Tuesday, November 20, 2012

Looks like they are finally firing the Banksters


They had to toss some fish into the shark tank. QB

Adoboli’s Fate Decided at Wine Bar as UBS Market Bets Unravelled

On a cool late summer evening last year in London’s financial district, with the euro-zone crisis worsening and Greece tottering on the edge of default, Kweku Adoboli says he asked the three traders who worked with him at UBS AG’s exchange-traded funds desk to join him for a drink.
Adoboli said in a post on his Facebook page that he needed “a miracle” as his bets on the market imploded. That night at a wine bar across the street from their office, Adoboli asked John Hughes, the senior trader on the ETF desk, and two junior traders, what to do.
Kweku Adoboli, a former trader at UBS AG. Photographer: Simon Dawson/Bloomberg
The others decided he should take the blame for billions of dollars in losses and an elaborate web of secret trades in what he called an umbrella account that once held $40 million in hidden profits.
“I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough,” the 32-year-old Adoboli testified last month about the meeting, which the other traders deny took place.
Two days after the alleged meeting, on Sept. 14, 2011, Adoboli told a UBS accountant that he was responsible for causing the losses, which totalled $2.3 billion once the trades were unwound, leading to one of the highest-profile banking trials in British history. Prosecutors said the risks at one point approached $12 billion and threatened the survival of UBS (UBSN), the largest Swiss bank.

Seven Years

Adoboli was found guilty of fraud and sentenced to seven years in prison yesterday after a two-month trial at a London criminal court. Judge Brian Keith said Adoboli had to serve at least half the sentence. He was cleared of four counts of false accounting, where he was accused of booking fake hedges to hide the risk of his real trades, and keeping profits off the books in an internal account to cover future costs of running the desk.
Evidence at the trial suggested Adoboli was driven to be a star trader and had a personal spread-betting habit. When he turned himself in, despite making 360,000 pounds ($573,000) in salary and bonus the previous year, he was in debt with three overdrawn bank accounts.
Sasha Wass, the lead prosecutor, called Adoboli arrogant, reckless and an “accomplished liar” who “played God” with the bank’s money to boost his ego and wallet through larger bonuses.
The case also shined a light on UBS’s oversight of its trading floor. The bank, which had a team of about eight lawyers and public-relations representatives at the trial, is being investigated by U.K. and Swiss regulators for failing to detect the trades over three years.

Hard Look

“If there’s one thing that we learned in this case, it’s that the investment-banking industry needs to take a good, long, hard look at itself,” Adoboli’s lawyer, Charles Sherrard told the judge before sentencing yesterday.
Eleven UBS employees resigned or were fired in the wake of the trading loss. That includes former Chief Executive Officer Oswald Gruebel and the co-heads of global equities, Yassine Bouhara and Francois Gouws. Chief Financial Officer Tom Naratil testified during the trial that while 550 job cuts last year weren’t directly linked to Adoboli, “a loss of $2.3 billion would affect staffing levels.”

13 comments:

Mammoth said...

A crooked banker actually being sentanced to a jail term?

I'd better chec my calendar to see if this is April Fool's Day.

Mammoth said...

SPAMMER ALERT!!!
Queenbee, check the last two posts on the previous thread.

Mammoth said...

Queenbee, since you do not put many miles on your car, what would the advantage be for you to purchase a Prius?

I wonder how many people who drive paid-off gas-guzzlers ever think to do the math on their actual dollar savings by weighing the cost of a replacement vehicle vs. the price of the fuel they would save?

Queenbee said...

I know there really is no advantage to buy a Prius for me. I was just thinking how long can my Ford go? Yesterday the spambots hit me three more times. I will go and delete them.

Queenbee said...

Mammoth I was think more like Hell freezing over. Maybe there is hope. Every day I see another scandal.

Queenbee said...

I just cannot believe that money managers are still buying AAPL. For the love of god that looks like a balloon that is ready to pop.

Queenbee said...

CL where have you been? Family?

gaw said...

Well, on the Prius I can only tell you what my friend who bought one said ( he got a 3 yr old one that a lady traded in towards a new Prius, so I guess she liked it) - he was ecstatic with the gas mileage. But he drives a LOT for work and commuting twice a day too, and was paying ~$1400/month gas for his Yukon guzzler. Now he spends about $300 to drive the same miles.

He talked to the salesman at the Toyota dealer ( a friend of his) about the battery, and was referred to a battery supply place that sells the replacement batteries for Prius. The battery guy told him they usually last to about 400,000 kilometers (~266K miles), and right now the replacment battery pack was about $1500. He was also told to "drive it till the battery dies, then replace it", as the replacement batteries get cheaper by about $100-$200 each year, and they also improve the strength of the battery each year over the factory one. The electric drive motor itself is a sealed unit, not replaceable (you scrap the car when it goes), but Prius taxis in Japan have gotten over 1.2 million kilometers (750 K miles) before it went.

However, for you, with a disabled partner, or a not fully mobile one at least, the Prius is probably too small - it is a small car, after all. The doors just aren't very big, making it harder to get somebody in out of a wheelchair etc. You might be better off to look at mini-vans. Most of the domestic mini-vans can be had cheaply now, they don't last much more than 5-8 years, but they don't cost much either. Or, Toyota and Honda make nicer ones, for more money, of course.

Queenbee said...

Thanks for the information GAW. I do prefer the larger car to transport Yvonne and Crown Vics can last up to 500k with proper maintenance. I don't think I drive 2k a year so that is a long time.

gaw said...

This year's model of Prius is the 5th generation now, and they get much better mileage than the older ones - 78 mpg hwy/81 mpg city. The battery in the new one is state of the art, but I am sure by the time you needed to replace it they would be better.

Probably the ideal customer would be someone who drives a lot, and is in city gridlock a lot. As below 35 mph or so you burn no gas, running only on the battery. The engine will turn on once in a while to charge the battery, but you hardly notice it. Even the 'base' model is fully loaded with power everything and a/c etc except power windows, the higher models have the fancier interiors and trim and better sound systems and have power windows.

Battery performance will be degraded in cold climates, but you live in Florida so that is not a concern. I would steer clear of the Volt, as they have battery overheating issues, and require large cooling fans running all the time, so in a hot climate like Florida that would be a worry.

gaw said...

Well, if your car is still running OK, just keep driving it till it dies. Those Fords are cheap to maintain, and the parts are cheap, so even if you have to fix a few things here and there it is till economical. Probably cheaper to insure than most vehicles too.

A few years down the road there will be more choices in hybrids etc, and they will get cheaper, and better mileage. So you don't lose anything by waiting, other than fuel costs now, and with the limited number of miles you drive, I wouldn't worry too much about it.

gaw said...

As mammoth said, you have to do the math, and a Prius only really pays off if you drive a lot of miles all the time. Then the fuel savings can pay for the car and insurance, making it a no-brainer.

But if you don't drive much, the math is more like that for any other car - totoal cost of ownership.

One thing I can say about Toyota's in general is that their "retained value" (what you can sell it for in a few years used) is extremely high. A 5 year old Prius goes for almost as much as a new one, for example, which helps the math a lot, if you can sell it after a few years and it won't have an extreme amount of miles on it.

But you still have to make that monthly payment, insurance would be more than you pay now etc.

Queenbee said...

Thanks to all for the feedback. No Prius for me. I can drive my CV for years. I don't even bother with collision insurance, but I keep liability up and pip. New post going up soon and no new one on Thanksgiving.