Former UBS LIBOR trader to appeal FCA ban

A former UBS LIBOR trader is referring his recent FCA ban to the Upper Tribunal.

Related topics:  Finance News
Rozi Jones
14th April 2016
FCA

The FCA decided that Arif Hussein, formerly a derivatives trader at UBS in London, is not a fit and proper person and banned him from any role in regulated financial services.

The Tribunal will determine whether to dismiss the reference or remit it to the FCA with a direction to reconsider.

Hussein was Head of UBS’ GBP Rates Desk where he traded interest rate derivative products referenced to benchmarks including GBP LIBOR. The FCA says Mr Hussein understood that it would be improper for UBS’s Trader-Submitters to make LIBOR submissions with the aim of benefitting UBS’s trading positions. However, between 28 January and 19 March 2009 Mr Hussein engaged in 21 communications in which he informed UBS’s GBP Trader-Submitters of his preferences (or, occasionally, his lack of a preference) for GBP LIBOR rates.

The FCA discovered that such communications were routine and they ended only when Mr Hussein resigned from UBS.

The FCA said that Hussein "closed his mind" to the risk that UBS’s GBP Trader-Submitters would use his preferences to influence the GBP LIBOR submissions they made on behalf of UBS, with the aim of benefitting his trading positions. In so doing, the FCA found that "he acted recklessly and so lacks integrity".

However in a statement, Arif Hussein responded:

"I worked as a very junior trader for UBS at a time when UBS admitted it routinely sought to manipulate LIBOR and that it had an improper culture. I was the most junior trader on the desk. I managed no-one and had no direct reports. I am accused of lacking integrity by recklessness because I provided information relating to my trading positions to a person I later found out was the reserve LIBOR submitter. This was a person I had never met who was located in another country. The FCA has admitted that I was ordered to communicate my positions but says that I contemplated the possibility that I was communicating with an individual who was either a LIBOR submitter or in communication with a person who was. The FCA says I "closed my eyes" as to what the submitter would do with the information. This is absurd. It was UBS's policy to ensure that its LIBOR submissions always benefitted its own trading positions and reflected its commercial interests.

"Every day at UBS I was required to upload my exposure to LIBOR onto a spreadsheet on the Bank's intranet system. I now know that this was done so as to ensure that the submitters could take account of all of UBS's trading positions in the aggregate. I was only one, and the most junior, of many traders who were required to disclose their exposure to LIBOR. The spreadsheet of all LIBOR exposures was made available to everyone within UBS who wanted it including the submitters and external brokers. This was regarded as normal practice. Had I not uploaded my LIBOR exposure on a daily basis I would have been subjected to disciplinary action by UBS.

"I can only conclude that the FCA investigators had no interest in conducting an independent fact finding exercise and abdicated all responsibility for evidence gathering to lawyers defending the interests of UBS who repeatedly provided incomplete, partial and misleading information. The FCA did not conduct anything approaching a proper and impartial investigation which pursued all reasonable lines of enquiry including those which point away from the commission of any offence. There was nothing approaching a proper investigation in this case, just a cosy deal done with a bank serving its own interests behind closed doors without any independent scrutiny."

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