US federal prosecutors have charged Neil Phillips, a high-profile supervisor of a London-based hedge fund beforehand backed by George Soros, with conspiracy to control foreign money markets.
Phillips, 52, who co-founded Glen Point Capital, an rising markets-focused hedge fund agency, in 2015, was arrested in Spain earlier this week, Department of Justice prosecutors mentioned on Thursday.
Phillips is charged with conspiracy to commit commodities and wire fraud, commodities fraud, and wire fraud over a plan to control the South African rand alternate price so as to set off a $20mn payout on an choice his fund had purchased.
“As alleged, Mr Phillips maliciously manipulated global markets in order to defraud financial institutions for illicit profit,” mentioned an FBI assistant director Michael J Driscoll.
Phillips, who couldn’t instantly be reached for remark, beforehand labored at London-based BlueBay Asset Management, the place he managed a $1.4bn world macro fund earlier than leaving in 2014.
The subsequent debut of Glen Point, which isn’t talked about within the indictment, was one among London’s highest-profile hedge fund launches on the time.
However, following poor efficiency Glen Point was final 12 months reportedly near being acquired by Eisler Capital, earlier than that deal collapsed and Glen Point staff moved to various totally different companies.
Eight of the group, together with 4 funding professionals, subsequently moved to Kirkoswald Capital, a US-based hedge fund agency launched by former GLG star dealer Greg Coffey.
Earlier this week these workers have been suspended by Kirkoswald, mentioned folks with information of the agency. Kirkoswald declined to remark.
Balyasny Asset Management this week fired two analysis analysts who beforehand labored at Glen Point. Balyasny declined to remark.
No suggestion of wrongdoing has been made in opposition to every other former Glen Point worker by the DoJ.
According to prosecutors, Phillips’s fund purchased a so-called ‘one-touch’ choice in late October 2017. The choice would pay out $20mn if the dollar-rand alternate price fell beneath 12.5 at any time earlier than expiry on January 2 the next 12 months. Phillips’s fund then allotted a portion of this potential payout to an unnamed consumer, entitling the consumer to obtain $4.34mn of the $20mn.
On Boxing Day 2017 Phillips directed a whole lot of tens of millions of {dollars} of dollar-rand trades “for the express purpose of artificially driving the [dollar-rand] rate below 12.50”, prosecutors mentioned. For occasion, from shortly earlier than midnight London time on Christmas Day till round 12:45am on Boxing Day, he “personally directed” a Singapore-based worker of a financial institution to promote round $725mn in {dollars} in alternate for rand. This, in accordance with prosecutors, pushed down the alternate price to only beneath 12.5.
“As soon as Phillips had achieved his objective and the [dollar-rand] rate fell below 12.50 due to Phillips’s manipulative spot-trading activity, Phillips immediately directed that [the employee] cease trading,” mentioned prosecutors.
In Bloomberg chat messages, Phillips wrote that “my aim is to trade thru 50,” “[n]eed it to trade thru 50. 4990 is fine,” and “[g]et it thru.”
