Accused UBS "rogue trader" Kweku Adoboli lost 123,000 pounds on a spread-betting account in his last year at the Swiss bank even though he had been in trouble over personal trading and UBS had banned it, a British court heard on Monday.
The jury also heard that Adoboli, whose total 2010 income from his job at UBS's London office was 360,000 pounds, had made payments from his current account to advance pay-day loan companies Moneybox, Wageday Advance, Wonga.com and Payday UK.
Adoboli, 32, is on trial at London's Southwark Crown Court accused of fraud by abuse of position and false accounting that cost UBS $2.3 billion - charges he denies. If convicted, he could face a maximum sentence of 10 years in jail.
Details of Adoboli's spread-betting and personal finances were read out to the jury as part of the "agreed facts" of the case, which do not need to be proven in court because the prosecution and the defence accept they are true.
The agreed facts also contained details of evidence seized by police after Adoboli was arrested at UBS offices at 3:30 a.m. on September 15, 2011.
That evidence includes an exchange of text messages on June 1, 2011, between Adoboli and a person named only as Rochan. The pair discussed Adoboli's day at work.
"Yeah, still at work," Adoboli was quoted as saying in one message. "Having to explain how we made so much money."
"I hope in a good way, or are you being accused of theft?" Rochan wrote back, punctuating the message with a smiley.
"Ha ha, no," Adoboli wrote back, adding that "on days like this that is an amazing PnL (profit and loss), we have to explain how it is done. It's a risk control thing."
Later on in the exchange, Adoboli says he is "grateful to the trading gods" although he has a feeling there is a "moment of real reckoning on the way".
Rochan was the person whom Adoboli asked the police to call on the night he was arrested, three and a half months later. No other details were given in court about Rochan's identity.
Pounds to pocket
The jury did hear a great deal of detail about Adoboli's spread-betting, a form of trading that involves placing personal bets on future movements of financial markets.
Adoboli applied for an account with IG Index, a spread-betting company, in March 2010, and soon started using it.
A month later, he was told by UBS's legal and compliance department that he had violated bank rules by failing to disclose his account and his trades. A month after that, he received a second violation notice and was told that if it happened again, the matter would be referred to human resources.
A year later, UBS changed its policy and banned spread-betting by its staff. Adoboli, who had applied in March 2011 for an account with City Index, another spread-betting firm, did not disclose that account to UBS and continued to use both that account and the IG Index one until his arrest.
The jury heard that turnover on Adoboli's current account, into which UBS paid his monthly salary of 6,200 pounds, was 233,000 pounds in his final 12 months at UBS. The account was overdrawn by about 3,600 pounds at the time of his arrest.
No explanations were given, so it was not clear what, if any, was the connection between Adoboli's spread-betting, his dealings with pay-day loan companies and the general state of his personal finances.
As well as the pay-day lenders, Adoboli had made payments to companies called Lending Stream, Credit Expert, Pounds to Pocket and Everyday Lending.
The spread-betting losses involved his own money, as opposed to the losses which have led to criminal charges against him and which involved UBS's money.
"Gentle rap over the knuckles"
Later on Monday, Adoboli's counsel Paul Garlick gave a first flavour of what his defence would be.
Taking on the prosecution's argument that Adoboli flouted the bank's risk control rules by exceeding his trading limits, Garlick referred to an exchange of emails between Adoboli and his line manager, John Di Bacco.
In one email, Di Bacco, commenting on a trade that had gone well for Adoboli and earned a large sum for UBS, nevertheless scolded Adoboli for exceeding the desk's trading limit and told him that in future he should let Di Bacco know first.
"This is one occasion when a trader exceeds the limit, makes money for the bank and gets a gentle rap over the knuckles," Garlick said.
The question of how much UBS managers knew about Adoboli's trades and whether or not they condoned his breaking of internal rules in the pursuit of profit will be central to the case.
Garlick also read out a series of transcripts of electronic chats that suggested that at least one of Adoboli's colleagues had known about his "umbrella" fund, which according to the prosecution he used to conceal his unauthorised trading.
The chats, dating back to early 2011, were between Adoboli and his colleague John Hughes, who like him worked on the Exchange Traded Funds (ETFs) desk. John Hugues will give evidence at the trial later.
In the excerpts, Hughes and Adoboli commented on how the desk's trading was going on a particular day.
"All I can say is thank fuck for your umbrella," Hughes was quoted as saying in one of the chats. In another, he said: "We might need to unlock some umbrella." In a third, he asked Adoboli: "How much is (in the) umbrella?"
In her opening statement on Friday, prosecutor Sasha Wass described the umbrella as an illicit set of accounts Adoboli set up in 2008 and used to conceal fraudulent trades.
Wass said that even if some of his colleagues had later become aware of the umbrella, that could not be a defence for Adoboli as he was the architect and manager of the fraud.
The trial, which is expected to last eight weeks, continues on Tuesday.