Wednesday 20 June 2018 3:11 pm

Tribunal raps FCA’s ‘troubling’ conduct towards former UBS trader banned for Libor rigging

A tribunal has rapped the UK's financial watchdog for its conduct in a Libor rigging probe that saw former UBS trader Arif Hussein banned from the industry.

Hussein, who held a junior position at the bank, attempted to overturn the Financial Conduct Authority's (FCA) decision to ban him from financial services for manipulating the London Interbank Offered Rate, an interest benchmark relied on by banks on lending to each other.

The FCA argued that Hussein had acted dishonestly and without integrity when he was found to have messaged colleagues at the bank regarding rate submissions. The tribunal disagreed.

It did however find that Hussein had failed to be "candid and truthful" with the regulator during their investigation and had also mislead the tribunal at earlier stages. Hussein's ban remains in place as the tribunal did not have the power to overturn it.

The tribunal said it found aspects of the case against Hussein "troubling", particularly the FCA's apparent failure to pursue more senior members of the bank.

"Mr Hussein was a relatively junior trader at UBS and he was put under investigation in relation to a limited number of chats which took place over a very short period," it said. "This was against a background of widespread manipulation of Libor within UBS for which senior managers bear ultimate responsibility and which… was widely condoned."

It noted that Hussein's lawyer, Sara George at Stephenson Harwood, had questioned why none of the senior managers at UBS had been investigated or brought to account because they were not in the UK at the time.

The judges recalled a "troubling" observation made by the FCA's barrister, Benjamin Strong QC, that senior people "somehow manage to keep their fingerprints off the relevant documents sometimes", to which they responded: "It is hoped that the observation … is not a true reflection of the authority's attitude to pursuing senior management either in this jurisdiction or elsewhere when it is necessary to do so."

Hussein said in a statement that he did not seek personally to manipulate the Libor rate and had been acting on "clear instructions from senior management to share my trading information".

"I'm relieved and grateful that Judge Herrington's decision confirms this," he said. "I accept his findings and regret not coming forward with the full explanation for my actions sooner."

He continued: "I ask the FCA to observe the Judge's findings and investigate and bring to account those senior managers at UBS and reconsider its policy of pursuing only the most junior, impecunious and vulnerable."

A spokesperson for the FCA said: "The tribunal decided that Mr Hussein was not candid and truthful with the regulator, and was not subsequently truthful in his evidence to the tribunal. We therefore welcome the Tribunal’s decision to dismiss Mr Hussein’s reference. The FCA carefully considered the available evidence in relation to individuals potentially engaged in Libor misconduct at UBS. The extent of the evidence, the responsibilities of the individual, where they were based, the action of other agencies and whether they were FCA approved persons were all factors in the nature and timing of any action taken."

UBS declined to comment.