A former UBS trader wept in a London dock on Tuesday after reading an email in which "rogue trader" Kweku Adoboli, a former colleague accused of fraud, admitted to unauthorised trades that risked undermining the Swiss bank and colleagues.
John Hughes, 30, one of the most senior former traders on the bank's Exchange Traded Funds (ETF) desk in London, conceded he also made some unauthorised trades. But he insisted he did not know that Adoboli had been creating fictitious trades. He smiled when calling his former colleague an "excessive" gambler.
In mainly monosyllabic responses, Hughes - dressed in a grey jumper and fiddling with a hair tie for his collar-length fair hair - told the court he did not know the extent of losses Adoboli had exposed the bank to in a secret "umbrella" account.
Adoboli, 32, was arrested on September 15, 2011 and is now on trial for fraud and false accounting that cost UBS $2.3 billion. He has pleaded not guilty.
Hughes told the court last week he had known about Adoboli's umbrella account - in which he hid losses and profits on unauthorised trades - since early 2011, but decided against reporting it to management.
Hughes, who was dismissed for gross misconduct weeks after Adoboli's arrest, has not been charged with any crime and was in court only to give evidence at Adoboli's trial.
The prosecution, led by lawyer Sasha Wass, says Adoboli was a "master fraudster" who hid his activities from colleagues.
But Charles Sherrard, Adoboli's lawyer, alleges his client was one of "four musketeers" on the ETF desk - but that the other three later "stabbed him in the back".
ETFs are financial instruments that allow holders to track indices rather than buying the underlying securities outright, and are a way for investors to gain exposure to markets that are illiquid or otherwise hard to buy into.
A third member of the desk, Simon Taylor, told the court he had resigned two days before a disciplinary meeting last November because he believed he would have merely been "collateral damage" if he had remained.
Taylor, who also brushed away a tear under persistent cross-examination by Sherrard, insisted he was too junior to have been told much about Adoboli's umbrella account.
However, the account was mentioned in a conversation between Taylor and Adoboli via their computer message system in January 2011. "Great week, really have enjoyed it," Taylor wrote. Adoboli responded: "We've got some nice cash for the umbrella fund. We have a new fund for the rainy days."
"Nice," said Taylor, who will be back in court on Wednesday.
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