FCA Bans Trader John Christopher Hughes over Kweku Adoboli's $2.3bn UBS Rogue Trading

The Financial Conduct Authority has banned trader John Christopher Hughes from the financial services industry for life after the regulator found that he was not a "fit and proper person" over failings related to the ex-UBS rogue trader Kweku Adoboli.

The FCA said that between January 2011 and September 2011, Hughes failed to report Adoboli's unauthorised trading, which resulted in $2.3bn worth of losses for Swiss bank UBS.

"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," said Tracey McDermott, the FCA's director of enforcement and financial crime.

"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."

During the aforementioned period, Hughes worked in the Global Synthetic Equities division of the London branch of UBS. He was the most senior trader on the ETF desk.

The watchdog said that during that time Adoboli, another trader on the desk, undertook unauthorised trading which caused $2.3bn in losses.

Adoboli was sentenced to seven years' imprisonment in November 2012 for fraud by abuse of position.

He created and used an undeclared fund of profits, termed the Umbrella, which had the effect of manipulating the desk's reported profit and loss.

"Hughes was aware of the existence of the Umbrella and that it was being used to misrepresent the desk's profit and loss," said the FCA. "In addition he made enquiries about the Umbrella's size and influenced decisions about how it would be funded and used.

"Hughes did not consider the Umbrella to be honest and knew that UBS would not have authorised its use. Hughes' conduct in relation to the Umbrella was dishonest and demonstrates that he is not a fit and proper person to perform functions in relation to any regulated activity carried on by an authorised or exempt person."