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March 21, 2014

Britain Fines Former Credit Suisse Trader Over Bond Manipulation

“LONDON – Another day, another iteration of financial fraud innovation.”

“‘A British financial regulator on Thursday fined and barred a veteran Credit Suisse bond trader for manipulating the price of British bonds in 2011 during one of the periods of so-called quantitative easing, when the Bank of England bought large amounts of government bonds to stimulate the economy.’”

“‘The regulator, the Financial Conduct Authority, fined Mark Stevenson 662,700 pounds, or about $1.1 million, and barred him from the industry, it said in a statement. Mr. Stevenson had nearly 30 years’ experience. He left the bank in December 2013. Because he agreed to settle early in the investigation, the authority said, his fine was reduced 30 percent.’”

“‘British government bonds are commonly referred to as gilts. They are widely traded, with roughly £7.2 trillion of turnover in 2011 in the interdealer broker market. The central bank ran two quantitative easing programs, from March 2009 to February 2010 and from October 2011 to May 2012, to stimulate the economy and spur inflation toward a target of 2 percent.’”

“‘On Oct. 10, 2011, as the second program began, Mr. Stevenson tried to sell £1.2 billion gilt to the Bank of England for an artificially high price. His unusual trading was reported within 40 minutes, and the bank decided not to buy that gilt.’”

“The authority said Mr. Stevenson’s trading that day “‘was designed to move the price of the bond, in an attempt to sell it to the Bank of England at an abnormal and artificial level, thereby increasing the potential profit made from the sale of the bond.’”

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Read full New York Times article here.

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