(Contains strong language in paragraph 18)
LONDON - 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 the practice, a British court heard on Monday.
The jury also heard that Adoboli, who earned a total of 360,000 pounds in 2010, had made payments from his current account to pay-day loan companies Moneybox, Wageday Advance, Wonga.com and Payday UK.
He had also made payments to companies called Lending Stream, Credit Expert, Pounds to Pocket and Everyday Lending.
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 (1.4 billion pounds), 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.
Presenting the facts to the jury, prosecuting lawyer Esther Schutzer-Weissmann said Adoboli had applied for an account with IG Index, a spread-betting company, in March 2010. An IG Index account allows the holder to place personal bets on future movements of financial markets.
A month later, Adoboli received an email from UBS's legal and compliance department informing him that he had violated bank rules by failing to disclose his IG Index account and by using the account to deal in shares before obtaining clearance from UBS.
A month after that, Adoboli received a second notice of violation, also citing a failure to disclose his personal trading. He was told that if a third violation occurred, the matter would be escalated to the human resources department.
A year later, UBS changed its policy and banned spread-betting on financial instruments 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 it until he was arrested in September.
He made a total of 28 deposits worth a total of almost 30,000 pounds into the City Index account between March and September 2011, and made a total profit of over 18,000 pounds.
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.
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.
Later on Monday, Adoboli's counsel Paul Garlick gave a first flavour of what his defence would be.
Cross-examining expert witness Richard Evans, a former Morgan Stanley trader and manager, Garlick 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.
In the excerpts, Hughes and Adoboli were commenting, sometimes in jargon that was hard for non-traders to follow, on the events of the day. Garlick said the chats suggested Hughes had not only known about the umbrella, but had also encouraged Adoboli to make use of it.
"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 said Adoboli set up the umbrella in 2008 but it was not until 2011 that any of his colleagues became aware of what she described as an illicit fund.
Wass said that even if some of his colleagues had later become aware of the fund, 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.
(Editing by Janet Lawrence)