The former UBS trader accused of unauthorized deals that cost the Swiss bank $2.3 billion pleaded not guilty to four fraud and false accounting charges in a London court on Monday.

Kweku Adoboli, 31, was charged in September in connection with one of the world's biggest cases of alleged "rogue trading."

The losses shook the Swiss bank, leading to the resignation of former chief executive Oswald Gruebel and a shake-up of its investment arm to cut its exposure to risk.

The trial is expected to shed light on the bank's management, traders and risk controls.

Adoboli, who faces a maximum 10-year jail sentence if found guilty, spoke only to confirm his name and reply "not guilty" to all the charges when they were read out to him at a packed Southwark Crown Court.

Judge Alistair McCreath remanded Adoboli in custody and set the start of the trial for September 3.

"An earlier trial would be simply not possible," he said.

Adoboli, the British-educated son of a retired United Nations official from Ghana, he was arrested in London on September 15 and charged a day later.

At his last hearing on December 20, his lawyers said he had changed legal teams because he was unhappy with the advice he had received. That meant he had been unable to enter a meaningful plea, his new defense lawyer Paul Garlick told the court at the time.

Adoboli, who worked as a director of exchange traded funds, spent Christmas in prison after the hearing was adjourned to give his lawyers more time to work on the case.

UBS said the “unauthorized trading incident” that led to the $2.3 billion loss it took in its third quarter was not “sufficiently investigated” when detected.

The activity allegedly undertaken by former trader Abodoli involved stock index futures positions offset in UBS systems “with fictitious, forward-settling exchange-traded funds positions.”

The fictitious positions masked its trading risks, but even though both the company’s risk and operational systems detected “unauthorized or unexplained activity,’’ the activity was not properly probed and “appropriate action” was not taken to enforce controls.

UBS said the incident would be investigated by a special committee appointed by its board as well as a separate investigtion by the Swiss Financial Market Supervisory Authority and the UK Financial Services Authority.

Independent auditor KPMG was also retained to assist.

UBS said Fitch Ratings downgraded its long-term issuer default rating from “A+” to “A” based upon its assessment of diminishing government support with a stable outlook.

Major ratings agencies, the company noted, put its credit on watch for possible downgrading, after it announced the “unauthorized trading incident” on September 15.

UBS did not say what flags were raised by its risk and operational systems, when the unauthorized trading took place.

After calculating the impact of the trading loss, UBS reported a $1.1 billion profit in its third quarter income statement.

(Reporting by Peter Griffiths; editing by Steve Addison, Tom Steinert-Threlkeld)


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