Sachin Karpe, a former UBS trader, is contesting a £1.25m fine from the Financial Services Authority (FSA) for engaging in alleged unauthorised trades.
A tribunal heard that Karpe, the ex-head of the Asia II desk, had chaired a disciplinary hearing in 2007 of an employee who had engaged in unauthorised foreign-exchange trades. This, the FSA says, was a case of “breathtaking hypocrisy”.
Along with issuing Karpe the £1.25m fine – which is one of FSA’s biggest individual fines – the FSA wants to ban him from working in regulated financial services.
Karpe’s barrister, Michael Blair QC, said the fine would bankrupt Karpe. He is not contesting the ban.
The FSA argues Karpe misused client money by allocating money from client accounts to cover up losses in other accounts on the back of unauthorised trades, which lead to UBS having to pay $42m in compensation to customers and pay an £8m fine to the regulator in 2009.
In a related hearing at the tribunal, John Pottage, who was chief executive and Karpe’s boss, is challenging the FSA in its attempt to fine him £100,000 for not properly monitoring his team, which included Karpe.
UBS said in a statement to the Financial Times it is supporting Pottage, who is still employed by the bank, but not Karpe, who left the business when the matters first came to light.