UK hedge fund founder charged in New York with market manipulation, fraud
2022.09.01 20:34
By Jonathan Stempel
NEW YORK (Reuters) -The co-founder and chief investment officer of a prominent London hedge fund was charged on Thursday with fraudulently manipulating the U.S. dollar-South African rand exchange rate in order to trigger a $20 million payment, U.S. prosecutors said.
Neil Phillips, 52, of Glen Point Capital LLP, was indicted in Manhattan on four criminal charges including wire fraud, commodities fraud and two conspiracy counts.
Prosecutors said Phillips on Dec. 26, 2017, directed $725 million of dollar-rand trades to drive the exchange rate below 12.50, entitling him to the $20 million under a contract that might otherwise have expired worthless one week later.
Phillips was arrested in Spain this week at the United States’ request, and would be extradited to face the charges.
Glen Point is not a defendant or named in the indictment, but Phillips registered with the U.S. Commodity Futures Trading Commission as being associated with that firm.
A lawyer for Phillips could not immediately be identified. Glen Point did not immediately respond to a request for comment.
Prosecutors said Glen Point had in October 2017 bought a “one touch” contract from an unnamed New York bank that provided for the $20 million payment if the dollar-rate rate fell below 12.50, and which expired on Jan. 2, 2018.
The indictment said that as the deadline loomed, Phillips worked with a Singapore-based bank employee on the trades, and sent messages including “my aim is to trade thru 50” and “need to get it thru 50. 4990 is fine.”
According to the indictment, after the 12.50 rate was breached, Phillips messaged the employee: “Perfect.”
He received the $20 million two days later, and later reported a positive 6% return for the month of December to his investors, the indictment said.
“As alleged, Mr. Phillips maliciously manipulated global markets in order to defraud financial institutions for illicit profit,” FBI assistant director Michael Driscoll said in a statement.
The case is U.S. v. Phillips, U.S. District Court, Southern District of New York, No. 22-cr-00138.
