UBS Trader Faces Trial For $2.3 Billion Loss

Kweku Adoboli

LONDON — A former UBS trader, Kweku M. Adoboli, pleaded not guilty on Monday to charges of fraud and false accounting that led to a $2.3 billion trading loss at UBS last year.

Standing in a glass-walled box in a London court, Mr. Adoboli, 31, pleaded not guilty to each of the four counts. He faces up to 10 years in prison if found guilty of the two counts of falsifying accounts and two counts of fraud by abuse of position.

The judge, Alistair McCreath, sent Mr. Adoboli back into custody and said the trial would start Sept. 3. Given the “magnitude” of the case, with a vast amount of material and witnesses, “it’s unlikely to try before that,” the judge said. The trial is expected to last as long as eight weeks.

A spokesman for UBS declined to comment, saying that during active criminal proceedings, “English criminal law limits what we can say about this incident.”

Paul Garlick, Mr. Adoboli’s lawyer, said he expected to enter an application for bail “in the near future.”

Mr. Adoboli was arrested Sept. 15 on suspicion of fraud after UBS alerted the police. The bank has said it lost $2.3 billion as a result of unauthorized trades in equity index futures and claimed that Mr. Adoboli had masked those activities from internal controls with fictitious trades.

In a surprise step in December, Mr. Adoboli fired his lawyers at Kingsley Napley, the firm that previously represented Nick Leeson, the rogue trader blamed for the collapse of the British bank Barings in 1995. His lawyer had told a court in September that Mr. Adoboli was “sorry beyond words for what had happened” at UBS. Mr. Adoboli switched to another law firm and then asked the court for more time to enter a plea.

The trading scandal shook UBS and prompted the resignation of its chief executive, Oswald J. Grübel.

While UBS, based in Zurich, has completed an internal investigation into the trading loss, a separate inquiry by the Financial Services Authority, the British regulatory agency, and the Swiss financial watchdog is continuing. The F.S.A. has hired the accounting firm KPMG to help.

The bank’s internal investigation showed that while its risk controls had picked up something unusual and red flags had been raised, those in charge had failed to investigate them sufficiently. UBS said in October that the co-heads of the equity division in London, where the trades occurred, had resigned.

“We have to be straight with ourselves,” Sergio P. Ermotti, the chief executive, said then. “In no circumstances should something like this ever occur.”
 
   

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TradeStation Acquires IBFX

TradeStation


PLANTATION, Fla., Nov. 16, 2011 (GLOBE NEWSWIRE) -- TradeStation Group, Inc. ("TSG") today announced the acquisition of IBFX Holdings, LLC ("IBFX"), an innovative provider of forex trading services to 27,000 individual traders, fund managers and institutional clients worldwide. Under the terms of the acquisition, which has been unanimously approved by the Boards of both companies, TradeStation Technologies, Inc., a wholly-owned subsidiary of TSG, acquired from Interbank FX, LLC, a Utah corporation and one of the wholly-owned operating subsidiaries of IBFX, the proprietary risk-management software of Interbank FX, LLC, and immediately thereafter TSG acquired all of the ownership interests of IBFX from its members. Within the next 30 days, Interbank FX, LLC (the primary Forex operating company of the IBFX group) will be merged into TradeStation Forex, Inc., a Retail Foreign Exchange Dealer registered with the Commodity Futures Trading Commission and a member of the National Futures Association, and, as a result, all of Interbank FX, LLC's accounts will be transferred to TradeStation Forex and it will be operated as the "IBFX Division" of TradeStation Forex. IBFX Australia Pty. Ltd. ("IBFXAU"), an Australian company regulated as a member of the Australia Securities and Investments Commission ("ASIC"), will also operate as a subsidiary of TSG.

"This is a win-win for IBFX and TradeStation clients and makes TradeStation a global leader in forex trading, dramatically expanding our customer relationships and creating a global operating presence," said Gary Weiss, President of TradeStation Forex, Inc. "IBFX's proprietary forex tools and services and its focus on customer care will now be backed by the financial stability and trading technology leadership of TradeStation. In time, TradeStation forex clients will benefit from technology offered by IBFX using TradeStation's award-winning, market analysis and trading platform."

"Since IBFX's inception in 2001, our goal has been to provide our clients with the best possible forex trading resources and experience. I believe this acquisition by TradeStation is the best way for IBFX to continue to fulfill that mission," said Todd Crosland, chief executive officer of Interbank FX. "I believe this combination will benefit both IBFX clients as well as TradeStation clients and am thrilled to take part in this collaboration." Going forward, Mr. Crosland will head the IBFX division of TradeStation Forex.

About TradeStation Group, Inc.

