A former JPMorgan & Co and Citigroup Inc. trader, who is currently a star manager at hedge fund giant Brevan Howard, has been named in a U.K. court as an alleged co-conspirator in what prosecutors call a scheme to manipulate interest rates.
The trader, Alfredo Saitta, and six less prominent individuals were named last month by the U.K.’s Serious Fraud Office as alleged co-conspirators–but not charged with a crime–during an ongoing trial of other bank employees accused of trying to rig the euro interbank offered rate, or Euribor.
A spokesman for Brevan Howard, speaking on behalf of Mr. Saitta and the firm, declined to comment. The SFO’s allegation about Mr. Saitta hasn’t previously been publicly reported.
The Euribor case is being brought against four employees who were then at Barclays Bank and one then at Deutsche Bank for conspiracy to defraud between 2005 and 2009. They went on trial in London’s High Court on April 9.
Four defendants have pleaded not-guilty. One defendant, Philippe Moryoussef, hasn’t entered a formal plea. He is being tried in absentia and has denied the charges in news articles. Mr. Moryoussef couldn’t immediately be reached for comment.
A sixth defendant in the case, a former Deutsche Bank trader, Christian Bittar, pleaded guilty in March to conspiracy to defraud and is awaiting sentencing.
Mr. Saitta worked at Citigroup from 2001 until 2006, and at JPMorgan from 2006 until 2011, according to the U.K. Financial Conduct Authority’s register.
Spokeswomen for Citigroup and JPMorgan declined to comment. JPMorgan was fined just over EUR337 million ($407 million) in 2016 in connection with Euribor. At the time the bank denied “any wrongdoing with respect to the Euribor benchmark.”
In an opening statement to the court on April 11, James Waddington, a lawyer acting for the SFO, alleged that Mr. Saitta and six other individuals were “involved in the conspiracy” as co-conspirators, according to the transcript.
The other individuals named were employed by Barclays, Deutsche Bank, BNP Paribas, Citibank, JPMorgan, Société Générale, Crédit Agricole and HSBC, according to Mr. Waddington.
HSBC, Crédit Agricole, Deutsche Bank, Citi, JPMorgan and BNP declined to comment. Barclays didn’t respond to a request for comment.
A spokesman for Société Générale said: “The case relates to an individual who left the bank in 2009 and not the bank itself. Due to the ongoing legal proceedings it would be inappropriate to make any further comment.”
Euribor is a benchmark that helps set interest rates on trillions of dollars’ worth of financial products, such as mortgages and corporate loans. The benchmark was an average of figures submitted by a panel of banks based on how much it costs European banks to borrow from each other.
In 2016, the five defendants and Mr. Bittar were charged with conspiracy to defraud. That involved efforts to move the rate by getting their banks and others to submit rates that suited their positions, according to the prosecutor.
“There is a lot of this interbank collusion going on,” Mr. Waddington told the court on April 13, according to the transcript. He alleged that Mr. Saitta, Mr. Bittar, two other co-conspirators and one defendant were “trying to get the banks together to influence the rate.”
An SFO spokesman declined to comment further on the prosecution case or the individuals involved.
The Euribor trial follows the conviction of a number of bank traders for attempting to rig Libor, the London interbank offered rate. The most high-profile conviction was in 2015 of trader Tom Hayes, for conspiracy to defraud for his role in attempting to rig interest-rate benchmarks. He was sentenced to 14 years in prison, although this was later reduced to 11 years on appeal.
Mr. Saitta is a well-known figure in the high stakes world of trading in global bond and currency markets.
Last year, Brevan Howard launched a macro hedge fund for the veteran trader that would accept money from external investors. The Wall Street Journal reported in September that the firm was planning to inject $300 million to $400 million to help the fund get up and running. By the end of January it had grown to around $550 million in size, according to a letter sent to investors and reviewed by the Journal.
Brevan Howard told potential investors around the time of the launch that Mr. Saitta would be named in the Euribor trial in 2018, according to people familiar with the matter.
At Brevan Howard, his fund is up 5% this year, outperforming other so-called macro funds, according to a person who had seen the numbers. The fund made large gains in January, benefiting from large selloffs in dollar and euro interest rate markets and a bet, using options, that the S&P 500 would rise, according to that letter.
The Brevan Howard spokesman declined to comment on the fund’s performance.
Jessica Davies contributed to this article.
Write to Laurence Fletcher at laurence.fletcher@wsj.com
Source : MTV
