Jury Convicts Hedge-Fund Manager Accused of Rigging Foreign-Exchange Market
Neil Phillips oversaw a $20 million bet on South Africa’s currency, which prosecutors allege he manipulated
By
Dave Michaels
Oct. 25, 2023 2:59 pm ET
London hedge-fund manager Neil Phillips faces a maximum sentence of 10 years in prison.
A London hedge-fund manager accused of manipulating the foreign-exchange market was convicted Wednesday of fraud in a trial that opened a window into a complex corner of the global currency-trading business.
A federal jury in Manhattan deliberated for less than a day before finding Neil Phillips guilty of commodities fraud. The jury acquitted Phillips, the former chief investment officer of Glen Point Capital, of a separate conspiracy charge.
The trial focused on a $20 million foreign-exchange options trade that Glen Point entered in 2017. Phillips had a bullish view on the South African rand, and the contract paid off because that currency strengthened against the U.S. dollar. But prosecutors argued Phillips rigged the outcome by trading so much of the dollar-rand currency pair in December of that year that he deliberately moved the exchange rate past the level needed to profit on his options contract.
“A jury unanimously found that Neil Phillips intentionally manipulated the foreign exchange, or ‘FX’ market—the world’s largest decentralized financial market—in order to trigger a $20 million windfall for his hedge fund under a barrier option,” Manhattan U.S. Attorney Damian Williams said. “The policing of the financial markets is critical to the health and sanctity of our economy.”
The case against Phillips was prosecutors’ latest move to rein in practices in the unregulated foreign-exchange market, which trades $7.5 trillion around the clock. The Justice Department brought a series of criminal cases over the past decade that accused bank traders of coordinating their efforts to rig currency rates. The world’s biggest banks paid over $10 billion in fines worldwide to resolve the probes.
Phillips argued that his trading was a legitimate part of his overall strategy betting on the rand. He believed the currency would strengthen as a result of a 2017 leadership vote that determined the next president of South Africa. Phillips said he didn’t manipulate the exchange rate but was trading to enhance the value of his wager on the rand.
“We are extremely disappointed by the verdict and believe strongly that Neil Phillips is innocent of the one charge on which he was found guilty,” said his attorney, Sean Hecker. “We will continue to fight for the right result.”
Phillips, who launched Glen Point Capital in London in 2015 with backing from financier George Soros, grew up in South Africa and began his career trading at a series of banks, including Morgan Stanley.
. He was executive producer of a 2021 documentary about the thousands of Nazi war criminals who were never prosecuted for their roles in the Holocaust.
Phillips was convicted of commodities fraud and faces a maximum sentence of 10 years in prison. A judge will decide his sentence at a later phase.
Neil Phillips oversaw a $20 million bet on South Africa’s currency, which prosecutors allege he manipulated
By
Dave Michaels
Oct. 25, 2023 2:59 pm ET
London hedge-fund manager Neil Phillips faces a maximum sentence of 10 years in prison.
A London hedge-fund manager accused of manipulating the foreign-exchange market was convicted Wednesday of fraud in a trial that opened a window into a complex corner of the global currency-trading business.
A federal jury in Manhattan deliberated for less than a day before finding Neil Phillips guilty of commodities fraud. The jury acquitted Phillips, the former chief investment officer of Glen Point Capital, of a separate conspiracy charge.
The trial focused on a $20 million foreign-exchange options trade that Glen Point entered in 2017. Phillips had a bullish view on the South African rand, and the contract paid off because that currency strengthened against the U.S. dollar. But prosecutors argued Phillips rigged the outcome by trading so much of the dollar-rand currency pair in December of that year that he deliberately moved the exchange rate past the level needed to profit on his options contract.
“A jury unanimously found that Neil Phillips intentionally manipulated the foreign exchange, or ‘FX’ market—the world’s largest decentralized financial market—in order to trigger a $20 million windfall for his hedge fund under a barrier option,” Manhattan U.S. Attorney Damian Williams said. “The policing of the financial markets is critical to the health and sanctity of our economy.”
The case against Phillips was prosecutors’ latest move to rein in practices in the unregulated foreign-exchange market, which trades $7.5 trillion around the clock. The Justice Department brought a series of criminal cases over the past decade that accused bank traders of coordinating their efforts to rig currency rates. The world’s biggest banks paid over $10 billion in fines worldwide to resolve the probes.
Phillips argued that his trading was a legitimate part of his overall strategy betting on the rand. He believed the currency would strengthen as a result of a 2017 leadership vote that determined the next president of South Africa. Phillips said he didn’t manipulate the exchange rate but was trading to enhance the value of his wager on the rand.
“We are extremely disappointed by the verdict and believe strongly that Neil Phillips is innocent of the one charge on which he was found guilty,” said his attorney, Sean Hecker. “We will continue to fight for the right result.”
Phillips, who launched Glen Point Capital in London in 2015 with backing from financier George Soros, grew up in South Africa and began his career trading at a series of banks, including Morgan Stanley.
. He was executive producer of a 2021 documentary about the thousands of Nazi war criminals who were never prosecuted for their roles in the Holocaust.
Phillips was convicted of commodities fraud and faces a maximum sentence of 10 years in prison. A judge will decide his sentence at a later phase.
