The Upper Tribunal has directed the Financial Services Authority (FSA) to fine and ban two former London-based UBS traders.
Sachin Karpe has been fined £1.25 million and Laila Karan £75,000 for failing to act with integrity and both have been banned from performing any role in regulated financial services.
Between January 2006 and January 2008, Mr Karpe was desk head of the Asia II desk at UBS’s international wealth management business in London.
Between February 2007 and January 2008, he worked as a client advisor on the Asia II desk, which provided services to customers resident in India, or of Indian origin.
During the period, Mr Karpe carried out substantial unauthorised trading, predominantly in FX instruments, with a gross value of billions of pounds across 39 customer accounts.
He also made unauthorised transfers and loans between client accounts to conceal losses and directed others (including Ms Karan) to assist in arranging the transfers and loans, and in creating false documentation for unauthorised trading.
His scheme resulted in substantial losses for 21 customers and UBS has since paid compensation of $42 million to those affected.
Turning to Ms Karan, she did not instigate the unauthorised trading but was aware that unauthorised activity was occurring on customer accounts for which she was responsible.
She assisted Mr Karpe in concealing the unauthorised activity, in particular by preparing false, handwritten telephone attendance notes purporting to record customer instructions.
Commenting on the case, the FSA’s acting director of enforcement and financial crime, Tracey McDermott, said: “Karpe exploited and abused his position of trust, and persuaded more junior employees to engage in misconduct to assist him.”
She added: “We welcome the Tribunal’s confirmation that as well as banning Karpe, a significant financial penalty should also be imposed. This sends a clear message of the consequences of such behaviour.”