Hedge fund founder indicted for FX fraud and manipulation

Neil Phillips, founder of hedge fund Glen Point Capital, has been charged with manipulating the foreign exchange market and committing fraud, according to the U.S. Department of Justice.

Phillips, 52, carried out a plan to “artificially manipulate” the exchange rate of the currency pair USD/ZAR (South African rand) to trigger a $20 million payout in the DOJ’s options contract on Sept. 1. was accused of press release Said.

He was arrested in Spain last week at the request of the United States.

In late October 2017, Philips purchased USD/ZAR digital options that expire on January 2, 2018. The option contract had a barrier his rate of 12.50 ZAR against USD and he had a notional amount of $20 million. If the ZAR exchange rate falls below his 12.50 by January 2, Phillips’ hedge fund will entitle him to a payment of $20 million.

Phillips was betting that the December elections in South Africa would trigger a rise in the ZAR against the USD. But even though the ZAR soared to his highest two-year high a week before Christmas after the election, he still needed to break through his 12.50 level to trigger a $20 million payout. I couldn’t. In a few days, the option expired.

Late on Christmas night, Phillips instructed employees of Nomura Holdings in Singapore to sell a large amount of USD in exchange for ZAR, with the aim of pushing the USD/ZAR exchange rate below 12.50.

Then, $725 million worth of US dollars was sold in exchange for ZAR, dropping the rate below 12.50 and allowing Phillips to claim $20 million. Glen Point is said to have made about $16 million in options trading.

Soros Fund Management, the investment firm of billionaire George Soros, reportedly made about $4 million in profit through the deal. bloombergPhillips oversaw Soros funds through managed accounts.


Phillips, from England, has been charged with conspiracy to commit merchandise fraud, carries a maximum sentence of five years’ imprisonment, and a sentence of one count, under Sections 7, 9(1) and 13(a)(5) of the United States Code. is sentenced to a maximum of 10 years in prison.

He has also been charged with wire fraud and conspiracy to commit wire fraud, both of which carry up to 20 years in prison.

In an interview with Bloomberg, economist Rosa Abrantes-Metz, co-head of The Brattle Group’s antitrust division, said this kind of fraud happens “more often than we’d like.” I pointed out that it tends to happen.

In its defense, Phillips could argue that he was not trading illegally, only offensive trading. “It is very difficult to prove that market manipulation is very difficult,” Abrantes-Metz said.

In a release, FBI Deputy Director Michael J. Driscoll said the FBI is “determined to eradicate” these types of fraud from the marketplace to ensure a level playing field. .

“As shown today, the FBI seeks to find fraudsters anywhere in the world and bring them back to the United States to face the consequences of their actions in the federal criminal justice system,” he said. I got

Naveen Aslapury


Naveen Athrappully is a news reporter covering business and world events for The Epoch Times.