UBS ignored rules for profit, says rogue trader lawyer Thu Sep 20, 2012 3:58pm EDT Attention strong language in paragraph 15 LONDON (Reuters) - Managers at Swiss bank UBS (UBSN.VX) turned a blind eye when traders exceeded their agreed limits as long as the bank was making money from their deals, a lawyer for accused "rogue trader" Kweku Adoboli told a London court on Thursday. Thursday's hearing laid bare the human drama behind the jargon of the trading floor. At one point, Adoboli was in tears at the back of the courtroom under the emotional impact of the evidence that was presented to the jury. Adoboli heard his lawyer read out long excerpts from his performance appraisals, which described him as an outstanding and popular member of staff with a great future ahead of him on the Exchange Traded Funds (ETFs) desk and beyond. "He's certainly the good cop of the ETFs desk," wrote fellow trader John Hughes, who will appear as a witness in the trial. Adoboli also had to watch Ronald Greenidge, a former boss with whom he had friendly relations, face a barrage of tricky questions from his own lawyer, Charles Sherrard. Prosecutors said on previous days of the trial that Adoboli recklessly gambled with the bank's money by exceeding his limits, failing to hedge his positions, entering fictitious trades into the accounts to hide what he was doing and lying to his bosses. Sherrard sought to challenge that version of events. He was referring to an electronic chat in which Adoboli said he had breached his limits and Greenidge took no action. Throughout his evidence, he said that the limits were important and the traders had to follow the rules, whether or not they were written down. Sherrard read out more examples to illustrate his point. "You do know you're properly mad," Greenidge responded, apparently in jest, to a message from Adoboli about a day in April 2011 when the trader had taken a $200 million position, well in excess of the $50 million he was allowed. On another occasion, Greenidge appeared to question whether Adoboli could really have made the profit he had reported that day from his stated trading positions. "You must have a (trading) book the size of a small planet, 30 versus 20 my arse," Greenidge told Adoboli, referring to the long and short positions the trader had recorded on the system. "Well done," Greenidge said at the end of the exchange. Pressed to explain these conversations, Greenidge said: "We've seen two examples in two years and as I've said before, there was some flexibility around those limits." Sherrard also suggested through his questions that some managers from rival Deutsche Bank (DBKGn.DE) who were recruited into UBS in late 2010 had introduced a more aggressive drive for profits that had incentivized traders to take greater risks. One of these managers was Yassine Bouhara, who resigned as UBS's co-head of global equities on October 5, 2011, as part of the fallout from the Adoboli affair. "Mr Bouhara made it very clear to the junior traders that in the new world if they made loads of money for the book they would make loads of money for themselves," Sherrard said. Greenidge responded that he had been aware that there were new messages coming down from management in some departments, but that as far as he was concerned the reputation of the bank and respect for the rules were still paramount. In another line of questioning, Sherrard suggested that there might be a legitimate explanation for Adoboli's "umbrella." According to the prosecution, this was an illicit fund he used to hide big gains and losses which would otherwise have revealed his excessive risk-taking. Sherrard said the umbrella could have been a "suspense account" where profits made by the trading desk were kept to offset future costs. In response, Greenidge said suspense accounts were sometimes used as an accounting device. Later, when questioned one last time by prosecutor Sasha Wass, he said he did not think it possible that Adoboli's umbrella was a legitimate account. He said that would not have been hidden from the back office and would not have had an impact on risk exposure, as the umbrella did. The trial, which is scheduled to last about eight weeks, continues on Friday. Editing by Philippa Fletcher and Giles Elgood