Senior UBS FX, Metals Traders Among 11 Said to Face Swiss Probe
Nov. 26 (Bloomberg) — UBS AG co-chief currency dealer Niall O’Riordan is one of 11 individuals the Swiss finance regulator has told are under investigation as part of its currency-rigging case, people with knowledge of the matter said.
The Financial Market Supervisory Authority wrote to O’Riordan, Chris Vogelgesang, the bank’s former global co-head of foreign exchange and precious metals, and precious-metals trader Andre Flotron notifying them of possible enforcement action, said two people, who asked not to be identified because the letters are private. The investigation is ongoing and no findings of fault have been made against any of the individuals.
Finma said it started proceedings against 11 current and former employees on Nov. 12, when it joined U.K. and U.S. regulators in an $800 million settlement to their foreign- exchange manipulation probes. The regulator is considering measures such as a ban from the industry for as long as five years, as well as “naming and shaming” and profit seizure, according to another person.
O’Riordan was suspended last year. Flotron went on leave in early 2014, according to a person at the time. UBS announced in a Nov. 19, 2013, memo that Vogelgesang would step down and look for another role at the Zurich-based bank.
Former precious-metals trader Wolfgang Kajewski, currency trader Sven Schneider and structured-products trader Daniel Laager also got letters, one person said. Kajewski left the bank in 2013, according to his LinkedIn profile.
Attempts to reach the six men by phone, e-mail and through social media or their lawyers were unsuccessful.
$4.3 Billion
Hana Dunn, a UBS spokeswoman, declined to comment on the status of any of its employees or on Finma’s investigation. Vinzenz Mathys, a spokesman for Bern, Switzerland-based Finma, declined to comment on the probe.
The regulator ordered UBS — the world’s fourth biggest currency dealer — to give up 134 million Swiss francs ($139 million) in profits this month after determining bank employees tried to rig foreign-exchange benchmarks and front-run precious metals orders. Finma’s action was part of $4.3 billion in penalties levied that day against six banks by the U.K. Financial Conduct Authority, the U.S. Commodity Futures Trading Commission and the Office of the Comptroller of the Currency.
Finma has now turned to focus on allegations individuals abused clients with practices such as front-running, excessive markups and deliberately triggering stop-loss orders, according to a letter seen by Bloomberg.
‘A Legend’
A stop-loss order is an instruction to buy or sell when a price reaches a certain level. Front-running is when a banker acts on advance knowledge of a client’s trade. Excessive markups on sales are also a focus of the U.S. Justice Department’s foreign-exchange investigation, people with knowledge of that probe have said.
Traders spoke openly of their attempts to manipulate benchmarks such as the 4 p.m. WM/Reuters fix, front run clients and “jamming some stops,” according to excerpts from group chats in the Finma decision. Another wrote “call me a legend! Front run legend.”
Finma’s investigation focused on UBS’s 14-person currency spot trading desk in Zurich between 2008 and 2013. Precious- metals spot trading was also done there. KPMG LLP led the probe for the regulator, according to two of the people.
“The desk supervisors ignored their monitoring duties,” Finma said in its report, enabling “the repeated conduct of a limited circle of persons acting against the clients’ interests.”
‘Not My Role’
One senior employee told the investigators that “my role is to run the desk and make money. Compliance is not my role.”
UBS still faces investigations by antitrust regulators in Switzerland, the U.S. and European Union, as well as a separate fraud probe by the Justice Department. The Swiss federal prosecutor is also investigating individuals connected to currency-rigging. The bank was first to notify U.S. and EU competition authorities, securing it leniency in those matters, people with knowledge of those cases have said.
The bank benefited from a 30 percent reduction by the FCA for settling early, and Finma said it was “substantially assisted by the thoroughness of UBS’s internal investigation.”
Citigroup Inc., Deutsche Bank AG, Barclays Plc and UBS are the four biggest foreign-exchange dealers in the world, according to a survey by Euromoney Institutional Investor Plc.
–With assistance from Jeffrey Vögeli in Zurich.
To contact the reporters on this story: Suzi Ring in London at sring5@bloomberg.net; Liam Vaughan in London at lvaughan6@bloomberg.net; Hugo Miller in Geneva at hugomiller@bloomberg.net To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net Simone Meier
