- Managers, traders are first individuals punished in FX scandal
- Finma says responsible people tolerated improper action
Switzerland’s financial regulator banned six former UBS Group AG employees from working in the industry for as long as five years, making them the first individuals punished in the global currency-rigging scandal.
The former managers and traders were “directly responsible for serious breaches of regulation at UBS,” Finma said in a statement Thursday, without disclosing any names. Proceedings against four other UBS currency traders were dropped in August after they were given "reprimands," and one other case is continuing, the regulator said.
"Those responsible for the management of foreign exchange trading tolerated, and at times encouraged, behavior which was improper and against the interests of clients," the Swiss regulator said. "Although managers were aware that traders were able to use chat groups to share information and knew of the risks associated with this behavior, they failed to implement adequate systems and controls and to consistently monitor compliance."
While more than 30 traders have been fired, suspended or put on leave before today, no individuals had been punished by authorities in relation to the foreign-exchange manipulation scandal, which has seen seven banks fined about $10 billion by global authorities. U.S. and U.K. prosecutors are conducting criminal probes into the scandal.
Mark Hengel, a spokesman for UBS, declined to comment on the announcement.
The UBS traders are among 11 ex-employees Finma said it was investigating in November 2014, when it ordered UBS to give up 134 million Swiss francs ($134.6 million) in profits, after it “severely violated” proper conduct in currency markets.
Finma said Thursday that UBS’s former head of global foreign exchange trading has been suspended from senior management positions in the Swiss finance industry for four years, and the Zurich-based bank’s former global foreign exchange spot trading chief for five years.
Chris Vogelgesang, UBS’s former global co-head of foreign exchange and precious metals, and former co-chief currency dealer Niall O’Riordan, were among the 11 originally under investigation, people with knowledge of the probe have said.
O’Riordan’s lawyer declined to comment while an attorney for Vogelgesang didn’t immediately respond to a phone call and e-mail. Finma wouldn’t confirm the names of those handed four and five-year bans.
Traders spoke openly in chat rooms of their attempts to manipulate currency benchmarks such as the 4 p.m. WM/Reuters fix, according to global settlements with regulators last year. The UBS traders shared confidential client information, sometimes revealing those clients to third parties and further abused clients’ trust by practices such as front-running and deliberately triggering stop-loss orders, according to Thursday’s statement.