The Financial Conduct Authority has banned a former UBS trader for failings related to $2.3 billion unauthorised trading losses by rogue trader Kweku Mawuli.

The Financial Conduct Authority has banned a former UBS trader for failings related to rogue trader Kweku Mawuli Adoboli, who ran up losses of $2.3 million.

The FCA said that John Hughes, Adoboli's supervisor, had failed to adequately supervise Adoboli and did not challenge him regarding unauthorised trading, saying Hughes was “not a fit and proper person”.

Between 1 January 2011 and 14 September 2011, Hughes was the most senior trader on the ETF desk in the global synthetic equities division of the London branch of UBS.

Adoboli was sentenced to seven years imprisonment in November 2012 after being found guilty of two counts of fraud by abuse of position. Part of the unauthorised trading involved creating and using an undeclared fund of profits, called the “umbrella”, which had the effect of manipulating the desk’s reported profit and loss.

The regulator said that Hughes was aware of the umbrella, how it was being used and that it was dishonest. He also knew that UBS would not have authorised its use and made enquiries about the umbrella’s size and influenced decisions about how it would be funded and used, the FCA said.

“Hughes was the most senior person on the exchange traded funds 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,” she added.