RBS Market Manipulator Got Canned Because Some Janitor Posed As A Bond Guy And For No Other Reason, Says RBS Market Manipulator

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Time was, RBS had a lax policy on its employees manipulating the price of securities. It wasn't something management had ever expressed a problem with and certainly no one was going to get fired for doing so, if it was even noticed, which typically it was not. Which is why trader Alex Mallinson felt comfortable engaging in a little market abuse, and why Alex Mallison would've continued engaging in a little market abuse, if one guy hadn't come along and ruined things for the whole group.

KK Ho appeared out of nowhere last year on the Royal Bank of Scotland Group Plc’s London trading floor. He had freshly printed business cards identifying himself as a bond salesman. He met with customers and impressed executives in internal meetings with his talk about rich clients he knew, according to two people familiar with the matter. Then, just as suddenly, he was out the door several months later after bank managers began asking questions about him, questions that led to the realization that he wasn’t a bond salesman after all, the people said...Ho had been a manager in RBS property services facing a layoff, and was given a desk to help him find a new position, according to the three people, who asked not to be identified because they weren’t authorized to discuss it. Ho wasn’t assigned to a team, had no manager and wasn’t authorized to sell securities or meet clients.
The case came to light in an employment tribunal lawsuit filed by a former RBS trader, Alex Mallinson, who claimed he was unfairly fired after being accused of manipulating internal pricing systems. In a witness statement given to the London tribunal in February, Mallinson described an incident that led the compliance department to treat employees more harshly. The bank “uncovered a situation where an RBS premises (building maintenance) worker had infiltrated the trading floor” and “posed as a senior bond salesman,” he said in the statement. “Once the situation was uncovered it was dealt with very swiftly, but the fallout was substantial.” The compliance department was reprimanded and the incident “sent a number of very senior managers that had been fooled into thinking this individual was a top salesman, into a tail-spin,” Mallinson said.

And that and only that is the reason Mallison is no longer employed by the bank. If not for fake-bond-guy, Mallison would still be there, doing his thang, no questions asked.

Bond Salesman Who Wasn’t Reveals RBS Human Errors [Bloomberg]

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One thing that most people probably agree on is that having their instant messages, e-mails, and phone calls end up court would be cause for at least a little embarrassment. Everyone's thrown in an emoticon they aren't proud of, some of us have used company time to chat with significant others about undergarments, and the vast majority of workers have spent a not insignificant amount of the workday talking shit about their superiors. Of course, the humiliation gets ratcheted up a notch in the case of people who 'haha' (and in extreme circumstances "hahahah') their own jokes* which, just for example, involve habitual Libor manipulation. Tan Chi Min knows what we're talking about: “Nice Libor,” Tan said in an April 2, 2008, instant message with traders including Neil Danziger, who also was fired by RBS, and David Pieri. “Our six-month fixing moved the entire fixing, hahahah.” And while having such an exchange become public would be tremendously awkward for most, you know what's really 'hahaha' about this whole thing is that 1) Tan was the one who wanted people to read the above, which was submitted as part of a 231-page affidavit earlier this month and 2) He's trying to use it as evidence that he didn't deserve to be fired. The conversations among traders at RBS and firms including Deutsche Bank AG illustrate how the risk of abuse was embedded in the process for setting Libor, the benchmark for more than $300 trillion of securities worldwide......Tan, the bank’s former Singapore-based head of delta trading for Asia, [is] suing Britain’s third-biggest lender by assets for wrongful dismissal after being fired last year for allegedly trying to manipulate the London interbank offered rate, or Libor. Tan, who 'allegedly' tried to manipulate the London interbank offered rate, also included this conversations as part of his defense: “What’s the call on Libor,” Jezri Mohideen, then the bank’s head of yen products in Singapore, asked Danziger in an Aug. 21, 2007, chat. “Where would you like it, Libor that is,” Danziger asked, according to a transcript included in Tan’s filings. “Mixed feelings, but mostly I’d like it all lower so the world starts to make a little sense,” another trader responded. “The whole HF world will be kissing you instead of calling me if Libor move lower,” Tan said, referring to hedge funds. “OK, I will move the curve down 1 basis point, maybe more if I can,” Danziger replied. And this: In another conversation on March 27, 2008, Tan called for RBS to raise its Libor submission, saying an earlier lower figure the bank submitted may have cost his team 200,000 pounds. “We need to bump it way up high, highest among all if possible,” Tan said. Tan also asked for a high submission in an Aug. 20, 2007, instant message to Scott Nygaard, global head of RBS’s treasury markets in London. “We want high fix in 3s,” Tan said in the message. “Neil is the one setting the yen Libor in London now and for this week and next.” Also this: “It’s just amazing how Libor fixing can make you that much money or lose if opposite,” Tan said on an Aug. 19, 2007, conversation with traders at other banks, including Deutsche Bank’s Mark Wong. “It’s a cartel now in London.” And this philosophical one, for good measure: “This whole process would make banks pull out of Libor fixing,” Tan said in a May 16, 2011, chat with money markets trader Andrew Smoler. “Question is what is illegal? If making money if bank fix it to suits its own books are illegal... then no point fixing it right? Cuz there will be days when we will def make money fixing it.” The defense rests. RBS Instant Messages Show Libor Rates Skewed for Traders [Bloomberg] *Although actually people who do this probably don't even have the good sense to be ashamed of themselves.

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Like many of its peers in the banking world, RBS used to make a habit of manipulating Libor (among other things). And, as recent reports suggest, the Royalest Bank of Scotland is probably going to be forced to cough up £300m (and fire a couple execs) to convince the government everyone is very sorry and it won't happen again. How does the bank, which has not had a money-making quarter since the financial crisis,* plan to come up with the cash? By 1) taking back bonuses that were already paid out to people who were involved in the scandal and 2) reducing everyone's bonus this year.

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Just because their manipulation of Libor has gotten the most notice doesn't mean it's the only thing like to mess with. Don't box them into that corner, like your one-trick ponies at Barclays. Royal Bank of Scotland suspended a trader for trying to rig the Singapore dollar swap offer rate, indicating employees may have sought to manipulate more than just Libor, two people briefed on the matter said. Senior trader Chong Wen Kuang was put on leave earlier this year for trying to rig the interest rate to benefit his trading position, said the people who asked not to be identified because the bank is probing his actions. He is the first RBS employee to be suspended or fired for attempting to rig a benchmark other than the London interbank offered rate, one of the people said. RBS Said To Suspend Trader Of Interest Rate Rigging [RBS] Earlier: RBS Trader Whose Instant Messages Clearly Show Him (Allegedly) Engaging In Libor Manipulation Not Going Down Without A Fight

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A broker who worked with the ex-UBS employee cannot deny his talent.

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And then presumably slapped himself on the forehead and shouted "Idiot!" immediately after hitting send.

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RBS Market Manipulator Got Canned Because Some Janitor Posed As A Bond Guy And For No Other Reason, Says RBS Market Manipulator

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