Ex-hedge fund executive Neil Phillips convicted

Glen Point Capital co-founder Neil Phillips has been convicted of manipulating the foreign-exchange market to hit a ‘barrier’ rate and trigger a $20m option. The former hedge fund executive has been found guilty of commodities fraud by Manhattan jury after a weeklong trial. Prosecutors had accused Phillips of directing $725m in trades on 26 December 2017, to intentionally raise the value of the SA rand against the US dollar. Fin24 reports that Phillips (53) faces a maximum of 10 years in prison on the fraud count. US District Judge Lewis Liman scheduled his sentencing for 14 March. Phillips had argued that his actions were part of a longer-term strategy and also fell within standard industry practices associated with barrier trading. He contended that alleged victim Morgan Stanley, which sold Glen Point the option for around $2m, engaged in similar trades to hedge its own risk from the bet. At the heart of the prosecutors’ case was a one-hour buying binge of the South African currency in the early hours of 26 December, 2017.

The ‘Boxing Day trades’ effectively moved the exchange rate to R12.50 against the dollar, the barrier at which the Morgan Stanley option would pay out. According to the government, Phillips resorted to market manipulation because the option was set to expire on 2 January 2018. Jurors were shown transcripts of Bloomberg chats in which Phillips discussed how ‘to break 50’ with the Singapore-based trader at Nomura Holdings who placed his orders. ‘My aim is to trade thru 50,’ Phillips said in one message. ‘Get it thru,’ he said in another. Fin24 notes that prosecutors also played an earlier phone conversation in which Phillips told one of his Glen Point traders that he might need him ‘to start fucking around in dollar/rand tonight.’