A senior executive at Credit Suisse who leaked details of a €2.5bn (£2bn) bond issue by playing parlour games with a fund manager has been fined by both the regulator and his own bank.
Nicholas Kyprios is still in his job at the Swiss bank's Canary Wharf office but he has been fined £210,000 by the Financial Services Authority and, it is understood, has been docked half of his 2011 bonus – which almost certainly runs to tens of thousands of pounds.
Mr Kyprios, the head of European credit sales, was acting for John Malone's Liberty Media in an agreed $3bn (£2.5bn) takeover of a German rival, UnityMedia. As part of a complex transaction the deal was part-funded and some of UnityMedia's existing debt was redeemed through a €2.5bn bond issue by the target company.
Mr Kyprios was "wall-crossed" – or made an insider – in order that he could market the bonds to his clients.
He rang one of these clients, who indicated he did not want to be made an insider. Mr Kyprios let him know that the issuer was German and the bonds related to a takeover deal.
He then said: "We could play this game. You're going to be my charades partner." He then invited the fund manager to guess the name of the company, beginning by suggesting he guess where on the alphabet the name was and advising him when he was "getting warmer". When the manager finally guessed UnityMedia Mr Kyprios signalled he was right by repeatedly saying "the line is breaking up" even though it wasn't. The fund manager responded: "I can't get any unity into my hearing," at which Mr Kyprios laughed.
The FSA said Mr Kyprios had given the fund manager five key pieces of information including the name of the issuer, the fact that the bond issue would be the next day and the likely rating of the bond. He also failed to stop the conversation when it strayed into dangerous territory.
Tracey McDermott, the FSA's 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."Reuse content