Jury Convicts Hedge-Fund Manager Accused of Rigging Foreign-Exchange Market Neil Phillips oversaw a $20 million bet on South Africa’s currency, which prosecutors allege he manipulated By Dave Michaels Oct. 25, 2023 2:59 pm ET London hedge-fund manager Neil Phillips faces a maximum sentence of 10 years in prison. A London hedge-fund manager accused of manipulating the foreign-exchange market was convicted Wednesday of fraud in a trial that opened a window into a complex corner of the global currency-trading business. A federal jury in Manhattan deliberated for less than a day before finding Neil Phillips guilty of commodities fraud. The jury acquitted Phillips, the former chief investment officer of Glen Point Capital, of a separate conspiracy charge. The trial focused on a $20 million foreign-exchange options trade that Glen Point entered in 2017. Phillips had a bullish view on the South African rand, and the contract paid off because that currency strengthened against the U.S. dollar. But prosecutors argued Phillips rigged the outcome by trading so much of the dollar-rand currency pair in December of that year that he deliberately moved the exchange rate past the level needed to profit on his options contract. “A jury unanimously found that Neil Phillips intentionally manipulated the foreign exchange, or ‘FX’ market—the world’s largest decentralized financial market—in order to trigger a $20 million windfall for his hedge fund under a barrier option,” Manhattan U.S. Attorney Damian Williams said. “The policing of the financial markets is critical to the health and sanctity of our economy.” The case against Phillips was prosecutors’ latest move to rein in practices in the unregulated foreign-exchange market, which trades $7.5 trillion around the clock. The Justice Department brought a series of criminal cases over the past decade that accused bank traders of coordinating their efforts to rig currency rates. The world’s biggest banks paid over $10 billion in fines worldwide to resolve the probes. Phillips argued that his trading was a legitimate part of his overall strategy betting on the rand. He believed the currency would strengthen as a result of a 2017 leadership vote that determined the next president of South Africa. Phillips said he didn’t manipulate the exchange rate but was trading to enhance the value of his wager on the rand. “We are extremely disappointed by the verdict and believe strongly that Neil Phillips is innocent of the one charge on which he was found guilty,” said his attorney, Sean Hecker. “We will continue to fight for the right result.” Phillips, who launched Glen Point Capital in London in 2015 with backing from financier George Soros, grew up in South Africa and began his career trading at a series of banks, including Morgan Stanley. . He was executive producer of a 2021 documentary about the thousands of Nazi war criminals who were never prosecuted for their roles in the Holocaust. Phillips was convicted of commodities fraud and faces a maximum sentence of 10 years in prison. A judge will decide his sentence at a later phase.
So banks happily defend/attack barriers all day long, but a hedge fund? Fraud! Looks like a stitch up.
Seems like a garbage article. It leaves out important information. What specifically about his trading did they allege was manipulative? I'm glad I don't pay for this lazy crap journalism. The article just mentions that we had options at the same time as he traded the underlying. That alone as a basis for a conviction seems ridiculous. If a buy a call on IBM and then buy 1000 shares on IBM, I'm not manipulating anything, I'm just participating in the market. So did he coordinate with other traders, spoof trades, corner the market at specific times? If feels like there has to be more here. I found this yahoo article that has a little more detail but it still doesn't make a very detailed case https://finance.yahoo.com/news/glen-point-capital-neil-phillips-163850748.html The case seems to be that certain text messages plus trying to buy up to a certain price is manipulative.
In all such cases, the details and vital information are not provided due to whatever mysterious reasons by the professional writers. The details are important to help us identify trading opportunities so that we can earn tons and tons of $$$$$ (and also thank the manipulators/riggers for the trading opportunities).
Well yes, except the barrier means it was more than just wanting to trade through a price, he knew manipulating the underlying to hit the barrier would pay off. But had he not done it, irrespective of the fundamental pressure upwards, you can bet MS would have kept it below 50 till maturity, and they both knew it.. to the extent MS offered $13m to buy it back. It's been going on for decades and they pin it on the smallest fish in the pond... shabby
%% Good points. But 100% of the jury was against him. What's shabby about that?? The fact the DA ,or whatever his title, likes cases he can win. Is that ''shabby''LOL It does seem, as you hinted , like the bigger banks get by with a lot/ but they get plenty of big fines also, a lot of big fines Nice suit/ so he has more sense than hoddie FTX crook
And good question— the SEC must have brought this. the guys ‘guilty’ sure, but globally it is accepted practice in fx unless you’ve been living under a rock. and they’ve penalised a trader for understanding how it works while meanwhile anything goes under the guise of a delta hedge. Double shabby!
Bank flow is defending barriers? You’ve seen it, huh? So you’re saying that since manipulation happens all the time we should ignore it? The irony is not lost that if the dude had actually hedged his deltas he would never have been prosecuted. He ramped up longs in the curb sessions to effect a touch. He closed all longs immediately on touching the barrier. Those actions are not simply the execution of a long bias. Should manipulation be legal; spoofing, attacking/defending barriers be legal? It’s one thing to target stops below the contract low… but not OK if you’re using inside info to do so. Analogs would be bidding for single deltas in VIX vol to manip the SOQ or futures spoofing which are far less egregious.