The Swiss bank is said to be planning a big round of cuts in the investment bank with the aim of saving a bunch of money, which it will then spend on luring in “more promising talent.” Read more »
Bess: Can you really sue someone for [thing someone is suing someone else over]?
Matt: Anyone can sue anyone for anything.
Bess: Did you even go to law school?1
What you don’t learn in law school, though, is that “what the law says” and “what you can settle a case for” are two different things. One thing people love to sue about is “doing stupid shit with shareholder money.” Weirdly, though, the state law that governs who can do what with shareholder money not only allows but actively encourages doing stupid shit with shareholder money; if you go to Delaware state court and say “hey the CEO of my company did stupid shit with my money and now it’s gone” they will LAUGH AND LAUGH AND LAUGH at you and then make you go away.2
If you go to federal court and say “the CEO did stupid shit with my money” you will also be kicked out of court, but for purely technical reasons: that is not technically a thing federal courts care about. But you can fix it easily; all you have to do is say “the CEO did stupid shit with my money and then didn’t tell me about it.” This is called “securities fraud,” and it is something federal courts care deeply about. And a moment’s reflection should tell you that those sentences are essentially equivalent: how many companies have you seen issue press releases that say “hey, FYI, we did some stupid shit this quarter, but no one’s noticed yet”?
There are two big pieces of federal securities class action news today. The bigger one is that BofA settled a lawsuit over its acquisition of Merrill Lynch for $2.43 billion. There are many things worth saying about this, including: Read more »
John Hughes, the former senior trader on the ETF desk, said Adoboli told him in January last year about an internal account he called his umbrella. Prosecutors allege Adoboli created the account to pool profit from trades he hadn’t booked to use to cover up future losses. Hughes testified that he thought the umbrella referred to a profit pool that hadn’t been booked. “You live in blue sky scenarios,” Hughes wrote in an instant-message exchange with Adoboli in January 2011. “It often rains,” Adoboli responded. “I learned that last year. So I built an umbrella.” [BusinessWeek, Related: "I take responsibility for my actions and the shit storm that will now ensue."]
UBS Encouraged Kweku Adoboli To Develop Other Interests Outside Rogue Trading, Which It Condoned, Says Lawyer/Old BossBy Bess Levin
Adoboli lawyer Charles Sherrard said the bank became “more aggressive in terms of its desire to make profits” in 2011, while cross-examining one of Adoboli’s former bosses at a fraud trial in London today. “The culture, practice at the bank you were working for, didn’t matter as long as you were making money,” Sherrard said to Ron Greenidge, who oversaw UBS’s exchange-traded-funds desk until April of last year…Greenidge, who worked at UBS for 19 years, said today he was dismissed for gross misconduct because of Adoboli’s trades. He said he felt the bank was making him a scapegoat…Sherrard read out Adoboli’s performance reviews from 2009 written by Greenidge, which said the trader needed a better balance between work and other activities. Greenidge said Adoboli was a “great ambassador for the ETF product” and had outstanding performance that year…The culture at UBS changed with the arrival from Deutsche Bank of Yassine Bouhara in 2010 as the co-head of equities, Sherrard said. Bouhara is no longer at the bank. “The very nature of the bank became more aggressive in terms of its desire to make profit,” Sherrard said to Greenidge. “The mantra was coming from above was revenue, revenue, revenue.” [Bloomberg]
UBS is said to be embarking on a “fresh round of cuts” in the investment bank, starting with employees big and small in Europe. Read more »
A Lot Of People Saddle Their Employer With Billions In Losses Over A Few Thousand In Personal Credit Card DebtBy Bess Levin
UBS, the Swiss bank, was aware of problems with Kweku Adoboli’s trading five weeks before he was arrested, a court was told on Tuesday. The bank’s back office questioned €3.6bn (£2.9bn) of incorrectly booked trades as early as August 4, Southwark Crown Court heard in the trial of the former trader accused of losing his bank $2.3bn in rogue trades. The trades, normally booked on the same day, remained unregistered weeks after Mr Adoboli made them. Yesterday, the court heard how he himself had lost £123,000 spread-betting through a personal account with IG index. His trading with IG Index prompted two official warnings from his bank bosses after he failed to disclose the account and then failed to disclose individual trades. The court heard on Monday how Mr Adoboli owed thousands of pounds on current accounts and credit cards despite earning £360,000 and was overdrawn and relying on pay-day loan companies when he was arrested. Despite seeing £233,000 pass through his NatWest Bank account in the 12 months prior to his arrest Mr Adoboli’s account was overdrawn by £3,594 when he was arrested on September 15 last year, the court was told. Across his four banks accounts and two credit cards the 32-year-old trader owed £4,181. His primary current account showed payments to eight pay-day loan companies including Wageday Advance, Wonga.com, Payday UK and Pounds to Pocket. [Telegraph]
Reader Poll: What Is The Appropriate Way To Close A Letter Informing Your Employer You’ve Lost It A Couple Billion Dollars?By Bess Levin
“Regards”? “Best wishes”? “Very yours truly”? “Sincerely”? “All the best”? “Love”? ”Again, really sorry”? ”Well I guess I’ll take off now”? “It’s been a pleasure working with you”? “TTYL”? “Keep in touch”? Kweku Adoboli, UBS’s alleged rogue trader, who does sound genuinely sorry for the “shit storm” he brought on the bank, went with “thanks.” Read more »