When a disgraced trader, who went to prison for his sins, talks, one should probably listen, particularly if one is in the compliance profession. The Man From FCPA was therefore very interested in a recent Op-Ed piece in the Financial Times by Kweku Adoboli, the UBS trader who took massive trading positions that led the firm to sustain a $2.3 billion dollar loss. As he noted, “for which I took responsibility in September 2011—and to my eventual imprisonment.”
While some might view Adoboli’s mea culpa in the pages of the FT as not worth the ink it was printed on, there were some insights that every compliance practitioner should consider and evaluate for their compliance program. A series of global and industry financial losses had led UBS to not only greater demand for every penny of profit, but also had stripped many trading functions of the company of seasoned leadership, leading Adoboli to note that he and another trader with only 30 months of experience between them, managed a trading book “with more than $50bn in assets.” How many compliance professionals consider the seniority and experience of salespersons put in high anti-compliance risk situations?
Another point was that Adoboli worked in London, while the trading managers he reported to were in Connecticut and the risk management leadership was “in another location or half way around the world in India.” While this is the effect of any worldwide, international business, it directly points to the need for compliance to get out of the office and travel to high-risk jurisdictions for training and simple communications with troops in the field. When leadership, compliance, or otherwise goes out into the field, it not only improves morale but also provides an opportunity for interpersonal communication in a way that e-mails, conference calls, and other marvels of 21st century communication do not.
These points are excellent to consider in light of the Justice Department’s Evalution of Corporate Compliance Programs requirement to operationalize compliance. The speak to a level of detail for any compliance professional to consider how an organization is doing business.