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Luke Macgregor / Reuters
Kweku Adoboli leaves City of London Magistrates Court in London. Adoboli appeared in a London court on Friday charged with fraud after Swiss bank UBS said it had lost about $2 billion in unauthorized trades. The court ordered him to be detained until a further hearing next week.
The 31-year-old UBS AG trader accused of costing the bank $2 billion in losses through unauthorized trades was charged Friday with fraud and false accounting dating back to 2008.
London police released a statement saying Kweku Adoboli had been charged with two offenses. Reuters said a tearful Adoboli appeared before magistrates later Friday for a brief hearing in which he was remanded into police custody until Sept. 22.
UBS AG has come under increasing pressure to explain how one of its traders allegedly could have gotten away with the trades without triggering suspicion at the bank.
The Wall Street Journal reported Friday that Adoboli admitted to making the trades after risk-control officers at the bank discovered them. The Journal attributed the information to a person familiar with the situation.
The Journal said that the risk-control officers unearthed the trades on Wednesday, the day before Adoboli was arrested. The person familiar with the situation told the newspaper that it's not certain when the bank first discovered the trades.
The BBC reported that it was Adoboli himself who alerted the bank to the trades. Reuters said the bank declined to comment on that report.
In the meantime, investors and experts were scratching their heads about how UBS could have let the trades slip through its control nets.
"Until UBS has explained in detail how such a significant loss due to unauthorized trading could happen, and how the problem will be solved, confidence will remain impaired," Andreas Venditti, an analyst at Zuercher Kantonalbank, told Reuters.
Ratings agencies Moody's and Standard & Poor's have placed UBS' credit grade on review for possible downgrade, Reuters said. And some Swiss politicians have called for UBS senior management to take the blow for the losses, which the bank has said could lead it to report a loss for the third quarter of 2011.
UBS has not released any further public statements since announcing Thursday that it had discovered a loss due to unauthorized trading by an investment bank trader.
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