UBS Trader Fired Over False Swap Prices Loses U.K. Suit

A former UBS AG trader, who was fired after the bank found he manipulated security values to benefit a colleague, lost his case claiming unfair dismissal.

Ramon Braga, a trader and market maker on the bank’s corporate-credit desk in London, worked with proprietary trader Denis Minayev to overvalue credit-default swaps, according to findings from a UBS internal investigation. He was also accused of securing a misleading quote from a broker.

Braga, who was fired for gross misconduct in October, “fundamentally damaged the trust between himself” and the bank, Judge Graeme Hodgson said in written ruling dated July 3 and made public yesterday. “The dismissal was not unfair.”

The influence of traders over parts of a bank that are supposed to remain separate is under scrutiny as a result of a global probe into the rigging of benchmark interest rates, including the London interbank offered rate. Barclays Plc was fined $450 million last month after investigators found traders had asked colleagues to alter Libor submissions for their benefit.

Braga, who dealt with orders from large clients and had to “mark” the value of securities at the end of the day, had those submissions re-marked by Minayev on 66 occasions even though Minayev shouldn’t have had the authority to do so, UBS staff said during the trial in May. Minayev no longer works at the bank and declined to comment when reached by phone in Monaco.

Braga’s lawyer Jennifer Nicol didn’t respond to a phone message and e-mail requesting comment. A contact number for Braga couldn’t immediately be attained.

‘Zero Tolerance’

“UBS has zero tolerance for such behavior,” said Richard Morton, a spokesman for the Zurich-based lender. “The judge in this case recognized the claimant’s wrongdoing, completely rejected his case and agreed with the action we took.”

The lender admitted the interaction between Braga and Minayev was inappropriate, the judge said in his decision.

Failing to prevent Minayev’s actions “was procedurally wrong and should not have been allowed to happen,” he said. “However the claimant knew that he should maintain independence, and the fact that there were poor procedural safeguards applied is no excuse for the claimant obtaining a false quote and actively colluding.”

The product being re-marked was a credit default swap on European industrial-company bonds, which was illiquid and difficult to value because it was rarely traded. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.

Braga was an inexperienced trader who was “thrown in at the deep end,” another of his lawyers, Amy Sander, said at the trial. He wasn’t aware of many of the changes Minayev made, she said, and thought his actions were permitted by managers.

UBS is still dealing with the fallout from what the bank said were unauthorized trades by London-based UBS employee Kweku Adoboli, which led to a $2.3 billion loss, regulatory probes and the resignation of Chief Executive Officer Oswald Gruebel.

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