Tokyo-based Nomura Holdings pushed through hundreds of millions of dollars of trades for hedge fund Glen Point Capital that are now at the center of U.S. criminal charges against its co-founder Neil Phillips, according to people familiar with the matter.
Prosecutors said Thursday that Phillips, 52, worked with a Singapore-based employee of an unidentified firm to arrange some $725 million of currency trades as he sought to manipulate rates. The firm, known only as Bank-3 in the indictment, is Nomura, according to the people, who requested anonymity as the details are private.
The U.S. has charged Phillips with fraud, alleging that he tried to manipulate the exchange rate between the U.S. dollar and the South African rand in 2017 to make a complex $20 million wager succeed. The hedge fund manager, who co-founded Glen Point in 2015, was arrested in Spain on request from the U.S. earlier this week. A lawyer for Phillips didn¡¯t immediately respond to a voicemail seeking comment on the charges.
Simon Danaher, a spokesman for Nomura in London, declined to comment. A spokesperson for Manhattan U.S. Attorney Damian Williams didn¡¯t respond to a request for comment on the identity of the banks in the indictment.
¡°MAS will assess any request for assistance received and where possible, will render assistance to our foreign counterparts,¡± a spokesperson for the Singapore financial regulator said in response to a Bloomberg query about the case connection with the city-state.
Phillips had bet that the dollar would fall below 12.50 rand by Jan. 2, 2018 but that had yet to happen by late December 2017. Shortly before midnight on Christmas Day, he began directing the bank employee to sell dollars in return for rand in a bid to drive the rate down further, according to prosecutors. He ¡°explicitly¡± told the official that his goal was to push the metric below 12.50, they said.
Within about two hours, Phillips and the employee allegedly engaged in $725 million of trades and the rate fell just below 12.50. He told the official to stop trading immediately and later cashed in the bet, according to prosecutors.
Other financial institutions were parties to the transaction, prosecutors said. A Manhattan-based bank, referred to as Bank-1, paid the $20 million option, while another, referred to as Bank-2, served as the fund¡¯s prime broker. None of the firms were identified by the government, but Glen Point identified JPMorgan Chase & Co. as its prime broker in a filing with the U.S. Securities and Exchange Commission.
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