John Christopher Hughes was found not to be a “fit and proper person” for his failure to report the illegal trading activity of Kweku Mawuli Adoboli while working as a senior trader at the global equities division of the London branch of UBS.
During the period, Adoboli created and used an undeclared fund of profits, termed the ‘umbrella’, which manipulated the desk’s reported profits and losses.
The Financial Conduct Authority said Hughes was aware of the existence of the Umbrella and influenced decisions about how it would be funded and used.
Because he failed to report the scheme, despite knowing that UBS would not have authorised its use, the regulatory body said he was not fit to perform functions in relation to any regulated activity carried on or by an authorised or exempt person.
The FCA’s director of enforcement and financial crime Tracey McDermott said: “Hughes was the most senior person on the Exchange Traded Funds (ETF) desk.
“He should have been acting as a role model to others. Instead he failed to report the umbrella and allowed the desk’s profit and loss to be misstated over an extended period. This failure contributed to Adoboli’s unauthorised trading continuing unchecked.
“Approved people should operate to the highest standards of integrity. This means not only doing the right thing themselves but also challenging, and blowing the whistle on, those who are not. Hughes failed to do so with catastrophic consequences.”
Adoboli was sentenced to seven years imprisonment in November 2012 after being found guilty of two counts of fraud by abuse of position.
Earlier this week Invesco Perpetual was fined nearly £19m by the FCA for “exposing investors to greater levels of risk than they had led to believe”.
The FCA said the UK-headquartered asset manager broke rules designed to limit investors’ exposure to risk on more than 33 occasions, with these breaches occurring across more than 15 of Invesco’s funds, accounting for more than 70% of the firms’ total £47bn in assets under management.