TradeStation TradeStation Group, Inc. through its principal operating subsidiaries, TradeStation Securities, Inc. and TradeStation Forex, Inc. offers the TradeStation analysis and trading platform to the active trader and certain institutional trader markets. The TradeStation platform offers advanced electronic order execution and enables clients to design, test, optimize, monitor and automate their own custom Equities, Options, Futures and Forex trading strategies.

TradeStation Securities, Inc. (Member NYSE, FINRA, SIPC, NSCC, DTC, OCC & NFA) is a licensed securities broker-dealer and a registered futures commission merchant, and also a member of the Boston Options Exchange, Chicago Board Options Exchange, Chicago Stock Exchange, International Securities Exchange and NASDAQ OMX. Its TradeStation Prime Services division, based in New York, seeks to provide prime brokerage services, including securities lending, to small and mid-sized hedge funds and other firms. TradeStation Forex, Inc. (Member NFA) is a Retail Foreign Exchange Dealer (RFED) that provides the company's Forex brokerage offering. The company's technology subsidiary, TradeStation Technologies, Inc., develops and offers strategy trading software tools and subscription services. Its London-based subsidiary, TradeStation Europe Limited, an FSA-authorized brokerage firm, introduces UK and other European accounts to TradeStation Securities, Inc. and TradeStation Forex, Inc.

About IBFX

Interbank FX Headquartered in Salt Lake City, UT, USA, IBFX Holdings LLC is the parent of the Interbank FX group of companies; including Interbank FX LLC and IBFX Australia Pty Ltd. Interbank FX is a provider of online forex trading, offering individual traders, money managers and institutional customers proprietary technology, tools and education to trade spot foreign currency online.

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose. Read the full risk disclaimer and privacy policy on trading at www.ibfx.com and www.tradestation.com/products/forex.
 
   

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CFTC Sues 11 Forex Firms

CFTC Building in Washington, DC

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced that it simultaneously filed 10 enforcement actions in Federal District Courts in Illinois, New York, Utah, and Wyoming, alleging that 11 entities are illegally soliciting members of the public to engage in foreign currency (forex) transactions and are operating without being registered with the CFTC.

Some of these companies are very familiar to us.

Read the full announcement at CFTC.
 
   

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RBS Hires Jon Underwood To FX Options Team

Jon Underwood

NEW YORK -(Dow Jones)- Royal Bank of Scotland has hired Jonathan Underwood, former UK Parliamentary Spokesman, to its FX options trading team in Stamford, Conn.

Underwood, who was most recently employed as a parliamentary spokesman for the Liberal Democrats in the U.K., will focus on trading Latin America options in the RBS Global Banking and Markets division, the firm said.

He first started trading Latin America currency options in the late 1990s for NatWest. "Clearly Latin America is a much more significant part of the world economy than it was then," Underwood said in an emailed statement. "Indeed, you could argue that some of the countries have a more stable economic framework than many in the West, and the term emerging is more historic than descriptive."

In addition to Natwest, Underwood has previously traded various products at Deutsche Bank, Standard Chartered, Dresdner Bank and Merrill Lynch. He will report to Ian White, who heads FX Options North America.

Earlier this week, RBS announced it had appointed Ed Mount to a newly created role as head of technology-based trading in foreign exchange, based in London.

Copyright © 2011 Dow Jones Newswires
 
   

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NFA Takes Emergency Action Against IFINIX

IFINIX

August 18, Chicago - National Futures Association (NFA) announced today that it has taken an emergency enforcement action against IFINIX Futures Inc. (IFINIX). IFINIX is an Introducing Broker and Forex Firm Member of NFA, located in Plainview, New York. IFINIX also operates as Pro Active Futures, Inc.

NFA's investigation of the firm found that IFINIX's principal Benhope Munroe created fabricated bank statements in a deliberate attempt to deceive NFA regarding the firm's deficient capital position. The purported bank statements indicated that the firm's operating account had a current balance of more than $60,000. However, as discovered by NFA through its investigation, the firm's bank account actually had a negative balance. Therefore, IFINIX has failed to demonstrate that it is in capital compliance with NFA Financial Requirements.

Effective immediately, the Member Responsibility Action (MRA) suspends IFINIX from NFA membership until further notice. IFINIX and all futures commission merchants (FCMs) carrying customer accounts introduced by the firm are also required to provide copies of the MRA to their customers. In addition, IFINIX is prohibited from disbursing or transferring any funds over which it or any person acting on its behalf exercises control, without prior NFA approval.

The MRA will remain in effect until IFINIX has demonstrated that the firm is in complete compliance with all NFA Requirements. IFINIX may request a prompt hearing on this matter before NFA's Hearing Committee.

The complete text of the MRA can be found on NFA's website (www.nfa.futures.org).

 
   

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