the settlement date for now," Chu saidin one chat on July 12. "Done," replied Adoboli.

Garlick put it to Chu that this showed that he knew thatthese trades were fictitious as, if they had been real trades,unilaterally changing the settlement dates was not possible.

Chu denied any knowledge of fictitious trades. He said thatchanging the settlement date was a solution to breaks thatAdoboli had indicated to him several times in the past, and thatwas the only reason why he was suggesting it during thatparticular chat.

"I had no clue at all. I didn't know anything about the faketrades until everything was on the news," he said, referring toSept. 15, 2011, when Adoboli's losses and his arrest were firstreported by media.

(Editing by Alison Williams)

((estelle.shirbon@thomsonreuters.com))

Keywords: UBS TRIAL/