13.03.2012
By Simon Miller
Nicholas Kyprios, head of European Credit Sales at Credit Suisse, has been fined £210,000 for improper market conduct, disclosing client confidential information and exhibiting a lack of skill, care and diligence.
The Financial Services Authority (FSA) fined Nicholas Kyprios for mproper market conduct in disclosing client confidential information ahead of a significant bond issue in November 2009.
Credit Suisse acted on behalf of Liberty Global, Inc. (Liberty) during its takeover of UnityMedia GmbH (UnityMedia) which was part-financed by a €2.5 billion bond issue.
According to the FSA, on 9 November 2009, Kyprios was wall-crossed regarding the takeover and the proposed bond issue so that he could market the bond to clients.
As a result he was given confidential information by Credit Suisse, told that it was inside information and instructed in writing not to disclose it to third parties.
During a phone call to a fund manager on 11 November 2009, Kyprios ended up in a guessing game about the bond issu including advising when the fund manager was "getting warmer".
The regulator said Kyprios was an active participant in the guessing game and could have extracted himself before straying into dangerous territory but he did not do so.
As a result of the guessing game, Kyprios signalled the following information to the fund manager:
(i) Unitymedia was potentially about to bring a big bond issue to market;
(ii) the issue was intended to be announced the next day;
(iii) the potential rating of the issue;
(iv) Unitymedia would redeem outstanding bonds; and
(v) the issue was M&A related.
Tracey McDermott, acting director of enforcement and financial crime, said:
“While the FSA accepts that he did not set out to disclose the information, Kyprios' conduct in trying to push to the limit what he could say resulted in him crossing the line. His behaviour was well below the standards we expect of senior market professionals who we should be able to rely on to uphold the system rather than seek to get round it. The high penalty reflects the seriousness of Kyprios’ breach.
“Approved persons who have been wall-crossed need to recognise the value of the information they have been given and be vigilant in ensuring they do not inadvertently or recklessly disclose such information in breach of wall crossing procedures.”
Kyprios agreed to settle at an early stage and in doing so qualified for a 30% discount on the financial penalty. Without the reduction the FSA would have fined Kyprios £300,000.
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