Ex-Credit Suisse Trader Banned for Life by Hong Kong SFCPaul Panckhurst
A former trader for Credit Suisse Group AG was banned from Hong Kong’s financial industry for life after he made fictitious trades and covered up losses in 2012.
Jagjit Singh Dhillon, who traded equity derivatives, hid losses and his true exposure to risk in trading books, booked fake trades and entered incorrect market data, the city’s Securities and Futures Commission said on its website today.
The trader’s actions led to overstated profits and understated risk exposure, resulting in Zurich-based Credit Suisse having to make $5.4 million of adjustments to the cumulative monthly profit and loss figure for its trading book on May 18, 2012, the regulator said. Dhillon made no personal gain from his conduct, it said.
Dhillon gave his supervisors false information when they became suspicious, the SFC said. He was arrested after the regulator referred the case to police in June 2012. Holding charges against him were withdrawn in May 2013 due to a “lack of cooperation from key witnesses” and Dhillon left Hong Kong immediately, according to the SFC. It didn’t say where he went.
The SFC’s public register shows Dhillon was licensed to deal in securities and futures contracts for Credit Suisse between May 30, 2007 and June 9, 2012. His license was revoked when he left the firm in June 2012, according to the SFC.
Dhillon traded equity derivatives including listed futures, as well as listed and over-the-counter options related to the Hang Seng Index, the Hang Seng China Enterprises Index and South Korea’s Kospi index, according to a separate statement of disciplinary action posted on the SFC’s website.
Dhillon took steps to avoid showing losses from declines in the three indexes in his trading books and his level of risk exposure, Credit Suisse reported to the SFC in a series of communications between May and June 2012, according to the regulator.
“Credit Suisse has fully cooperated with the authorities in Hong Kong since identifying this incident in May 2012 and promptly reporting it to the relevant regulatory authorities,” spokeswoman Noel Cheung wrote in an e-mail.
On several occasions from May 8-17, 2012, Dhillon failed to enter or update market prices, or entered incorrect prices, in Credit Suisse’s profit and loss system for his trading books, resulting in the misstatement of his books’ profit and loss positions, the disciplinary statement showed.
During the same period, Dhillon entered a number of fictitious trades for listed futures and options in his trading books, which he then canceled before the settlement day for those trades. He did this to disguise the level of equity market risk exposure and mask daily losses for his books, according to the SFC.