UBS AG was sued for wrongful dismissal by two former traders in Singapore who claimed they were fired in a bid by the bank to cover up its role in allegedly manipulating key reference rates.
Mukesh Kumar Chhaganlal, the bank’s former co-head of macro-trading for emerging markets in Asia, and Prashant Mirpuri, a former executive director, said in separate lawsuits filed at Singapore’s High Court yesterday that they were given no opportunity to defend themselves against the bank’s claims of gross misconduct on their part.
UBS, fined about $1.5 billion in December by U.S., U.K. and Swiss regulators for trying to rig global interest rates, is being investigated by the Monetary Authority of Singapore and Hong Kong Monetary Authority. The Singapore central bank in September asked banks to expand their review of benchmark rates to include non-deliverable forwards.
The Feb. 7 firings of the two traders were “effected in order to cover up the defendant’s role in the growing scandal related to alleged fixing of rates of non-deliverable forwards,” according to their lawsuits.
The Zurich-based bank today declined to comment on the Singapore lawsuits, saying in an e-mailed statement that reviews are ongoing and it is cooperating fully with the authorities. A non-deliverable forward is a derivative traders use to speculate on the movement of currencies that are subject to domestic foreign exchange restrictions.
Chhaganlal, suspended for five months from Aug. 30, said in his lawsuit he had observed in 2012 that “increasingly unrealistic” U.S. dollar-Indonesia rupiah rates were being set in Singapore. He raised this concern with his supervisor as evidence of lack of regulation in the non-deliverable forward market, according to his lawsuit.
The supervisor replied that this was how the USD-IDR market behaved and “there was no way to control the market or how people set the rates on the market,” according to Chhaganlal’s lawsuit.
Chhaganlal also raised concerns over the way reference rates were set in Singapore with the city’s central bank and the Association of Banks in Singapore in early 2012, according to his lawsuit. Chhaganlal, who has denied wrongdoing, is suing UBS for loss of earnings and reputation, three months’ notice pay and S$2.41 million ($1.95 million) in shares.
Mirpuri, who was enticed to rejoin UBS from HSBC Holdings Plc in Hong Kong in September with an annual pay package of at least $1.5 million, said in his lawsuit that UBS and its lawyers asked him in October about transcripts of conversations he had with employees of the Swiss bank while he was working with HSBC from 2010 to 2012.
The information sought was confidential, Mirpuri said in his complaint.
Gareth Hewett, a Hong Kong-based spokesman at HSBC, declined to comment.
Mirpuri is seeking damages for loss of earnings and reputation as well as S$1.3 million including pay for a three-month notice period, shares and a performance incentive.
Regulators worldwide are probing banks over allegations traders colluded to manipulate benchmark rates so they could profit from bets on derivatives. Royal Bank of Scotland Group Plc, which this month agreed to a $612 million fine for rate rigging, has also been sued in Singapore by a former trader over wrongful dismissal.
Both Chhaganlal and Mirpuri said they suffered smears on their employment records, hampering their abilities to find alternative jobs.
“There was a clear lack of particulars of what they did wrong,” Daniel Chia, a lawyer for the two traders said today. The Straits Times earlier reported the lawsuits.
The cases are Prashant Parmeshwar Sunny Mirpuri v UBS AG S163/2013 and Mukesh Kumar Chhaganlal v UBS AG S164/2013. Singapore High Court.