A UK regulator has banned three bond traders and fined them a total of almost £600,000 for “market manipulation” six years ago when they were employed by the UK-based subsidiary of Japan’s Mizuho Financial Group.
The Financial Conduct Authority has decided to fine Diego Urra £395,000, and Jorge Lopez Gonzalez and Poojan Sheth £100,000 each for market abuse and ban them from “performing any functions in relation to regulated activity”, the watchdog has said. The FCA said the traders placed “large misleading orders” for Italian sovereign bond futures that “they did not intend to execute, giving false and misleading signals and a false or misleading impression as to the supply or demand” of the securities from June 1 to July 29 2016.
The traders are contesting the FCA’s decision and have referred it to the upper tribunal, an independent body where people can challenge the regulator’s decisions. The tribunal will hear both sides of the case and determine whether to approve the FCA’s decision. Urra had more than 18 years of experience in financial services and joined Mizuho International in 2013, according to the FCA. He managed the company’s European government bond desk and oversaw both Lopez Gonzalez and Sheth, who had 10 and four years of trading experience respectively. The FCA said the trio carried out an “abusive trading strategy” for Italian government bond futures by placing a large order to create the impression of increased supply or demand. This would help them execute a smaller genuine order that they actually wanted to trade on the opposite side of the order book.
“Mizuho International itself reported these events to the FCA in 2016 and has fully cooperated with the FCA,” the company said. No other investigations related to the trading are being carried out. They repeated this ‘deliberate and intentional market manipulation . . . and were dishonest’